I
107TH CONGRESS
2D SESSION
H. R. 5253
To modify the antitrust exemption applicable to the business of medical
malpractice insurance, to address current issues for health care providers,
to reform medical malpractice litigation by making available alternative
dispute resolution methods, requiring plaintiffs to submit affidavits of
merit before proceeding, and enabling judgments to be satisfied through
periodic payments, to reform the medical malpractice insurance market,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 26, 2002
Mr. SANDLIN (for himself, Mr. SHOWS, Ms. EDDIE BERNICE JOHNSON of
Texas, Mr. REYES, Mr. ISRAEL, Mr. DOGGETT, Mr. ROSS, Mr.
PASCRELL, Ms. SANCHEZ, Ms. BERKLEY, Mr. GONZALEZ, Mr. HOLT, Mr.
MEEKS of New York, and Ms. SOLIS) introduced the following bill; which
was referred to the Committee on the Judiciary, and in addition to the
Committees on Energy and Commerce, Ways and Means, and Education
and the Workforce, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To modify the antitrust exemption applicable to the business
of medical malpractice insurance, to address current
issues for health care providers, to reform medical mal-
practice litigation by making available alternative dispute
resolution methods, requiring plaintiffs to submit affida-
vits of merit before proceeding, and enabling judgments
to be satisfied through periodic payments, to reform the
medical malpractice insurance market, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medical Liability Insurance Crisis Response Act of
2002’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—ANTITRUST MATTERS: AMENDMENTS TO THE
MCCARRAN-FERGUSON ACT
Sec. 101. Short title.
Sec. 102. Rules of construction.
Sec. 103. Amendments.
Sec. 104. Study and report.
Sec. 105. Effective date.
TITLE II—ADDRESSING CURRENT ISSUES FOR HEALTH CARE
PROVIDERS
Sec. 201. Prompt payment of claims.
Sec. 202. Eliminating nurse shortages.
‘‘PART H—NATIONAL NURSE SERVICE CORPS SCHOLARSHIP PROGRAM
‘‘Sec. 851. National Nurse Service Corps Scholarship Program.
‘‘PART I—INITIATIVES TO RECRUIT NURSES AND COMBAT THE NURSING
SHORTAGE
‘‘Sec. 855. Nurse recruitment grant program.
‘‘PART J—INITIATIVES TO STRENGTHEN THE NURSE WORKFORCE
‘‘Sec. 857. Grants for career ladder programs.
‘‘Sec. 858. Grants for nurse training in long-term care for the elderly.
‘‘Sec. 859. Grants for internship and residency programs.
‘‘Sec. 860. Developing retention strategies and best practices in nursing
staff management.
‘‘Sec. 861. Stipend and scholarship program.
TITLE III—MEDICAL MALPRACTICE LIABILITY REFORM
Sec. 301. Definitions.
Sec. 302. Federal tort reform.
Sec. 303. Alternative dispute resolution methods.
Sec. 304. Preventing frivolous malpractice suits.
Sec. 305. Requirement for affidavit of merit.
Sec. 306. Periodic payment of awards.
TITLE IV—MEDICAL MALPRACTICE INSURANCE REFORMS
Sec. 401. Advisory Commission on Medical Malpractice.
Sec. 402. Freeze in medical malpractice insurance rates.
Sec. 403. Withdrawal from medical malpractice insurance market.
Sec. 404. Guaranteed renewability of coverage.
Sec. 405. Guaranteed coverage for certain health care providers.
Sec. 406. Medical malpractice insurance disclosure.
Sec. 407. Medical malpractice insurance price comparison.
TITLE V—ADDITIONAL PROVISIONS
Sec. 501. State consideration of additional and alternative methods.
Sec. 502. Mandating equal treatment between traditional insurers and risk re-
tention groups, including medical malpractice risk retention
groups.
TITLE I—ANTITRUST MATTERS:
AMENDMENTS 
TO 
THE
McCARRAN-FERGUSON ACT
SEC. 101. SHORT TITLE.
This title may be cited as the ‘‘Medical Malpractice
Insurance Competitive Pricing Act of 2002’’.
SEC. 102. RULES OF CONSTRUCTION.
The amendments made by this title preserve—
(1) the provisions relating to State taxing and
regulatory authority in section 2 of the Act of March
9, 1945 (59 Stat. 34; 15 U.S.C. 1012), commonly
known as the McCarran-Ferguson Act;
(2) the availability, to persons engaged in the
business of medical malpractice insurance, of the de-
fense of State action in the same manner and to the
same extent as such defense is available to other
persons;
(3) the availability, to persons engaged in the
business of medical malpractice insurance, of any
antitrust immunity or defense that may be applica-
ble under law other than the McCarran-Ferguson
Act;
(4) the legal standards applicable under the
McCarran-Ferguson Act, as in effect before such Act
is amended by this title, to all conduct described in
the safe harbors found in subparagraphs (B) and
(C) of section 2(b)(1) of the McCarran-Ferguson
Act, as amended by this title; and
(5) the provisions relating to boycott, coercion,
or intimidation in section 3(b) of the McCarran-Fer-
guson Act.
SEC. 103. AMENDMENTS.
Section 2 of the Act of March 9, 1945 (59 Stat. 34;
15 U.S.C. 1012), commonly known as the McCarran-Fer-
guson Act, is amended—
(1) in subsection (b) by striking ‘‘: Provided,’’
and all that follows through ‘‘law.’’ and inserting the
following: ‘‘except as follows:
‘‘(1)(A) The antitrust laws shall be applicable
to the business of medical malpractice insurance ex-
cept as provided in subparagraphs (B) and (C).
‘‘(B) The antitrust laws shall not be applicable
to conduct that consists of making an agreement or
engaging in joint conduct—
‘‘(i)(I) to collect, compile, classify, or dis-
seminate historical data;
‘‘(II) to develop procedures to collect, com-
pile, classify, or disseminate historical data; or
‘‘(III) to verify that historical data is accu-
rate and complete;
‘‘(ii) to determine, using standard actuarial
techniques, or disseminate, a loss development
factor or developed losses;
‘‘(iii) to develop or disseminate a standard
medical malpractice insurance policy form (in-
cluding a standard addendum to a medical mal-
practice insurance policy form and standard
terminology in such a policy form) if such
agreement or joint conduct does not include an
agreement to adhere to such standard form, or
to require adherence to such standard form, ex-
cept that the fact that 2 or more persons en-
gaged in the business of medical malpractice in-
surance use such standard form—
‘‘(I) shall not be sufficient in itself to
support a finding that an agreement to ad-
here, or to require adherence, to such
standard form exists; and
‘‘(II) may be used only for the pur-
pose of supplementing or explaining direct
evidence of the existence of an agreement
to adhere, or to require adherence, to such
standard form;
‘‘(iv) to develop or disseminate, for use in
providing medical malpractice insurance in a
State, a manual that is filed, before dissemina-
tion, with the State entity that regulates the
business of medical malpractice insurance under
State law, if such manual includes only—
‘‘(I) information and conduct de-
scribed in clauses (i), (ii), and (iii), includ-
ing relativity factors;
‘‘(II) during the transition period, a
trend factor or information to which a
trend factor has been applied, to the extent
permitted under subparagraph (C); and
‘‘(III) explanations and instructions
for using the manual (or any of the infor-
mation contained in the manual), if such
agreement or joint conduct does not in-
clude an agreement among competitors to
adhere, or to require adherence, to any of
such explanations or instructions;
‘‘(v) to provide medical malpractice insur-
ance pursuant to a public necessity market
mechanism; or
‘‘(vi) to administer a public necessity mar-
ket mechanism in a State, pursuant to the au-
thorization of and under the supervision of such
State, if all persons who provide medical mal-
practice insurance in such State pursuant to
such mechanism, and all persons seeking to ob-
tain medical malpractice insurance through
such mechanism, have a reasonable opportunity
to appeal determinations affecting them to a
governmental entity;
to the extent that such conduct is regulated by State
law.
‘‘(C) During the transition period, the antitrust
laws shall not be applicable to conduct that consists
of making an agreement or engaging in joint con-
duct to determine or disseminate a trend factor, to
the extent that such conduct is regulated by State
law.
‘‘(2) Subsequent to the transition period, the
independent purchase of a trend factor by a person
engaged in the business of medical malpractice in-
surance from a person not engaged in providing
such insurance (and not affiliated with a person en-
gaged in providing such insurance) shall be pre-
sumed not to violate the antitrust laws.
‘‘(3) The Federal Trade Commission Act shall
be applicable to the business of medical malpractice
insurance to the extent that such business is not
regulated by State law, except that, with respect to
enforcement of the antitrust laws, section 5 of such
Act shall be applicable to the business of medical
malpractice insurance to the same extent as the
other antitrust laws.’’, and
(2) by adding at the end the following:
‘‘(c) For purposes of subsection (b)—
‘‘(1) the term ‘antitrust laws’ has the meaning
given it in subsection (a) of the first section of the
Clayton Act (15 U.S.C. 12), except that such term
includes section 5 of the Federal Trade Commission
Act (15 U.S.C. 45) as such section 5 applies to con-
duct that constitutes a violation of the Sherman Act
or the Clayton Act;
‘‘(2) the term ‘developed losses’ means aggre-
gate paid losses and aggregate reserves held for re-
ceived claims, as adjusted by a loss development fac-
tor;
‘‘(3) the term ‘historical data’ means informa-
tion respecting—
‘‘(A) losses paid by, claims received by, re-
serves for such claims set aside by, or units of
exposure to loss in medical malpractice insur-
ance policies sold by any person engaged in the
business of medical malpractice insurance; or
‘‘(B) medical malpractice insurance pre-
miums received by any person engaged in the
business of medical malpractice insurance, if
such information is not disseminated in a form
from which information respecting premiums
received by any separately identifiable person
engaged in the business of medical malpractice
insurance may be derived;
‘‘(4) the term ‘medical malpractice insurance
policy’ means a contract under which medical mal-
practice insurance is sold to an insured;
‘‘(B) in which the persons providing such
type of medical malpractice insurance pursuant
to such mechanism represent a substantial
number of the persons engaged in the business
of providing such type of insurance in such
State and are either required by State law, or
formally requested or ordered by such State en-
tity, to participate;
‘‘(C) the purpose of which is to make such
type of insurance available to persons who
would not otherwise be able to obtain such type
of insurance at affordable cost; and
‘‘(D) in which the rate for such type of in-
surance is subject to the approval or dis-
approval of such State;
‘‘(9) the term ‘relativity factor’ means a ratio
comparing one classification of historical data to an-
other such classification, or comparing developed
losses in one such classification to developed losses
in another such classification;
‘‘(10) the term ‘transition period’ means the 2-
year period beginning on the effective date of the In-
surance Competitive Pricing Act of 2002; and
‘‘(11) the term ‘trend factor’ means an adjust-
ment to be made to developed losses in order to ac-
count for any change that is anticipated to affect
losses.’’.
SEC. 104. STUDY AND REPORT.
(a) STUDY.—During the 5-year period beginning on
the effective date of this title, the Attorney General shall
conduct a study to determine the effect of this title, and
the amendments made by this title, on the business of
medical malpractice insurance.
(b) REPORT.—Not later than 1 year after the expira-
tion of the 5-year period referred to in subsection (a), the
Attorney General shall submit, to the Speaker of the
House of Representatives and the President pro tempore
of the Senate, a report summarizing the results of the
study required by subsection (a).
SEC. 105. EFFECTIVE DATE.
This title shall take effect 1 year after the date of
the enactment of this Act.
TITLE 
II—ADDRESSING 
CUR-
RENT ISSUES FOR HEALTH
CARE PROVIDERS
SEC. 201. PROMPT PAYMENT OF CLAIMS.
(a) GROUP HEALTH PLANS.—
(1) PUBLIC
HEALTH
SERVICE
ACT
AMEND-
MENTS.—(A) Subpart 2 of part A of title XXVII of
the Public Health Service Act is amended by adding
at the end the following new section:
‘‘SEC. 2707. PROMPT PAYMENT OF CLAIMS.
‘‘(a) IN GENERAL.—A group health plan, and a
health insurance issuer offering health insurance coverage
in connection with a group health plan, shall provide for
prompt payment of claims submitted for health care serv-
ices or supplies furnished to a participant, beneficiary, or
enrollee with respect to benefits covered by the plan or
issuer, in a manner that is no less protective than the pro-
visions referred to in subsection (b).
‘‘(b) PROVISIONS.—The provisions referred to in this
subsection are the provisions of section 1842(c)(2) of the
Social Security Act (42 U.S.C. 1395u(c)(2)), as modified
as follows:
‘‘(1) ALTERNATIVE INTEREST RATE.—Instead
of applying the interest rate calculated under section
3902(a) of title 31, United States Code, the interest
rate shall be 1 percent of the payment amount due
plus, in the case of payments not made within 25
days of the due date, an additional 1 percent inter-
est due for every month the payment is past due.
‘‘(2) COVERAGE OF 100 PERCENT OF CLAIMS.—
The reference in such section 1842(c)(2) to ‘not less
than 95 percent of all claims submitted under this
part’ shall be deemed to be a reference to ‘100 per-
cent of all claims submitted under the plan or cov-
erage involved’.
‘‘(c) PERMITTING ADDITIONAL PENALTIES.—State
Insurance Commissioners may establish and impose mone-
tary penalties or other penalties for failure by a group
health plan, and a health insurance issuer offering health
insurance coverage in connection with a group health plan,
to comply with the provisions referred to in subsection
(b).’’.
(2) ERISA AMENDMENTS.—(A) Subpart B of
part 7 of subtitle B of title I of the Employee Re-
tirement Income Security Act of 1974 is amended by
adding at the end the following new section:
‘‘SEC. 714. PROMPT PAYMENT OF CLAIMS.
‘‘(a) IN GENERAL.—A group health plan, and a
health insurance issuer offering health insurance coverage
in connection with a group health plan, shall provide for
prompt payment of claims submitted for health care serv-
ices or supplies furnished to a participant or beneficiary
with respect to benefits covered by the plan or issuer, in
a manner that is no less protective than the provisions
referred to in subsection (b).
‘‘(b) PROVISIONS.—The provisions referred to in this
subsection are the provisions of section 1842(c)(2) of the
Social Security Act (42 U.S.C. 1395u(c)(2)), as modified
as follows:
‘‘(1) ALTERNATIVE INTEREST RATE.—Instead
of applying the interest rate calculated under section
3902(a) of title 31, United States Code, the interest
rate shall be 1 percent of the payment amount due
plus, in the case of payments not made within 25
days of the due date, an additional 1 percent inter-
est due for every month the payment is past due.
‘‘(2) COVERAGE OF 100 PERCENT OF CLAIMS.—
The reference in such section 1842(c)(2) to ‘not less
than 95 percent of all claims submitted under this
part’ shall be deemed to be a reference to ‘100 per-
cent of all claims submitted under the plan or cov-
erage involved’.
‘‘(c) PERMITTING ADDITIONAL PENALTIES.—State
Insurance Commissioners may establish and impose mone-
tary penalties or other penalties for failure by a group
health plan, and a health insurance issuer offering health
insurance coverage in connection with a group health plan,
to comply with the provisions referred to in subsection
(b).’’.
(D) The table of contents in section 1 of such
Act is amended by inserting after the item relating
to section 713 the following new item:
‘‘Sec. 714. Prompt payment of claims.’’.
(3) 
INTERNAL
REVENUE
CODE
AMEND-
MENTS.—
(A) IN GENERAL.—Subchapter B of chap-
ter 100 of the Internal Revenue Code of 1986
is amended—
(i) in the table of sections, by insert-
ing after the item relating to section 9812
the following new item:
‘‘Sec. 9813. Prompt payment of claims.’’;
and
(ii) by inserting after section 9812 the
following:
‘‘SEC. 9813. PROMPT PAYMENT OF CLAIMS.
‘‘A group health plan shall provide for prompt pay-
ment of claims submitted for health care services or sup-
plies furnished to a participant or beneficiary with respect
to benefits covered by the plan, in a manner that is no
less protective than the provisions referred to in subsection
(b).
‘‘(b) PROVISIONS.—The provisions referred to in this
subsection are the provisions of section 1842(c)(2) of the
Social Security Act (42 U.S.C. 1395u(c)(2)), as modified
as follows:
‘‘(1) ALTERNATIVE INTEREST RATE.—Instead
of applying the interest rate calculated under section
3902(a) of title 31, United States Code, the interest
rate shall be 1 percent of the payment amount due
plus, in the case of payments not made within 25
days of the due date, an additional 1 percent inter-
est due for every month the payment is past due.
‘‘(2) COVERAGE OF 100 PERCENT OF CLAIMS.—
The reference in such section 1842(c)(2) to ‘not less
than 95 percent of all claims submitted under this
part’ shall be deemed to be a reference to ‘100 per-
cent of all claims submitted under the plan involved’.
‘‘(c) PERMITTING ADDITIONAL PENALTIES.—State
Insurance Commissioners may establish and impose mone-
tary penalties or other penalties for failure by a group
health plan to comply with the provisions referred to in
subsection (b).’’.
(b) INDIVIDUAL HEALTH INSURANCE.—(1) Part B
of title XXVII of the Public Health Service Act is amend-
ed by inserting after section 2752 the following new sec-
tion:
‘‘SEC. 2753. PROMPT PAYMENT OF CLAIMS.
‘‘The provisions of section 2707 shall apply to health
insurance coverage offered by a health insurance issuer
in the individual market in the same manner as they apply
to health insurance coverage offered by a health insurance
issuer in connection with a group health plan in the small
or large group market.’’.
(c) PROTECTION OF STATES’ RIGHTS.—Any issue re-
lating to prompt payment for health care services or sup-
plies that is not governed by any provision of law as
amended by this section shall be governed by otherwise
applicable State or Federal law. This section (and the pro-
visions amended by this section) does not preempt or
supercede any law that imposes shorter time frames for
payment, greater penalties for non-payment, and, in gen-
eral, provides greater assurances that group health plans
and health insurance issuers provide for prompt payment
of claims submitted for health care services or supplies
furnished to a participant, beneficiary, or enrollee with re-
spect to benefits covered by the plan or issuer.
(d) EFFECTIVE DATES.—
(1) 
GROUP
HEALTH
PLANS
AND
GROUP
HEALTH INSURANCE COVERAGE.—The amendments
made by subsection (a) apply with respect to group
health plans for plan years beginning on or after
January 1, 2003.
(2) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The amendment made by subsection (b)
apply with respect to health insurance coverage of-
fered, sold, issued, renewed, in effect, or operated in
the individual market on or after such date.
SEC. 202. ELIMINATING NURSE SHORTAGES.
Title VIII of the Public Health Service Act (42
U.S.C. 296 et seq.) is amended—
(1) in section 846(a)(3), by inserting ‘‘in a
nursing home, in a hospice, in a home health agency,
in a nurse-managed health center, in a public health
department,’’ after ‘‘in a public hospital,’’;
(2) in section 801, by adding at the end the fol-
lowing:
‘‘(9) HEALTH
CARE
FACILITY.—The term
‘health care facility’ means an Indian Health service
health center, a Native Hawaiian health center, a
hospital, a migrant health center, a community
health center, a Federally qualified health center, a
nurse-managed health center, a rural health clinic, a
nursing home, a home health care agency, a hospice,
a public health clinic, a long-term care facility, a
skilled nursing facility, or any other public, non-
profit, or private facility designated by the Sec-
retary.’’; and
(3) by adding at the end the following:
‘‘PART H—NATIONAL NURSE SERVICE CORPS
SCHOLARSHIP PROGRAM
‘‘SEC. 851. NATIONAL NURSE SERVICE CORPS SCHOLAR-
SHIP PROGRAM.
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall
establish a National Nurse Service Corps Scholarship pro-
gram (referred to in this section as the ‘program’) that
provides scholarships to individuals seeking nursing edu-
cation in exchange for service by such individuals in crit-
ical nursing shortage areas or facilities.
‘‘(b) PREFERENCE.—In awarding scholarships under
this section, the Secretary shall give preference to appli-
cants with the greatest financial need, applicants who
agree to serve in health care facilities experiencing nursing
shortages in medically underserved areas, applicants cur-
rently working in a health care facility who agree to serve
the period of obligated service at such facility, minority
nurse applicants, and applicants with an interest in a
practice area of nursing that has unmet needs.
‘‘(c) REQUIREMENTS.—To be eligible to participate
in the program, an individual must—
‘‘(1) be accepted for enrollment, or be enrolled,
in an accredited school of nursing, on a full- or part-
time basis, to take courses leading to a collegiate or
associate degree in nursing, or a diploma in nursing;
‘‘(2) submit an application to participate in the
program; and
‘‘(3) enter into an agreement with the Sec-
retary, at the time of submittal of such application,
to—
‘‘(A) accept the conditions of the scholar-
ship and remain enrolled in a school of nursing;
‘‘(B) maintain an acceptable level of aca-
demic standing;
‘‘(C) maintain enrollment in a course of
study until the individual completes the course
of study; and
‘‘(D) serve as a nurse for a period of not
less than 2 years in a critical nursing shortage
area or facility, or the individual may complete
such required period of service on a part-time
basis subject to—
‘‘(i) an agreement entered into by the
facility and the individual which is ap-
proved by the Secretary; and
‘‘(ii) the individual agrees in writing
that the period of obligated service will be
extended so that the aggregate amount of
less than full-time service performed will
equal the amount of service that would be
performed through full-time service.
‘‘(d) RULE OF CONSTRUCTION.—In selecting individ-
uals to participate in the program, the Secretary shall give
preference to individuals serving at public or nonprofit pri-
vate facilities, unless only a private facility is present in
the geographic area that the Secretary determines is expe-
riencing a nursing shortage. While giving priority to indi-
viduals who propose to provide service in public or non-
profit private facilities, the Secretary must not disregard
the needs of areas that individuals seek to provide services
in which no public or nonprofit private facility is oper-
ating, including rural areas.
‘‘(e) APPLICATIONS.—
‘‘(1) IN GENERAL.—The application forms for
the programs shall include—
‘‘(A) a fair summary of the rights and li-
abilities of an individual whose application is
approved by the Secretary; and
‘‘(B) information respecting meeting a
service obligation and such other information as
may be necessary for the individual to under-
stand the program.
‘‘(2) ACCESSIBILITY.—The application form
and all other information furnished by the Secretary
shall be written so that it may be understood by the
average individual applying to participate in the pro-
gram. The Secretary shall make such application
forms, and other information available to individuals
desiring to participate in the program, on a date
sufficiently early to ensure that such individuals
have adequate time to carefully review and evaluate
such forms and information.
‘‘(3) DISTRIBUTION.—The Secretary shall dis-
tribute to junior and senior high schools, community
colleges, universities, and schools of nursing mate-
rials providing information on the program and shall
encourage the schools to disseminate the materials
to students of the schools.
‘‘(f) SCHOLARSHIP.—
‘‘(1) IN GENERAL.—A scholarship provided to a
student for a school year under a written contract
under the program shall consist of—
‘‘(A) payment to, or (in accordance with
paragraph (2)) on behalf of the student of—
‘‘(i) the tuition of the student in such
school year; and
‘‘(ii) all other reasonable educational
expenses and support services, including
fees, books, and laboratory expenses in-
curred by the student in such school year;
and
‘‘(B) payment to the student of a stipend
of $400 per month (adjusted in accordance with
paragraph (3)) for each month that the student
is enrolled.
‘‘(2) CONTRACTS.—
‘‘(A) WITH A SCHOOL OF NURSING.—The
Secretary may contract with a school of nurs-
ing, in which a participant in the program is
enrolled, for the payment to the school of nurs-
ing of the amounts of tuition and other reason-
able educational expenses described in para-
graph (1)(A).
‘‘(B) WITH
AN
INDIVIDUAL.—The Sec-
retary shall prepare a written contract for the
program that shall be provided to any indi-
vidual who is enrolled or accepted for enroll-
ment at a school of nursing and who desires to
participate in the program at the time that an
application is provided to such individual. The
contract described in this paragraph shall con-
tain a provision that any financial obligation of
the United States arising out of a contract en-
tered into under this section and any obligation
of the individual which is conditioned thereon,
is contingent upon funds being appropriated for
scholarships under this section.
‘‘(3) MONTHLY STIPEND.—The amount of the
monthly stipend for each month that a student is
enrolled, specified in paragraph (1)(B) and as pre-
viously adjusted (if at all) in accordance with this
paragraph, shall be increased by the Secretary as
the Secretary determines to be reasonable.
‘‘(g) BREACH OF AGREEMENT.—In the case of an in-
dividual who enters into an agreement under this section
to provide service as a nurse in consideration for receiving
a scholarship, such individual is liable to the Federal Gov-
ernment in accordance with sections 338E and 338F as
amended in the future. If the individual begins providing
less than full-time service but fails to begin or complete
the period of obligated service, the methods stated in sec-
tion 338E(c) for determining the damages for breach of
the individual’s written contract will be used after con-
verting periods of obligated service or of service performed
into their full-time equivalence.
‘‘(h) FUND REGARDING USE OF AMOUNTS RECOV-
ERED FOR CONTRACT BREACH.—There is established in
the Treasury of the United States a fund to be known
as the National Nurse Service Corps Replacement Fund.
Such fund shall be governed under section 338F.
‘‘(i) SERVICE INFORMATION.—The Secretary shall
provide to an individual who has participated in the pro-
gram and is nearing the conclusion of his or her service
obligation, information regarding other opportunities for
nursing in critical nursing shortage areas or facilities.
‘‘(j) REPORT.—Not later than 18 months after the
first loan cycle, and annually thereafter, the Secretary
shall prepare and submit to Congress a report describing
the program, including statements regarding—
‘‘(1) the number of enrollees, scholarships, and
grant recipients by year of study;
‘‘(2) the number of graduates;
‘‘(3) the amount of scholarship payments made
for each of tuition, stipends, and other expenses;
‘‘(4) which educational institution the scholar
attended;
‘‘(5) the number and placement location of the
scholars;
‘‘(6) the default rate and actions required;
‘‘(7) the amount of outstanding default funds;
‘‘(8) to the extent that it can be determined,
the reason for the default;
‘‘(9) the demographics of the individuals par-
ticipating in the scholarship program; and
‘‘(10) recommendations for future modifications
of the scholarship program.
‘‘(k) DEFINITIONS.—In this section:
‘‘(1) COMMUNITY HEALTH CENTER.—The term
‘community health center’ has the meaning given
such term in section 330(a).
‘‘(2) CRITICAL NURSING SHORTAGE AREA OR
FACILITY.—
‘‘(A) IN
GENERAL.—The term ‘critical
nursing shortage area or facility’ means—
‘‘(i) an urban or rural area that the
Secretary determines is experiencing a
nursing shortage;
‘‘(ii) a population that the Secretary
determines has such a shortage; or
‘‘(iii) a health care facility or other
public, nonprofit, or private facility that
the Secretary determines has a shortage.
‘‘(B) FACTORS TO CONSIDER.—In making
a determination regarding a critical nursing
shortage area or facility, the Secretary shall use
the criteria in section 846 for not more than 12
months, and after such period—
‘‘(i) the ratio of available nurses to
the number of individuals in the area or
population group;
‘‘(ii) the demonstrated need of a
health care facility or other public, non-
profit, or private facility in the area; or
‘‘(iii) the presence of innovative reten-
tion strategies utilized by eligible facilities.
‘‘(3) RURAL HEALTH CLINIC.—The term ‘rural
health clinic’ has the meaning given such term in
section 1861(aa)(2) of the Social Security Act.
‘‘(l) AUTHORIZATION OF APPROPRIATIONS.—For the
purpose of payments under agreements entered into under
subsection (a), there are authorized to be appropriated
$40,000,000 for fiscal year 2003 and such sums as may
be necessary for fiscal years 2004 through 2007.
‘‘PART I—INITIATIVES TO RECRUIT NURSES AND
COMBAT THE NURSING SHORTAGE
‘‘SEC. 855. NURSE RECRUITMENT GRANT PROGRAM.
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall
award grants to eligible entities to increase nursing edu-
cation opportunities.
‘‘(b) ELIGIBLE ENTITY.—In this section, the term
‘eligible entity’ means a school of nursing, or a health care
facility, or a partnership of such school and facility.
‘‘(c) USE OF FUNDS.—An eligible entity that receives
a grant under subsection (a) shall use funds received from
such grant to—
‘‘(1) support outreach programs at primary,
junior, and secondary schools that inform guidance
counselors and students of education opportunities
regarding nursing;
‘‘(2) carry out special projects to increase nurs-
ing education opportunities for individuals who are
from disadvantaged backgrounds (including economi-
cally disadvantaged backgrounds and racial and eth-
nic minorities underrepresented among registered
nurses) by providing student scholarships or sti-
pends, pre-entry preparation, or retention activities;
‘‘(3) support education programs for nursing
students who require assistance with math, science,
English, and medical terminology;
‘‘(4) meet the costs of dependent care and
transportation for individuals who are taking part in
a nursing education program at any level; or
‘‘(5) support community-based partnerships
seeking to recruit nurses in rural communities and
medically underserved urban communities, and other
communities experiencing a nursing shortage.
‘‘(d) APPLICATION.—An eligible entity desiring a
grant under subsection (a) shall submit an application to
the Secretary at such time, in such manner, and con-
taining such information as the Secretary may reasonably
require.
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There
is authorized to be appropriated to carry out this section
$10,000,000 for fiscal year 2003 and such sums as may
be necessary for fiscal years 2004 through 2007.
‘‘PART J—INITIATIVES TO STRENGTHEN THE
NURSE WORKFORCE
‘‘SEC. 857. GRANTS FOR CAREER LADDER PROGRAMS.
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall
award grants to eligible entities to assist individuals and
develop programs to assist individuals in obtaining edu-
cation and training required to enter the nursing profes-
sion and advance within such profession.
‘‘(b) DEFINITION.—The term ‘eligible entity’ means
a school of nursing or a health care facility, or a partner-
ship of such school and facility.
‘‘(c) USE OF FUNDS.—An eligible entity that receives
a grant under subsection (a) shall use such funds received
through such grant to—
‘‘(1) establish student scholarships or stipends
for nurse professionals, licensed practical nurses,
certified nurse assistants, and home health aides
who enroll in entry level nursing programs, advanced
practice nursing degree programs, RN/Master nurs-
ing degree programs, doctoral nursing programs,
nurse administrator programs, and training pro-
grams focused on specific technology use or disease
management;
‘‘(2) provide career counseling to individuals
seeking to advance within the nursing profession;
‘‘(3) provide employees of the facility advanced
training and education at the school of nursing or
health care facility;
‘‘(4) establish or expand nursing practice ar-
rangements in noninstitutional settings to dem-
onstrate methods to improve access to primary
health care in medically underserved communities;
and
‘‘(5) develop programs, including distance
learning programs in coordination with the Office
for the Advancement of Telehealth, to facilitate edu-
cational advancement for individuals with existing
degrees or health care training.
‘‘(d) APPLICATION.—An eligible entity seeking a
grant under subsection (a) shall submit an application to
the Secretary at such time, in such a manner, and con-
taining such information as the Secretary may reasonably
require.
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There
is authorized to be appropriated to carry out this section
$20,000,000 for fiscal year 2003 and such sums as may
be necessary for fiscal years 2004 through 2007.
‘‘SEC. 858. GRANTS FOR NURSE TRAINING IN LONG-TERM
CARE FOR THE ELDERLY.
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall
award grants to eligible entities to develop and incorporate
gerontology curriculum and competencies and to encour-
age individuals to enter the nursing profession with a
focus on providing long-term care for the elderly.
‘‘(b) ELIGIBLE ENTITY.—The term ‘eligible entity’
means a—
‘‘(1) school of nursing;
‘‘(2) health care facility; or
‘‘(3) partnership of paragraphs (1) and (2).
‘‘(c) USE OF FUNDS.—An eligible entity that receives
a grant under subsection (a) shall use funds under such
grant to—
‘‘(1) provide training to individuals who will
provide long-term care for the elderly;
‘‘(2) develop stand alone courses in geronto-
logical nursing to support concentrations, minors,
and majors in the discipline;
‘‘(3) train faculty members in gerontological
nursing; or
‘‘(4) provide continuing education in geronto-
logical nursing.
‘‘(d) APPLICATION.—An eligible entity desiring a
grant under subsection (a) shall submit an application to
the Secretary at such time, in such manner, and con-
taining such information as the Secretary may reasonably
require.
‘‘(e) DEFINITIONS.—For the purposes of this section,
the term ‘health care facility’ means a hospital, nursing
home, home health care agency, hospice, skilled nursing
facility, long-term care facility, or any other facility des-
ignated by the Secretary.
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There
is authorized to be appropriated to carry out this section
$12,000,000 for fiscal year 2003 and such sums as may
be necessary for fiscal years 2004 through 2007.
‘‘SEC. 859. GRANTS FOR INTERNSHIP AND RESIDENCY PRO-
GRAMS.
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall
award grants to an eligible entity to develop internship
and residency programs that encourage mentoring and the
development of specialties.
‘‘(b) DEFINITION.—The term ‘eligible entity’ means
a partnership of a school of nursing and health care facil-
ity.
‘‘(c) USE OF FUNDS.—An eligible entity that receives
a grant under subsection (a) shall use such funds received
through such grant to—
‘‘(1) develop internship and residency programs
and curriculum and training programs for graduates
of a nursing program;
‘‘(2) provide support for faculty and mentors;
and
‘‘(3) provide support for nurses participating in
internship and residency programs on both a full-
time and part-time basis.
‘‘(d) APPLICATION.—An eligible entity seeking a
grant under subsection (a) shall submit an application to
the Secretary at such time, in such a manner, and con-
taining such information as the Secretary may reasonably
require.
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There
is authorized to be appropriated to carry out this section
$10,000,000 for fiscal year 2003 and such sums as may
be necessary for fiscal years 2004 through 2007.
‘‘SEC. 860. DEVELOPING RETENTION STRATEGIES AND
BEST PRACTICES IN NURSING STAFF MAN-
AGEMENT.
‘‘(a) PROGRAM AUTHORIZED.—The Secretary shall
award grants to eligible entities to carry out and evaluate
demonstrations of models and best practices in nursing
care and develop innovative strategies or approaches for
retention of professional nurses.
‘‘(b) DEFINITIONS.—In this section:
‘‘(1) ELIGIBLE ENTITY.—The term ‘eligible en-
tity’ means—
‘‘(A) a partnership or coalition containing
a health care facility and a school of nursing;
‘‘(B) a partnership or coalition containing
a health care facility and another organization
with expertise in outcome and cost-effectiveness
measurement; or
‘‘(C) containing a health care facility dem-
onstrating proficiency in outcomes and cost-ef-
fectiveness measurement, and receipt of accredi-
tation by an accepted organization shall con-
stitute evidence of such proficiency.
‘‘(2) NURSE
LEADERSHIP.—The term ‘nurse
leadership’ includes nurse executives, nurse adminis-
trators, and nurse managers.
‘‘(3) PROFESSIONAL NURSE.—The term ‘profes-
sional nurse’ means a registered nurse who holds a
valid and unrestricted license to practice nursing in
a State.
‘‘(c) DISTRIBUTION OF GRANTS.—Grants awarded
under this section shall be distributed among a variety of
geographic regions and among a range of different types
and sizes of health care facilities.
‘‘(d) DURATION OF GRANTS.—Grants awarded under
this section shall be awarded for a period not greater than
2 years (and may be renewable only once).
‘‘(e) ALLOCATION.—The Secretary shall determine
the amount of a grant awarded under this section to the
nursing services of the health care facility based on the
number of staffed beds as follows, and if the Secretary
deems appropriate these amounts may be adjusted:
‘‘(1) A maximum of $200,000 for a facility with
less than 100 staffed beds.
‘‘(2) A maximum of $400,000 for a facility with
less than 400 staffed beds.
‘‘(3) A maximum of $600,000 for a facility with
400 or more staffed beds.
‘‘(f) PRIORITY CRITERIA.—The Secretary shall give
priority in awarding grants under this section to health
care facilities that have not previously received a grant
under this section, and in the case of a grant renewal,
the Secretary shall give priority to grant recipients who
have demonstrated outcome improvements or have been
designated as a magnet hospital by the American Nurses
Credentialing Center.
‘‘(g) USE OF FUNDS.—An eligible entity that receives
a grant under subsection (a) shall use such grant funds
to do one or more of the following:
‘‘(1) Improve the quality of the health care fa-
cility work environment, including improving com-
munication and collaboration among health care pro-
fessionals.
‘‘(2) Initiate or maintain aggressive nurse re-
tention programs, including other initiatives as
deemed appropriate by the nurse retention com-
mittee at the health care facility.
‘‘(3) Reduce workplace injuries.
‘‘(4) Reduce rates of nursing sensitive patient
outcomes.
‘‘(5) Provide high quality evaluations of the
cost-effectiveness and patient-outcomes of best prac-
tices, to assist health care facility decision-makers in
determining appropriate nurse retention strategies.
‘‘(6) Promote continuing nursing education and
career development.
‘‘(h) APPLICATION.—
‘‘(1) IN GENERAL.—An eligible entity desiring a
grant under subsection (a) shall submit an applica-
tion to the Secretary at such time, and in such man-
ner, and containing such information as the Sec-
retary may reasonably require.
‘‘(2) CONTENTS.—The application submitted
under paragraph (1) shall include a description of—
‘‘(A) the project or projects proposed to be
carried out with grant funds;
‘‘(B) the means by which to evaluate the
project with respect to its cost-effectiveness and
outcomes as they relate to staff turnover, work-
place injuries, and patient care outcomes that
are sensitive to nursing care; and
‘‘(C) the system of patient outcomes meas-
urement, which shall be described by the nurse
leadership and professional nurses of the health
care facility and shall be sensitive to nursing
care and shall evaluate the specific needs of the
patients served by the health care facility and
the educational needs of the nursing staff at
such facility to meet the needs of the patients,
and the health care facility must allocate suffi-
cient funds to carry out the system;
‘‘(D) the health care facility’s organiza-
tional and clinical decision-making processes
that incorporate the input of the nursing staff,
including the development of a nurse retention
committee, the inclusion of nurse executive par-
ticipation in senior level management of the
health care facility, and a nurse residency train-
ing program for new graduate nurses entering
the workforce on a full-time basis, or nurses re-
turning to work at a health care facility on a
full-time basis after an absence of not less than
3 years without working in the nursing field.
‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—There is
to be authorized to be appropriated to carry out this sec-
tion $10,000,000 for fiscal year 2003 and such sums as
may be necessary for fiscal years 2004 through 2007.
‘‘SEC. 861. STIPEND AND SCHOLARSHIP PROGRAM.
‘‘(a) PROGRAM AUTHORIZED.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish a scholarship and stipend program to encourage
individuals to seek a masters degree or a doctoral
degree at a school of nursing.
‘‘(2) LIMITATION.—Assistance provided under
paragraph (1) for a part-time masters degree pro-
gram shall be provided for not more than 6 years