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S. 1324 (111th): Health Care Freedom Act of 2009


The text of the bill below is as of Jun 23, 2009 (Introduced).


II

111th CONGRESS

1st Session

S. 1324

IN THE SENATE OF THE UNITED STATES

June 23, 2009

introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To ensure that every American has a health insurance plan that they can afford, own, and keep.

1.

Short title

This Act may be cited as the Health Care Freedom Act of 2009.

I

Access to coverage for every American

A

Tax code equity

101.

Refundable credit for health insurance coverage

(a)

In general

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36A the following new section:

36B.

Qualified health insurance credit

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year so much of the qualified health insurance costs of the taxpayer as does not exceed the sum of the monthly limitations determined under subsection (b).

(b)

Monthly limitation

(1)

In general

The monthly limitation for each month during the taxable year is 1/12th of—

(A)

$2,000, in the case of an individual purchasing individual coverage for an eligible individual, and

(B)

$5,000, in the case of an individual purchasing family coverage for 2 or more eligible individuals.

(2)

Limitation

In no case shall the annual sum of the monthly limitations with respect to any taxpayer exceed $5,000.

(3)

No credit for ineligible months

With respect to any individual, the monthly limitation shall be zero for any month for which such individual is not an eligible individual.

(c)

Eligible individual

For purposes of this section—

(1)

In general

The term eligible individual means, with respect to any month, an individual who—

(A)

is the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent,

(B)

is covered under qualified health insurance as of the 1st day of such month, and

(C)

is not covered under employer-provided health insurance as of the 1st day of such month.

(2)

Coverage under Medicare, Medicaid, SCHIP, military coverage

The term eligible individual shall not include any individual for a month if, as of the first day of such month, such individual is—

(A)

entitled to benefits under part A of title XVIII of the Social Security Act or enrolled under part B of such title, and the individual is not a participant or beneficiary in a group health plan or large group health plan that is a primary plan (as defined in section 1862(b)(2)(A) of such Act),

(B)

in the case of a State that has not made the election described in section 1939(a)(1)(B) of the Social Security Act, enrolled in the program under title XIX of such Act (other than under section 1928 of such Act), or

(C)

entitled to benefits under chapter 55 of title 10, United States Code.

(3)

Identification requirements

The term eligible individual shall not include any individual for any month unless the policy number associated with the qualified health insurance and the TIN of each eligible individual covered under such health insurance for such month are included on the return of tax for the taxable year in which such month occurs.

(4)

Prisoners

The term eligible individual shall not include any individual for a month if, as of the first day of such month, such individual is imprisoned under Federal, State, or local authority.

(5)

Aliens

The term eligible individual shall not include any alien individual for a month if, as of the first day of such month, such individual is not a lawful permanent resident of the United States.

(d)

Qualified health insurance costs

For purposes of this section, the term qualified health insurance costs means the sum of the amounts paid during the taxable year to obtain qualified health insurance for 1 or more eligible individuals.

(e)

Qualified health insurance

For purposes of this section, the term qualified health insurance includes a high deductible health plan within the meaning of section 223(c)(2), but shall not include any insurance if a substantial portion of its benefits are excepted benefits (as defined in section 9832(c)).

(f)

Other definitions

For purposes of this section—

(1)

Dependent

The term dependent has the meaning given such term by section 152 (determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof). An individual who is a child to whom section 152(e) applies shall be treated as a dependent of the custodial parent for a coverage month unless the custodial and noncustodial parent agree otherwise.

(2)

Child

The term child means a qualifying child (as defined in section 152(c)).

(g)

Special rules

(1)

Coordination with medical deduction, etc

Any amount paid by a taxpayer for insurance to which subsection (a) applies shall not be taken into account in computing the amount allowable to the taxpayer as a credit under section 35 or as a deduction under section 213(a).

(2)

Medical and health savings accounts

The amounts taken into account as qualified health insurance costs for any taxable year shall be reduced by the aggregate amounts, if any, distributed from Archer MSAs (as defined in section 220(d)) and health savings accounts (as defined in section 223(d)) which are excludable from gross income for such taxable year by reason of being used to pay premiums for coverage of an individual under qualified health insurance for any month during such taxable year.

(3)

Denial of credit to dependents

No credit shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins.

(4)

Married couples must file joint return

(A)

In general

If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and his spouse file a joint return for the taxable year.

(B)

Marital status; certain married individuals living apart

Rules similar to the rules of paragraphs (3) and (4) of section 21(e) shall apply for purposes of this paragraph.

(5)

Verification of coverage, etc

No credit shall be allowed under this section with respect to any individual unless such individual’s coverage (and such related information as the Secretary may require) is verified in such manner as the Secretary may prescribe.

(6)

Insurance which covers other individuals; treatment of payments

Rules similar to the rules of paragraphs (7) and (8) of section 35(g) shall apply for purposes of this section.

(7)

Participants in health care sharing ministries

(A)

In general

In the case of a taxpayer who is a participant or contributor to a health care sharing ministry during a month in the taxable year, and who is not covered under qualified health insurance during such month—

(i)

such taxpayer (and such taxpayer's spouse and dependents, if such individuals are covered by such health care sharing ministry) shall be considered to be eligible individuals for purposes of subsection (c)(1) for such month,

(ii)

the amount of such taxpayer's contribution to such health care sharing ministry in such month shall be considered to be qualified health insurance costs in such month,

(iii)

subsection (c)(3) shall apply to such taxpayer (and such taxpayer's spouse and dependents, if such individuals are covered by such ministry) without regard to the policy number requirement, and

(iv)

the Secretary may require such information under paragraph (5) of this subsection as may be necessary to verify such taxpayer's contribution to such ministry.

(B)

Health care sharing ministry

For purposes of this paragraph, the term health care sharing ministry means any health care cost sharing arrangement among persons of similar beliefs that is not in the trade or business of providing health insurance.

(C)

Credit denied in the case of charitable contributions

This paragraph shall not apply in the case of any contribution for which a deduction is allowable under section 170.

(h)

Election To forgo other Federal health benefit programs

(1)

In general

An individual who is a participant in, or is entitled to benefits under, any program described in subsection (c)(2) in any month may elect to forgo such individual's participation in or entitlement to benefits under such program in such month. If such election is made with respect to any month, such month shall not fail to be deemed a coverage month with respect to such individual solely because such individual would, but for such election, be a participant in or be entitled to benefits under a program described in subsection (c)(2).

(2)

Manner and reporting of election

The election described in paragraph (1) shall be made in a form and manner specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury, and a declaration of such election shall be attached to the taxpayer's return of tax for the taxable year, in a manner specified by the Secretary of the Treasury.

(3)

Prospective and year-long election

Each election described in paragraph (1)—

(A)

shall not be made with respect to any month beginning before the date of such election, and

(B)

shall be effective for such period (not less than 1 calendar year) as shall be specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury.

(i)

Credit in excess of allowable credit deposited in tax-favored health care accounts

(1)

In general

The excess, if any, of—

(A)

the monthly limitation applicable to the individual under subsection (b), multiplied by the number of coverage months of the individual for the taxable year, over

(B)

the credit allowed in such taxable year with respect to such individual under subsection (a),

shall be paid by the Secretary into the designated account of the individual.
(2)

Designated accounts

(A)

Designated account

For purposes of this subsection, the term designated account means any health savings account under section 223 or any Archer MSA under section 220 established and maintained by the provider of the individual's qualified health insurance—

(i)

which is designated by the individual (in such form and manner as the Secretary may provide) on the return of tax for the taxable year, and

(ii)

which, under the terms of the account, accepts the payment described in paragraph (1) on behalf of the individual.

(B)

Treatment of payment

Any payment under this subsection to a designated account—

(i)

shall not be taken into account with respect to any dollar limitation which applies with respect to contributions to such account (or to tax benefits with respect to such contributions),

(ii)

shall be included in gross income of the taxpayer for the taxable year in which the payment is made (except as provided in clause (iii)), and

(iii)

shall be taken into account in determining any deduction or exclusion from gross income in the same manner as if such contribution were made by the taxpayer.

(j)

Coordination with advance payments

(1)

Reduction in credit for advance payments

With respect to any taxable year, the amount which would (but for this subsection, and without regard to subsection (i)) be allowed as a credit to the taxpayer under subsection (a) shall be reduced (but not below zero) by the aggregate amount paid on behalf of such taxpayer under section 7527A for months beginning in such taxable year.

(2)

Recapture of excess advance payments

If the aggregate amount paid on behalf of the taxpayer under section 7527A for months beginning in the taxable year exceeds the sum of the monthly limitations under subsection (b) for such taxable year, then the tax imposed by this chapter for such taxable year shall be increased by the sum of—

(A)

such excess, plus

(B)

interest on such excess determined at the underpayment rate established under section 6621 for the period from the date of the payment under section 7527A to the date such excess is paid.

For purposes of subparagraph (B), an equal part of the aggregate amount of the excess shall be deemed to be attributable to payments made under section 7527A on the first day of each month beginning in such taxable year, unless the taxpayer establishes the date on which each such payment giving rise to such excess occurred, in which case subparagraph (B) shall be applied with respect to each date so established.
(k)

Regulations

The Secretary shall prescribe regulations for the administration of this section to ensure that no portion of the amounts taken into account as qualified health insurance costs are amounts for which another credit, deduction, or exclusion is allowed under this subtitle, including through a health flexible spending arrangement.

.

(b)

Advance payment of credit

Chapter 77 of the Internal Revenue Code of 1986 is amended by inserting after section 7527 the following new section:

7527A.

Advance payment of qualified health insurance credit

(a)

In general

The Secretary shall establish a program for making payments on behalf of taxpayers who are eligible individuals within the meaning of section 36B(c) to providers of qualified health insurance (as defined in section 36B(e)) or to health care sharing ministries (as defined in section 36B(g)(7)(B)) for such individuals.

(b)

Limitation

The Secretary may make payments under subsection (a) only to the extent that the Secretary determines that the amount of such payments made on behalf of any taxpayer for any month does not exceed the monthly limitation in effect under section 36B(b) for the taxpayer for such month.

.

(c)

Information reporting

(1)

In general

Subpart B of part III of subchapter A of chapter 61 of the Internal Revenue Code of 1986 is amended by inserting after section 6050W the following new section:

6050X.

Returns relating to qualified health insurance credit

(a)

Requirement of reporting

Every person who is entitled to receive payments for any month of any calendar year under section 7527A (relating to advance payment of qualified health insurance credit) with respect to any individual shall, at such time as the Secretary may prescribe, make the return described in subsection (b) with respect to each such individual.

(b)

Form and manner of returns

A return is described in this subsection if such return—

(1)

is in such form as the Secretary may prescribe, and

(2)

contains, with respect to each individual referred to in subsection (a)—

(A)

the name, address, and TIN of each such individual,

(B)

the months for which amounts payments under section 7527A were received,

(C)

the amount of each such payment,

(D)

the type of insurance coverage provided by such person with respect to such individual and the policy number associated with such coverage, if applicable,

(E)

the name, address, and TIN of the spouse and each dependent covered under such coverage, and

(F)

such other information as the Secretary may prescribe.

(c)

Statements To be furnished to individuals with respect to whom information is required

Every person required to make a return under subsection (a) shall furnish to each individual whose name is required to be set forth in such return a written statement showing—

(1)

the name and address of the person required to make such return and the phone number of the information contact for such person, and

(2)

the information required to be shown on the return with respect to such individual.

The written statement required under the preceding sentence shall be furnished on or before January 31 of the year following the calendar year for which the return under subsection (a) is required to be made.
(d)

Returns which would be required To be made by 2 or more persons

Except to the extent provided in regulations prescribed by the Secretary, in the case of any amount received by any person on behalf of another person, only the person first receiving such amount shall be required to make the return under subsection (a).

.

(2)

Assessable penalties

(A)

Subparagraph (B) of section 6724(d)(1) of such Code is amended by striking or at the end of clause (xxii), by striking and at the end of clause (xxiii) and inserting or, and by inserting after clause (xxiii) the following new clause:

(xxiv)

section 6050X (relating to returns relating to qualified health insurance credit), and

.

(B)

Paragraph (2) of section 6724(d) of such Code is amended by striking or at the end of subparagraph (EE), by striking the period at the end of subparagraph (FF) and inserting , or, and by inserting after subparagraph (FF) the following new subparagraph:

(GG)

section 6050X (relating to returns relating to qualified health insurance credit).

.

(d)

Conforming amendments

(1)

Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 36B, after 36A,.

(2)

The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36A the following new item:

Sec. 36B. Qualified health insurance credit.

.

(3)

The table of sections for chapter 77 of such Code is amended by inserting after the item relating to section 7527 the following new item:

Sec. 7527A. Advance payment of qualified health insurance credit.

.

(4)

The table of sections for subpart B of part III of subchapter A of chapter 61 of such Code is amended by adding at the end the following new item:

Sec. 6050X. Returns relating to qualified health insurance credit.

.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2009.

B

Improvements to health savings accounts

111.

Purchase of health insurance from HSA and Archer MSA accounts

(a)

Health savings accounts

Paragraph (2) of section 223(d) of the Internal Revenue Code of 1986 is amended to read as follows:

(2)

Qualified medical expenses

(A)

In general

The term qualified medical expenses means, with respect to an account beneficiary, amounts paid by such beneficiary for medical care (as defined in section 213(d)) for any individual covered by a high deductible health plan of the account beneficiary, but only to the extent such amounts are not compensated for by insurance or otherwise.

(B)

Health insurance may not be purchased from account

Except as provided in subparagraph (C), subparagraph (A) shall not apply to any payment for insurance.

(C)

Exceptions

Subparagraph (B) shall not apply to any expense for coverage under—

(i)

a health plan during any period of continuation coverage required under any Federal law,

(ii)

a qualified long-term care insurance contract (as defined in section 7702B(b)),

(iii)

a health plan during any period in which the individual is receiving unemployment compensation under any Federal or State law,

(iv)

a high deductible health plan, or

(v)

any health insurance under title XVIII of the Social Security Act, other than a Medicare supplemental policy (as defined in section 1882 of such Act).

.

(b)

Archer MSAs

Subparagraph (B) of section 220(d)(2) of the Internal Revenue Code of 1986 is amended to read as follows:

(B)

Health insurance may not be purchased from account

(i)

In general

Subparagraph (A) shall not apply to any payment for insurance.

(ii)

Exceptions

Clause (i) shall not apply to any expense for coverage under—

(I)

a health plan during any period of continuation coverage required under any Federal law,

(II)

a qualified long-term care insurance contract (as defined in section 7702B(b)),

(III)

a health plan during any period in which the individual is receiving unemployment compensation under any Federal or State law,

(IV)

a high deductible health plan, or

(V)

any health insurance under title XVIII of the Social Security Act, other than a Medicare supplemental policy (as defined in section 1882 of such Act).

.

(c)

Effective date

The amendments made by this section shall apply with respect to insurance purchased after the date of the enactment of this Act in taxable years beginning after such date.

C

Medical care access protection

121.

Short title

This subtitle may be cited as the Medical Care Access Protection Act of 2009 or the MCAP Act.

122.

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 injured 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 commerce and the health care liability litigation systems existing throughout the United States are activities that affect interstate commerce by contributing to the high costs of health care and premiums for health care liability insurance purchased by health care system providers.

(3)

Effect on Federal spending

Congress 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 operated 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 providers who provide items or services for which the Federal Government makes payments.

(b)

Purpose

It is the purpose of this subtitle to implement reasonable, comprehensive, and effective health care liability reforms designed to—

(1)

improve the availability of health care services in cases in which health care liability actions have been shown to be a factor in the decreased availability of services;

(2)

reduce the incidence of defensive medicine and lower the cost of health care liability insurance, 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 compensation, including reasonable noneconomic damages;

(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 unintended injury and improve patient care.

123.

Definitions

In this subtitle:

(1)

Alternative dispute resolution system; ADR

The term alternative dispute resolution system or ADR means a system that provides for the resolution of health care lawsuits in a manner 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, including 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 asserted or such an action is brought, whether deceased, 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 claimant, as a result of the injury or wrongful death, pursuant to—

(A)

any State or Federal health, sickness, income-disability, accident, or workers’ compensation law;

(B)

any health, sickness, income-disability, or accident insurance that provides health benefits or income-disability coverage;

(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 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 employment opportunities, damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature. Such term includes economic damages and noneconomic damages, as such terms are defined in this section.

(5)

Contingent fee

The term contingent fee includes all compensation to any person or persons 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 employment opportunities.

(7)

Health care goods or services

The term health care goods or services means any goods or services provided by a health care institution, provider, or by any individual working under the supervision of a health care provider, that relates to the diagnosis, prevention, care, or treatment of any human disease or impairment, or the assessment of the health of human beings.

(8)

Health care institution

The term health care institution means any entity licensed under Federal or State law to provide health care services (including but not limited to ambulatory surgical centers, assisted living facilities, emergency medical services providers, hospices, hospitals and hospital systems, nursing homes, or other entities licensed to provide such services).

(9)

Health care lawsuit

The term health care lawsuit means any health care liability claim concerning the provision of health care goods or services affecting interstate commerce, or any health care liability action concerning the provision of (or the failure to provide) health care goods or services affecting interstate commerce, brought in a State or Federal court or pursuant to an alternative dispute resolution system, against a health care provider or a health care institution regardless of the theory of liability on which the claim is based, or the number of claimants, plaintiffs, defendants, or other parties, or the number of claims or causes of action, in which the claimant alleges a health care liability claim.

(10)

Health care liability action

The term health care liability action means a civil action brought in a State or Federal Court or pursuant to an alternative dispute resolution system, against a health care provider or a health care institution regardless of the theory of liability on which the claim is based, or the number of plaintiffs, defendants, or other parties, or the number of causes of action, in which the claimant alleges a health care liability claim.

(11)

Health care liability claim

The term health care liability claim means a demand by any person, whether or not pursuant to ADR, against a health care provider or health care institution, including third-party claims, cross-claims, counter-claims, or contribution claims, which are based upon the provision of, use of, or payment for (or the failure to provide, use, or pay for) health care services, regardless of the theory of liability on which the claim is based, or the number of plaintiffs, defendants, or other parties, or the number of causes of action.

(12)

Health care provider

(A)

In general

The term health care provider means any person (including but not limited to a physician (as defined by section 1861(r) of the Social Security Act (42 U.S.C. 1395x(r)), registered nurse, dentist, podiatrist, pharmacist, chiropractor, or optometrist) required by State or Federal law to be licensed, registered, or certified to provide health care services, and being either so licensed, registered, or certified, or exempted from such requirement by other statute or regulation.

(B)

Treatment of certain professional associations

For purposes of this subtitle, a professional association that is organized under State law by an individual physician or group of physicians, a partnership or limited liability partnership formed by a group of physicians, a nonprofit health corporation certified under State law, or a company formed by a group of physicians under State law shall be treated as a health care provider under subparagraph (A).

(13)

Malicious intent to injure

The term malicious intent to injure means intentionally causing or attempting to cause physical injury other than providing health care goods or services.

(14)

Noneconomic damages

The term noneconomic damages means damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature.

(15)

Punitive damages

The term punitive damages means damages awarded, for the purpose of punishment or deterrence, and not solely for compensatory purposes, against a health care provider or health care institution. Punitive damages are neither economic nor noneconomic damages.

(16)

Recovery

The term recovery means the net sum recovered after deducting any disbursements or costs incurred in connection with prosecution or settlement of the claim, including all costs paid or advanced by any person. Costs of health care incurred by the plaintiff and the attorneys’ office overhead costs or charges for legal services are not deductible disbursements or costs for such purpose.

(17)

State

The term State means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States, or any political subdivision thereof.

124.

Encouraging speedy resolution of claims

(a)

In general

Except as otherwise provided for in this section, the time for the commencement of a health care lawsuit 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.

(b)

General exception

The time for the commencement of a health care lawsuit shall not exceed 3 years after the date of manifestation of injury unless the tolling of time was delayed as a result of—

(1)

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.

(c)

Minors

An action by a minor shall be commenced within 3 years from the date of the alleged manifestation of injury except that if such minor is under the full age of 6 years, such action shall be commenced within 3 years of the manifestation of injury, or prior to the eighth birthday of the minor, 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 institution have committed fraud or collusion in the failure to bring an action on behalf of the injured minor.

(d)

Rule 11 sanctions

Whenever a Federal or State court determines (whether by motion of the parties or whether on the motion of the court) that there has been a violation of rule 11 of the Federal Rules of Civil Procedure (or a similar violation of applicable State court rules) in a health care liability action to which this subtitle applies, the court shall impose upon the attorneys, law firms, or pro se litigants that have violated rule 11 or are responsible for the violation, an appropriate sanction, which shall include an order to pay the other party or parties for the reasonable expenses incurred as a direct result of the filing of the pleading, motion, or other paper that is the subject of the violation, including a reasonable attorneys' fee. Such sanction shall be sufficient to deter repetition of such conduct or comparable conduct by others similarly situated, and to compensate the party or parties injured by such conduct.

125.

Compensating patient injury

(a)

Unlimited amount of damages for actual economic losses in health care lawsuits

In any health care lawsuit, nothing in this subtitle shall limit the recovery by a claimant of the full amount of the available economic damages, notwithstanding the limitation contained in subsection (b).

(b)

Additional noneconomic damages

(1)

Health care providers

In any health care lawsuit where final judgment is rendered against a health care provider, the amount of noneconomic damages recovered from the provider, if otherwise available under applicable Federal or State law, may be as much as $250,000, regardless of the number of parties other than a health care institution against whom the action is brought or the number of separate claims or actions brought with respect to the same occurrence.

(2)

Health care institutions

(A)

Single institution

In any health care lawsuit where final judgment is rendered against a single health care institution, the amount of noneconomic damages recovered from the institution, if otherwise available under applicable Federal or State law, may be as much as $250,000, regardless of the number of parties against whom the action is brought or the number of separate claims or actions brought with respect to the same occurrence.

(B)

Multiple institutions

In any health care lawsuit where final judgment is rendered against more than one health care institution, the amount of noneconomic damages recovered from each institution, if otherwise available under applicable Federal or State law, may be as much as $250,000, regardless of the number of parties against whom the action is brought or the number of separate claims or actions brought with respect to the same occurrence, except that the total amount recovered from all such institutions in such lawsuit shall not exceed $500,000.

(c)

No discount of award for noneconomic damages

In any health care lawsuit—

(1)

an award for future noneconomic damages shall not be discounted to present value;

(2)

the jury shall not be informed about the maximum award for noneconomic damages under subsection (b);

(3)

an award for noneconomic damages in excess of the limitations provided for in subsection (b) shall be reduced either before the entry of judgment, or by amendment of the judgment after entry of judgment, and such reduction shall be made before accounting for any other reduction in damages required by law; and

(4)

if separate awards are rendered for past and future noneconomic damages and the combined awards exceed the limitations described in subsection (b), the future noneconomic damages shall be reduced 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. A separate judgment shall be rendered against each such party for the amount allocated to such party. For purposes of this section, the trier of fact shall determine the proportion of responsibility of each party for the claimant’s harm.

126.

Maximizing patient recovery

(a)

Court supervision of share of damages actually paid to claimants

(1)

In general

In any health care lawsuit, the court shall supervise the arrangements for payment of damages to protect against conflicts of interest that may have the effect of reducing the amount of damages awarded that are actually paid to claimants.

(2)

Contingency fees

(A)

In general

In any health care lawsuit in which the attorney for a party claims a financial stake in the outcome by virtue 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.

(B)

Limitation

The total of all contingent fees for representing all claimants in a health care lawsuit shall not exceed the following limits:

(i)

40 percent of the first $50,000 recovered by the claimant(s).

(ii)

331/3 percent of the next $50,000 recovered by the claimant(s).

(iii)

25 percent of the next $500,000 recovered by the claimant(s).

(iv)

15 percent of any amount by which the recovery by the claimant(s) is in excess of $600,000.

(b)

Applicability

(1)

In general

The limitations in subsection (a) shall apply whether the recovery is by judgment, settlement, mediation, arbitration, or any other form of alternative dispute resolution.

(2)

Minors

In a health care lawsuit involving 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.

(c)

Expert witnesses

(1)

Requirement

No individual shall be qualified to testify as an expert witness concerning issues of negligence in any health care lawsuit against a defendant unless such individual—

(A)

except as required under paragraph (2), is a health care professional who—

(i)

is appropriately credentialed or licensed in 1 or more States to deliver health care services; and

(ii)

typically treats the diagnosis or condition or provides the type of treatment under review; and

(B)

can demonstrate by competent evidence that, as a result of training, education, knowledge, and experience in the evaluation, diagnosis, and treatment of the disease or injury which is the subject matter of the lawsuit against the defendant, the individual was substantially familiar with applicable standards of care and practice as they relate to the act or omission which is the subject of the lawsuit on the date of the incident.

(2)

Physician review

In a health care lawsuit, if the claim of the plaintiff involved treatment that is recommended or provided by a physician (allopathic or osteopathic), an individual shall not be qualified to be an expert witness under this subsection with respect to issues of negligence concerning such treatment unless such individual is a physician.

(3)

Specialties and subspecialties

With respect to a lawsuit described in paragraph (1), a court shall not permit an expert in one medical specialty or subspecialty to testify against a defendant in another medical specialty or subspecialty unless, in addition to a showing of substantial familiarity in accordance with paragraph (1)(B), there is a showing that the standards of care and practice in the two specialty or subspecialty fields are similar.

(4)

Limitation

The limitations in this subsection shall not apply to expert witnesses testifying as to the degree or permanency of medical or physical impairment.

127.

Additional health benefits

(a)

In general

The amount of any damages received by a claimant in any health care lawsuit shall be reduced by the court by the amount of any collateral source benefits to which the claimant is entitled, less any insurance premiums or other payments made by the claimant (or by the spouse, parent, child, or legal guardian of the claimant) to obtain or secure such benefits.

(b)

Preservation of current law

Where a payor of collateral source benefits has a right of recovery by reimbursement or subrogation and such right is permitted under Federal or State law, subsection (a) shall not apply.

(c)

Application of provision

This section shall apply to any health care lawsuit that is settled or resolved by a fact finder.

128.

Punitive damages

(a)

Punitive damages permitted

(1)

In general

Punitive damages may, if otherwise available under 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 unnecessary injury that such person knew the claimant was substantially certain to suffer.

(2)

Filing of 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 motion 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.

(3)

Separate proceeding

At the request of any party in a health care lawsuit, the trier of fact shall consider in a separate proceeding—

(A)

whether punitive damages are to be awarded and the amount of such award; and

(B)

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 proceeding to determine whether compensatory damages are to be awarded.
(4)

Limitation where no compensatory damages are awarded

In any health care lawsuit where no judgment for compensatory damages is rendered against a person, no punitive damages may be awarded with respect to the claim in such lawsuit against such person.

(b)

Determining amount of punitive damages

(1)

Factors considered

In determining the amount of punitive damages under this section, 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 medical procedures rendered for compensation, as the case may be, by such party, of the kind causing the harm complained of by the claimant;

(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 awarded in a health care lawsuit may not exceed an amount equal to two times the amount of economic damages awarded in the lawsuit or $250,000, whichever is greater. The jury shall not be informed of the limitation under the preceding sentence.

(c)

Liability of health care providers

(1)

In general

A health care provider who prescribes, or who dispenses pursuant to a prescription, a drug, biological product, or medical device approved by the Food and Drug Administration, for an approved indication of the drug, biological product, or medical device, shall not be named as a party to a product liability lawsuit invoking such drug, biological product, or medical device and shall not be liable to a claimant in a class action lawsuit against the manufacturer, distributor, or product seller of such drug, biological product, or medical device.

(2)

Medical product

The term medical product means a drug or device intended for humans. The terms drug and device have the meanings given such terms in sections 201(g)(1) and 201(h) of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321), respectively, including any component or raw material used therein, but excluding health care services.

129.

Authorization of payment of future damages to claimants in health care lawsuits

(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 accordance with the Uniform Periodic Payment of Judgments Act promulgated by the National Conference of Commissioners on Uniform State Laws.

(b)

Applicability

This section applies to all actions which have not been first set for trial or retrial before the effective date of this subtitle.

130.

Effect on other laws

(a)

General vaccine injury

(1)

In general

To the extent that title XXI of the Public Health Service Act establishes a Federal rule of law applicable to a civil action brought for a vaccine-related injury or death—

(A)

this subtitle shall not affect the application of the rule of law to such an action; and

(B)

any rule of law prescribed by this subtitle in conflict with a rule of law of such title XXI shall not apply to such action.

(2)

Exception

If there is an aspect of a civil action brought for a vaccine-related injury or death to which a Federal rule of law under title XXI of the Public Health Service Act does not apply, then this subtitle or otherwise applicable law (as determined under this subtitle) will apply to such aspect of such action.

(b)

Smallpox vaccine injury

(1)

In general

To the extent that part C of title II of the Public Health Service Act establishes a Federal rule of law applicable to a civil action brought for a smallpox vaccine-related injury or death—

(A)

this subtitle shall not affect the application of the rule of law to such an action; and

(B)

any rule of law prescribed by this subtitle in conflict with a rule of law of such part C shall not apply to such action.

(2)

Exception

If there is an aspect of a civil action brought for a smallpox vaccine-related injury or death to which a Federal rule of law under part C of title II of the Public Health Service Act does not apply, then this subtitle or otherwise applicable law (as determined under this subtitle) will apply to such aspect of such action.

(c)

Other Federal law

Except as provided in this section, nothing in this subtitle shall be deemed to affect any defense available, or any limitation on liability that applies to, a defendant in a health care lawsuit or action under any other provision of Federal law.

131.

State flexibility and protection of states’ rights

(a)

Health care lawsuits

The provisions governing health care lawsuits set forth in this subtitle shall preempt, subject to subsections (b) and (c), State law to the extent that State law prevents the application of any provisions of law established by or under this subtitle. The provisions governing health care lawsuits set forth in this subtitle supersede chapter 171 of title 28, United States Code, to the extent that such chapter—

(1)

provides for a greater amount of damages or contingent fees, a longer period in which a health care lawsuit may be commenced, or a reduced applicability or scope of periodic payment of future damages, than provided in this subtitle; or

(2)

prohibits the introduction of evidence regarding collateral source benefits.

(b)

Preemption of certain State laws

No provision of this subtitle shall be construed to preempt any State law (whether effective before, on, or after the date of the enactment of this subtitle) that specifies a particular monetary amount of compensatory or punitive damages (or the total amount of damages) that may be awarded in a health care lawsuit, regardless of whether such monetary amount is greater or lesser than is provided for under this subtitle, notwithstanding section 125(a).

(c)

Protection of states’ rights and other laws

(1)

In general

Any issue that is not governed by a provision of law established by or under this subtitle (including the State standards of negligence) shall be governed by otherwise applicable Federal or State law.

(2)

Rule of construction

Nothing in this subtitle shall be construed to—

(A)

preempt or supersede any Federal or State law that imposes greater procedural or substantive protections (such as a shorter statute of limitations) for a health care provider or health care institution from liability, loss, or damages than those provided by this subtitle;

(B)

preempt or supercede any State law that permits and provides for the enforcement of any arbitration agreement related to a health care liability claim whether enacted prior to or after the date of enactment of this subtitle;

(C)

create a cause of action that is not otherwise available under Federal or State law; or

(D)

affect the scope of preemption of any other Federal law.

132.

Applicability; effective date

This subtitle shall apply to any health care lawsuit brought in a Federal or State court, or subject to an alternative dispute resolution system, that is initiated on or after the date of the enactment of this subtitle, except that any health care lawsuit arising from an injury occurring prior to the date of enactment of this subtitle shall be governed by the applicable statute of limitations provisions in effect at the time the injury occurred.

II

Enhancement of insurance markets for all Americans

A

Elimination of barriers

201.

Short title

This title may be cited as Health Care Choice Act of 2009.

202.

Specification of constitutional authority for enactment of law

This title is enacted pursuant to the power granted Congress under article I, section 8, clause 3, of the United States Constitution.

203.

Findings

Congress finds the following:

(1)

The application of numerous and significant variations in State law impacts the ability of insurers to offer, and individuals to obtain, affordable individual health insurance coverage, thereby impeding commerce in individual health insurance coverage.

(2)

Individual health insurance coverage is increasingly offered through the Internet, other electronic means, and by mail, all of which are inherently part of interstate commerce.

(3)

In response to these issues, it is appropriate to encourage increased efficiency in the offering of individual health insurance coverage through a collaborative approach by the States in regulating this coverage.

(4)

The establishment of risk-retention groups has provided a successful model for the sale of insurance across State lines, as the acts establishing those groups allow insurance to be sold in multiple States but regulated by a single State.

204.

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.) is amended by adding at the end the following new part:

D

Cooperative governing of individual health insurance coverage

2795.

Definitions

In this part:

(1)

Primary state

The term primary State means, with respect to individual health insurance coverage offered by a health insurance issuer, the State designated by the issuer as the State 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 respect 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 insurance 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.

(4)

Individual health insurance coverage

The term individual health insurance coverage means health insurance coverage offered in the individual market, as defined in section 2791(e)(1).

(5)

Applicable state authority

The term applicable State authority means, with respect to a health insurance issuer in a State, the State insurance commissioner or official or officials designated 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 financial 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, agreements, and orders governing the insurance business pertaining to—

(i)

individual health insurance coverage issued by a health insurance issuer;

(ii)

the offer, sale, rating (including medical underwriting), renewal, and issuance of individual health insurance coverage to an individual;

(iii)

the provision to an individual in relation to individual health insurance coverage of health care and insurance related services;

(iv)

the provision to an individual in relation to individual health insurance coverage of management, operations, and investment activities of a health insurance issuer; and

(v)

the provision to an individual in relation to individual health insurance coverage of loss control and claims administration for a health insurance issuer with respect to liability for which the issuer provides insurance.

(B)

Exception

Such term does not include any law, rule, regulation, agreement, or order governing the use of care or cost management techniques, including any requirement related to provider contracting, network access or adequacy, health care data collection, or quality assurance.

(8)

State

The term State means the 50 States and includes the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.

(9)

Unfair claims settlement practices

The term unfair claims settlement practices means only the following practices:

(A)

Knowingly misrepresenting to claimants and insured individuals relevant facts or policy provisions relating to coverage at issue.

(B)

Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under policies.

(C)

Failing to adopt and implement reasonable 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 conducting a reasonable investigation.

(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 institute 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 materially 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 requests with reasonable explanations regarding their use.

(K)

Attempting to cancel a policy in less time than that prescribed in the policy or by the law of the primary State.

(10)

Fraud and abuse

The term fraud and abuse means an act or omission committed by a person who, knowingly and with intent to defraud, commits, or conceals any material information concerning, one or more of the following:

(A)

Presenting, causing to be presented or preparing with knowledge or belief that it will be presented to or by an insurer, a reinsurer, broker or its agent, false information as part of, in support of or concerning a fact material to one or more of the following:

(i)

An application for the issuance or renewal of an insurance policy or reinsurance contract.

(ii)

The rating of an insurance policy or reinsurance contract.

(iii)

A claim for payment or benefit pursuant to an insurance policy or reinsurance contract.

(iv)

Premiums paid on an insurance policy or reinsurance contract.

(v)

Payments made in accordance with the terms of an insurance policy or reinsurance contract.

(vi)

A document filed with the commissioner or the chief insurance regulatory official of another jurisdiction.

(vii)

The financial condition of an insurer or reinsurer.

(viii)

The formation, acquisition, merger, reconsolidation, dissolution or withdrawal from one or more lines of insurance or reinsurance in all or part of a State by an insurer or reinsurer.

(ix)

The issuance of written evidence of insurance.

(x)

The reinstatement of an insurance policy.

(B)

Solicitation or acceptance of new or renewal insurance risks on behalf of an insurer reinsurer or other person engaged in the business of insurance by a person who knows or should know that the insurer or other person responsible for the risk is insolvent at the time of the transaction.

(C)

Transaction of the business of insurance in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of insurance.

(D)

Attempt to commit, aiding or abetting in the commission of, or conspiracy to commit the acts or omissions specified in this paragraph.

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 respect to the offering of coverage in any secondary State.

(b)

Exemptions from covered laws in a secondary state

Except as provided in this section, a health insurance issuer with respect to its offer, sale, rating (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—

(1)

make unlawful, or regulate, directly or indirectly, 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 documents or process;

(C)

to submit to an examination of its financial condition by the State insurance commissioner in any State in which the issuer is doing business to determine the issuer's financial condition, if—

(i)

the State insurance commissioner of the primary State has not done an examination within the period recommended by the National Association of Insurance Commissioners; and

(ii)

any such examination is conducted in accordance with the examiners' handbook of the National Association of Insurance Commissioners and is coordinated to avoid unjustified duplication and unjustified repetition;

(D)

to comply with a lawful order issued—

(i)

in a delinquency proceeding commenced by the State insurance commissioner if there has been a finding of financial impairment under subparagraph (C); or

(ii)

in a voluntary dissolution proceeding;

(E)

to comply with an injunction issued by a court of competent jurisdiction, upon a petition by the State insurance commissioner alleging that the issuer is in hazardous financial condition;

(F)

to participate, on a nondiscriminatory basis, in any insurance insolvency guaranty association or similar association to which a health insurance issuer in the State is required to belong;

(G)

to comply with any State law regarding fraud and abuse (as defined in section 2795(10)), except that if the State seeks an injunction 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 regarding unfair claims settlement practices (as defined in section 2795(9)); or

(I)

to comply with the applicable requirements 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 Secondary 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 insurance 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 State, the name of the secondary State, the name of the secondary State, and the name of the secondary State, respectively, for the coverage concerned:

This policy is issued by _____ and is governed by the laws and regulations of the State of _____, 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 _____, including coverage of some services or benefits mandated by the law of the State of _____. Additionally, this policy is not subject to all of the consumer protection laws or restrictions on rate changes of the State of _____. As with all insurance products, before purchasing 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 section, a health insurance issuer that provides individual health insurance coverage to an individual under this part in a primary or secondary State may not upon renewal—

(A)

move or reclassify the individual insured 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 status-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 experience;

(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 incentives—

(i)

are disclosed to the consumer in the insurance contract;

(ii)

are based on specific wellness activities that are not applicable to all individuals; and

(iii)

are not obtainable by all individuals 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 compensation subject to the provisions of the laws of that State, except that a State may not impose any qualification or requirement which discriminates against a nonresident agent or broker.

(g)

Documents for submission to state insurance commissioner

Each health insurance issuer issuing individual health insurance coverage in both primary and secondary States shall submit—

(1)

to the insurance commissioner of each State in which it intends to offer such coverage, before it may offer individual health insurance coverage in such State—

(A)

a copy of the plan of operation or feasibility 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 primary State; and

(2)

to the insurance commissioner of each secondary State in which it offers individual health insurance coverage, a copy of the issuer's quarterly financial statement submitted to the primary State, which statement shall be certified by an independent public accountant and contain a statement of opinion 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 insurance; 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 administrative 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 section 2796(b)(1).

(j)

State powers To enforce state laws

(1)

In general

Subject to the provisions of subsection (b)(1)(G) (relating to injunctions) and paragraph (2), nothing in this section shall be construed 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 Federal or State court of competent jurisdiction.

(k)

States' authority To sue

Nothing in this section shall affect the authority of any State to bring action 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 corporations.

(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 residents of a secondary State, and the issuer is offering coverage under this part in such secondary State which has not adopted a qualified high risk pool as its acceptable alternative mechanism (as defined in section 2744(c)(2)), the issuer shall, with respect to any individual health insurance coverage offered in a secondary State under this part, comply with the guaranteed availability requirements for eligible individuals in section 2741.

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 capital and surplus requirements for all health insurance issuers.

2798.

Independent external appeals procedures

(a)

Right to external appeal

A health insurance issuer may not offer, sell, or issue individual health insurance coverage in a secondary State under the provisions of this title unless—

(1)

both the secondary State and the primary State have legislation or regulations in place establishing an independent review process for individuals who are covered by individual health insurance coverage, or

(2)

in any case in which the requirements of subparagraph (A) are not met with respect to the either of such States, the issuer provides an independent review mechanism substantially identical (as determined by the applicable State authority of such State) to that prescribed in the Health Carrier External 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.

(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 reviewer 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 independent medical reviewer shall be a physician (allopathic or osteopathic) or health care professional who—

(A)

is appropriately credentialed or licensed in 1 or more States to deliver health care services; and

(B)

typically treats the condition, makes the diagnosis, or provides the type of treatment under review.

(3)

Independence

(A)

In general

Subject to subparagraph (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, financial, 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 subparagraph (A) shall be construed to—

(i)

prohibit an individual, solely on the basis of affiliation with the issuer, from serving as an independent medical reviewer if—

(I)

a non-affiliated individual is not reasonably available;

(II)

the affiliated individual is not involved in the provision of items or services in the case under review;

(III)

the fact of such an affiliation 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 serving 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

(A)

In general

In a case involving treatment, or the provision of items or services—

(i)

by a physician, a reviewer shall be a practicing physician (allopathic or osteopathic) of the same or similar specialty, as a physician who, acting within the appropriate 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 treatment 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 professional of the same or similar specialty as the non-physician health care professional who, acting within the appropriate scope of practice within the State in which the service is provided or rendered, typically treats the condition, makes the diagnosis, or provides the type of treatment under review.

(B)

Practicing defined

For purposes of this paragraph, the term practicing means, with respect to an individual who is a physician or other health care professional, that the 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 compensation

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 rendered 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 relating 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 representative).

(C)

The health care professional that provides the items or services involved in the denial.

(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 services 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 subsection:

(A)

Enrollee

The term enrollee means, with respect to health insurance coverage 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 individual 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.

2799.

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 secondary 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

(1)

Study

The Comptroller General of the United States shall conduct an ongoing study concerning the effect of the amendment made by subsection (a) on—

(A)

the number of uninsured and under-insured;

(B)

the availability and cost of health insurance policies for individuals with pre-existing medical conditions;

(C)

the availability and cost of health insurance policies generally;

(D)

the elimination or reduction of different 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 General 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).

205.

Severability

If any provision of the Act or the application of such provision to any person or circumstance is held to be unconstitutional, the remainder of this Act and the application of the provisions of such to any other person or circumstance shall not be affected.

B

Pre-existing condition

211.

Block grants to States

(a)

In general

The Secretary of Health and Human Services (referred to in this section as the Secretary) shall award block grants to States to provide for the development of innovative models that ensure affordable health insurance coverage for Americans with pre-existing health conditions.

(b)

Application

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 the Secretary may require.

(c)

Use of funds

A State shall use amounts received under a grant under this section to develop innovative programs that ensure the provision of affordable health insurance coverage for eligible individuals with pre-existing health conditions. Such models may include the development and funding of State high-risk pools and the enhancement of funding for existing State high risk pools.

(d)

Eligibility

To be eligible to participate in a program developed under subsection (c), an individual shall—

(1)

be a resident of the State involved;

(2)

provide assurances to the Secretary that activities carried out under the grant will not result in an increase in health insurance premiums for residents of the State; and

(3)

comply with any other requirements established by the State.

(e)

Amount of grant

The amount of a grant to a State under this section shall be determined by the Secretary.

(f)

Authorization of appropriations

There is authorized to be appropriated to carry out this section, $5,000,000,000 for each of the fiscal years 2010 through 2014.

(g)

Definition

In this section, the term pre-existing condition means a medical or other condition in an individual that exists prior to the date on which such individuals attempts to enroll in health insurance coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date.

III

Empowering the health care consumer

301.

Enhancing the patient-provider relationship

(a)

Provision of information

The Secretary of Health and Human Services shall promulgate regulations under which a health care provider (including a hospital) that receives reimbursement under title XVIII or XIX of the Social Security Act (42 U.S.C. 1395 and 1396 et seq.) shall be required to provide each patient of such provider (or hospital), upon the request of such patient, price information with respect to the items or services provided (or that will be provided) to such patient.

(b)

Requirement

The pricing information required under subsection (a) shall be broken down into the following categories:

(1)

The usual and customary price charged for the item or service involved.

(2)

The amount that would be provided as reimbursement under the Medicare and Medicaid Programs under titles XVIII and XIX of the Social Security Act (42 U.S.C. 1395 and 1396 et seq.) for the items or services involved.

(3)

The average amount that would be paid by an insured individual with respect to such item or service.

302.

Health insurance policy information

(a)

In general

A group health plan, or health insurance issuer in connection with group or individual health insurance coverage, shall provide an enrollee, upon the request of the enrollee, with information concerning their allowable payment for items or services under the plan or coverage involved.

(b)

Fee

A plan or issuer may assess an enrollee a reasonable fee to cover the costs incurred by the plan or issuer in providing the enrollee with the information requested under subsection (a).

(c)

Definitions

The definitions contained in section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91) shall apply for purposes of this section.

IV

Funding

401.

Funding provisions

(a)

Termination of TARP program

Notwithstanding any provision of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et seq.) or any other provision of law, the Secretary of Treasury may not, on and after the date of enactment of this Act, make any payment or obligation under the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et seq.). Any funds made available under such Act that have not been obligated shall be rescinded and made available to carry out this Act.

(b)

Collecting funds

Notwithstanding any other provision of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et seq.) or any other provision of law, the Secretary of Treasury shall collect all revenues relating to, and proceeds from the sale of, obligations purchased and made under the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et seq.) by not later than September 30, 2014, at a rate of not less than 20 percent per year of the total obligations purchased and made under such Act.