I

103D CONGRESS

1ST SESSION H. R. 975

To amend title I of the Employee Retirement Income Security Act of 1974

to ensure nondiscrimination in benefits provided under group health

plans, and to provide for adequate notice of adoption of material coverage

restrictions under group health plans and effective remedies for violations

of such title with respect to such plans.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 18, 1993

Mr. HUGHES (for himself, Mr. BOEHLERT, Mr. ABERCROMBIE, Mr. DEFAZIO,

Mr. WAXMAN, Mr. STUDDS, Mr. MATSUI, Mr. FRANK of Massachusetts,

Ms. PELOSI, Mr. MCDERMOTT, Mr. BLACKWELL, Mr. BERMAN, Mr.

HEFNER, Mr. CONYERS, Mr. STARK, Mr. EVANS, and Mr. WYDEN) introduced the following bill; which was referred to the Committee on Education and Labor

A BILL

To amend title I of the Employee Retirement Income Security Act of 1974 to ensure nondiscrimination in benefits

provided under group health plans, and to provide for

adequate notice of adoption of material coverage restrictions under group health plans and effective remedies

for violations of such title with respect to such plans.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Group Health Plan

3 Nondiscrimination Act of 1993’’.

4 SEC. 2. PROTECTION FROM INTERFERENCE WITH RIGHTS.

5 Section 510 of the Employee Retirement Income Se6 curity Act of 1974 (29 U.S.C. 1140) is amended—

7 (1) by inserting ‘‘(a) IN GENERAL.—’’ after

8 ‘‘SEC. 510.’’; and

9 (2) by adding at the end the following new sub10 section:

11 ‘‘(b) DISCRIMINATION BASED ON BENEFIT CLAIMS

12 UNDER GROUP HEALTH PLANS.—

13 ‘‘(1) IN GENERAL.—It shall be unlawful dis14 crimination for purposes of subsection (a) to take

15 any action to cancel or reduce a benefit of a partici16 pant or beneficiary under a group health plan (by

17 plan amendment or plan termination, change in in18 sured status of the plan, change of insurer under the

19 plan, or any other means), if—

20 ‘‘(A) such action is specifically related to

21 one or more particular diseases or medical con22 ditions,

23 ‘‘(B) such participant or beneficiary is un24 dergoing, at the time such action is taken, a

25 course of treatment related to any such disease

26 or medical condition, and
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1 ‘‘(C) a valid claim under the plan reason2 ably related to such course of treatment has

3 been submitted to the plan by or on behalf of

4 such participant or beneficiary prior to the tak5 ing of such action.

6 ‘‘(2) DEFINITIONS.—For purposes of this sub7 section—

8 ‘‘(A) GROUP HEALTH PLAN.—The term

9 ‘group health plan’ has the meaning provided in

10 section 607(1).

11 ‘‘(B) CHANGE IN INSURED STATUS.—The

12 term ‘change in insured status’ of a plan means

13 a change to self-insured status or a change in

14 the extent to which benefits provided under the

15 plan are provided under a contract or policy of

16 insurance issued by an insurer under the plan.

17 ‘‘(C) INSURER.—The term ‘insurer’ under

18 a plan means a person licensed by a State to

19 engage in the business of insurance who pro20 vides benefits under the plan under a contract

21 or policy of insurance issued by such person.

22 ‘‘(D) VALID CLAIM.—The term ‘valid

23 claim’ under a group health plan means a claim

24 which, at the time of its submission by or on

25 behalf of a participant or beneficiary, would
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1 have entitled the participant or beneficiary to

2 benefits under the plan.’’.

3 SEC. 3. NONDISCRIMINATION IN LIFETIME BENEFIT COV4 ERAGE UNDER A GROUP HEALTH PLAN.

5 (a) IN GENERAL.—Part 5 of title I of the Employee

6 Retirement Income Security Act of 1974 is amended by

7 adding at the end the following:

8 ‘‘NONDISCRIMINATION IN LIFETIME BENEFIT COVERAGE

9 UNDER A GROUP HEALTH PLAN

10 ‘‘SEC. 516. (a) IN GENERAL.—It shall be unlawful

11 for a group health plan to discriminate among diseases

12 or medical conditions with respect to levels of lifetime ben13 efit coverage provided to similarly situated participants

14 and beneficiaries under the plan. For purposes of this sec15 tion, the term ‘lifetime benefit coverage’ provided to any

16 participant or beneficiary under a plan means the maxi17 mum benefit available under the plan in the aggregate to

18 such participant or beneficiary.

19 ‘‘(b) LIMITATION.—Subsections (a) shall not apply

20 with respect to participants and their beneficiaries under

21 a group health plan if the requirements of paragraph (1)

22 or (2) are met as follows:

23 ‘‘(1) COLLECTIVE BARGAINING.—The require24 ments of this paragraph are met if—

25 ‘‘(A) the participants consist of employees

26 covered by a collective bargaining agreement be-
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1 tween employee representatives and one or more

2 employers,

3 ‘‘(B) there is evidence that benefits pro4 vided under the group health plan established

5 or maintained pursuant to such collective bar6 gaining agreement were the subject of good

7 faith bargaining between such employee rep8 resentatives and such employer or employers,

9 and

10 ‘‘(C) the discrimination consists of a lack

11 of uniformity based solely on—

12 ‘‘(i) variations in the required terms

13 of the collective bargaining agreement as

14 applied to separate geographically located

15 facilities of the same employer, or

16 ‘‘(ii) different levels of contributions

17 to such plan negotiated between such em18 ployee representatives and more than 1

19 employer, as set forth in applicable collec20 tive bargaining agreements.

21 ‘‘(2) EXEMPTION PROCEDURE.—The require22 ments of this paragraph are met if the sponsor of

23 such group health plan demonstrates to the Sec24 retary by a preponderance of the evidence that such

25 sponsor will be unable to continue such plan unless
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1 granted relief from the applicable requirements of

2 subsection (a), pursuant to an exemption procedure

3 which—

4 ‘‘(A) shall be established by the Secretary

5 by regulation for purposes of this subsection,

6 and

7 ‘‘(B) shall be subject to standards and pro8 cedures similar to those applicable under sec9 tion 408(a) with respect to exemptions granted

10 thereunder.’’.

11 (b) CLERICAL AMENDMENT.—The table of contents

12 in section 1 of such Act is amended by inserting after the

13 item relating to section 514 the following new items:

‘‘Sec. 515. Delinquent contributions.

‘‘Sec. 516. Discrimination in lifetime benefit coverage under group health plan.’’.

14 SEC. 4. REPORTING AND DISCLOSURE REQUIREMENTS.

15 (a) NOTICE OF MODIFICATIONS AND CHANGES.—

16 Section 104(b)(1) of the Employee Retirement Income Se17 curity Act of 1974 (29 U.S.C. 1024(b)) is amended by

18 adding at the end the following: ‘‘In the case of a group

19 health plan (as defined in section 607(1)), the adoption

20 of any material coverage restriction which constitutes such

21 a modification in the terms of the plan (including the ter22 mination of the plan), or which is represented by any such

23 change in the information required under section 102(b),

24 may not take effect until 60 days after such a summary
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1 description of such modification or change is furnished to

2 each participant and to each spouse thereof who is a bene3 ficiary under the plan in language calculated to be easily

4 understood by the typical participant or beneficiary. For

5 purposes of the preceding sentence, the term ‘material cov6 erage restriction’ means any change in the terms of a

7 group health plan that results in elimination of, or in8 creased restrictions on, any form of benefit coverage which

9 was provided by the plan prior to the change, including,

10 but not limited to, the establishment of, or increases in

11 the amount of, deductibles or coinsurance payments re12 quired of participants and beneficiaries under the plan, ex13 cept that the Secretary may by regulation exclude from

14 such term any such change of a type which the Secretary

15 finds to be de minimis.’’.

16 (b) SPECIAL REQUIREMENTS FOR SELF-INSURED

17 PLANS.—Section 102(b) of such Act (29 U.S.C. 1022(b))

18 is amended—

19 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

20 (2) by adding at the end the following new

21 paragraph:

22 ‘‘(2)(A) In the case of a self-insured group health

23 plan, the plan description and summary plan description

24 shall also contain a statement—
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1 ‘‘(i) indicating that the plan is a self-insured

2 group health plan and is not a policy of insurance,

3 ‘‘(ii) identifying the person who is responsible

4 for claim determinations and processing, and

5 ‘‘(iii) indicating that the plan is not subject to

6 State guarantee fund protection and that, if the plan

7 does not pay all benefits for which participants or

8 beneficiaries are eligible under the plan, responsibil9 ity for payment for medical care may to some extent

10 remain with the participant or beneficiary.

11 ‘‘(B) For purposes of this paragraph—

12 ‘‘(i) The term ‘group health plan’ has the

13 meaning provided in section 607(1).

14 ‘‘(ii) A group health plan is ‘self-insured’ unless

15 all benefits provided under the plan are provided

16 under a contract or policy of insurance issued by a

17 person licensed by a State to engage in the business

18 of insurance.’’.

19 SEC. 5. LEGAL RELIEF FROM DAMAGES FOR INTER20 FERENCE WITH RIGHTS UNDER PLAN.

21 (a) DAMAGES.—Section 502(c) of the Employee Re22 tirement Income Security Act of 1974 (29 U.S.C. 1132(c))

23 is amended by adding at the end the following new para24 graph:
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1 ‘‘(4)(A) Any person who violates section 510 or 516

2 with respect to any participant or beneficiary under a

3 group health plan shall be liable to such participant or

4 beneficiary for actual damages. Subject to subparagraph

5 (B), damages for such violation shall not include punitive

6 damages.

7 ‘‘(B) In any case in which the violation constitutes

8 willful, fraudulent, or malicious conduct, bad faith, or

9 gross negligence, each person liable under subparagraph

10 (A) may, in the court’s discretion, be liable to such partici11 pant or beneficiary for exemplary damages equal to not

12 more than the greater of—

13 ‘‘(i) 200 percent of the amount of actual dam14 ages awarded, or

15 ‘‘(ii) $10,000.

16 Any such exemplary damages shall be in addition to any

17 actual damages under subparagraph (A).

18 ‘‘(C) For purposes of this paragraph, the term ‘group

19 health plan’ has the meaning provided in section 607(1).’’.

20 (b) ATTORNEY’S FEES.—Section 502(g) of such Act

21 (29 U.S.C. 1132(g)) is amended by adding at the end the

22 following new paragraph:

23 ‘‘(3) In any action for damages under subsection

24 (c)(4) in which the plaintiff prevails or substantially pre25 vails, the court shall award the plaintiff reasonable attor-
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1 ney’s fees and other costs of the action, including reason2 able expert witness fees and costs, to be paid by the de3 fendant. Fees awarded under this paragraph shall be at

4 generally prevailing hourly rates.’’.

5 SEC. 6. EFFECTIVE DATE.

6 The amendments made by this Act shall apply with

7 respect to changes in group health plan coverage adopted

8 on or after February 4, 1993.

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