189
the person pursuant to a cause of action to 
which paragraph (1) applies. 
‘‘(B) CERTAIN
CAUSES
OF
ACTION
PER-
MITTED.—Notwithstanding subparagraph (A), 
paragraph (1) applies with respect to any cause 
of action that is brought by a participant or 
beneficiary under a group health plan (or the 
estate of such a participant or beneficiary) to 
recover damages resulting from personal injury 
or for wrongful death against any employer or 
other plan sponsor maintaining the plan (or 
against an employee of such an employer or 
sponsor acting within the scope of employment) 
if such cause of action arises by reason of a 
medically reviewable decision, to the extent that 
there was direct participation by the employer 
or other plan sponsor (or employee) in the deci-
sion. 
‘‘(C) DIRECT PARTICIPATION.—
‘‘(i) DIRECT PARTICIPATION IN DECI-
SIONS.—For purposes of subparagraph 
(B), the term ‘direct participation’ means, 
in connection with a decision described in 
subparagraph (B), the actual making of 
such decision or the actual exercise of con-
190
trol in making such decision or in the con-
duct constituting the failure. 
‘‘(ii) RULES OF CONSTRUCTION.—For 
purposes of clause (i), the employer or plan 
sponsor (or employee) shall not be con-
strued to be engaged in direct participation 
because of any form of decisionmaking or 
other conduct that is merely collateral or 
precedent to the decision described in sub-
paragraph (B) on a particular claim for 
benefits of a particular participant or bene-
ficiary, including (but not limited to)—
‘‘(I) any participation by the em-
ployer or other plan sponsor (or em-
ployee) in the selection of the group 
health plan or health insurance cov-
erage involved or the third party ad-
ministrator or other agent; 
‘‘(II) any engagement by the em-
ployer or other plan sponsor (or em-
ployee) in any cost-benefit analysis 
undertaken in connection with the se-
lection of, or continued maintenance 
of, the plan or coverage involved;
191
‘‘(III) any participation by the 
employer or other plan sponsor (or 
employee) in the process of creating, 
continuing, modifying, or terminating 
the plan or any benefit under the 
plan, if such process was not substan-
tially focused solely on the particular 
situation of the participant or bene-
ficiary 
referred 
to 
in 
paragraph 
(1)(A); and 
‘‘(IV) any participation by the 
employer or other plan sponsor (or 
employee) in the design of any benefit 
under the plan, including the amount 
of copayment and limits connected 
with such benefit. 
‘‘(iv) IRRELEVANCE OF CERTAIN COL-
LATERAL
EFFORTS
MADE
BY
EMPLOYER 
OR PLAN SPONSOR.—For purposes of this 
subparagraph, an employer or plan sponsor 
shall not be treated as engaged in direct 
participation in a decision with respect to 
any claim for benefits or denial thereof in 
the case of any particular participant or 
beneficiary solely by reason of—
192
‘‘(I) any efforts that may have 
been made by the employer or plan 
sponsor to advocate for authorization 
of coverage for that or any other par-
ticipant or beneficiary (or any group 
of participants or beneficiaries), or 
‘‘(II) any provision that may 
have been made by the employer or 
plan sponsor for benefits which are 
not covered under the terms and con-
ditions of the plan for that or any 
other participant or beneficiary (or 
any group of participants or bene-
ficiaries). 
‘‘(4) REQUIREMENT OF EXHAUSTION.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (D), a cause of action may not be 
brought under paragraph (1) in connection with 
any denial of a claim for benefits of any indi-
vidual until all administrative processes under 
sections 102, 103, and 104 of the Patients’ Bill 
of Rights Act of 2004 (if applicable) have been 
exhausted. 
‘‘(B) LATE MANIFESTATION OF INJURY.—
193
‘‘(i) IN GENERAL.—A participant or 
beneficiary shall not be precluded from 
pursuing a review under section 104 of the 
Patients’ Bill of Rights Act of 2004 re-
garding an injury that such participant or 
beneficiary has experienced if the external 
review entity first determines that the in-
jury of such participant or beneficiary is a 
late manifestation of an earlier injury. 
‘‘(ii) DEFINITION.—In this subpara-
graph, the term ‘late manifestation of an 
earlier injury’ means an injury sustained 
by the participant or beneficiary which was 
not known, and should not have been 
known, by such participant or beneficiary 
by the latest date that the requirements of 
subparagraph (A) should have been met 
regarding the claim for benefits which was 
denied. 
‘‘(C) EXCEPTION FOR NEEDED CARE.—A 
participant or beneficiary may seek relief exclu-
sively in Federal court under subsection 
502(a)(1)(B) prior to the exhaustion of admin-
istrative remedies under sections 102, 103, or 
104 of the Patients’ Bill of Rights Act of 2004
194
(as required under subparagraph (A)) if it is 
demonstrated to the court that the exhaustion 
of such remedies would cause irreparable harm 
to the health of the participant or beneficiary. 
Notwithstanding the awarding of relief under 
subsection 502(a)(1)(B) pursuant to this sub-
paragraph, no relief shall be available as a re-
sult of, or arising under, paragraph (1)(A) un-
less the requirements of subparagraph (A) are 
met. 
‘‘(D) FAILURE TO REVIEW.—
‘‘(i) IN GENERAL.—If the external re-
view entity fails to make a determination 
within the time required under section 
104(e)(1)(A)(i), a participant or bene-
ficiary may bring an action under section 
514(d) after 10 additional days after the 
date on which such time period has expired 
and the filing of such action shall not af-
fect the duty of the independent medical 
reviewer (or reviewers) to make a deter-
mination 
pursuant 
to 
section 
104(e)(1)(A)(i). 
‘‘(ii) EXPEDITED DETERMINATION.—
If the external review entity fails to make
195
a determination within the time required 
under section 104(e)(1)(A)(ii), a partici-
pant or beneficiary may bring an action 
under this subsection and the filing of such 
an action shall not affect the duty of the 
independent medical reviewer (or review-
ers) to make a determination pursuant to 
section 104(e)(1)(A)(ii). 
‘‘(E) RECEIPT OF BENEFITS DURING AP-
PEALS PROCESS.—Receipt by the participant or 
beneficiary of the benefits involved in the claim 
for benefits during the pendency of any admin-
istrative processes referred to in subparagraph 
(A) or of any action commenced under this sub-
section—
‘‘(i) shall not preclude continuation of 
all such administrative processes to their 
conclusion if so moved by any party, and 
‘‘(ii) shall not preclude any liability 
under subsection (a)(1)(C) and this sub-
section in connection with such claim. 
‘‘(F) 
ADMISSIBLE.—Any 
determination 
made by a reviewer in an administrative pro-
ceeding under section 104 of the Patients’ Bill 
of Rights Act of 2004 shall be admissible in
196
any Federal or State court proceeding and shall 
be presented to the trier of fact. 
‘‘(5) TOLLING PROVISION.—The statute of limi-
tations for any cause of action arising under section 
502(n) relating to a denial of a claim for benefits 
that is the subject of an action brought in State 
court shall be tolled until such time as the State 
court makes a final disposition, including all ap-
peals, of whether such claim should properly be 
within the jurisdiction of the State court. The tolling 
period shall be determined by the applicable Federal 
or State law, whichever period is greater. 
‘‘(6) 
EXCLUSION
OF
DIRECTED
RECORD-
KEEPERS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), paragraph (1) shall not apply with 
respect to a directed recordkeeper in connection 
with a group health plan. 
‘‘(B) 
DIRECTED
RECORDKEEPER.—For 
purposes of this paragraph, the term ‘directed 
recordkeeper’ means, in connection with a 
group health plan, a person engaged in directed 
recordkeeping activities pursuant to the specific 
instructions of the plan or the employer or 
other plan sponsor, including the distribution of
197
enrollment information and distribution of dis-
closure materials under this Act or title I of the 
Patients’ Bill of Rights Act of 2004 and whose 
duties do not include making decisions on 
claims for benefits. 
‘‘(C) 
LIMITATION.—Subparagraph 
(A) 
does not apply in connection with any directed 
recordkeeper to the extent that the directed rec-
ordkeeper fails to follow the specific instruction 
of the plan or the employer or other plan spon-
sor. 
‘‘(7) CONSTRUCTION.—Nothing in this sub-
section shall be construed as—
‘‘(A) saving from preemption a cause of 
action under State law for the failure to provide 
a benefit for an item or service which is specifi-
cally excluded under the group health plan in-
volved, except to the extent that—
‘‘(i) the application or interpretation 
of the exclusion involves a determination 
described in section 104(d)(2) of the Pa-
tients’ Bill of Rights Act of 2004, or 
‘‘(ii) the provision of the benefit for 
the item or service is required under Fed-
198
eral law or under applicable State law con-
sistent with subsection (b)(2)(B); 
‘‘(B) preempting a State law which re-
quires an affidavit or certificate of merit in a 
civil action; 
‘‘(C) affecting a cause of action or remedy 
under State law in connection with the provi-
sion or arrangement of excepted benefits (as de-
fined in section 733(c)), other than those de-
scribed in section 733(c)(2)(A); or 
‘‘(D) affecting a cause of action under 
State law other than a cause of action described 
in paragraph (1)(A). 
‘‘(8) PURCHASE OF INSURANCE TO COVER LI-
ABILITY.—Nothing in section 410 shall be construed 
to preclude the purchase by a group health plan of 
insurance to cover any liability or losses arising 
under a cause of action described in paragraph 
(1)(A). 
‘‘(9) RELIEF FROM LIABILITY FOR EMPLOYER 
OR
OTHER
PLAN
SPONSOR
BY
MEANS
OF
DES-
IGNATED DECISIONMAKER.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply with respect to any cause of action 
described in paragraph (1)(A) under State law
199
insofar as such cause of action provides for li-
ability with respect to a participant or bene-
ficiary of an employer or plan sponsor (or an 
employee of such employer or sponsor acting 
within the scope of employment), if with respect 
to the employer or plan sponsor there is (or is 
deemed under subparagraph (B) to be) a des-
ignated decisionmaker that meets the require-
ments of section 502(o)(1) with respect to such 
participant or beneficiary. Such paragraph (1) 
shall apply with respect to any cause of action 
described in paragraph (1)(A) under State law 
against the designated decisionmaker of such 
employer or other plan sponsor with respect to 
the participant or beneficiary. 
‘‘(B) AUTOMATIC DESIGNATION.—A health 
insurance issuer shall be deemed to be a des-
ignated decisionmaker for purposes of subpara-
graph (A) with respect to the participants and 
beneficiaries of an employer or plan sponsor, 
whether or not the employer or plan sponsor 
makes such a designation, and shall be deemed 
to have assumed unconditionally all liability of 
the employer or plan sponsor under such des-
ignation in accordance with subsection (o), un-
200
less the employer or plan sponsor affirmatively 
enters into a contract to prevent the service of 
the designated decisionmaker. 
‘‘(C) TREATMENT
OF
CERTAIN
TRUST 
FUNDS.—For purposes of this paragraph, the 
terms ‘employer’ and ‘plan sponsor’, in connec-
tion with the assumption by a designated deci-
sionmaker of the liability of employer or other 
plan sponsor pursuant to this paragraph, shall 
be construed to include a trust fund maintained 
pursuant to section 302 of the Labor Manage-
ment Relations Act, 1947 (29 U.S.C. 186) or 
the Railway Labor Act (45 U.S.C. 151 et seq.). 
‘‘(10) PREVIOUSLY PROVIDED SERVICES.—
‘‘(A) IN GENERAL.—Except as provided in 
this paragraph, a cause of action shall not arise 
under paragraph (1) where the denial involved 
relates to an item or service that has already 
been fully provided to the participant or bene-
ficiary under the plan or coverage and the claim 
relates solely to the subsequent denial of pay-
ment for the provision of such item or service. 
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to—
211
end of paragraph (12), by striking the period at the end 
of paragraph (13) and inserting ‘‘, plus’’, and by adding 
at the end the following: 
‘‘(14) in the case of a small employer (as de-
fined in section 45E(d)(3)), the health insurance 
credit determined under section 45E(a).’’. 
(c) NO CARRYBACKS.—Subsection (d) of section 39 
of such Code (relating to carryback and carryforward of 
unused credits) is amended by adding at the end the fol-
lowing: 
‘‘(10) NO CARRYBACK OF SECTION 45E CREDIT 
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is 
attributable to the employee health insurance ex-
penses credit determined under section 45E may be 
carried back to a taxable year ending before the date 
of the enactment of section 45E.’’. 
(d) DENIAL OF DOUBLE BENEFIT.—Section 280C of 
such Code is amended by adding at the end the following 
new subsection: 
‘‘(d) CREDIT FOR SMALL BUSINESS HEALTH INSUR-
ANCE EXPENSES.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the expenses (otherwise al-
lowable as a deduction) taken into account in deter-