II

104TH CONGRESS

1ST SESSION S. 588

To amend the Employee Retirement Income Security Act of 1974 with respect

to rules governing litigation contesting termination or reduction of retiree

health benefits.

IN THE SENATE OF THE UNITED STATES

MARCH 22 (legislative day, MARCH 16), 1995

Mr. DASCHLE (for himself, Mr. HARKIN, Mr. WELLSTONE, and Mr. PRESSLER) introduced the following bill; which was read twice and referred to

the Committee on Labor and Human Resources

A BILL

To amend the Employee Retirement Income Security Act

of 1974 with respect to rules governing litigation contesting termination or reduction of retiree health benefits.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Retiree Health Bene5 fits Protection Act’’.

6 SEC. 2. RULES GOVERNING LITIGATION INVOLVING RE7 TIREE HEALTH BENEFITS.

8 (a) IN GENERAL.—Part 5 of subtitle B of title I of

9 the Employee Retirement Income Security Act of 1974
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1 (29 U.S.C. 1131 et seq.) is amended by adding at the end

2 the following new section:

3 ‘‘SEC. 516. RULES GOVERNING LITIGATION INVOLVING RE4 TIREE HEALTH BENEFITS.

5 ‘‘(a) MAINTENANCE OF BENEFITS.—

6 ‘‘(1) IN GENERAL.—If—

7 ‘‘(A) retiree health benefits or plan or plan

8 sponsor payments in connection with such bene9 fits are to be or have been terminated or re10 duced under an employee welfare benefit plan;

11 and

12 ‘‘(B) an action is brought by any partici13 pant or beneficiary to enjoin or otherwise mod14 ify such termination or reduction,

15 the court without requirement of any additional

16 showing shall promptly order the plan and plan

17 sponsor to maintain the retiree health benefits and

18 payments at the level in effect immediately before

19 the termination or reduction while the action is

20 pending in any court. No security or other undertak21 ing shall be required of any participant or bene22 ficiary as a condition for issuance of such relief. An

23 order requiring such maintenance of benefits may be

24 refused or dissolved only upon determination by the
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1 court, on the basis of clear and convincing evidence,

2 that the action is clearly without merit.

3 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

4 apply to any action if—

5 ‘‘(A) the termination or reduction of re6 tiree health benefits is substantially similar to

7 a termination or reduction in health benefits (if

8 any) provided to current employees which oc9 curs either before, or at or about the same time

10 as, the termination or reduction of retiree

11 health benefits, or

12 ‘‘(B) the changes in benefits are in connec13 tion with the addition, expansion, or clarifica14 tion of the delivery system, including utilization

15 review requirements and restrictions, require16 ments that goods or services be obtained

17 through managed care entities or specified pro18 viders or categories of providers, or other spe19 cial major case management restrictions.

20 ‘‘(3) MODIFICATIONS.—Nothing in this section

21 shall preclude a court from modifying the obligation

22 of a plan or plan sponsor to the extent retiree bene23 fits are otherwise being paid by the plan sponsor.

24 ‘‘(b) BURDEN OF PROOF.—In addition to the relief

25 authorized in subsection (a) or otherwise available, if, in
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1 any action to which subsection (a)(1) applies, the terms

2 of the employee welfare benefit plan summary plan de3 scription or, in the absence of such description, other ma4 terials distributed to employees at the time of a partici5 pant’s retirement or disability, are silent or are ambigu6 ous, either on their face or after consideration of extrinsic

7 evidence, as to whether retiree health benefits and pay8 ments may be terminated or reduced for a participant and

9 his or her beneficiaries after the participant’s retirement

10 or disability, then the benefits and payments shall not be

11 terminated or reduced for the participant and his or her

12 beneficiaries unless the plan or plan sponsor establishes

13 by a preponderance of the evidence that the summary plan

14 description or other materials about retiree benefits—

15 ‘‘(1) were distributed to the participant at least

16 90 days in advance of retirement or disability;

17 ‘‘(2) did not promise retiree health benefits for

18 the lifetime of the participant and his or her spouse;

19 and

20 ‘‘(3) clearly and specifically disclosed that the

21 plan allowed such termination or reduction as to the

22 participant after the time of his or her retirement or

23 disability.
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1 The disclosure described in paragraph (3) must have been

2 made prominently and in language which can be under3 stood by the average plan participant.

4 ‘‘(c) REPRESENTATION.—Notwithstanding any other

5 provision of law, an employee representative of any retired

6 employee or the employee’s spouse or dependents may—

7 ‘‘(1) bring an action described in this section on

8 behalf of such employee, spouse, or dependents; or

9 ‘‘(2) appear in such an action on behalf of such

10 employee, spouse or dependents.

11 ‘‘(d) RETIREE HEALTH BENEFITS.—For the pur12 poses of this section, the term ‘retiree health benefits’

13 means health benefits (including coverage) which are pro14 vided to—

15 ‘‘(1) retired or disabled employees who, imme16 diately before the termination or reduction, have a

17 reasonable expectation to receive such benefits upon

18 retirement or becoming disabled; and

19 ‘‘(2) their spouses or dependents.’’

20 (b) CONFORMING AMENDMENT.—The table of con21 tents in section 1 of such Act is amended by inserting

22 after the item relating to section 515 the following new

23 item:

‘‘Sec. 516. Rules governing litigation involving retiree health benefits.’’

24 (c) EFFECTIVE DATE.—The amendments made by

25 this section shall apply to actions relating to terminations
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1 or reductions of retiree health benefits which are pending

2 or brought, on or after March 23, 1995.

Æ