116 
shall, upon conviction, be imprisoned not more than 5 
years, be fined under title 18, United States Code, or 
both.’’. 
(b) CEASE ACTIVITIES ORDERS.—Section 502 of 
such Act (29 U.S.C. 1132) is amended by adding at the 
end the following new subsection: 
‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE-
SIST ORDERS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
upon application by the Secretary showing the oper-
ation, promotion, or marketing of an association 
health plan (or similar arrangement providing bene-
fits consisting of medical care (as defined in section 
733(a)(2))) that— 
‘‘(A) is not certified under part 8, is sub-
ject under section 514(b)(6) to the insurance 
laws of any State in which the plan or arrange-
ment offers or provides benefits, and is not li-
censed, registered, or otherwise approved under 
the insurance laws of such State; or 
‘‘(B) is an association health plan certified 
under part 8 and is not operating in accordance 
with the requirements under part 8 for such 
certification, 
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a district court of the United States shall enter an 
order requiring that the plan or arrangement cease 
activities. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply in the case of an association health plan or 
other arrangement if the plan or arrangement shows 
that— 
‘‘(A) all benefits under it referred to in 
paragraph (1) consist of health insurance cov-
erage; and 
‘‘(B) with respect to each State in which 
the plan or arrangement offers or provides ben-
efits, the plan or arrangement is operating in 
accordance with applicable State laws that are 
not superseded under section 514. 
‘‘(3) ADDITIONAL
EQUITABLE
RELIEF.—The 
court may grant such additional equitable relief, in-
cluding any relief available under this title, as it 
deems necessary to protect the interests of the pub-
lic and of persons having claims for benefits against 
the plan.’’. 
(c) RESPONSIBILITY
FOR CLAIMS PROCEDURE.— 
Section 503 of such Act (29 U.S.C. 1133) is amended by 
inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 
and by adding at the end the following new subsection: 
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‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 
each association health plan which is or has been certified 
under part 8 shall require the board of trustees or the 
named fiduciary (as applicable) to ensure that the require-
ments of this section are met in connection with claims 
filed under the plan.’’. 
SEC. 235. COOPERATION BETWEEN FEDERAL AND STATE 
AUTHORITIES. 
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136) is amended by adding 
at the end the following new subsection: 
‘‘(d) CONSULTATION WITH STATES WITH RESPECT 
TO ASSOCIATION HEALTH PLANS.— 
‘‘(1) AGREEMENTS
WITH
STATES.—The Sec-
retary shall consult with the State recognized under 
paragraph (2) with respect to an association health 
plan regarding the exercise of— 
‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements 
for certification under part 8; and 
‘‘(B) the Secretary’s authority to certify 
association health plans under part 8 in accord-
ance with regulations of the Secretary applica-
ble to certification under part 8. 
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‘‘(2) RECOGNITION
OF
PRIMARY
DOMICILE 
STATE.—In carrying out paragraph (1), the Sec-
retary shall ensure that only one State will be recog-
nized, with respect to any particular association 
health plan, as the State with which consultation is 
required. In carrying out this paragraph— 
‘‘(A) in the case of a plan which provides 
health insurance coverage (as defined in section 
812(a)(3)), such State shall be the State with 
which filing and approval of a policy type of-
fered by the plan was initially obtained, and 
‘‘(B) in any other case, the Secretary shall 
take into account the places of residence of the 
participants and beneficiaries under the plan 
and the State in which the trust is main-
tained.’’. 
SEC. 236. EFFECTIVE DATE AND TRANSITIONAL AND 
OTHER RULES. 
(a) EFFECTIVE DATE.—The amendments made by 
this subtitle shall take effect 1 year after the date of the 
enactment of this Act. The Secretary of Labor shall first 
issue all regulations necessary to carry out the amend-
ments made by this subtitle within 1 year after the date 
of the enactment of this Act. 
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(b) TREATMENT
OF CERTAIN EXISTING HEALTH 
BENEFITS PROGRAMS.— 
(1) IN GENERAL.—In any case in which, as of 
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of 
providing benefits consisting of medical care for the 
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make 
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and 
such arrangement is licensed under the laws of one 
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 812(a)(5) of 
the Employee Retirement Income Security Act of 
1974 (as amended by this subtitle)) by the arrange-
ment of an application for certification of the ar-
rangement under part 8 of subtitle B of title I of 
such Act— 
(A) such arrangement shall be deemed to 
be a group health plan for purposes of title I 
of such Act; 
(B) the requirements of sections 801(a) 
and 803(a) of the Employee Retirement Income 
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Security Act of 1974 shall be deemed met with 
respect to such arrangement; 
(C) the requirements of section 803(b) of 
such Act shall be deemed met, if the arrange-
ment is operated by a board of directors 
which— 
(i) is elected by the participating em-
ployers, with each employer having one 
vote; and 
(ii) has complete fiscal control over 
the arrangement and which is responsible 
for all operations of the arrangement; 
(D) the requirements of section 804(a) of 
such Act shall be deemed met with respect to 
such arrangement; and 
(E) the arrangement may be certified by 
any applicable authority with respect to its op-
erations in any State only if it operates in such 
State on the date of certification. 
The provisions of this subsection shall cease to apply 
with respect to any such arrangement at such time 
after the date of the enactment of this Act as the 
applicable requirements of this subsection are not 
met with respect to such arrangement. 
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(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘group health plan’’, ‘‘medical 
care’’, and ‘‘participating employer’’ shall have the 
meanings provided in section 812 of the Employee 
Retirement Income Security Act of 1974, except 
that the reference in paragraph (7) of such section 
to an ‘‘association health plan’’ shall be deemed a 
reference to an arrangement referred to in this sub-
section. 
TITLE III—INTERSTATE MARKET 
FOR HEALTH INSURANCE 
SEC. 
301. 
COOPERATIVE 
GOVERNING 
OF 
INDIVIDUAL 
HEALTH INSURANCE COVERAGE. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.), as restored by sec-
tion 2, is amended by adding at the end the following new 
part: 
‘‘PART D—COOPERATIVE GOVERNING OF 
INDIVIDUAL HEALTH INSURANCE COVERAGE 
‘‘SEC. 2795. DEFINITIONS. 
‘‘In this part: 
‘‘(1) PRIMARY
STATE.—The term ‘primary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
the State designated by the issuer as the State 
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whose covered laws shall govern the health insurance 
issuer in the sale of such coverage under this part. 
An issuer, with respect to a particular policy, may 
only designate one such State as its primary State 
with respect to all such coverage it offers. Such an 
issuer may not change the designated primary State 
with respect to individual health insurance coverage 
once the policy is issued, except that such a change 
may be made upon renewal of the policy. With re-
spect to such designated State, the issuer is deemed 
to be doing business in that State. 
‘‘(2) SECONDARY STATE.—The term ‘secondary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
any State that is not the primary State. In the case 
of a health insurance issuer that is selling a policy 
in, or to a resident of, a secondary State, the issuer 
is deemed to be doing business in that secondary 
State. 
‘‘(3) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2), except that such an 
issuer must be licensed in the primary State and be 
qualified to sell individual health insurance coverage 
in that State. 
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‘‘(4) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘individual health insurance cov-
erage’ means health insurance coverage offered in 
the individual market, as defined in section 
2791(e)(1), but does not include excepted benefits 
described in section 2791(c). 
‘‘(5) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
surance commissioner or official or officials des-
ignated by the State to enforce the requirements of 
this title for the State with respect to the issuer. 
‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 
term ‘hazardous financial condition’ means that, 
based on its present or reasonably anticipated finan-
cial condition, a health insurance issuer is unlikely 
to be able— 
‘‘(A) to meet obligations to policyholders 
with respect to known claims and reasonably 
anticipated claims; or 
‘‘(B) to pay other obligations in the normal 
course of business. 
‘‘(7) COVERED LAWS.— 
‘‘(A) IN
GENERAL.—The term ‘covered 
laws’ means the laws, rules, regulations, agree-
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ments, and orders governing the insurance busi-
ness pertaining to— 
‘‘(i) individual health insurance cov-
erage issued by a health insurance issuer; 
‘‘(ii) the offer, sale, rating (including 
medical 
underwriting), 
renewal, 
and 
issuance of individual health insurance cov-
erage to an individual; 
‘‘(iii) the provision to an individual in 
relation to individual health insurance cov-
erage of health care and insurance related 
services; 
‘‘(iv) the provision to an individual in 
relation to individual health insurance cov-
erage of management, operations, and in-
vestment activities of a health insurance 
issuer; and 
‘‘(v) the provision to an individual in 
relation to individual health insurance cov-
erage of loss control and claims adminis-
tration for a health insurance issuer with 
respect to liability for which the issuer pro-
vides insurance. 
‘‘(B) EXCEPTION.—Such term does not in-
clude any law, rule, regulation, agreement, or 
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order governing the use of care or cost manage-
ment techniques, including any requirement re-
lated to provider contracting, network access or 
adequacy, health care data collection, or quality 
assurance. 
‘‘(8) STATE.—The term ‘State’ means only the 
50 States and the District of Columbia. 
‘‘(9) UNFAIR
CLAIMS
SETTLEMENT
PRAC-
TICES.—The term ‘unfair claims settlement prac-
tices’ means only the following practices: 
‘‘(A) Knowingly misrepresenting to claim-
ants and insured individuals relevant facts or 
policy provisions relating to coverage at issue. 
‘‘(B) Failing to acknowledge with reason-
able promptness pertinent communications with 
respect to claims arising under policies. 
‘‘(C) Failing to adopt and implement rea-
sonable standards for the prompt investigation 
and settlement of claims arising under policies. 
‘‘(D) Failing to effectuate prompt, fair, 
and equitable settlement of claims submitted in 
which liability has become reasonably clear. 
‘‘(E) Refusing to pay claims without con-
ducting a reasonable investigation. 
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‘‘(F) Failing to affirm or deny coverage of 
claims within a reasonable period of time after 
having completed an investigation related to 
those claims. 
‘‘(G) A pattern or practice of compelling 
insured individuals or their beneficiaries to in-
stitute suits to recover amounts due under its 
policies by offering substantially less than the 
amounts ultimately recovered in suits brought 
by them. 
‘‘(H) A pattern or practice of attempting 
to settle or settling claims for less than the 
amount that a reasonable person would believe 
the insured individual or his or her beneficiary 
was entitled by reference to written or printed 
advertising material accompanying or made 
part of an application. 
‘‘(I) Attempting to settle or settling claims 
on the basis of an application that was materi-
ally altered without notice to, or knowledge or 
consent of, the insured. 
‘‘(J) Failing to provide forms necessary to 
present claims within 15 calendar days of a re-
quests with reasonable explanations regarding 
their use. 
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‘‘(C) Transaction of the business of insur-
ance in violation of laws requiring a license, cer-
tificate of authority or other legal authority for 
the transaction of the business of insurance. 
‘‘(D) Attempt to commit, aiding or abet-
ting in the commission of, or conspiracy to com-
mit the acts or omissions specified in this para-
graph. 
‘‘SEC. 2796. APPLICATION OF LAW. 
‘‘(a) IN GENERAL.—The covered laws of the primary 
State shall apply to individual health insurance coverage 
offered by a health insurance issuer in the primary State 
and in any secondary State, but only if the coverage and 
issuer comply with the conditions of this section with re-
spect to the offering of coverage in any secondary State. 
‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC-
ONDARY STATE.—Except as provided in this section, a 
health insurance issuer with respect to its offer, sale, rat-
ing (including medical underwriting), renewal, and 
issuance of individual health insurance coverage in any 
secondary State is exempt from any covered laws of the 
secondary State (and any rules, regulations, agreements, 
or orders sought or issued by such State under or related 
to such covered laws) to the extent that such laws would— 
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‘‘(1) make unlawful, or regulate, directly or in-
directly, the operation of the health insurance issuer 
operating in the secondary State, except that any 
secondary State may require such an issuer— 
‘‘(A) to pay, on a nondiscriminatory basis, 
applicable premium and other taxes (including 
high-risk pool assessments) which are levied on 
insurers and surplus lines insurers, brokers, or 
policyholders under the laws of the State; 
‘‘(B) to register with and designate the 
State insurance commissioner as its agent solely 
for the purpose of receiving service of legal doc-
uments or process; 
‘‘(C) to submit to an examination of its fi-
nancial condition by the State insurance com-
missioner in any State in which the issuer is 
doing business to determine the issuer’s finan-
cial condition, if— 
‘‘(i) the State insurance commissioner 
of the primary State has not done an ex-
amination within the period recommended 
by the National Association of Insurance 
Commissioners; and 
‘‘(ii) any such examination is con-
ducted in accordance with the examiners’ 
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132 
handbook of the National Association of 
Insurance Commissioners and is coordi-
nated to avoid unjustified duplication and 
unjustified repetition; 
‘‘(D) to comply with a lawful order 
issued— 
‘‘(i) in a delinquency proceeding com-
menced by the State insurance commis-
sioner if there has been a finding of finan-
cial impairment under subparagraph (C); 
or 
‘‘(ii) in a voluntary dissolution pro-
ceeding; 
‘‘(E) to comply with an injunction issued 
by a court of competent jurisdiction, upon a pe-
tition by the State insurance commissioner al-
leging that the issuer is in hazardous financial 
condition; 
‘‘(F) to participate, on a nondiscriminatory 
basis, in any insurance insolvency guaranty as-
sociation or similar association to which a 
health insurance issuer in the State is required 
to belong; 
‘‘(G) to comply with any State law regard-
ing fraud and abuse (as defined in section 
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133 
2795(10)), except that if the State seeks an in-
junction regarding the conduct described in this 
subparagraph, such injunction must be obtained 
from a court of competent jurisdiction; 
‘‘(H) to comply with any State law regard-
ing unfair claims settlement practices (as de-
fined in section 2795(9)); or 
‘‘(I) to comply with the applicable require-
ments for independent review under section 
2798 with respect to coverage offered in the 
State; 
‘‘(2) require any individual health insurance 
coverage issued by the issuer to be countersigned by 
an insurance agent or broker residing in that Sec-
ondary State; or 
‘‘(3) otherwise discriminate against the issuer 
issuing insurance in both the primary State and in 
any secondary State. 
‘‘(c) CLEAR
AND CONSPICUOUS DISCLOSURE.—A 
health insurance issuer shall provide the following notice, 
in 12-point bold type, in any insurance coverage offered 
in a secondary State under this part by such a health in-
surance issuer and at renewal of the policy, with the 5 
blank spaces therein being appropriately filled with the 
name of the health insurance issuer, the name of primary 
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State, the name of the secondary State, the name of the 
secondary State, and the name of the secondary State, re-
spectively, for the coverage concerned: 
This policy is issued by lllll and is governed by 
the laws and regulations of the State of lllll, and 
it has met all the laws of that State as determined by 
that State’s Department of Insurance. This policy may be 
less expensive than others because it is not subject to all 
of the insurance laws and regulations of the State of 
lllll, including coverage of some services or bene-
fits mandated by the law of the State of lllll. Ad-
ditionally, this policy is not subject to all of the consumer 
protection laws or restrictions on rate changes of the State 
of lllll. As with all insurance products, before pur-
chasing this policy, you should carefully review the policy 
and determine what health care services the policy covers 
and what benefits it provides, including any exclusions, 
limitations, or conditions for such services or benefits. 
‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS 
AND PREMIUM INCREASES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a health insurance issuer that provides indi-
vidual health insurance coverage to an individual 
under this part in a primary or secondary State may 
not upon renewal— 
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135 
‘‘(A) move or reclassify the individual in-
sured under the health insurance coverage from 
the class such individual is in at the time of 
issue of the contract based on the health-status 
related factors of the individual; or 
‘‘(B) increase the premiums assessed the 
individual for such coverage based on a health 
status-related factor or change of a health sta-
tus-related factor or the past or prospective 
claim experience of the insured individual. 
‘‘(2) CONSTRUCTION.—Nothing in paragraph 
(1) shall be construed to prohibit a health insurance 
issuer— 
‘‘(A) from terminating or discontinuing 
coverage or a class of coverage in accordance 
with subsections (b) and (c) of section 2742; 
‘‘(B) from raising premium rates for all 
policy holders within a class based on claims ex-
perience; 
‘‘(C) from changing premiums or offering 
discounted premiums to individuals who engage 
in wellness activities at intervals prescribed by 
the issuer, if such premium changes or incen-
tives— 
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136 
‘‘(i) are disclosed to the consumer in 
the insurance contract; 
‘‘(ii) are based on specific wellness ac-
tivities that are not applicable to all indi-
viduals; and 
‘‘(iii) are not obtainable by all individ-
uals to whom coverage is offered; 
‘‘(D) from reinstating lapsed coverage; or 
‘‘(E) from retroactively adjusting the rates 
charged an insured individual if the initial rates 
were set based on material misrepresentation by 
the individual at the time of issue. 
‘‘(e) PRIOR OFFERING
OF POLICY
IN PRIMARY 
STATE.—A health insurance issuer may not offer for sale 
individual health insurance coverage in a secondary State 
unless that coverage is currently offered for sale in the 
primary State. 
‘‘(f) LICENSING
OF AGENTS
OR BROKERS
FOR 
HEALTH INSURANCE ISSUERS.—Any State may require 
that a person acting, or offering to act, as an agent or 
broker for a health insurance issuer with respect to the 
offering of individual health insurance coverage obtain a 
license from that State, with commissions or other com-
pensation subject to the provisions of the laws of that 
State, except that a State may not impose any qualifica-
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137 
tion or requirement which discriminates against a non-
resident agent or broker. 
‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN-
SURANCE COMMISSIONER.—Each health insurance issuer 
issuing individual health insurance coverage in both pri-
mary and secondary States shall submit— 
‘‘(1) to the insurance commissioner of each 
State in which it intends to offer such coverage, be-
fore it may offer individual health insurance cov-
erage in such State— 
‘‘(A) a copy of the plan of operation or fea-
sibility study or any similar statement of the 
policy being offered and its coverage (which 
shall include the name of its primary State and 
its principal place of business); 
‘‘(B) written notice of any change in its 
designation of its primary State; and 
‘‘(C) written notice from the issuer of the 
issuer’s compliance with all the laws of the pri-
mary State; and 
‘‘(2) to the insurance commissioner of each sec-
ondary State in which it offers individual health in-
surance coverage, a copy of the issuer’s quarterly fi-
nancial statement submitted to the primary State, 
which statement shall be certified by an independent 
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138 
public accountant and contain a statement of opin-
ion on loss and loss adjustment expense reserves 
made by— 
‘‘(A) a member of the American Academy 
of Actuaries; or 
‘‘(B) a qualified loss reserve specialist. 
‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 
Nothing in this section shall be construed to affect the 
authority of any Federal or State court to enjoin— 
‘‘(1) the solicitation or sale of individual health 
insurance coverage by a health insurance issuer to 
any person or group who is not eligible for such in-
surance; or 
‘‘(2) the solicitation or sale of individual health 
insurance coverage that violates the requirements of 
the law of a secondary State which are described in 
subparagraphs 
(A) 
through 
(H) 
of 
section 
2796(b)(1). 
‘‘(i) POWER OF SECONDARY STATES TO TAKE AD-
MINISTRATIVE ACTION.—Nothing in this section shall be 
construed to affect the authority of any State to enjoin 
conduct in violation of that State’s laws described in sec-
tion 2796(b)(1). 
‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 
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139 
‘‘(1) IN GENERAL.—Subject to the provisions of 
subsection (b)(1)(G) (relating to injunctions) and 
paragraph (2), nothing in this section shall be con-
strued to affect the authority of any State to make 
use of any of its powers to enforce the laws of such 
State with respect to which a health insurance issuer 
is not exempt under subsection (b). 
‘‘(2) COURTS OF COMPETENT JURISDICTION.— 
If a State seeks an injunction regarding the conduct 
described in paragraphs (1) and (2) of subsection 
(h), such injunction must be obtained from a Fed-
eral or State court of competent jurisdiction. 
‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 
section shall affect the authority of any State to bring ac-
tion in any Federal or State court. 
‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 
this section shall be construed to affect the applicability 
of State laws generally applicable to persons or corpora-
tions. 
‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO 
HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 
health insurance issuer is offering coverage in a primary 
State that does not accommodate residents of secondary 
States or does not provide a working mechanism for resi-
dents of a secondary State, and the issuer is offering cov-
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erage under this part in such secondary State which has 
not adopted a qualified high-risk pool as its acceptable al-
ternative mechanism (as defined in section 2744(c)(2)), 
the issuer shall, with respect to any individual health in-
surance coverage offered in a secondary State under this 
part, comply with the guaranteed availability requirements 
for eligible individuals in section 2741. 
‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 
BEFORE ISSUER MAY SELL INTO SECONDARY 
STATES. 
‘‘A health insurance issuer may not offer, sell, or 
issue individual health insurance coverage in a secondary 
State if the State insurance commissioner does not use 
a risk-based capital formula for the determination of cap-
ital and surplus requirements for all health insurance 
issuers. 
‘‘SEC. 2798. LIMITATION ON INDIVIDUAL PURCHASE IN SEC-
ONDARY STATE. 
‘‘Effective beginning two years after the date of en-
actment of this part, an individual in a State may not 
buy individual health insurance coverage in a secondary 
State if the premium for individual health insurance in 
the primary State (with respect to the individual) exceeds 
the national average premium by 10 percent or more. 
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‘‘SEC. 2799. INDEPENDENT EXTERNAL APPEALS PROCE-
DURES. 
‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur-
ance issuer may not offer, sell, or issue individual health 
insurance coverage in a secondary State under the provi-
sions of this title unless— 
‘‘(1) both the secondary State and the primary 
State have legislation or regulations in place estab-
lishing an independent review process for individuals 
who are covered by individual health insurance cov-
erage, or 
‘‘(2) in any case in which the requirements of 
subparagraph (A) are not met with respect to the ei-
ther of such States, the issuer provides an inde-
pendent review mechanism substantially identical (as 
determined by the applicable State authority of such 
State) to that prescribed in the ‘Health Carrier Ex-
ternal Review Model Act’ of the National Association 
of Insurance Commissioners for all individuals who 
purchase insurance coverage under the terms of this 
part, except that, under such mechanism, the review 
is conducted by an independent medical reviewer, or 
a panel of such reviewers, with respect to whom the 
requirements of subsection (b) are met. 
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‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL 
REVIEWERS.—In the case of any independent review 
mechanism referred to in subsection (a)(2)— 
‘‘(1) IN GENERAL.—In referring a denial of a 
claim to an independent medical reviewer, or to any 
panel of such reviewers, to conduct independent 
medical review, the issuer shall ensure that— 
‘‘(A) each independent medical reviewer 
meets the qualifications described in paragraphs 
(2) and (3); 
‘‘(B) with respect to each review, each re-
viewer meets the requirements of paragraph (4) 
and the reviewer, or at least 1 reviewer on the 
panel, meets the requirements described in 
paragraph (5); and 
‘‘(C) compensation provided by the issuer 
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 one or more States to deliver health 
care services; and 
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‘‘(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 issuer, 
from serving as an independent medical re-
viewer if— 
‘‘(I) a non-affiliated individual is 
not reasonably available; 
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‘‘(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 issuer and the 
enrollee (or authorized representative) 
and neither party objects; and 
‘‘(IV) the affiliated individual is 
not an employee of the issuer and 
does not provide services exclusively or 
primarily to or on behalf of the 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 issuer and 
the 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.— 
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‘‘(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 reviewer, or at least 1 
member of the review panel, shall be a 
practicing non-physician health care pro-
fessional of the same or similar specialty 
as the non-physician health care profes-
sional who, acting within the appropriate 
scope of practice within the State in which 
the service is provided or rendered, typi-
cally treats the condition, makes the diag-
nosis, or provides the type of treatment 
under review. 
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‘‘(B) PRACTICING
DEFINED.—For pur-
poses of this paragraph, the term ‘practicing’ 
means, with respect to an individual who is a 
physician or other health care professional, that 
the individual 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 the issuer 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 coverage relat-
ing to an enrollee, any of the following: 
‘‘(A) The issuer involved, or any fiduciary, 
officer, director, or employee of the issuer. 
‘‘(B) The enrollee (or authorized represent-
ative). 
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‘‘(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. 
‘‘(8) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ENROLLEE.—The term ‘enrollee’ 
means, with respect to health insurance cov-
erage offered by a health insurance issuer, an 
individual enrolled with the issuer to receive 
such coverage. 
‘‘(B) HEALTH CARE PROFESSIONAL.—The 
term ‘health care professional’ means an indi-
vidual who is licensed, accredited, or certified 
under State law to provide specified health care 
services and who is operating within the scope 
of such licensure, accreditation, or certification. 
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‘‘SEC. 2800. ENFORCEMENT. 
‘‘(a) IN GENERAL.—Subject to subsection (b), with 
respect to specific individual health insurance coverage the 
primary State for such coverage has sole jurisdiction to 
enforce the primary State’s covered laws in the primary 
State and any secondary State. 
‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 
subsection (a) shall be construed to affect the authority 
of a secondary State to enforce its laws as set forth in 
the exception specified in section 2796(b)(1). 
‘‘(c) COURT INTERPRETATION.—In reviewing action 
initiated by the applicable secondary State authority, the 
court of competent jurisdiction shall apply the covered 
laws of the primary State. 
‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 
of individual health insurance coverage offered in a sec-
ondary State that fails to comply with the covered laws 
of the primary State, the applicable State authority of the 
secondary State may notify the applicable State authority 
of the primary State.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to individual health insurance 
coverage offered, issued, or sold after the date that is one 
year after the date of the enactment of this Act. 
(c) GAO ONGOING STUDY AND REPORTS.— 
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(1) STUDY.—The Comptroller General of the 
United States shall conduct an ongoing study con-
cerning the effect of the amendment made by sub-
section (a) on— 
(A) the number of uninsured and under-in-
sured; 
(B) the availability and cost of health in-
surance policies for individuals with pre-existing 
medical conditions; 
(C) the availability and cost of health in-
surance policies generally; 
(D) the elimination or reduction of dif-
ferent types of benefits under health insurance 
policies offered in different States; and 
(E) cases of fraud or abuse relating to 
health insurance coverage offered under such 
amendment and the resolution of such cases. 
(2) ANNUAL REPORTS.—The Comptroller Gen-
eral shall submit to Congress an annual report, after 
the end of each of the 5 years following the effective 
date of the amendment made by subsection (a), on 
the ongoing study conducted under paragraph (1). 
(d) SEVERABILITY.—If any provision of the section 
or the application of such provision to any person or cir-
cumstance is held to be unconstitutional, the remainder 
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of this section and the application of the provisions of such 
to any other person or circumstance shall not be affected. 
TITLE IV—SAFETY NET 
REFORMS 
SEC. 401. REQUIRING OUTREACH AND COVERAGE BEFORE 
EXPANSION OF ELIGIBILITY. 
(a) STATE CHILD HEALTH PLAN REQUIRED TO 
SPECIFY HOW IT WILL ACHIEVE COVERAGE FOR 90 PER-
CENT OF TARGETED LOW-INCOME CHILDREN.— 
(1) IN GENERAL.—Section 2102(a) of the So-
cial Security Act (42 U.S.C. 1397bb(a)) is amend-
ed— 
(A) in paragraph (6), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (7), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(8) how the eligibility and benefits provided 
for under the plan for each fiscal year (beginning 
with fiscal year 2013) will allow for the State’s an-
nual funding allotment to cover at least 90 percent 
of the eligible targeted low-income children in the 
State.’’. 
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(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to State child health 
plans for fiscal years beginning with fiscal year 
2013. 
(b) LIMITATION ON PROGRAM EXPANSIONS UNTIL 
LOWEST INCOME ELIGIBLE INDIVIDUALS ENROLLED.— 
Section 2105(c) of such Act (42 U.S.C. 1397dd(c)) is 
amended by adding at the end the following new para-
graph: 
‘‘(12) LIMITATION
ON
INCREASED
COVERAGE 
OF HIGHER INCOME CHILDREN.— 
‘‘(A) IN GENERAL.—For child health as-
sistance furnished in a fiscal year beginning 
with fiscal year 2013: 
‘‘(i) NO
PAYMENT
FOR
CHILDREN 
WITH FAMILY INCOME ABOVE 300 PERCENT 
OF POVERTY LINE.—Payment shall not be 
made under this section for child health 
assistance for a targeted low-income child 
in a family the income of which exceeds 
300 percent of the poverty line applicable 
to a family of the size involved. 
‘‘(ii) SPECIAL RULES FOR PAYMENT 
FOR
CHILDREN
WITH
FAMILY
INCOME 
ABOVE 200 PERCENT OF POVERTY LINE.— 
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In the case of child health assistance for a 
targeted low-income child in a family the 
income of which exceeds 200 percent (but 
does not exceed 300 percent) of the pov-
erty line applicable to a family of the size 
involved no payment shall be made under 
this section for such assistance unless the 
State demonstrates to the satisfaction of 
the Secretary that— 
‘‘(I) the State has met the 90 
percent retrospective coverage test 
specified in subparagraph (B)(i) for 
the previous fiscal year; and 
‘‘(II) the State will meet the 90 
percent prospective coverage test spec-
ified in subparagraph (B)(ii) for the 
fiscal year. 
‘‘(B) 90 PERCENT COVERAGE TESTS.— 
‘‘(i) RETROSPECTIVE TEST.—The 90 
percent retrospective coverage test speci-
fied in this clause is, for a State for a fis-
cal year, that on average during the fiscal 
year, the State has enrolled under this title 
or title XIX at least 90 percent of the indi-
viduals residing in the State who— 
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graph and who are eligible for child 
health assistance under this title. 
‘‘(C) GRANDFATHER.—Clauses (i) and (ii) 
of subparagraph (A) shall not apply to the pro-
vision of child health assistance— 
‘‘(i) to a targeted low-income child 
who is enrolled for child health assistance 
under this title as of September 30, 2010; 
‘‘(ii) to a pregnant woman who is en-
rolled for assistance under this title as of 
September 30, 2011, through the comple-
tion of the post-partum period following 
completion of her pregnancy; and 
‘‘(iii) for items and services furnished 
before October 1, 2012, to an individual 
who is not a targeted low-income child and 
who is enrolled for assistance under this 
title as of September 30, 2011. 
‘‘(D) 
TREATMENT
OF
PREGNANT 
WOMEN.—In 
this 
paragraph 
and 
sections 
2102(a)(8) and 2104(a)(2), the term ‘targeted 
low-income child’ includes an individual under 
age 19, including the period from conception to 
birth, who is eligible for child health assistance 
under this title by virtue of the definition of the 
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term ‘child’ under section 457.10 of title 42, 
Code of Federal Regulations.’’. 
(c) STANDARDIZATION
OF
INCOME
DETERMINA-
TIONS.— 
(1) IN GENERAL.—Section 2110(d) of such Act 
(42 U.S.C. 1397jj) is amended by adding at the end 
the following new subsection: 
‘‘(d) STANDARDIZATION
OF INCOME DETERMINA-
TIONS.—In determining family income under this title (in-
cluding in the case of a State child health plan that pro-
vides health benefits coverage in the manner described in 
section 2101(a)(2)), a State shall base such determination 
on gross income (including amounts that would be in-
cluded in gross income if they were not exempt from in-
come taxation) and may only take into consideration such 
income disregards as the Secretary shall develop.’’. 
(2) EFFECTIVE DATE.—(A) Subject to subpara-
graph (B), the amendment made by paragraph (1) 
shall apply to determinations (and redeterminations) 
of income made on or after April 1, 2012. 
(B) In the case of a State child health plan 
under title XXI of the Social Security Act which the 
Secretary of Health and Human Services determines 
requires State legislation (other than legislation ap-
propriating funds) in order for the plan to meet the 
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additional requirement imposed by the amendment 
made by paragraph (1), the State child health plan 
shall not be regarded as failing to comply with the 
requirements of such title solely on the basis of its 
failure to meet this additional requirement before 
the first day of the first calendar quarter beginning 
after the close of the first regular session of the 
State legislature that begins after the date of the en-
actment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year 
legislative session, each year of such session shall be 
deemed to be a separate regular session of the State 
legislature. 
SEC. 402. EASING ADMINISTRATIVE BARRIERS TO STATE 
COOPERATION WITH EMPLOYER-SPONSORED 
INSURANCE COVERAGE. 
(a) REQUIRING SOME COVERAGE FOR EMPLOYER- 
SPONSORED INSURANCE UNDER CHIP.—Section 2102(a) 
of the Social Security Act (42 U.S.C. 1397b(a)), as 
amended by section 401(a), is amended— 
(1) in paragraph (7), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (8), by striking the period at 
the end and inserting ‘‘; and’’; and 
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(3) by adding at the end the following new 
paragraph: 
‘‘(9) effective for plan years beginning on or 
after October 1, 2012, how the plan will provide for 
child health assistance with respect to targeted low- 
income children covered under a group health 
plan.’’. 
(b) FEDERAL FINANCIAL PARTICIPATION FOR EM-
PLOYER-SPONSORED INSURANCE.—Section 2105 of such 
Act (42 U.S.C. 1397d) is amended— 
(1) in subsection (a)(1)(C), by inserting before 
the semicolon at the end the following: ‘‘and, subject 
to paragraph (3)(C), in the form of payment of the 
premiums for coverage under a group health plan 
that includes coverage of targeted low-income chil-
dren and benefits supplemental to such coverage’’; 
and 
(2) by amending paragraph (3) of subsection 
(c) to read as follows: 
‘‘(3) PURCHASE OF EMPLOYER-SPONSORED IN-
SURANCE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of family coverage under a group 
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health plan that includes coverage of targeted 
low-income children unless such coverage would 
otherwise substitute for coverage that would be 
provided to such children but for the purchase 
of family coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A)— 
‘‘(i) notwithstanding section 2102, no 
minimum benefits requirement (other than 
those otherwise applicable with respect to 
services referred to in section 2102(a)(7)) 
under this title shall apply; and 
‘‘(ii) no limitation on beneficiary cost- 
sharing otherwise applicable under this 
title or title XIX shall apply. 
‘‘(C) REQUIRED
PROVISION
OF
SUPPLE-
MENTAL BENEFITS.—If the coverage described 
in subparagraph (A) does not provide coverage 
for 
the 
services 
referred 
to 
in 
section 
2102(a)(7), the State child health plan shall 
provide coverage of such services as supple-
mental benefits. 
‘‘(D) LIMITATION ON FFP.—The amount 
of the payment under paragraph (1)(C) for cov-
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erage described in subparagraph (A) (and sup-
plemental benefits under subparagraph (C) for 
individuals so covered) during a fiscal year may 
not exceed the product of— 
‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(E) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet Web site or other 
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means including the State transparency 
plan portal established under section 901 
of the Empowering Patients First Act) to 
the parent or guardian of the child infor-
mation on the coverage available under 
this title, including benefits and cost-shar-
ing; and 
‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
coverage that is otherwise made available 
under this title. 
‘‘(F) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2012; 
and 
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‘‘(iii) post a description of these cov-
erage options on any official Web site that 
may be established by the State in connec-
tion with the plan, including the State 
transparency plan portal established under 
section 901 of the Empowering Patients 
First Act. 
‘‘(G) SEMIANNUAL VERIFICATION OF COV-
ERAGE.—If coverage described in subparagraph 
(A) is provided under a group health plan with 
respect to a targeted low-income child, the 
State child health plan shall provide for the col-
lection, at least once every six months, of proof 
from the plan that the child is enrolled in such 
coverage. 
‘‘(H) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
‘‘(i) offering wrap around benefits in 
order for a group health plan to meet any 
State-established minimum benefit require-
ments; 
‘‘(ii) establishing a cost-effectiveness 
test to qualify for coverage under such a 
plan; 
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‘‘(iii) establishing limits on beneficiary 
cost-sharing under such a plan; 
‘‘(iv) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such a plan; 
‘‘(v) paying less than the full cost of 
the employee’s share of the premium under 
such a plan, including prorating the cost of 
the premium to pay for only what the 
State determines is the portion of the pre-
mium that covers targeted low-income chil-
dren; 
‘‘(vi) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); 
‘‘(vii) allowing beneficiaries enrolled in 
group health plans from changing plans to 
another coverage option available under 
this title at any time; or 
‘‘(viii) providing any guidance or in-
formation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A). 
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‘‘(I) GROUP HEALTH PLAN DEFINED.—In 
this paragraph, the term ‘group health plan’ 
has the meaning given such term in section 
2791(a)(1) of the Public Health Service Act (42 
U.S.C. 300gg–91(a)(1)).’’. 
(c) APPLICATION UNDER MEDICAID.—The Secretary 
of Health and Human Services shall provide for the appli-
cation of the amendments made by subsections (a) and 
(b) under the Medicaid program under title XIX of the 
Social Security Act in the same manner as such amend-
ments apply to SCHIP under title XXI of such Act. 
SEC. 403. IMPROVING BENEFICIARY CHOICE IN SCHIP. 
(a) REQUIRING OFFERING OF ALTERNATIVE COV-
ERAGE OPTIONS.—Section 2102 of the Social Security Act 
(42 U.S.C. 1397b), as amended by sections 401(a) and 
402(a), is amended— 
(1) in subsection (a)— 
(A) in paragraph (8), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (9), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(10) effective for plan years beginning on or 
after October 1, 2012, how the plan will provide for 
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child health assistance with respect to targeted low- 
income children through alternative coverage options 
in accordance with subsection (e).’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(d) ALTERNATIVE COVERAGE OPTIONS.— 
‘‘(1) IN GENERAL.—Effective October 1, 2012, 
a State child health plan shall provide for the offer-
ing of any qualified alternative coverage that a 
qualified entity seeks to offer to targeted low-income 
children through the plan in the State. 
‘‘(2) APPLICATION
OF
UNIFORM
FINANCIAL 
LIMITATION FOR ALL ALTERNATIVE COVERAGE OP-
TIONS.—With respect to all qualified alternative cov-
erage offered in a State, the State child health plan 
shall establish a uniform dollar limitation on the per 
capita monthly amount that will be paid by the 
State to the qualified entity with respect to such 
coverage provided to a targeted low-income child. 
Such limitation may not be less than 90 percent of 
the per capita monthly payment made for coverage 
offered under the State child health plan that is not 
in the form of an alternative coverage option. Noth-
ing in this paragraph shall be construed— 
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‘‘(A) as requiring a State to provide for 
the full payment of premiums for qualified al-
ternative coverage; 
‘‘(B) as preventing a State from charging 
additional premiums to cover the difference be-
tween the cost of qualified alternative coverage 
and the amount of such payment limitation; or 
‘‘(C) as preventing a State from using its 
own funds to provide a dollar limitation that ex-
ceeds the Federal financial participation as lim-
ited under section 2105(c)(10). 
‘‘(3) TREATMENT OF LOW COST COVERAGE.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), if the uniform dollar limita-
tion under paragraph (2) exceeds the premium 
for qualified alternative coverage for an en-
rollee, then such excess shall be refunded to the 
Federal and State governments in the same 
proportion as is otherwise applicable to recov-
ered funds under this title. 
‘‘(B) EXCEPTION FOR HIGH-DEDUCTIBLE 
HEALTH PLANS.—In the case of coverage under 
a high-deductible health plan, the excess de-
scribed in subparagraph (A) shall be deposited 
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into a health savings account established with 
respect to such plan. 
‘‘(4) EXEMPTION.—A State is not subject to 
the requirement of paragraph (1) if the State child 
health plan provides, as of the date of the enactment 
of this subsection, for a cash out or health savings 
account type option for those enrolled under the 
plan. 
‘‘(5) QUALIFIED ALTERNATIVE COVERAGE DE-
FINED.—In this section, the term ‘qualified alter-
native coverage’ means health insurance coverage 
that— 
‘‘(A) meets the coverage requirements of 
section 2103 (other than cost-sharing require-
ments of such section); and 
‘‘(B) is offered by a qualified insurer, and 
not directly by the State. 
‘‘(6) QUALIFIED
INSURER
DEFINED.—In this 
section, the term ‘qualified insurer’ means, with re-
spect to a State, an entity that is licensed to offer 
health insurance coverage in the State.’’. 
(b) FEDERAL
FINANCIAL
PARTICIPATION
FOR 
QUALIFIED ALTERNATIVE COVERAGE.—Section 2105 of 
such Act (42 U.S.C. 1397d) is amended— 
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(1) in subsection (a)(1)(C), as amended by sec-
tion 402(b), by inserting before the semicolon at the 
end the following: ‘‘and, subject to paragraph 
(13)(C), in the form of payment of the premiums for 
coverage for qualified alternative coverage’’; and 
(2) in subsection (c), as amended by section 
401(b) by adding at the end the following new para-
graph: 
‘‘(13) PURCHASE OF QUALIFIED ALTERNATIVE 
COVERAGE.— 
‘‘(A) IN
GENERAL.—Payment may be 
made to a State under subsection (a)(1)(C), 
subject to the provisions of this paragraph, for 
the purchase of qualified alternative coverage. 
‘‘(B) WAIVER OF CERTAIN PROVISIONS.— 
With respect to coverage described in subpara-
graph (A), no limitation on beneficiary cost- 
sharing otherwise applicable under this title or 
title XIX shall apply. 
‘‘(C) LIMITATION ON FFP.—The amount of 
the payment under paragraph (1)(C) for cov-
erage described in subparagraph (A) during a 
fiscal year in the aggregate for all such cov-
erage in the State may not exceed the product 
of— 
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‘‘(i) the national per capita expendi-
ture under this title (taking into account 
both Federal and State expenditures) for 
the previous fiscal year (as determined by 
the Secretary using the best available 
data); 
‘‘(ii) the enhanced FMAP for the 
State and fiscal year involved; and 
‘‘(iii) the number of targeted low-in-
come children for whom such coverage is 
provided. 
‘‘(D) VOLUNTARY ENROLLMENT.—A State 
child health plan— 
‘‘(i) may not require a targeted low- 
income child to enroll in coverage described 
in subparagraph (A) in order to obtain 
child health assistance under this title; 
‘‘(ii) before providing such child 
health assistance for such coverage of a 
child, shall make available (which may be 
through an Internet Web site or other 
means) to the parent or guardian of the 
child information on the coverage available 
under this title, including benefits and 
cost-sharing; and 
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‘‘(iii) shall provide at least one oppor-
tunity per fiscal year for beneficiaries to 
switch coverage under this title from cov-
erage described in subparagraph (A) to the 
coverage that is otherwise made available 
under this title. 
‘‘(E) INFORMATION
ON
COVERAGE
OP-
TIONS.—A State child health plan shall— 
‘‘(i) describe how the State will notify 
potential beneficiaries of coverage de-
scribed in subparagraph (A); 
‘‘(ii) provide such notification in writ-
ing at least during the initial application 
for enrollment under this title and during 
redeterminations of eligibility if the indi-
vidual was enrolled before October 1, 2012; 
and 
‘‘(iii) post a description of these cov-
erage options on any official Web site that 
may be established by the State in connec-
tion with the plan. 
‘‘(F) RULE OF CONSTRUCTION.—Nothing 
in this section is to be construed to prohibit a 
State from— 
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‘‘(i) establishing limits on beneficiary 
cost-sharing under such alternative cov-
erage; 
‘‘(ii) paying all or part of a bene-
ficiary’s cost-sharing requirements under 
such coverage; 
‘‘(iii) paying less than the full cost of 
a child’s share of the premium under such 
coverage, insofar as the premium for such 
coverage exceeds the limitation established 
by the State under subparagraph (C); 
‘‘(iv) using State funds to pay for 
benefits above the Federal upper limit es-
tablished under subparagraph (C); or 
‘‘(v) providing any guidance or infor-
mation it deems appropriate in order to 
help beneficiaries make an informed deci-
sion regarding the option to enroll in cov-
erage described in subparagraph (A).’’. 
(c) APPLICATION UNDER MEDICAID.—The Secretary 
of Health and Human Services shall provide for the appli-
cation of the amendments made by subsections (a) and 
(b) under the Medicaid program under title XIX of the 
Social Security Act in the same manner as such amend-
ments apply to SCHIP under title XXI of such Act. 
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171 
TITLE V—MEDICAL LIABILITY 
REFORMS 
SEC. 501. SHORT TITLE. 
This title may be cited as the ‘‘Help Efficient, Acces-
sible, Low-cost, Timely Healthcare (HEALTH) Act of 
2011’’. 
SEC. 502. FINDINGS AND PURPOSE. 
(a) FINDINGS.— 
(1) EFFECT
ON
HEALTH
CARE
ACCESS
AND 
COSTS.—Congress finds that our current civil justice 
system is adversely affecting patient access to health 
care services, better patient care, and cost-efficient 
health care, in that the health care liability system 
is a costly and ineffective mechanism for resolving 
claims of health care liability and compensating in-
jured patients, and is a deterrent to the sharing of 
information among health care professionals which 
impedes efforts to improve patient safety and quality 
of care. 
(2) EFFECT
ON
INTERSTATE
COMMERCE.— 
Congress finds that the health care and insurance 
industries are industries affecting interstate com-
merce and the health care liability litigation systems 
existing throughout the United States are activities 
that affect interstate commerce by contributing to 
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the high costs of health care and premiums for 
health care liability insurance purchased by health 
care system providers. 
(3) EFFECT
ON
FEDERAL
SPENDING.—Con-
gress finds that the health care liability litigation 
systems existing throughout the United States have 
a significant effect on the amount, distribution, and 
use of Federal funds because of— 
(A) the large number of individuals who 
receive health care benefits under programs op-
erated or financed by the Federal Government; 
(B) the large number of individuals who 
benefit because of the exclusion from Federal 
taxes of the amounts spent to provide them 
with health insurance benefits; and 
(C) the large number of health care pro-
viders who provide items or services for which 
the Federal Government makes payments. 
(b) PURPOSE.—It is the purpose of this title to imple-
ment reasonable, comprehensive, and effective health care 
liability reforms designed to 
(1) improve the availability of health care serv-
ices in cases in which health care liability actions 
have been shown to be a factor in the decreased 
availability of services; 
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(2) reduce the incidence of ‘‘defensive medi-
cine’’ and lower the cost of health care liability in-
surance, all of which contribute to the escalation of 
health care costs; 
(3) ensure that persons with meritorious health 
care injury claims receive fair and adequate com-
pensation, including reasonable noneconomic dam-
ages; 
(4) improve the fairness and cost-effectiveness 
of our current health care liability system to resolve 
disputes over, and provide compensation for, health 
care liability by reducing uncertainty in the amount 
of compensation provided to injured individuals; and 
(5) provide an increased sharing of information 
in the health care system which will reduce unin-
tended injury and improve patient care. 
SEC. 503. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 
The time for the commencement of a health care law-
suit shall be 3 years after the date of manifestation of 
injury or 1 year after the claimant discovers, or through 
the use of reasonable diligence should have discovered, the 
injury, whichever occurs first. In no event shall the time 
for commencement of a health care lawsuit exceed 3 years 
after the date of manifestation of injury unless tolled for 
any of the following— 
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(1) upon proof of fraud; 
(2) intentional concealment; or 
(3) the presence of a foreign body, which has no 
therapeutic or diagnostic purpose or effect, in the 
person of the injured person. 
Actions by a minor shall be commenced within 3 years 
from the date of the alleged manifestation of injury except 
that actions by a minor under the full age of 6 years shall 
be commenced within 3 years of manifestation of injury 
or prior to the minor’s 8th birthday, whichever provides 
a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian 
and a health care provider or health care organization 
have committed fraud or collusion in the failure to bring 
an action on behalf of the injured minor. 
SEC. 504. COMPENSATING PATIENT INJURY. 
(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL 
ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 
health care lawsuit, nothing in this title shall limit a claim-
ant’s recovery of the full amount of the available economic 
damages, notwithstanding the limitation in subsection (b). 
(b) ADDITIONAL NONECONOMIC DAMAGES.—In any 
health care lawsuit, the amount of noneconomic damages, 
if available, may be as much as $250,000, regardless of 
the number of parties against whom the action is brought 
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or the number of separate claims or actions brought with 
respect to the same injury. 
(c) NO DISCOUNT OF AWARD FOR NONECONOMIC 
DAMAGES.—For purposes of applying the limitation in 
subsection (b), future noneconomic damages shall not be 
discounted to present value. The jury shall not be in-
formed about the maximum award for noneconomic dam-
ages. An award for noneconomic damages in excess of 
$250,000 shall be reduced either before the entry of judg-
ment, or by amendment of the judgment after entry of 
judgment, and such reduction shall be made before ac-
counting for any other reduction in damages required by 
law. If separate awards are rendered for past and future 
noneconomic damages and the combined awards exceed 
$250,000, the future noneconomic damages shall be re-
duced first. 
(d) FAIR SHARE RULE.—In any health care lawsuit, 
each party shall be liable for that party’s several share 
of any damages only and not for the share of any other 
person. Each party shall be liable only for the amount of 
damages allocated to such party in direct proportion to 
such party’s percentage of responsibility. Whenever a 
judgment of liability is rendered as to any party, a sepa-
rate judgment shall be rendered against each such party 
for the amount allocated to such party. For purposes of 
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this section, the trier of fact shall determine the propor-
tion of responsibility of each party for the claimant’s 
harm. 
SEC. 505. MAXIMIZING PATIENT RECOVERY. 
(a) COURT SUPERVISION OF SHARE OF DAMAGES 
ACTUALLY PAID TO CLAIMANTS.—In any health care law-
suit, the court shall supervise the arrangements for pay-
ment of damages to protect against conflicts of interest 
that may have the effect of reducing the amount of dam-
ages awarded that are actually paid to claimants. In par-
ticular, in any health care lawsuit in which the attorney 
for a party claims a financial stake in the outcome by vir-
tue of a contingent fee, the court shall have the power 
to restrict the payment of a claimant’s damage recovery 
to such attorney, and to redirect such damages to the 
claimant based upon the interests of justice and principles 
of equity. In no event shall the total of all contingent fees 
for representing all claimants in a health care lawsuit ex-
ceed the following limits: 
(1) Forty percent of the first $50,000 recovered 
by the claimant(s). 
(2) Thirty-three and one-third percent of the 
next $50,000 recovered by the claimant(s). 
(3) Twenty-five percent of the next $500,000 
recovered by the claimant(s). 
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(4) Fifteen percent of any amount by which the 
recovery by the claimant(s) is in excess of $600,000. 
(b) APPLICABILITY.—The limitations in this section 
shall apply whether the recovery is by judgment, settle-
ment, mediation, arbitration, or any other form of alter-
native dispute resolution. In a health care lawsuit involv-
ing a minor or incompetent person, a court retains the 
authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The require-
ment for court supervision in the first two sentences of 
subsection (a) applies only in civil actions. 
SEC. 506. ADDITIONAL HEALTH BENEFITS. 
In any health care lawsuit involving injury or wrong-
ful death, any party may introduce evidence of collateral 
source benefits. If a party elects to introduce such evi-
dence, any opposing party may introduce evidence of any 
amount paid or contributed or reasonably likely to be paid 
or contributed in the future by or on behalf of the oppos-
ing party to secure the right to such collateral source bene-
fits. No provider of collateral source benefits shall recover 
any amount against the claimant or receive any lien or 
credit against the claimant’s recovery or be equitably or 
legally subrogated to the right of the claimant in a health 
care lawsuit involving injury or wrongful death. This sec-
tion shall apply to any health care lawsuit that is settled 
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as well as a health care lawsuit that is resolved by a fact 
finder. This section shall not apply to section 1862(b) (42 
U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 
1396a(a)(25)) of the Social Security Act. 
SEC. 507. PUNITIVE DAMAGES. 
(a) IN GENERAL.—Punitive damages may, if other-
wise permitted by applicable State or Federal law, be 
awarded against any person in a health care lawsuit only 
if it is proven by clear and convincing evidence that such 
person acted with malicious intent to injure the claimant, 
or that such person deliberately failed to avoid unneces-
sary injury that such person knew the claimant was sub-
stantially certain to suffer. In any health care lawsuit 
where no judgment for compensatory damages is rendered 
against such person, no punitive damages may be awarded 
with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit 
as initially filed. A court may allow a claimant to file an 
amended pleading for punitive damages only upon a mo-
tion by the claimant and after a finding by the court, upon 
review of supporting and opposing affidavits or after a 
hearing, after weighing the evidence, that the claimant has 
established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the re-
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quest of any party in a health care lawsuit, the trier of 
fact shall consider in a separate proceeding— 
(1) whether punitive damages are to be award-
ed and the amount of such award; and 
(2) the amount of punitive damages following a 
determination of punitive liability. 
If a separate proceeding is requested, evidence relevant 
only to the claim for punitive damages, as determined by 
applicable State law, shall be inadmissible in any pro-
ceeding to determine whether compensatory damages are 
to be awarded. 
(b) DETERMINING AMOUNT
OF PUNITIVE DAM-
AGES.— 
(1) FACTORS
CONSIDERED.—In determining 
the amount of punitive damages, if awarded, in a 
health care lawsuit, the trier of fact shall consider 
only the following— 
(A) the severity of the harm caused by the 
conduct of such party; 
(B) the duration of the conduct or any 
concealment of it by such party; 
(C) the profitability of the conduct to such 
party; 
(D) the number of products sold or med-
ical procedures rendered for compensation, as 
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the case may be, by such party, of the kind 
causing the harm complained of by the claim-
ant; 
(E) any criminal penalties imposed on such 
party, as a result of the conduct complained of 
by the claimant; and 
(F) the amount of any civil fines assessed 
against such party as a result of the conduct 
complained of by the claimant. 
(2) MAXIMUM AWARD.—The amount of punitive 
damages, if awarded, in a health care lawsuit may 
be as much as $250,000 or as much as two times 
the amount of economic damages awarded, which-
ever is greater. The jury shall not be informed of 
this limitation. 
(c) NO PUNITIVE DAMAGES FOR PRODUCTS THAT 
COMPLY WITH FDA STANDARDS.— 
(1) IN GENERAL.— 
(A) No punitive damages may be awarded 
against the manufacturer or distributor of a 
medical product, or a supplier of any compo-
nent or raw material of such medical product, 
based on a claim that such product caused the 
claimant’s harm where— 
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(i)(I) such medical product was sub-
ject to premarket approval, clearance, or li-
censure by the Food and Drug Administra-
tion with respect to the safety of the for-
mulation or performance of the aspect of 
such medical product which caused the 
claimant’s harm or the adequacy of the 
packaging or labeling of such medical 
product; and 
(II) such medical product was so ap-
proved, cleared, or licensed; or 
(ii) such medical product is generally 
recognized among qualified experts as safe 
and effective pursuant to conditions estab-
lished by the Food and Drug Administra-
tion and applicable Food and Drug Admin-
istration regulations, including without 
limitation those related to packaging and 
labeling, unless the Food and Drug Admin-
istration has determined that such medical 
product was not manufactured or distrib-
uted in substantial compliance with appli-
cable Food and Drug Administration stat-
utes and regulations. 
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182 
(B) RULE OF CONSTRUCTION.—Subpara-
graph (A) may not be construed as establishing 
the obligation of the Food and Drug Adminis-
tration to demonstrate affirmatively that a 
manufacturer, distributor, or supplier referred 
to in such subparagraph meets any of the con-
ditions described in such subparagraph. 
(2) LIABILITY OF HEALTH CARE PROVIDERS.— 
A health care provider who prescribes, or who dis-
penses pursuant to a prescription, a medical product 
approved, licensed, or cleared by the Food and Drug 
Administration shall not be named as a party to a 
product liability lawsuit involving such product and 
shall not be liable to a claimant in a class action 
lawsuit against the manufacturer, distributor, or 
seller of such product. Nothing in this paragraph 
prevents a court from consolidating cases involving 
health care providers and cases involving products li-
ability claims against the manufacturer, distributor, 
or product seller of such medical product. 
(3) PACKAGING.—In a health care lawsuit for 
harm which is alleged to relate to the adequacy of 
the packaging or labeling of a drug which is required 
to have tamper-resistant packaging under regula-
tions of the Secretary of Health and Human Serv-
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183 
ices (including labeling regulations related to such 
packaging), the manufacturer or product seller of 
the drug shall not be held liable for punitive dam-
ages unless such packaging or labeling is found by 
the trier of fact by clear and convincing evidence to 
be substantially out of compliance with such regula-
tions. 
(4) EXCEPTION.—Paragraph (1) shall not 
apply in any health care lawsuit in which— 
(A) a person, before or after premarket ap-
proval, clearance, or licensure of such medical 
product, knowingly misrepresented to or with-
held from the Food and Drug Administration 
information that is required to be submitted 
under the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 301 et seq.) or section 351 of 
the Public Health Service Act (42 U.S.C. 262) 
that is material and is causally related to the 
harm which the claimant allegedly suffered; 
(B) a person made an illegal payment to 
an official of the Food and Drug Administra-
tion for the purpose of either securing or main-
taining approval, clearance, or licensure of such 
medical product; or 
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(C) the defendant caused the medical prod-
uct which caused the claimant’s harm to be 
misbranded or adulterated (as such terms are 
used in chapter V of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 351 et seq.)). 
SEC. 508. LIMITATION ON RECOVERY IN A HEALTH CARE 
LAWSUIT BASED ON COMPLIANCE WITH BEST 
PRACTICE GUIDELINES. 
(a) SELECTION AND ISSUANCE OF BEST PRACTICES 
GUIDELINES.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall provide for the selection and 
issuance of best practice guidelines for treatment of 
medical conditions (each in this subsection referred 
to as a ‘‘guideline’’) in accordance with paragraphs 
(2) and (3). 
(2) DEVELOPMENT PROCESS.—Not later than 
90 days after the date of enactment of this title, the 
Secretary shall enter into a contract with a qualified 
physician consensus-building organization (such as 
the Physician Consortium for Performance Improve-
ment), in concert and agreement with physician spe-
cialty organizations, to develop guidelines. The con-
tract shall require that the organization submit 
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185 
guidelines to the agency not later than 18 months 
after the date of enactment of this title. 
(3) ISSUANCE.— 
(A) IN GENERAL.—Not later than 2 years 
after the date of the enactment of this title, the 
Secretary shall, after notice and opportunity for 
public comment, make a rule that provides for 
the establishment of the guidelines submitted 
under paragraph (2). 
(B) LIMITATION.—The Secretary may not 
make a rule that includes guidelines other than 
those submitted under paragraph (2). 
(C) DISSEMINATION.—The Secretary shall 
post such guidelines on the public Internet web 
page of the Department of Health and Human 
Services. 
(4) MAINTENANCE.—Not later than 4 years 
after the date of enactment of this title, and every 
2 years thereafter, the Secretary shall review the 
guidelines and shall, as necessary, enter into con-
tracts similar to the contract described in paragraph 
(2), and issue guidelines in a manner similar to the 
issuance of guidelines under paragraph (3). 
(b) LIMITATION ON DAMAGES.— 
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(1) LIMITATION ON NONECONOMIC DAMAGES.— 
In any health care lawsuit, a court may not award 
noneconomic damages with respect to treatment that 
is consistent with a guideline issued under sub-
section (a). 
(2) LIMITATION
ON
PUNITIVE
DAMAGES.—In 
any health care lawsuit, no punitive damages may be 
awarded against a health care provider based on a 
claim that such treatment caused the claimant harm 
if— 
(A) such treatment was subject to quality 
review by a qualified physician consensus-build-
ing organization and has been found to be safe, 
effective, and appropriate; 
(B) such treatment was approved in a 
guideline that underwent full review by such or-
ganization, public comment, approval by the 
Secretary, and dissemination as described in 
subparagraph (a); or 
(C) such medical treatment is generally 
recognized among qualified experts (including 
medical providers and relevant physician spe-
cialty organizations) as safe, effective, and ap-
propriate. 
(c) USE.— 
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(1) INTRODUCTION AS EVIDENCE.—Guidelines 
established in a rule made under subsection (a) may 
not be introduced as evidence of negligence or devi-
ation in the standard of care in any health care law-
suit unless they have previously been introduced by 
the defendant. 
(2) NO PRESUMPTION OF NEGLIGENCE.—There 
shall be no presumption of negligence if a health 
care provider provides treatment in a manner incon-
sistent with such guidelines. 
(d) CONSTRUCTION.—Nothing in this section shall be 
construed as preventing a State from— 
(1) replacing their current medical malpractice 
rules with rules that rely, as a defense, upon a 
health care provider’s compliance with a guideline 
issued under subsection (a); or 
(2) applying additional guidelines or safe-har-
bors that are in addition to, but not in lieu of, the 
guidelines issued under subsection (a). 
SEC. 509. STATE GRANTS TO CREATE ADMINISTRATIVE 
HEALTH CARE TRIBUNALS. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.) is amended by adding at the end 
the following: 
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‘‘SEC. 399T. STATE GRANTS TO CREATE ADMINISTRATIVE 
HEALTH CARE TRIBUNALS. 
‘‘(a) IN GENERAL.—The Secretary may award grants 
to States for the development, implementation, and eval-
uation of administrative health care tribunals that comply 
with this section, for the resolution of disputes concerning 
injuries allegedly caused by health care providers. 
‘‘(b) CONDITIONS FOR DEMONSTRATION GRANTS.— 
To be eligible to receive a grant under this section, a State 
shall submit to the Secretary an application at such time, 
in such manner, and containing such information as may 
be required by the Secretary. A grant shall be awarded 
under this section on such terms and conditions as the 
Secretary determines appropriate. 
‘‘(c) REPRESENTATION BY COUNSEL.—A State that 
receives a grant under this section may not preclude any 
party to a dispute before an administrative health care tri-
bunal operated under such grant from obtaining legal rep-
resentation during any review by the expert panel under 
subsection (d), the administrative health care tribunal 
under subsection (e), or a State court under subsection 
(f). 
‘‘(d) EXPERT PANEL REVIEW AND EARLY OFFER 
GUIDELINES.— 
‘‘(1) IN GENERAL.—Prior to the submission of 
any dispute concerning injuries allegedly caused by 
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health care providers to an administrative health 
care tribunal under this section, such allegations 
shall first be reviewed by an expert panel. 
‘‘(2) COMPOSITION.— 
‘‘(A) IN GENERAL.—The members of each 
expert panel under this subsection shall be ap-
pointed by the head of the State agency respon-
sible for health. Each expert panel shall be 
composed of no fewer than 3 members and not 
more than 7 members. At least one-half of such 
members shall be medical experts (either physi-
cians or health care professionals). 
‘‘(B) LICENSURE AND EXPERTISE.—Each 
physician or health care professional appointed 
to an expert panel under subparagraph (A) 
shall— 
‘‘(i) be appropriately credentialed or 
licensed in one or more States to deliver 
health care services; and 
‘‘(ii) typically treat the condition, 
make the diagnosis, or provide the type of 
treatment that is under review. 
‘‘(C) INDEPENDENCE.— 
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‘‘(i) IN GENERAL.—Subject to clause 
(ii), each individual appointed to an expert 
panel under this paragraph shall— 
‘‘(I) not have a material familial, 
financial, or professional relationship 
with a party involved in the dispute 
reviewed by the panel; and 
‘‘(II) not otherwise have a con-
flict of interest with such a party. 
‘‘(ii) EXCEPTION.—Nothing in clause 
(i) shall be construed to prohibit an indi-
vidual who has staff privileges at an insti-
tution where the treatment involved in the 
dispute was provided from serving as a 
member of an expert panel merely on the 
basis of such affiliation, if the affiliation is 
disclosed to the parties and neither party 
objects. 
‘‘(D) PRACTICING HEALTH CARE PROFES-
SIONAL IN SAME FIELD.— 
‘‘(i) IN GENERAL.—In a dispute be-
fore an expert panel that involves treat-
ment, or the provision of items or serv-
ices— 
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‘‘(I) by a physician, the medical 
experts on the expert panel shall be 
practicing physicians (allopathic or os-
teopathic) of the same or similar spe-
cialty as a physician who typically 
treats the condition, makes the diag-
nosis, or provides the type of treat-
ment under review; or 
‘‘(II) by a health care profes-
sional other than a physician, at least 
two medical experts on the expert 
panel shall be practicing physicians 
(allopathic or osteopathic) of the same 
or similar specialty as the health care 
professional who typically treats the 
condition, makes the diagnosis, or 
provides the type of treatment under 
review, and, if determined appropriate 
by the State agency, an additional 
medical expert shall be a practicing 
health care professional (other than 
such a physician) of such a same or 
similar specialty. 
‘‘(ii) PRACTICING DEFINED.—In this 
paragraph, the term ‘practicing’ means, 
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with respect to an individual who is a phy-
sician or other health care professional, 
that the individual provides health care 
services to individual patients on average 
at least 2 days a week. 
‘‘(E) PEDIATRIC EXPERTISE.—In the case 
of dispute relating to a child, at least 1 medical 
expert on the expert panel shall have expertise 
described in subparagraph (D)(i) in pediatrics. 
‘‘(3) DETERMINATION.—After a review under 
paragraph (1), an expert panel shall make a deter-
mination as to the liability of the parties involved 
and compensation. 
‘‘(4) ACCEPTANCE.—If the parties to a dispute 
before an expert panel under this subsection accept 
the determination of the expert panel concerning li-
ability and compensation, such compensation shall 
be paid to the claimant and the claimant shall agree 
to forgo any further action against the health care 
providers involved. 
‘‘(5) FAILURE TO ACCEPT.—If any party de-
cides not to accept the expert panel’s determination, 
the matter shall be referred to an administrative 
health care tribunal created pursuant to this section. 
‘‘(e) ADMINISTRATIVE HEALTH CARE TRIBUNALS.— 
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‘‘(1) IN GENERAL.—Upon the failure of any 
party to accept the determination of an expert panel 
under subsection (d), the parties shall have the right 
to request a hearing concerning the liability or com-
pensation involved by an administrative health care 
tribunal established by the State involved. 
‘‘(2) REQUIREMENTS.—In establishing an ad-
ministrative health care tribunal under this section, 
a State shall— 
‘‘(A) ensure that such tribunals are pre-
sided over by special judges with health care ex-
pertise; 
‘‘(B) provide authority to such judges to 
make binding rulings, rendered in written deci-
sions, on standards of care, causation, com-
pensation, and related issues with reliance on 
independent expert witnesses commissioned by 
the tribunal; 
‘‘(C) establish gross negligence as the legal 
standard for the tribunal; 
‘‘(D) allow the admission into evidence of 
the recommendation made by the expert panel 
under subsection (d); and 
‘‘(E) provide for an appeals process to 
allow for review of decisions by State courts. 
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‘‘(f) REVIEW BY STATE COURT AFTER EXHAUSTION 
OF ADMINISTRATIVE REMEDIES.— 
‘‘(1) RIGHT TO FILE.—If any party to a dispute 
before a health care tribunal under subsection (e) is 
not satisfied with the determinations of the tribunal, 
the party shall have the right to file their claim in 
a State court of competent jurisdiction. 
‘‘(2) FORFEIT OF AWARDS.—Any party filing 
an action in a State court in accordance with para-
graph (1) shall forfeit any compensation award 
made under subsection (e). 
‘‘(3) ADMISSIBILITY.—The determinations of 
the expert panel and the administrative health care 
tribunal pursuant to subsections (d) and (e) with re-
spect to a State court proceeding under paragraph 
(1) shall be admissible into evidence in any such 
State court proceeding. 
‘‘(g) DEFINITION.—In this section, the term ‘health 
care provider’ means any person or entity required by 
State or Federal laws or regulations to be licensed, reg-
istered, or certified to provide health care services, and 
being either so licensed, registered, or certified, or exempt-
ed from such requirement by other statute or regulation. 
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated for any fiscal year such 
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sums as may be necessary for purposes of making grants 
to States under this section.’’. 
SEC. 510. AUTHORIZATION OF PAYMENT OF FUTURE DAM-
AGES TO CLAIMANTS IN HEALTH CARE LAW-
SUITS. 
(a) IN GENERAL.—In any health care lawsuit, if an 
award of future damages, without reduction to present 
value, equaling or exceeding $50,000 is made against a 
party with sufficient insurance or other assets to fund a 
periodic payment of such a judgment, the court shall, at 
the request of any party, enter a judgment ordering that 
the future damages be paid by periodic payments, in ac-
cordance with the Uniform Periodic Payment of Judg-
ments Act promulgated by the National Conference of 
Commissioners on Uniform State Laws. 
(b) APPLICABILITY.—This section applies to all ac-
tions which have not been first set for trial or retrial be-
fore the effective date of this title. 
SEC. 511. DEFINITIONS. 
In this title: 
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution 
system’’ or ‘‘ADR’’ means a system that provides 
for the resolution of health care lawsuits in a man-
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ner other than through a civil action brought in a 
State or Federal court. 
(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who brings a health care lawsuit, includ-
ing a person who asserts or claims a right to legal 
or equitable contribution, indemnity, or subrogation, 
arising out of a health care liability claim or action, 
and any person on whose behalf such a claim is as-
serted or such an action is brought, whether de-
ceased, incompetent, or a minor. 
(3) COLLATERAL
SOURCE
BENEFITS.—The 
term ‘‘collateral source benefits’’ means any amount 
paid or reasonably likely to be paid in the future to 
or on behalf of the claimant, or any service, product, 
or other benefit provided or reasonably likely to be 
provided in the future to or on behalf of the claim-
ant, as a result of the injury or wrongful death, pur-
suant to— 
(A) any State or Federal health, sickness, 
income-disability, accident, or workers’ com-
pensation law; 
(B) any health, sickness, income-disability, 
or accident insurance that provides health bene-
fits or income-disability coverage; 
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(C) any contract or agreement of any 
group, organization, partnership, or corporation 
to provide, pay for, or reimburse the cost of 
medical, hospital, dental, or income-disability 
benefits; and 
(D) any other publicly or privately funded 
program. 
(4) 
COMPENSATORY
DAMAGES.—The 
term 
‘‘compensatory 
damages’’ 
means 
objectively 
verifiable monetary losses incurred as a result of the 
provision of, use of, or payment for (or failure to 
provide, use, or pay for) health care services or med-
ical products, such as past and future medical ex-
penses, loss of past and future earnings, cost of ob-
taining domestic services, loss of employment, and 
loss of business or employment opportunities, dam-
ages for physical and emotional pain, suffering, in-
convenience, physical impairment, mental anguish, 
disfigurement, loss of enjoyment of life, loss of soci-
ety and companionship, loss of consortium (other 
than loss of domestic service), hedonic damages, in-
jury to reputation, and all other nonpecuniary losses 
of any kind or nature. The term ‘‘compensatory 
damages’’ includes economic damages and non-
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economic damages, as such terms are defined in this 
section. 
(5) CONTINGENT FEE.—The term ‘‘contingent 
fee’’ includes all compensation to any person or per-
sons which is payable only if a recovery is effected 
on behalf of one or more claimants. 
(6) ECONOMIC DAMAGES.—The term ‘‘economic 
damages’’ means objectively verifiable monetary 
losses incurred as a result of the provision of, use 
of, or payment for (or failure to provide, use, or pay 
for) health care services or medical products, such as 
past and future medical expenses, loss of past and 
future earnings, cost of obtaining domestic services, 
loss of employment, and loss of business or employ-
ment opportunities. 
(7) FEDERAL TAX BENEFIT.—A claimant shall 
be treated as receiving a Federal tax benefit with re-
spect to payment for items or services if— 
(A) such payment is compensation by in-
surance— 
(i) which constitutes medical care, and 
(ii) with respect to the payment of 
premiums for which the claimant, or the 
employer of the claimant, was allowed an 
exclusion from gross income, a deduction, 
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or a credit for Federal income tax pur-
poses, 
(B) a deduction was allowed with respect 
to such payment for Federal income tax pur-
poses, or 
(C) such payment was from an Archer 
MSA (as defined in section 220(d) of the Inter-
nal Revenue Code of 1986), a health savings 
account (as defined in section 223(d) of such 
Code), a flexible spending arrangement (as de-
fined in section 106(c)(2) of such Code), or a 
health reimbursement arrangement which is 
treated as employer-provided coverage under an 
accident or health plan for purposes of section 
106 of such Code. 
(8) 
HEALTH
CARE
LAWSUIT.—The 
term 
‘‘health care lawsuit’’ means any health care liability 
claim concerning the provision of health care goods 
or services brought in a Federal court or in a State 
court or pursuant to an alternative dispute resolu-
tion system, if such claim concerns items or services 
with respect to which payment is made under title 
XVIII, title XIX, or title XXI of the Social Security 
Act or for which the claimant receives a Federal tax 
benefit, against a health care provider, a health care 
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organization, or the manufacturer, distributor, sup-
plier, marketer, promoter, or seller of a medical 
product, regardless of the theory of liability on which 
the claim is based, or the number of claimants, 
plaintiffs, defendants, or other parties, or the num-
ber of claims or causes of action, in which the claim-
ant alleges a health care liability claim. Such term 
does not include a claim or action which is based on 
criminal liability; which seeks civil fines or penalties 
paid to Federal government; or which is grounded in 
antitrust. 
(9) HEALTH
CARE
LIABILITY
ACTION.—The 
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal court or pursuant 
to an alternative dispute resolution system, against 
a health care provider, a health care organization, or 
the manufacturer, distributor, supplier, marketer, 
promoter, or seller of a medical product, regardless 
of the theory of liability on which the claim is based, 
or the number of plaintiffs, defendants, or other par-
ties, or the number of causes of action, in which the 
claimant alleges a health care liability claim. 
(10) HEALTH
CARE
LIABILITY
CLAIM.—The 
term ‘‘health care liability claim’’ means a demand 
by any person, whether or not pursuant to ADR, 
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