To amend the Internal Revenue Code of 1986 to allow a business credit for qualified expenditures for medical professional malpractice insurance.

May 11, 2005

Ms. HERSETH (for herself, Mr. JEFFERSON, Mr. SNYDER, Ms. BERKLEY, Mr. HIGGINS, Mr. NADLER, Mr. BOUCHER, Mr. MOORE of Kansas, Mr. ISRAEL, Mr. LEWIS of Georgia, Mr. BAIRD, Mr. ROSS, Mr. GENE GREEN of Texas, Mr. HONDA, Mr. BERRY, Mr. BOSWELL, Mr. CLAY, Mr. GONZALEZ, Ms. KAPTUR, Mr. REYES, Mr. RUPPERSBERGER, Mr. HINOJOSA, Mr. DAVIS of Alabama, Mr. THOMPSON of California, Mr. CROWLEY, Mr. MEEKS of New York, and Mr. BISHOP of New York) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Internal Revenue Code of 1986 to allow a business credit for qualified expenditures for medical professional malpractice insurance.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Medical Malpractice Relief Act of 2005'.

SEC. 2. CREDIT FOR QUALIFIED EXPENDITURES FOR MEDICAL PROFESSIONAL MALPRACTICE INSURANCE.

(a) In General- Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business tax credits) is amended by adding at the end the following:

`SEC. 45J. CREDIT FOR EXPENDITURES FOR MEDICAL PROFESSIONAL MALPRACTICE INSURANCE.

`(a) General Rule- For purposes of section 38, in the case of an eligible person, the medical malpractice insurance expenditure tax credit determined under this section for a taxable year is the amount equal to the applicable percentage of qualified medical malpractice insurance expenditures.

`(b) Limitation-

`(1) IN GENERAL- The amount of qualified medical malpractice insurance expenditures taken into account under subsection (a) for a taxable year with respect to an eligible person shall not exceed the amount equal to twice the average of costs of qualified medical malpractice insurance for similarly situated eligible persons.

`(2) AVERAGE COSTS- For purposes of paragraph (1), the Secretary of Health and Human Services, after consultation with State boards of medical licensure and State boards (or agencies) regulating insurance, shall--

`(A) determine average costs (rounded to the nearest whole dollar) of providing or furnishing general medical malpractice liability insurance to eligible persons, and

`(B) certify the amount of such costs to the Secretary on or before the 15th day of November of each year.

`(c) Definitions and Special Rule- For purposes of this section--

`(1) QUALIFIED MEDICAL MALPRACTICE INSURANCE EXPENDITURE-

`(A) IN GENERAL- The term `qualified medical malpractice insurance expenditure' means so much of any professional insurance premium, surcharge, payment, or other cost or expense which is paid or incurred in the taxable year by an eligible person for the sole purpose of providing or furnishing general medical malpractice liability insurance for such eligible person.

`(2) ELIGIBLE PERSON- The term `eligible person' means--

`(A) any physician (as defined in section 213(d)(4)) who practices in any surgical specialty or subspecialty, emergency medicine, obstetrics, anesthesiology or who does intervention work which is reflected in medical malpractice insurance expenditures,

`(B) any physician (as so defined) who practices in general medicine, allergy, dermatology, pathology, or any other specialty not otherwise described in this section, and

`(C) any hospital, clinic, or long-term care provider,

which meets applicable legal requirements to provide the health care services involved.

`(3) APPLICABLE PERCENTAGE- The applicable percentage is--

`(A) 30 percent in the case of a person described in paragraph (2)(A), and

`(B) 20 percent in the case of a person described in subparagraph (B) or (C) of paragraph (2).

`(4) SIMILARLY SITUATED- The determination of whether persons are similarly situated shall be made on the basis of medical practices primarily located within a statistical area (as defined in section 142(k)(2)) and shall differentiate between specialty and subspecialty medical practices.

`(d) Election not to Claim Credit- This section shall not apply to a taxpayer for any taxable year if such taxpayer elects to have this section not apply for such taxable year.

`(e) Termination- This section shall not apply to taxable years beginning after December 31, 2006.'.

(b) Credit Made Part of General Business Credit- Section 38(b) of such Code (relating to current year business credit) is amended by striking `plus' at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting `, plus', and by adding at the end the following new paragraph:

`(20) the medical malpractice insurance expenditure tax credit determined under section 45J(a).'.

(c) Denial of Double Benefit- Section 280C of such Code (relating to certain expenses for which credits are allowable) is amended by adding at the end the following new subsection:

`(e) Credit for Medical Malpractice Liability Insurance Premiums-

`(1) IN GENERAL- No deduction shall be allowed for that portion of the qualified medical malpractice insurance expenditures otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit allowable for the taxable year under section 45J (determined without regard to section 38(c)).

`(2) CONTROLLED GROUPS- In the case of a corporation which is a member of a controlled group of corporations (within the meaning of section 41(f)(5)) or a trade or business which is treated as being under common control with other trades or business (within the meaning of section 41(f)(1)(B)), this subsection shall be applied under rules prescribed by the Secretary similar to the rules applicable under subparagraphs (A) and (B) of section 41(f)(1).'.

(d) Grants to Non-Profit Hospitals, Clinics, and Long-Term Care Providers-

(1) IN GENERAL- The Secretary of Health and Human Services, acting through the Administrator of the Health Resources and Services Administration, shall award grants to eligible non-profit hospitals, clinics, and long-term care providers to assist such hospitals, clinics, and long-term care providers in defraying qualified medical malpractice insurance expenditures.

(2) ELIGIBLE NON-PROFIT HOSPITAL, CLINIC, OR LONG-TERM CARE PROVIDER- To be eligible to receive a grant under paragraph (1) an entity shall--

(A) be a non-profit hospital, clinic, or long-term care provider;

(B) be an organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code for the year for which an application is submitted under subparagraph (C); and

(C) prepare and submit to the Secretary of Health and Human Services an application at such time, in such manner, and containing such information as the Secretary may require.

(3) AMOUNT OF GRANT- The amount of a grant to a non-profit hospital, clinic, or long-term care provider under paragraph (1) shall equal 15 percent of the amount of the qualified medical malpractice insurance expenditures of the hospital, clinic, or long-term care provider for the year involved.

(4) QUALIFIED MEDICAL MALPRACTICE INSURANCE EXPENDITURE- In this subsection, the term `qualified medical malpractice insurance expenditure' means so much of any professional insurance premium, surcharge, payment or other cost or expense which is incurred by a non-profit hospital, clinic, or long-term care provider in a year for the sole purpose of providing or furnishing general medical malpractice liability insurance for such hospital, clinic, or long-term care provider as does not exceed twice the average of such costs for similarly situated hospitals, clinics, or long-term care provider homes.

(5) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this subsection such sums as may be necessary for each of fiscal years 2006 and 2007.

(e) Clerical Amendment- The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

`Sec. 45J. Credit for expenditures for medical professional malpractice insurance.'.

(f) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2004.

END