I
108th CONGRESS
2d Session
H. R. 4124
IN THE HOUSE OF REPRESENTATIVES
April 1, 2004
Mr. Sandlin (for himself, Ms. Kaptur, Mr. Frost, Mr. Bell, Mr. Crowley, Ms. Eddie Bernice Johnson of Texas, Ms. Berkley, Mr. Ross, Mr. Larson of Connecticut, Mr. Cardoza, Mr. Strickland, Mr. Gonzalez, Mr. Berry, Mr. Clay, Mr. Israel, Mr. Ruppersberger, Mr. Moore, Mr. Reyes, Ms. Solis, Mr. Honda, Mr. Lampson, Mr. Ford, Mr. Meeks of New York, Mr. Edwards, Mr. Doggett, Mr. Turner of Texas, Mr. Green of Texas, Mr. Baird, Mr. Lewis of Georgia, Mr. Boswell, and Mr. Thompson of California) introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow a business credit for qualified expenditures for medical professional malpractice insurance.
Short title
This Act may be cited as the &short-title1;
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Credit for qualified expenditures for medical professional malpractice insurance
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:
Credit for expenditures for medical professional malpractice insurance
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.
Limitation
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.
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—
determine average costs (rounded to the nearest whole dollar) of providing or furnishing general medical malpractice liability insurance to eligible persons, and
certify the amount of such costs to the Secretary on or before the 15th day of November of each year.
Definitions and special rule
For purposes of this section—
Qualified medical malpractice insurance expenditure
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.
Eligible person
The term eligible person means—
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,
any physician (as so defined) who practices in general medicine, allergy, dermatology, pathology, or any other specialty not otherwise described in this section, and
any hospital, clinic, or long-term care provider,
Applicable percentage
The applicable percentage is—
20 percent in the case of a person described in paragraph (2)(A),
10 percent in the case of a person described in paragraph (2)(B), and
15 percent in the case of a person described in paragraph (2)(C).
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.
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.
Termination
This section shall not apply to taxable years beginning after December 31, 2005.
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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 (14), by striking the period at the end of paragraph (15) and inserting , plus
, and by adding at the end the following new paragraph:
the medical malpractice insurance expenditure tax credit determined under section 45G(a).
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Limitation on carryback
Section 39(d) of such Code (relating to transition rules) is amended by adding at the end the following new paragraph:
No carryback of medical malpractice insurance expenditure tax credit before effective date
No portion of the unused business credit for any taxable year which is attributable to the credit determined under section 45G may be carried back to any taxable year beginning before January 1, 2004.
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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:
Credit for medical malpractice liability insurance premiums
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 45G (determined without regard to section 38(c)).
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).
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Grants to non-profit hospitals, clinics, and long-term care providers
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.
Eligible non-profit hospital, clinic, or long-term care provider
To be eligible to receive a grant under paragraph (1) an entity shall—
be a non-profit hospital, clinic, or long-term care provider;
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
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.
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.
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.
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 2005 and 2006.
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. 45G. Credit for expenditures for medical professional malpractice insurance
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Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2003.