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H.R.4577
Departments of Labor, Health and Human Services, and Education, and
Related Agencies Appropriations Act, 2001 (Public Print)
SEC. 2231. AVAILABILITY OF COURT REMEDIES.
(a) IN GENERAL- Section 502 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1132) is amended by adding at the end the
following:
`(n) CAUSE OF ACTION RELATING TO DENIAL OF A CLAIM FOR HEALTH
BENEFITS-
`(A) FAILURE TO COMPLY WITH EXTERNAL MEDICAL REVIEW- In any case
in which--
`(i) a designated decision-maker described in paragraph (2)
fails to exercise ordinary care in approving coverage pursuant to the
written determination of an independent medical reviewer under section
503B(d)(3)(F) that reverses a denial of a claim for benefits;
and
`(ii) the failure described in clause (i) is the proximate cause
of substantial harm to, or the wrongful death of, the participant or
beneficiary;
such designated decision-maker shall be liable to the participant
or beneficiary (or the estate of such participant or beneficiary) for
economic and noneconomic damages in connection with such failure and such
injury or death (subject to paragraph (4)).
`(B) WRONGFUL DETERMINATION RESULTING IN DELAY IN PROVIDING
BENEFITS- In any case in which--
`(i) a designated decision-maker described in paragraph (2) acts
in bad faith in making a final determination denying a claim for
benefits under section 503A(b);
`(ii) the denial described in clause (i) is reversed by an
independent medical reviewer under section 503B(d); and
`(iii) the delay attributable to the failure described in clause
(i) is the proximate cause of substantial harm to, or the wrongful death
of, the participant or beneficiary;
such designated decision-maker shall be liable to the participant
or beneficiary (or the estate of such participant or beneficiary) for
economic and noneconomic damages in connection with such failure and such
injury or death (subject to paragraph (4)).
`(2) DESIGNATED DECISION-MAKERS FOR PURPOSES OF LIABILITY- An
employer or plan sponsor shall not be liable under any cause of action
described in paragraph (1) if the employer or plan sponsor complies with the
following provisions:
`(A) APPOINTMENT- A group health plan may designate one or more
persons to serve as the designated decision-maker for purposes of
paragraph (1). Such designated decision-makers shall have the exclusive
authority under the group health plan (or under the health insurance
coverage in the case of a health insurance issuer offering coverage in
connection with a group health plan) to make determinations described in
section 503A with respect to claims for benefits and determination to
approve coverage pursuant to written determination of independent medical
reviewers under section 503B, except that the plan documents may expressly
provide that the designated decision-maker is subject to the direction of
a named fiduciary.
`(B) PROCEDURES- A designated decision-maker shall--
`(i) be a person who is named in the plan or coverage documents,
or who, pursuant to procedures specified in the plan or coverage
documents, is identified as the designated decision-maker
by--
`(I) a person who is an employer or employee organization with
respect to the plan or issuer;
`(II) a person who is such an employer and such an employee
organization acting jointly; or
`(III) a person who is a named fiduciary;
`(ii) agree to accept appointment as a designated
decision-maker; and
`(iii) be identified in the plan or coverage documents as
required under section 714(b)(14).
`(C) QUALIFICATIONS- To be appointed as a designated
decision-maker under this paragraph, a person shall be--
`(ii) a group health plan;
`(iii) a health insurance issuer; or
`(iv) any other person who can provide adequate evidence, in
accordance with regulations promulgated by the Secretary, of the ability
of the person to--
`(I) carry out the responsibilities set forth in the plan or
coverage documents;
`(II) carry out the applicable requirements of this
subsection; and
`(III) meet other applicable requirements under this Act,
including any financial obligation for liability under this
subsection.
`(D) FLEXIBILITY IN ADMINISTRATION- A group health plan, or health
insurance issuer offering coverage in connection with a group health plan,
may provide--
`(i) that any person or group of persons may serve in more than
one capacity with respect to the plan or coverage (including service as
a designated decision-maker, administrator, and named fiduciary);
or
`(ii) that a designated decision-maker may employ one or more
persons to provide advice with respect to any responsibility of such
decision-maker under the plan or coverage.
`(E) FAILURE TO DESIGNATE- In any case in which a designated
decision-maker is not appointed under this paragraph, the group health
plan (or health insurance issuer offering coverage in connection with the
group health plan), the administrator, or the party or parties that bears
the sole responsibility for making the final determination under section
503A(b) (with respect to an internal review), or for approving coverage
pursuant to the written determination of an independent medical reviewer
under section 503B, with respect to a denial of a claim for benefits shall
be treated as the designated decision-maker for purposes of liability
under this section.
`(3) REQUIREMENT OF EXHAUSTION OF INDEPENDENT MEDICAL REVIEW-
Paragraph (1) shall apply only if a final determination denying a claim for
benefits under section 503A(b) has been referred for independent medical
review under section 503B(d) and a written determination by an independent
medical reviewer to reverse such final determination has been issued with
respect to such review.
`(4) LIMITATIONS ON RECOVERY OF DAMAGES-
`(A) MAXIMUM AWARD OF NONECONOMIC DAMAGES- The aggregate amount of
liability for noneconomic loss in an action under paragraph (1) may not
exceed $350,000.
`(B) INCREASE IN AMOUNT- The amount referred to in subparagraph
(A) shall be increased or decreased, for each calendar year that ends
after December 31, 2001, by the same percentage as the percentage by which
the Consumer Price Index for All Urban Consumers (United States city
average), published by the Bureau of Labor Statistics, for September of
the preceding calendar year has increased or decreased from the such Index
for September of 2001.
`(C) JOINT AND SEVERAL LIABILITY- In the case of any action
commenced pursuant to paragraph (1), the defendant shall be liable only
for the amount of noneconomic damages attributable to such defendant in
direct proportion to such defendant's share of fault or responsibility for
the injury suffered by the participant or beneficiary. In all such cases,
the liability of a defendant for noneconomic damages shall be several and
not joint.
`(D) TREATMENT OF COLLATERAL SOURCE PAYMENTS-
`(i) IN GENERAL- In the case of any action commenced pursuant to
paragraph (1), the total amount of damages received by a participant or
beneficiary under such action shall be reduced, in accordance with
clause (ii), by any other payment that has been, or will be, made to
such participant or beneficiary to compensate such participant or
beneficiary for the injury that was the subject of such
action.
`(ii) AMOUNT OF REDUCTION- The amount by which an award of
damages to a participant or beneficiary for an injury shall be reduced
under clause (i) shall be--
`(I) the total amount of any payments (other than such award)
that have been made or that will be made to such participant or
beneficiary to pay costs of or compensate such participant or
beneficiary for the injury that was the subject of the action;
less
`(II) the amount paid by such participant or beneficiary (or
by the spouse, parent, or legal guardian of such participant or
beneficiary) to secure the payments described in subclause
(I).
`(iii) DETERMINATION OF AMOUNTS FROM COLLATERAL SOURCES- The
reduction required under clause (ii) shall be determined by the court in
a pretrial proceeding. At the subsequent trial no evidence shall be
admitted as to the amount of any charge, payments, or damage for which a
participant or beneficiary--
`(I) has received payment from a collateral source or the
obligation for which has been assured by a third party;
or
`(II) is, or with reasonable certainty, will be eligible to
receive from a collateral source which will, with reasonable
certainty, be assumed by a third party.
`(5) AFFIRMATIVE DEFENSES- In the case of any cause of action under
paragraph (1), it shall be an affirmative defense that--
`(A) the group health plan, or health insurance issuer offering
health insurance coverage in connection with a group health plan, involved
did not receive from the participant or beneficiary (or authorized
representative) or the treating health care professional (if any),
sufficient information regarding the medical condition of the participant
or beneficiary that was necessary to make a final determination on a claim
for benefits under section 503A(b);
`(B) the participant or beneficiary (or authorized
representative)--
`(i) was in possession of facts that were sufficient to enable
the participant or beneficiary (or authorized representative) to know
that an expedited review under section 503A or 503B would have prevented
the harm that is the subject of the action; and
`(ii) failed to notify the plan or issuer of the need for such
an expedited review; or
`(C) the cause of action is based solely on the failure of a
qualified external review entity or an independent medical reviewer to
meet the timelines applicable under section 503B.
Nothing in this paragraph shall be construed to limit the
application of any other affirmative defense that may be applicable to the
cause of action involved.
`(6) WAIVER OF INTERNAL REVIEW- In the case of any cause of action
under paragraph (1), the waiver or nonwaiver of internal review under
section 503A(b)(1)(D) by the group health plan, or health insurance issuer
offering health insurance coverage in connection with a group health plan,
shall not be used in determining liability.
`(7) LIMITATIONS ON ACTIONS- Paragraph (1) shall not apply in
connection with any action that is commenced more than 1 year
after--
`(A) the date on which the last act occurred which constituted a
part of the failure referred to in such paragraph; or
`(B) in the case of an omission, the last date on which the
decision-maker could have cured the failure.
`(8) LIMITATION ON RELIEF WHERE DEFENDANT'S POSITION PREVIOUSLY
SUPPORTED UPON EXTERNAL REVIEW- In any case in which the court finds the
defendant to be liable in an action under this subsection, to the extent
that such liability is based on a finding by the court of a particular
failure described in paragraph (1) and such finding is contrary to a
previous determination by an independent medical reviewer under section
503B(d) with respect to such defendant, no relief shall be available under
this subsection in addition to the relief otherwise available under
subsection (a)(1)(B).
`(9) CONSTRUCTION- Nothing in this subsection shall be construed as
authorizing a cause of action under paragraph (1) for--
`(A) the failure of a group health plan or health insurance issuer
to provide an item or service that is specifically excluded under the plan
or coverage; or
`(B) any denial of a claim for benefits that was not eligible for
independent medical review under section 503B(d).
`(10) FEDERAL JURISDICTION- In the case of any action commenced
pursuant to paragraph (1) the district courts of the United States shall
have exclusive jurisdiction.
`(11) DEFINITIONS- In this subsection:
`(A) AUTHORIZED REPRESENTATIVE- The term `authorized
representative' has the meaning given such term in section
503B(i).
`(B) CLAIM FOR BENEFITS- The term `claim for benefits' shall have
the meaning given such term in section 503B(i), except that such term
shall only include claims for prior authorization determinations (as such
term is defined in section 503B(i)).
`(C) GROUP HEALTH PLAN- The term `group health plan' shall have
the meaning given such term in section 733(a).
`(D) HEALTH INSURANCE COVERAGE- The term `health insurance
coverage' has the meaning given such term in section
733(b)(1).
`(E) HEALTH INSURANCE ISSUER- The term `health insurance issuer'
has the meaning given such term in section 733(b)(2) (including health
maintenance organizations as defined in section 733(b)(3)).
`(F) ORDINARY CARE- The term `ordinary care' means the care,
skill, prudence, and diligence under the circumstances prevailing at the
time the care is provided that a prudent individual acting in a like
capacity and familiar with the care being provided would use in providing
care of a similar character.
`(G) SUBSTANTIAL HARM- The term `substantial harm' means the loss
of life, loss or significant impairment of limb or bodily function,
significant disfigurement, or severe and chronic physical
pain.
`(12) EFFECTIVE DATE- The provisions of this subsection shall apply
to acts and omissions occurring on or after the date of enactment of this
subsection.'.
(b) IMMUNITY FROM LIABILITY FOR PROVISION OF INSURANCE OPTIONS-
(1) IN GENERAL- Section 502 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132), as amended by subsection (a), is
further amended by adding at the end the following:
`(o) IMMUNITY FROM LIABILITY FOR PROVISION OF INSURANCE OPTIONS-
`(1) IN GENERAL- No liability shall arise under subsection (n) with
respect to a participant or beneficiary against a group health plan (other
than a fully insured group health plan) if such plan offers the participant
or beneficiary the coverage option described in paragraph (2).
`(2) COVERAGE OPTION- The coverage option described in this
paragraph is one under which the group health plan (other than a fully
insured group health plan), at the time of enrollment or as provided for in
paragraph (3), provides the participant or beneficiary with the option
to--
`(A) enroll for coverage under a fully insured health plan;
or
`(B) receive an individual benefit payment, in an amount equal to
the amount that would be contributed on behalf of the participant or
beneficiary by the plan sponsor for enrollment in the group health plan,
for use by the participant or beneficiary in obtaining health insurance
coverage in the individual market.
`(3) TIME OF OFFERING OF OPTION- The coverage option described in
paragraph (2) shall be offered to a participant or beneficiary--
`(A) during the first period in which the individual is eligible
to enroll under the group health plan; or
`(B) during any special enrollment period provided by the group
health plan after the date of enactment of the Patients' Bill of Rights Plus Act for purposes of
offering such coverage option.'.
(2) AMENDMENTS TO INTERNAL REVENUE CODE-
(A) EXCLUSION FROM INCOME- Section 106 of the Internal Revenue
Code of 1986 (relating to contributions by employer to accident and health
plans) is amended by adding at the end the following:
`(d) TREATMENT OF CERTAIN COVERAGE OPTION UNDER SELF-INSURED PLANS- No
amount shall be included in the gross income of an individual by reason
of--
`(1) the individual's right to elect a coverage option described in
section 502(o)(2) of the Employee Retirement Income Security Act of 1974,
or
`(2) the receipt by the individual of an individual benefit payment
described in section 502(o)(2)(A) of such Act.'
(B) NONDISCRIMINATION RULES- Section 105(h) of such Code (relating
to self-insured medical expense reimbursement plans) is amended by adding
at the end the following:
`(11) TREATMENT OF CERTAIN COVERAGE OPTIONS- If a self-insured
medical reimbursement plan offers the coverage option described in section
502(o)(2) of the Employee Retirement Income Security Act of 1974, employees
who elect such option shall be treated as eligible to benefit under the plan
and the plan shall be treated as benefiting such employees.'
(c) CONFORMING AMENDMENT- Section 502(a)(1)(A) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1132(a)(1)(A)) is amended by
inserting `or (n)' after `subsection (c)'.
SEC. 2232. LIMITATION ON CERTAIN CLASS ACTION LITIGATION.
(a) ERISA- Section 502 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1132), as amended by section 2231, is further amended by
adding at the end the following:
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