To amend title 38, United States Code, to modify and update provisions of law relating to nonprofit research and education corporations, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans Nonprofit Research and 
Education Corporations Enhancement Act of 2009''.

SEC. 2. GENERAL AUTHORITIES ON ESTABLISHMENT OF CORPORATIONS.

    (a) Authorization of Multi-medical Center Research Corporations.--
            (1) In general.--Section 7361 of title 38, United States 
        Code, is amended--
                    (A) by redesignating subsection (b) as subsection 
                (e); and
                    (B) by inserting after subsection (a) the following 
                new subsection (b):
    ``(b)(1) Subject to paragraph (2), a corporation established under 
this subchapter may facilitate the conduct of research, education, or 
both at more than one medical center. Such a corporation shall be known 
as a `multi-medical center research corporation'.
    ``(2) The board of directors of a multi-medical center research 
corporation under this subsection shall include the official at each 
Department medical center concerned who is, or who carries out the 
responsibilities of, the medical center director of such center as 
specified in section 7363(a)(1)(A)(i) of this title.
    ``(3) In facilitating the conduct of research, education, or both 
at more than one Department medical center under this subchapter, a 
multi-medical center research corporation may administer receipts and 
expenditures relating to such research, education, or both, as 
applicable, performed at the Department medical centers concerned.''.
            (2) Expansion of existing corporations to multi-medical 
        center research corporations.--Such section is further amended 
        by adding at the end the following new subsection:
    ``(f) A corporation established under this subchapter may act as a 
multi-medical center research corporation under this subchapter in 
accordance with subsection (b) if--
            ``(1) the board of directors of the corporation approves a 
        resolution permitting facilitation by the corporation of the 
        conduct of research, education, or both at the other Department 
        medical center or medical centers concerned; and
            ``(2) the Secretary approves the resolution of the 
        corporation under paragraph (1).''.
    (b) Restatement and Modification of Authorities on Applicability of 
State Law.--
            (1) In general.--Section 7361 of such title, as amended by 
        subsection (a) of this section, is further amended by inserting 
        after subsection (b) the following new subsection (c):
    ``(c) Any corporation established under this subchapter shall be 
established in accordance with the nonprofit corporation laws of the 
State in which the applicable Department medical center is located and 
shall, to the extent not inconsistent with any Federal law, be subject 
to the laws of such State. In the case of any multi-medical center 
research corporation that facilitates the conduct of research, 
education, or both at Department medical centers located in different 
States, the corporation shall be established in accordance with the 
nonprofit corporation laws of the State in which one of such Department 
medical centers is located.''.
            (2) Conforming amendment.--Section 7365 of such title is 
        repealed.
    (c) Clarification of Status of Corporations.--Section 7361 of such 
title, as amended by this section, is further amended--
            (1) in subsection (a), by striking the second sentence; and
            (2) by inserting after subsection (c) the following new 
        subsection (d):
    ``(d)(1) Except as otherwise provided in this subchapter or under 
regulations prescribed by the Secretary, any corporation established 
under this subchapter, and its officers, directors, and employees, 
shall be required to comply only with those Federal laws, regulations, 
and executive orders and directives that apply generally to private 
nonprofit corporations.
    ``(2) A corporation under this subchapter is not--
            ``(A) owned or controlled by the United States; or
            ``(B) an agency or instrumentality of the United States.''.
    (d) Reinstatement of Requirement for 501(c)(3) Status of 
Corporations.--Subsection (e) of section 7361 of such title, as 
redesignated by subsection (a)(1) of this section, is further amended 
by inserting ``section 501(c)(3) of'' after ``exempt from taxation 
under''.

SEC. 3. CLARIFICATION OF PURPOSES OF CORPORATIONS.

    (a) Clarification of Purposes.--Subsection (a) of section 7362 of 
title 38, United States Code, is amended in the first sentence--
            (1) by striking ``Any corporation'' and all that follows 
        through ``facilitate'' and inserting ``A corporation 
        established under this subchapter shall be established to 
        provide a flexible funding mechanism for the conduct of 
        approved research and education at one or more Department 
        medical centers and to facilitate functions related to the 
        conduct of''; and
            (2) by inserting before the period at the end the 
        following: ``or centers''.
    (b) Modification of Defined Term Relating to Education and 
Training.--Subsection (b) of such section is amended in the matter 
preceding paragraph (1) by striking ``the term `education and 
training''' and inserting ``the term `education' includes education and 
training and''.
    (c) Repeal of Role of Corporations With Respect to Fellowships.--
Paragraph (1) of subsection (b) of such section is amended by striking 
the flush matter following subparagraph (C).
    (d) Availability of Education for Families of Veteran Patients.--
Paragraph (2) of subsection (b) of such section is amended by striking 
``to patients and to the families'' and inserting ``and includes 
education and training for patients and families''.

SEC. 4. MODIFICATION OF REQUIREMENTS FOR BOARDS OF DIRECTORS OF 
              CORPORATIONS.

    (a) Requirements for Department Board Members.--Paragraph (1) of 
section 7363(a) of title 38, United States Code, is amended to read as 
follows:
            ``(1) with respect to the Department medical center--
                    ``(A)(i) the director (or directors of each 
                Department medical center, in the case of a multi-
                medical center research corporation);
                    ``(ii) the chief of staff; and
                    ``(iii) as appropriate for the activities of such 
                corporation, the associate chief of staff for research 
                and the associate chief of staff for education; or
                    ``(B) in the case of a Department medical center at 
                which one or more of the positions referred to in 
                subparagraph (A) do not exist, the official or 
                officials who are responsible for carrying out the 
                responsibilities of such position or positions at the 
                Department medical center; and''.
    (b) Requirements for Non-department Board Members.--Paragraph (2) 
of such section is amended--
            (1) by inserting ``not less than two'' before ``members''; 
        and
            (2) by striking ``and who'' and all that follows through 
        the period at the end and inserting ``and who have backgrounds, 
        or business, legal, financial, medical, or scientific 
        expertise, of benefit to the operations of the corporation.''.
    (c) Clarification That Department Employees May Serve as Executive 
Directors.--Subsection (b) of section 7363 of such title is amended in 
the first sentence, by inserting after ``executive director who'' the 
following: ``may be an employee of the Department and who''.
    (d) Conflicts of Interest.--Subsection (c) of section 7363 of such 
title is amended by striking ``, employed by, or have any other 
financial relationship with'' and inserting ``or employed by''.

SEC. 5. CLARIFICATION OF POWERS OF CORPORATIONS.

    (a) In General.--Section 7364 of title 38, United States Code, is 
amended to read as follows:
``Sec. 7364. General powers
    ``(a) In General.--(1) A corporation established under this 
subchapter may, solely to carry out the purposes of this subchapter--
            ``(A) accept, administer, retain, and spend funds derived 
        from gifts, contributions, grants, fees, reimbursements, and 
        bequests from individuals and public and private entities;
            ``(B) enter into contracts and agreements with individuals 
        and public and private entities;
            ``(C) subject to paragraph (2), set fees for education and 
        training facilitated under section 7362 of this title, and 
        receive, retain, administer, and spend funds in furtherance of 
        such education and training;
            ``(D) reimburse amounts to the applicable appropriation 
        account of the Department for the Office of General Counsel for 
        any expenses of that Office in providing legal services 
        attributable to research and education agreements under this 
        subchapter; and
            ``(E) employ such employees as the corporation considers 
        necessary for such purposes and fix the compensation of such 
        employees.
    ``(2) Fees charged pursuant to paragraph (1)(C) for education and 
training described in that paragraph to individuals who are officers or 
employees of the Department may not be paid for by any funds 
appropriated to the Department.
    ``(3) Amounts reimbursed to the Office of General Counsel under 
paragraph (1)(D) shall be available for use by the Office of the 
General Counsel only for staff and training, and related travel, for 
the provision of legal services described in that paragraph and shall 
remain available for such use without fiscal year limitation.
    ``(b) Transfer and Administration of Funds.--(1) Except as provided 
in paragraph (2), any funds received by the Secretary for the conduct 
of research or education at a Department medical center or centers, 
other than funds appropriated to the Department, may be transferred to 
and administered by a corporation established under this subchapter for 
such purposes.
    ``(2) A Department medical center may reimburse the corporation for 
all or a portion of the pay, benefits, or both of an employee of the 
corporation who is assigned to the Department medical center if the 
assignment is carried out pursuant to subchapter VI of chapter 33 of 
title 5.
    ``(3) A Department medical center may retain and use funds provided 
to it by a corporation established under this subchapter. Such funds 
shall be credited to the applicable appropriation account of the 
Department and shall be available, without fiscal year limitation, for 
the purposes of that account.
    ``(c) Research Projects.--Except for reasonable and usual 
preliminary costs for project planning before its approval, a 
corporation established under this subchapter may not spend funds for a 
research project unless the project is approved in accordance with 
procedures prescribed by the Under Secretary for Health for research 
carried out with Department funds. Such procedures shall include a 
scientific review process.
    ``(d) Education Activities.--Except for reasonable and usual 
preliminary costs for activity planning before its approval, a 
corporation established under this subchapter may not spend funds for 
an education activity unless the activity is approved in accordance 
with procedures prescribed by the Under Secretary for Health.
    ``(e) Policies and Procedures.--The Under Secretary for Health may 
prescribe policies and procedures to guide the spending of funds by 
corporations established under this subchapter that are consistent with 
the purpose of such corporations as flexible funding mechanisms and 
with Federal and State laws and regulations, and executive orders, 
circulars, and directives that apply generally to the receipt and 
expenditure of funds by nonprofit organizations exempt from taxation 
under section 501(c)(3) of the Internal Revenue Code of 1986.''.
    (b) Conforming Amendment.--Section 7362(a) of such title, as 
amended by section 3(a)(1) of this Act, is further amended by striking 
the last sentence.

SEC. 6. REDESIGNATION OF SECTION 7364A OF TITLE 38, UNITED STATES CODE.

    (a) Redesignation.--Section 7364A of title 38, United States Code, 
is redesignated as section 7365 of such title.
    (b) Clerical Amendments.--The table of sections at the beginning of 
chapter 73 of such title is amended--
            (1) by striking the item relating to section 7364A; and
            (2) by striking the item relating to section 7365 and 
        inserting the following new item:

``7365. Coverage of employees under certain Federal tort claims 
                            laws.''.

SEC. 7. IMPROVED ACCOUNTABILITY AND OVERSIGHT OF CORPORATIONS.

    (a) Additional Information in Annual Reports.--Subsection (b) of 
section 7366 of title 38, United States Code, is amended to read as 
follows:
    ``(b)(1) Each corporation shall submit to the Secretary each year a 
report providing a detailed statement of the operations, activities, 
and accomplishments of the corporation during that year.
    ``(2)(A) A corporation with revenues in excess of $500,000 for any 
year shall obtain an audit of the corporation for that year.
    ``(B) A corporation with annual revenues between $100,000 and 
$500,000 shall obtain an audit of the corporation at least once every 
three years.
    ``(C) Any audit under this paragraph shall be performed by an 
independent auditor.
    ``(3) The corporation shall include in each report to the Secretary 
under paragraph (1) the following:
            ``(A) The most recent audit of the corporation under 
        paragraph (2).
            ``(B) The most recent Internal Revenue Service Form 990 
        `Return of Organization Exempt from Income Tax' or equivalent 
        and the applicable schedules under such form.''.
    (b) Conflict of Interest Policies.--Subsection (c) of such section 
is amended to read as follows:
    ``(c) Each director, officer, and employee of a corporation 
established under this subchapter shall be subject to a conflict of 
interest policy adopted by that corporation.''.
    (c) Establishment of Appropriate Payee Reporting Threshold.--
Subsection (d)(3)(C) of such sec-


              

tion is amended by striking ``$35,000'' and inserting ``$50,000''.

            Passed the House of Representatives July 27, 2009.

            Attest:

                                            LORRAINE C. MILLER,

                                                                 Clerk.

Summary: Veterans Nonprofit Research and Education Corporations Enhancement Act of 2009 - (Sec. 2) Amends federal provisions concerning the establishment at Department of Veterans Affairs (VA) medical facilities of nonprofit research and education corporations (NRECs) to allow an NREC to facilitate the conduct of research or education, or both, at more than one VA medical center. States that such an NREC shall be known as a multi-medical center research corporation (MCRC).

Allows an NREC to act as a MCRC if: (1) the NREC board of directors approve a resolution permitting that NREC to act as a MCRC; and (2) the Secretary of Veterans Affairs approves the resolution.

Requires each NREC and MCRC (corporation) to be established in accordance with the nonprofit corporation laws of the state in which the VA medical center which it supports is located. States that neither such corporation shall be considered to be owned by, or an agent or instrumentality of, the United States.

(Sec. 3) Restates the purposes of the corporations, including with respect to their role in: (1) providing a flexible funding mechanism; and (2) residencies or similar programs.

(Sec. 4) Modifies the composition of corporation boards of directors. Revises requirements concerning non-VA members of boards of directors of NRECs and MCRCs to: (1) state a minimum number who are not officers or employees of the federal government; and (2) expand the required areas of experience or expertise.

Allows a corporation executive director to be an employee of the VA.

Removes financial relationship restrictions from conflict of interest standards applicable to directors.

(Sec. 5) Increases authorized corporate powers of the corporations to include entering into contracts and setting fees for education and training facilitated through a corporation.

(Sec. 7) Revises annual report procedures to modify the thresholds for the obtaining of audits and require submission of an Internal Revenue Service return form applicable to organizations exempt from income tax.

Revises conflict of interest policies applicable to directors, officers, and employees of a corporation to apply the policy adopted by the corporation (under current law, they are subject to federal laws and regulations applicable to federal employees).

Revises requirements for a report to Congress to increase the threshold for providing information identifying payees of the corporation.