SEC. 1760. DENIAL OF PAYMENTS FOR LITIGATION-RELATED MISCONDUCT.

[a] In General- Section- 1903[i] of the Social Security Act [42 U.S.C. 1396b[i]], as previously amended is amended--

[1] by striking 'or' at the end of paragraph [25];

[2] by striking the period at the end of paragraph [26] and inserting a semicolon; and

[3] by inserting after paragraph [26] the following new paragraphs:

'[27] with respect to any amount expended--

'[A] on litigation in which a court imposes sanctions on the State, its employees, or its counsel for litigation-related misconduct; or

'[B] to reimburse [or otherwise compensate] a managed care entity for payment of legal expenses associated with any action in which a court imposes sanctions on the managed care entity for litigation-related misconduct.'.

[b] Effective Date- The amendments made by subsection [a] shall apply to amounts expended on or after January 1, 2010.