or issuer by the external review entity until 
the date the refusal to provide the benefit 
is corrected. 
(ii) ADDITIONAL PENALTY FOR FAIL-
ING TO FOLLOW TIMELINE.—In any case 
in which treatment was not commenced by 
the plan in accordance with the determina-
tion of an independent external review 
panel, the Secretary shall assess a civil 
penalty of $10,000 against the plan and 
the plan shall pay such penalty to the par-
ticipant, beneficiary, or enrollee involved. 
(B) CEASE
AND
DESIST
ORDER
AND 
ORDER OF ATTORNEY’S FEES.—In any action 
described in subparagraph (A) brought by a 
participant, beneficiary, or enrollee with respect 
to a group health plan, or a health insurance 
issuer offering health insurance coverage, in 
which a plaintiff alleges that a person referred 
to in such subparagraph has taken an action re-
sulting in a refusal of a benefit determined by 
an external appeal entity to be covered, or has 
failed to take an action for which such person 
is responsible under the terms and conditions of 
the plan or coverage and which is necessary
under the plan or coverage for authorizing a 
benefit, the court shall cause to be served on 
the defendant an order requiring the defend-
ant—
(i) to cease and desist from the al-
leged action or failure to act; and 
(ii) to pay to the plaintiff a reasonable 
attorney’s fee and other reasonable costs 
relating to the prosecution of the action on 
the charges on which the plaintiff prevails. 
(C) ADDITIONAL CIVIL PENALTIES.—
(i) IN GENERAL.—In addition to any 
penalty imposed under subparagraph (A) 
or (B), the appropriate Secretary may as-
sess a civil penalty against a person acting 
in the capacity of authorizing a benefit de-
termined by an external review entity for 
one or more group health plans, or health 
insurance issuers offering health insurance 
coverage, for—
(I) any pattern or practice of re-
peated refusal to authorize a benefit 
determined by an external appeal enti-
ty to be covered; or
(II) any pattern or practice of re-
peated violations of the requirements 
of this section with respect to such 
plan or coverage. 
(ii) 
STANDARD
OF
PROOF
AND 
AMOUNT OF PENALTY.—Such penalty shall 
be payable only upon proof by clear and 
convincing evidence of such pattern or 
practice and shall be in an amount not to 
exceed the lesser of—
(I) 25 percent of the aggregate 
value of benefits shown by the appro-
priate Secretary to have not been pro-
vided, or unlawfully delayed, in viola-
tion of this section under such pattern 
or practice; or 
(II) $500,000. 
(D) REMOVAL AND DISQUALIFICATION.—
Any person acting in the capacity of author-
izing benefits who has engaged in any such pat-
tern or practice described in subparagraph 
(C)(i) with respect to a plan or coverage, upon 
the petition of the appropriate Secretary, may 
be removed by the court from such position, 
and from any other involvement, with respect to
such a plan or coverage, and may be precluded 
from returning to any such position or involve-
ment for a period determined by the court. 
(4) PROTECTION OF LEGAL RIGHTS.—Nothing 
in this subsection or subtitle shall be construed as 
altering or eliminating any cause of action or legal 
rights or remedies of participants, beneficiaries, en-
rollees, and others under State or Federal law (in-
cluding sections 502 and 503 of the Employee Re-
tirement Income Security Act of 1974), including 
the right to file judicial actions to enforce rights. 
(g) QUALIFICATIONS
OF INDEPENDENT MEDICAL 
REVIEWERS.—
(1) IN GENERAL.—In referring a denial to an 
independent medical review panel to conduct inde-
pendent medical review under subsection (c), the 
qualified external review entity shall ensure that—
(A) each independent medical reviewer 
meets the qualifications described in paragraphs 
(2) and (3); 
(B) with respect to each review, the review 
panel meets the requirements of paragraph (4) 
and at least 1 reviewer on the panel meets the 
requirements described in paragraph (5); and
(C) compensation provided by the entity to 
each reviewer is consistent with paragraph (6). 
(2) LICENSURE AND EXPERTISE.—Each inde-
pendent medical reviewer shall be a physician 
(allopathic or osteopathic) or health care profes-
sional who—
(A) is appropriately credentialed or li-
censed in 1 or more States to deliver health 
care services; and 
(B) typically treats the condition, makes 
the diagnosis, or provides the type of treatment 
under review. 
(3) INDEPENDENCE.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), each independent medical reviewer 
in a case shall—
(i) not be a related party (as defined 
in paragraph (7)); 
(ii) not have a material familial, fi-
nancial, or professional relationship with 
such a party; and 
(iii) not otherwise have a conflict of 
interest with such a party (as determined 
under regulations).
(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to—
(i) prohibit an individual, solely on the 
basis of affiliation with the plan or issuer,
from serving as an independent medical re-
viewer if—
(I) a non-affiliated individual is 
not reasonably available; 
(II) the affiliated individual is 
not involved in the provision of items 
or services in the case under review; 
(III) the fact of such an affili-
ation is disclosed to the plan or issuer 
and the participant, beneficiary, or 
enrollee (or authorized representative) 
and neither party objects; and 
(IV) the affiliated individual is 
not an employee of the plan or issuer 
and does not provide services exclu-
sively or primarily to or on behalf of 
the plan or issuer; 
(ii) prohibit an individual who has 
staff privileges at the institution where the 
treatment involved takes place from serv-
ing as an independent medical reviewer
merely on the basis of such affiliation if 
the affiliation is disclosed to the plan or 
issuer and the participant, beneficiary, or 
enrollee (or authorized representative), and 
neither party objects; or 
(iii) prohibit receipt of compensation 
by an independent medical reviewer from 
an entity if the compensation is provided 
consistent with paragraph (6). 
(4) PRACTICING HEALTH CARE PROFESSIONAL 
IN SAME FIELD.—
(A) IN
GENERAL.—In a case involving 
treatment, or the provision of items or serv-
ices—
(i) by a physician, a reviewer shall be 
a practicing physician (allopathic or osteo-
pathic) of the same or similar specialty, as 
a physician who, acting within the appro-
priate scope of practice within the State in 
which the service is provided or rendered, 
typically treats the condition, makes the 
diagnosis, or provides the type of treat-
ment under review; or 
(ii) by a non-physician health care 
professional, the independent medical re-
view panel shall include at least one prac-
ticing non-physician health care profes-
sional of the same or similar specialty as 
the non-physician health care professional 
who, acting within the appropriate scope of 
practice within the State in which the serv-
ice is provided or rendered, typically treats 
the condition, makes the diagnosis, or pro-
vides the type of treatment under review. 
(B) PRACTICING DEFINED.—For purposes 
of this paragraph, the term ‘‘practicing’’ means, 
with respect to an individual who is a physician 
or other health care professional that the indi-
vidual provides health care services to individual 
patients on average at least 2 days per week. 
(5) PEDIATRIC EXPERTISE.—In the case of an 
external review relating to a child, a reviewer shall 
have expertise under paragraph (2) in pediatrics. 
(6) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by a qualified exter-
nal review entity to an independent medical reviewer 
in connection with a review under this section 
shall—
(A) not exceed a reasonable level; and
(B) not be contingent on the decision ren-
dered by the reviewer. 
(7) RELATED PARTY DEFINED.—For purposes 
of this section, the term ‘‘related party’’ means, with 
respect to a denial of a claim under a plan or cov-
erage relating to a participant, beneficiary, or en-
rollee, any of the following: 
(A) The plan, plan sponsor, or issuer in-
volved, or any fiduciary, officer, director, or em-
ployee of such plan, plan sponsor, or issuer. 
(B) The participant, beneficiary, or en-
rollee (or authorized representative). 
(C) The health care professional that pro-
vides the items or services involved in the de-
nial. 
(D) The institution at which the items or 
services (or treatment) involved in the denial 
are provided. 
(E) The manufacturer of any drug or 
other item that is included in the items or serv-
ices involved in the denial. 
(F) Any other party determined under any 
regulations to have a substantial interest in the 
denial involved. 
(h) QUALIFIED EXTERNAL REVIEW ENTITIES.—
(1) SELECTION OF QUALIFIED EXTERNAL RE-
VIEW ENTITIES.—
(A) LIMITATION ON PLAN OR ISSUER SE-
LECTION.—The appropriate Secretary shall im-
plement procedures—
(i) to assure that the selection process 
among qualified external review entities 
will not create any incentives for external 
review entities to make a decision in a bi-
ased manner; and 
(ii) for auditing a sample of decisions 
by such entities to assure that no such de-
cisions are made in a biased manner. 
No such selection process under the procedures 
implemented by the appropriate Secretary may 
give either the patient or the plan or issuer any 
ability to determine or influence the selection of 
a qualified external review entity to review the 
case of any participant, beneficiary, or enrollee. 
(B) STATE AUTHORITY WITH RESPECT TO 
QUALIFIED EXTERNAL REVIEW ENTITIES FOR 
HEALTH INSURANCE ISSUERS.—With respect to 
health insurance issuers offering health insur-
ance coverage in a State, the State may provide 
for external review activities to be conducted by
a qualified external appeal entity that is des-
ignated by the State or that is selected by the
State in a manner determined by the State to 
assure an unbiased determination. 
(2) CONTRACT WITH QUALIFIED EXTERNAL RE-
VIEW
ENTITY.—Except as provided in paragraph 
(1)(B), the external review process of a plan or 
issuer under this section shall be conducted under a 
contract between the plan or issuer and 1 or more 
qualified external review entities (as defined in para-
graph (4)(A)). 
(3) TERMS AND CONDITIONS OF CONTRACT.—
The terms and conditions of a contract under para-
graph (2) shall—
(A) be consistent with the standards the 
appropriate Secretary shall establish to assure 
there is no real or apparent conflict of interest 
in the conduct of external review activities; and 
(B) provide that the costs of the external 
review process shall be borne by the plan or 
issuer. 
Subparagraph (B) shall not be construed as apply-
ing to the imposition of a filing fee under subsection 
(b)(2)(A)(iv) or costs incurred by the participant, 
beneficiary, or enrollee (or authorized representative)
or treating health care professional (if any) in sup-
port of the review, including the provision of addi-
tional evidence or information. 
(4) QUALIFICATIONS.—
(A) IN
GENERAL.—In this section, the 
term ‘‘qualified external review entity’’ means, 
in relation to a plan or issuer, an entity that is 
initially certified (and periodically recertified) 
under subparagraph (C) as meeting the fol-
lowing requirements: 
(i) The entity has (directly or through 
contracts or other arrangements) sufficient 
medical, legal, and other expertise and suf-
ficient staffing to carry out duties of a 
qualified external review entity under this 
section on a timely basis, including making 
determinations under subsection (b)(2)(A) 
and providing for independent medical re-
views under subsection (d). 
(ii) The entity is not a plan or issuer 
or an affiliate or a subsidiary of a plan or 
issuer, and is not an affiliate or subsidiary 
of a professional or trade association of 
plans or issuers or of health care providers.
(iii) The entity has provided assur-
ances that it will conduct external review 
activities consistent with the applicable re-
quirements of this section and standards 
specified in subparagraph (C), including 
that it will not conduct any external review 
activities in a case unless the independence 
requirements of subparagraph (B) are met 
with respect to the case. 
(iv) The entity has provided assur-
ances that it will provide information in a 
timely manner under subparagraph (D). 
(v) The entity meets such other re-
quirements as the appropriate Secretary 
provides by regulation. 
(B) INDEPENDENCE REQUIREMENTS.—
(i) IN
GENERAL.—Subject to clause 
(ii), an entity meets the independence re-
quirements of this subparagraph with re-
spect to any case if the entity—
(I) is not a related party (as de-
fined in subsection (g)(7)); 
(II) does not have a material fa-
milial, financial, or professional rela-
tionship with such a party; and