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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1272 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 1272

To amend title I of the Employee Retirement Income Security Act of 1974 
    to set standards under such title for multiple employer welfare 
              arrangements providing health plan benefits.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 10, 1993

Mr. Petri (for himself, Mr. Martinez, Mr. Goodling, Mr. Gunderson, Mr. 
   Fawell, Mr. Ballenger, Ms. Molinari, Mr. Barrett of Nebraska, Mr. 
 Boehner, Mr. Grandy, Mr. Sensenbrenner, Mr. Oxley, Mrs. Morella, Mr. 
  Lewis of Florida, and Mr. Barton of Texas) 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 set standards under such title for multiple employer welfare 
              arrangements providing health plan benefits.

    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 ``Multiple Employer Health Benefits 
Protection Act of 1993''.

SEC. 2. LIMITED EXEMPTION UNDER PREEMPTION RULES FOR MULTIPLE EMPLOYER 
              PLANS PROVIDING HEALTH BENEFITS SUBJECT TO CERTAIN 
              FEDERAL STANDARDS.

    (a) In General.--Subtitle B of title I of the Employee Retirement 
Income Security Act of 1974 is amended by adding at the end the 
following new part:

                ``Part 7--Multiple Employer Health Plans

``SEC. 701. DEFINITIONS.

    ``For purposes of this part--
            ``(1) Insurer.--The term `insurer' means an insurance 
        company, insurance service, or insurance organization, licensed 
        to engage in the business of insurance by a State.
            ``(2) Participating employer.--The term `participating 
        employer' means, in connection with a multiple employer welfare 
        arrangement, any employer if any of its employees, or any of 
        the dependents of its employees, are or were covered under such 
        arrangement during the employment of the employees.
            ``(3) Excess/stop loss coverage.--The term `excess/stop 
        loss coverage' means, in connection with a multiple employer 
        welfare arrangement, a contract under which an insurer provides 
        for payment with respect to claims under the arrangement, 
        relating to participants or beneficiaries individually or 
        otherwise, in excess of an amount or amounts specified in such 
        contract.
            ``(4) Qualified actuary.--The term `qualified actuary' 
        means an individual who is a member of the American Academy of 
        Actuaries or meets such reasonable standards and qualifications 
        as the Secretary may provide by regulation.
            ``(5) Sponsor.--The term `sponsor' means, in connection 
        with a multiple employer welfare arrangement, the association 
        or other entity which establishes or maintains the arrangement.
            ``(6) State location of covered individuals.--
                    ``(A) In general.--A multiple employer welfare 
                arrangement shall be treated as covering individuals 
                located in a State only if the minimum required number 
                of individuals who are covered under the arrangement 
                are located in such State, except that if the minimum 
                required number of individuals are not located in any 
                State, such arrangement shall be treated as covering 
                individuals in any State in which any covered 
                individual is located.
                    ``(B) Minimum required number.--For purposes of 
                subparagraph (A), the minimum required number is the 
                greater of--
                            ``(i) 5 percent of the total number of 
                        individuals described in subparagraph (A), or
                            ``(ii) 50.
                    ``(C) Location of individuals in state.--For 
                purposes of subparagraph (A), an individual shall be 
                treated as located in a State if such individual is 
                employed in such State or the address of such 
                individual last known by the arrangement is located in 
                such State.
            ``(7) State insurance commissioner.--The term `State 
        insurance commissioner' means the insurance commissioner (or 
        similar official) of a State.
            ``(8) Domicile state.--The term `domicile State' means, in 
        connection with a multiple employer welfare arrangement, the 
        State in which, according to the application for an exemption 
        under this part, most individuals to be covered under the 
        arrangement are located, except that, in any case in which 
        information contained in the latest annual report of the 
        arrangement filed under this part indicates that most 
        individuals covered under the arrangement are located in a 
        different State, such term means such different State.
            ``(9) Fully insured arrangement.--A multiple employer 
        welfare arrangement shall be treated as fully insured only if 
        one or more insurers, health maintenance organizations, similar 
        organizations regulated under State law for solvency, or any 
        combination thereof are liable under one or more insurance 
        policies or contracts for all benefits under the arrangement 
        (irrespective of any recourse they may have against other 
        parties).
            ``(10) Multiple employer health plan.--The term `multiple 
        employer health plan' means a multiple employer welfare 
        arrangement treated as an employee welfare benefit plan by 
        reason of an exemption under this part.

``SEC. 702. EXEMPTED MULTIPLE EMPLOYER PLANS PROVIDING BENEFITS IN THE 
              FORM OF MEDICAL CARE RELIEVED OF CERTAIN RESTRICTIONS ON 
              PREEMPTION OF STATE LAW AND TREATED AS EMPLOYEE WELFARE 
              BENEFIT PLANS.

    ``(a) In General.--Subject to subsection (b), a multiple employer 
welfare arrangement which is not fully insured and with respect to 
which there is in effect an exemption granted by the Secretary under 
this part (or with respect to which there is pending a complete 
application for such an exemption and the Secretary determines that 
provisional protection under this part is appropriate)--
            ``(1) shall be treated for purposes of subtitle A and the 
        preceding parts of this subtitle as an employee welfare benefit 
        plan, irrespective of whether such arrangement is an employee 
        welfare benefit plan, and
            ``(2) shall be exempt from section 514(b)(6)(A)(ii).
    ``(b) Benefits Must Consist of Medical Care.--Subsection (a) shall 
apply to a multiple employer welfare arrangement only if the benefits 
provided thereunder consist solely of medical care described in section 
607(1) (disregarding such incidental benefits as the Secretary shall 
specify by regulation).
    ``(c) Restriction on Commencement of New Arrangements.--A multiple 
employer welfare arrangement providing benefits which consist of 
medical care described in section 607(1) which has not commenced 
operations as of January 1, 1994, may commence operations only if an 
exemption granted to the arrangement under this part is in effect (or 
there is pending with respect to the arrangement a complete application 
for such an exemption and the Secretary determines that provisional 
protection under this part is appropriate).

``SEC. 703. EXEMPTION PROCEDURE.

    ``(a) In General.--The Secretary shall grant an exemption described 
in section 702(a) to a multiple employer welfare arrangement if--
            ``(1) an application for such exemption with respect to 
        such arrangement, identified individually or by class, has been 
        duly filed in complete form with the Secretary in accordance 
        with this part,
            ``(2) such application demonstrates compliance with the 
        requirements of section 704 with respect to such arrangement, 
        and
            ``(3) the Secretary finds that such exemption is--
                    ``(A) administratively feasible,
                    ``(B) not adverse to the interests of the 
                individuals covered under the arrangement, and
                    ``(C) protective of the rights and benefits of the 
                individuals covered under the arrangement.
    ``(b) Notice and Hearing.--Before granting an exemption under this 
section, the Secretary shall publish notice in the Federal Register of 
the pendency of the exemption, shall require that adequate notice be 
given to interested persons, including the State insurance commissioner 
of each State in which covered individuals under the arrangement are, 
or are expected to be, located, and shall afford interested persons 
opportunity to present views. The Secretary may not grant an exemption 
under this section unless the Secretary affords an opportunity for a 
hearing and makes a determination on the record with respect to the 
findings required under subsection (a)(3). The Secretary shall, to the 
maximum extent practicable, make a final determination with respect to 
any application filed under this section in the case of a newly 
established arrangement within 90 days after the date which the 
Secretary determines is the date on which such application is filed in 
complete form.

``SEC. 704. ELIGIBILITY REQUIREMENTS.

    ``(a) Application for Exemption.--
            ``(1) In general.--An exemption may be granted by the 
        Secretary under this part only on the basis of an application 
        filed with the Secretary in such form and manner as shall be 
        prescribed in regulations of the Secretary. Any such 
        application shall be signed by the operating committee and the 
        sponsor of the arrangement.
            ``(2) Filing fee.--The arrangement shall pay to the 
        Secretary at the time of filing an application under this 
        section a filing fee in the amount of $5,000, which shall be 
        available, to the extent provided in appropriation Acts, to the 
        Secretary for the sole purpose of administering the exemption 
        procedures under this part.
            ``(3) Information included.--An application filed under 
        this section shall include, in a manner and form prescribed in 
        regulations of the Secretary, at least the following 
        information:
                    ``(A) Identifying information.--The names and 
                addresses of--
                            ``(i) the sponsor, and
                            ``(ii) the members of the operating 
                        committee of the arrangement.
                    ``(B) States in which arrangement intends to do 
                business.--The States in which individuals covered 
                under the arrangement are to be located and the number 
                of such individuals expected to be located in each such 
                State.
                    ``(C) Bonding requirements.--Evidence provided by 
                the operating committee that the bonding requirements 
                of section 412 will be met as of the date of the 
                application.
                    ``(D) Plan documents.--A copy of the documents 
                governing the arrangement (including any bylaws and 
                trust agreements), the summary plan description, and 
                other material describing the benefits and coverage 
                that will be provided to individuals covered under the 
                arrangement.
                    ``(E) Agreements with service providers.--A copy of 
                any agreements between the arrangement and contract 
                administrators and other service providers.
                    ``(F) Funding report.--A report setting forth 
                information determined as of a date within the 120-day 
                period ending with the date of the application, 
                including the following:
                            ``(i) Reserves.--A statement, certified by 
                        the operating committee of the arrangement, and 
                        a statement of actuarial opinion, signed by a 
                        qualified actuary, that all applicable 
                        requirements of section 707 are or will be met 
                        in accordance with regulations which the 
                        Secretary shall prescribe.
                            ``(ii) Adequacy of contribution rates.--A 
                        statement of actuarial opinion, signed by a 
                        qualified actuary, which sets forth a 
                        description of the extent to which contribution 
                        rates are adequate to provide for the payment 
                        of all obligations and the maintenance of 
                        required reserves under the arrangement for the 
                        12-month period beginning with such date within 
                        such 120-day period, taking into account the 
                        expected coverage and experience of the 
                        arrangement. If the contribution rates are not 
                        fully adequate, the statement of actuarial 
                        opinion shall indicate the extent to which the 
                        rates are inadequate and the changes needed to 
                        ensure adequacy.
                            ``(iii) Current and projected value of 
                        assets and liabilities.--A statement of 
                        actuarial opinion signed by a qualified 
                        actuary, which sets forth the current value of 
                        the assets and liabilities accumulated under 
                        the arrangement and a projection of the assets, 
                        liabilities, income, and expenses of the 
                        arrangement for the 12-month period referred to 
                        in clause (ii). The income statement shall 
                        identify separately the arrangement's 
                        administrative expenses and claims.
                            ``(iv) Costs of coverage to be charged and 
                        other expenses.--A statement of the costs of 
                        coverage to be charged, including an 
                        itemization of amounts for administration, 
                        reserves, and other expenses associated with 
                        the operation of the arrangement.
                            ``(v) Other information.--Any other 
                        information which may be prescribed in 
                        regulations of the Secretary as necessary to 
                        carry out the purposes of this part.
    ``(b) Other Requirements.--A complete application for an exemption 
under this part shall include information which the Secretary 
determines to be complete and accurate and sufficient to demonstrate 
that the following requirements are met with respect to the 
arrangement:
            ``(1) Sponsor.--The sponsor is, and has been (together with 
        its immediate predecessor, if any) for a continuous period of 
        not less than 3 years before the date of the application, 
        organized and maintained in good faith, with a constitution and 
        bylaws specifically stating its purpose, as a trade 
        association, an industry association, a professional 
        association, or a chamber of commerce or other business group, 
        for substantial purposes other than that of obtaining or 
        providing medical care described in section 607(1), and the 
        applicant demonstrates to the satisfaction of the Secretary 
        that the sponsor is established as a permanent entity which 
        receives the active support of its members.
            ``(2) Operating committee.--The arrangement is operated, 
        pursuant to a trust agreement, by an operating committee which 
        has complete fiscal control over the arrangement and which is 
        responsible for all operations of the arrangement, and the 
        operating committee has in effect rules of operation and 
        financial controls, based on a 3-year plan of operation, 
        adequate to carry out the terms of the arrangement and to meet 
        all requirements of this title applicable to the arrangement. 
        The members of the committee are individuals selected from 
        individuals who are the owners, officers, directors, or 
        employees of the participating employers or who are partners in 
        the participating employers and actively participate in the 
        business. No such member is an owner, officer, director, or 
        employee of, or partner in, a contract administrator or other 
        service provider to the arrangement, except that officers or 
        employees of a sponsor which is a service provider (other than 
        a contract administrator) to the arrangement may be members of 
        the committee if they constitute not more than 25 percent of 
        the membership of the committee and they do not provide 
        services to the arrangement other than on behalf of the 
        sponsor. The committee has sole authority to approve 
        applications for participation in the arrangement and to 
        contract with a service provider to administer the day-to-day 
        affairs of the arrangement.
            ``(3) Contents of governing instruments.--The instruments 
        governing the arrangement include a written instrument, meeting 
        the requirements of an instrument required under section 
        402(a)(1), which--
                    ``(A) provides that the committee serves as the 
                named fiduciary required for plans under section 
                402(a)(1) and serves in the capacity of a plan 
                administrator (referred to in section 3(16)(A)),
                    ``(B) provides that the sponsor is to serve as plan 
                sponsor (referred to in section 3(16)(B)),
                    ``(C) incorporates the requirements of section 707, 
                and
                    ``(D) provides that, effective upon the granting of 
                an exemption under this part--
                            ``(i) all participating employers must be 
                        members or affiliated members of the sponsor, 
                        except that, in the case of a sponsor which is 
                        a professional association or other individual-
                        based association, if at least one of the 
                        officers, directors, or employees of an 
                        employer, or at least one of the individuals 
                        who are partners in an employer and who 
                        actively participates in the business, is a 
                        member or affiliated member of the sponsor, 
                        participating employers may also include such 
                        employer, and
                            ``(ii) all individuals thereafter 
                        commencing coverage under the arrangement must 
                        be--
                                    ``(I) active or retired owners, 
                                officers, directors, or employees of, 
                                or partners in, participating 
                                employers, or
                                    ``(II) the beneficiaries of 
                                individuals described in subclause (I).
            ``(4) Contribution rates.--The contribution rates referred 
        to in subsection (a)(3)(F)(ii) are adequate.
            ``(5) Regulatory requirements.--Such other requirements as 
        the Secretary may prescribe by regulation as necessary to carry 
        out the purposes of this part.
    ``(c) Treatment of Party Seeking Exemption Where Party is Subject 
to Disqualification.--
            ``(1) In general.--In the case of any application for an 
        exemption under this part with respect to a multiple employer 
        welfare arrangement, if the Secretary determines that the 
        sponsor of the arrangement or any other person associated with 
        the arrangement is subject to disqualification under paragraph 
        (2), the Secretary may deny the exemption with respect to such 
        arrangement.
            ``(2) Disqualification.--A person is subject to 
        disqualification under this paragraph if such person--
                    ``(A) has intentionally made a material 
                misstatement in the application for exemption;
                    ``(B) has obtained or attempted to obtain an 
                exemption under this part through misrepresentation or 
                fraud;
                    ``(C) has misappropriated or converted to such 
                person's own use, or improperly withheld, money held 
                under a plan or any multiple employer welfare 
                arrangement;
                    ``(D) is prohibited (or would be prohibited if the 
                arrangement were a plan) from serving in any capacity 
                in connection with the arrangement under section 411,
                    ``(E) has failed to appear without reasonable cause 
                or excuse in response to a subpoena, examination, 
                warrant, or any other order lawfully issued by the 
                Secretary compelling such response,
                    ``(F) has previously been subject to a 
                determination under this part resulting in the denial, 
                suspension, or revocation of an exemption under this 
                part on similar grounds, or
                    ``(G) has otherwise violated any provision of this 
                title with respect to a matter which the Secretary 
                determines of sufficient consequence to merit 
                disqualification for purposes of this part.
    ``(d) Franchise Networks.--In the case of a multiple employer 
welfare arrangement established and maintained by a franchisor for a 
franchise network consisting of its franchisees, such franchisor shall 
be treated as the sponsor referred to in the preceding provisions of 
this section, such network shall be treated as an association referred 
to in such provisions, and each franchisee shall be treated as a member 
(of the association and the sponsor) referred to in such provisions, if 
all participating employers are such franchisees and the requirements 
of subsection (b)(1) with respect to a sponsor are met with respect to 
the network.
    ``(e) Certain Collectively Bargained Arrangements.--In applying the 
preceding provisions of this section in the case of a multiple employer 
welfare arrangement which would be described in section 3(40)(A)(i) but 
for the failure to meet any requirement of section 3(40)(C)--
            ``(1) paragraphs (1) and (2) of subsection (b) and 
        subparagraphs (A), (B), and (D) of paragraph (3) of subsection 
        (b) shall be disregarded, and
            ``(2) the joint board of trustees shall be considered the 
        operating committee of the arrangement.
    ``(f) Certain Arrangements Not Meeting Single Employer 
Requirement.--
            ``(1) In general.--In any case in which the majority of the 
        employees covered under a multiple employer welfare arrangement 
        are employees of a single employer (within the meaning of 
        clauses (i) and (ii) of section 3(40)(B)), if all other 
        employees covered under the arrangement are employed by 
        employers who are related to such single employer, subsection 
        (b)(3)(D) shall be disregarded.
            ``(2) Related employers.--For purposes of paragraph (1), 
        employers are `related' if there is among all such employers a 
        common ownership interest or a substantial commonality of 
        business operations based on common suppliers or customers.

``SEC. 705. ADDITIONAL REQUIREMENTS APPLICABLE TO EXEMPTED 
              ARRANGEMENTS.

    ``(a) Notice of Material Changes.--In the case of any multiple 
employer welfare arrangement with respect to which there is in effect 
an exemption granted under this part, descriptions of material changes 
in any information which was required to be submitted with the 
application for the exemption shall be filed in such form and manner as 
shall be prescribed in regulations of the Secretary. The Secretary may 
require by regulation prior notice of material changes with respect to 
specified matters which might serve as the basis for suspension or 
revocation of the exemption.
    ``(b) Reporting Requirements.--Under regulations of the Secretary, 
the requirements of sections 102, 103, and 104 shall apply with respect 
to any multiple employer welfare arrangement with respect to which 
there is or has been in effect an exemption granted under this part in 
the same manner and to the same extent as such requirements apply to 
employee welfare benefit plans, irrespective of whether such exemption 
continues in effect. The annual report required under section 103 for 
any plan year in the case of any such multiple employer welfare 
arrangement shall also include information described in section 
704(a)(3)(F) with respect to the plan year and, notwithstanding section 
104(a)(1)(A), shall be filed not later than 90 days after the close of 
the plan year.
    ``(c) Engagement of Qualified Actuary.--The operating committee of 
each multiple employer welfare arrangement with respect to which there 
is or has been in effect an exemption granted under this part shall 
engage, on behalf of all covered individuals, a qualified actuary who 
shall be responsible for the preparation of the materials comprising 
information necessary to be submitted by a qualified actuary under this 
part. The qualified actuary shall utilize such assumptions and 
techniques as are necessary to enable such actuary to form an opinion 
as to whether the contents of the matters reported under this part--
            ``(1) are in the aggregate reasonably related to the 
        experience of the arrangement and to reasonable expectations, 
        and
            ``(2) represent such actuary's best estimate of anticipated 
        experience under the arrangement.
The opinion by the qualified actuary shall be made with respect to, and 
shall be made a part of, the annual report.
    ``(d) Filing Notice of Exemption With States.--An exemption granted 
to a multiple employer welfare arrangement under this part shall not be 
effective unless written notice of such exemption is filed with the 
State insurance commissioner of each State in which at least 5 percent 
of the individuals covered under the arrangement are located. For 
purposes of this paragraph, an individual shall be considered to be 
located in the State in which a known address of such individual is 
located or in which such individual is employed. The Secretary may by 
regulation provide in specified cases for the application of the 
preceding sentence with lesser percentages in lieu of such 5 percent 
amount.

``SEC. 706. DISCLOSURE TO PARTICIPATING EMPLOYERS BY ARRANGEMENTS 
              PROVIDING MEDICAL CARE.

    ``(a) In General.--A multiple employer welfare arrangement 
providing benefits consisting of medical care described in section 
607(1) shall issue to each participating employer--
            ``(1) a document equivalent to the summary plan description 
        required of plans under part 1,
            ``(2) information describing the contribution rates 
        applicable to participating employers, and
            ``(3) a statement indicating--
                    ``(A) whether or not the arrangement is fully 
                insured,
                    ``(B) whether or not there is in effect with 
                respect to the arrangement an exemption granted under 
                this part and, if there is in effect such an exemption, 
                that the arrangement is (or is treated as) an employee 
                welfare benefit plan under this title, and
                    ``(C) that the arrangement is not a licensed 
                insurer under the laws of any State.
    ``(b) Time for Disclosure.--Such information shall be issued to 
employers within such reasonable period of time before becoming 
participating employers as may be prescribed in regulations of the 
Secretary.

``SEC. 707. MAINTENANCE OF RESERVES.

    ``(a) In General.--Each multiple employer welfare arrangement with 
respect to which there is or has been in effect an exemption granted 
under this part and which is not fully insured shall establish and 
maintain reserves, consisting of--
            ``(1) a reserve for unearned contributions,
            ``(2) a reserve for payment of claims reported and not yet 
        paid and claims incurred but not yet reported, and for expected 
        administrative costs with respect to such claims, and
            ``(3) a reserve, in an amount recommended by the qualified 
        actuary, for any other obligations of the arrangement.
    ``(b) Minimum Amount for Certain Reserves.--The total of the 
reserves described in subsection (a)(2) shall not be less than an 
amount equal to 25 percent of expected incurred claims and expenses for 
the plan year.
    ``(c) Required Margin.--In determining the amounts of reserves 
required under this section in connection with any multiple employer 
welfare arrangement, the qualified actuary shall include a margin for 
error and other fluctuations taking into account the specific 
circumstances of such arrangement.
    ``(d) Additional Requirements.--The Secretary may provide such 
additional requirements relating to reserves and excess/stop loss 
coverage as the Secretary considers appropriate. Such requirements may 
be provided, by regulation or otherwise, with respect to any 
arrangement or any class of arrangements.
    ``(e) Adjustments for Excess/Stop Loss Coverage.--The Secretary may 
provide for adjustments to the levels of reserves otherwise required 
under subsections (a) and (b) with respect to any arrangement or class 
of arrangements to take into account excess/stop loss coverage provided 
with respect to such arrangement or arrangements.

``SEC. 708. CORRECTIVE ACTIONS.

    ``(a) Actions to Avoid Depletion of Reserves.--A multiple employer 
welfare arrangement with respect to which there is or has been in 
effect an exemption granted under this part shall continue to meet the 
requirements of section 707, irrespective of whether such exemption 
continues in effect. The operating committee of such arrangement shall 
determine semiannually whether the requirements of section 707 are met. 
In any case in which the committee determines that there is reason to 
believe that there is or will be a failure to meet such requirements, 
or the Secretary makes such a determination and so notifies the 
committee, the committee shall immediately notify the qualified actuary 
engaged by the arrangement, and such actuary shall, not later than the 
end of the next following month, make such recommendations to the 
committee for corrective action as the actuary determines necessary to 
ensure compliance with section 707. Not later than 10 days after 
receiving from the actuary recommendations for corrective actions, the 
committee shall notify the Secretary (in such form and manner as the 
Secretary may prescribe by regulation) of such recommendations of the 
actuary for corrective action, together with a description of the 
actions (if any) that the committee has taken or plans to take in 
response to such recommendations. The committee shall thereafter report 
to the Secretary, in such form and frequency as the Secretary may 
specify to the committee, regarding corrective action taken by the 
committee until the requirements of section 707 are met.
    ``(b) Termination.--
            ``(1) Notice of termination.--In any case in which the 
        operating committee of a multiple employer welfare arrangement 
        with respect to which there is or has been in effect an 
        exemption granted under this part determines that there is 
        reason to believe that the arrangement will terminate, the 
        committee shall so inform the Secretary, shall develop a plan 
        for winding up the affairs of the arrangement in connection 
        with such termination in a manner which will result in timely 
        payment of all benefits for which the arrangement is obligated, 
        and shall submit such plan in writing to the Secretary. Actions 
        required under this paragraph shall be taken in such form and 
        manner as may be prescribed in regulations of the Secretary.
            ``(2) Actions required in connection with termination.--In 
        any case in which--
                    ``(A) the Secretary has been notified under 
                subsection (a) of a failure of a multiple employer 
                welfare arrangement with respect to which there is or 
                has been in effect an exemption granted under this part 
                to meet the requirements of section 707 and has not 
                been notified by the operating committee of the 
                arrangement that corrective action has restored 
                compliance with such requirements, and
                    ``(B) the Secretary determines that the continuing 
                failure to meet the requirements of section 707 can be 
                reasonably expected to result in a continuing failure 
                to pay benefits for which the arrangement is obligated,
        the operating committee of the arrangement shall, at the 
        direction of the Secretary, terminate the arrangement and, in 
        the course of the termination, take such actions as the 
        Secretary may require as necessary to ensure that the affairs 
        of the arrangement will be, to the maximum extent possible, 
        wound up in a manner which will result in timely payment of all 
        benefits for which the arrangement is obligated.

``SEC. 709. EXPIRATION, SUSPENSION, OR REVOCATION OF EXEMPTION.

    ``(a) Expiration and Renewal of Exemption.--An exemption granted to 
a multiple employer welfare arrangement under this part shall expire 3 
years after the date on which the exemption is granted. An exemption 
which has expired may be renewed by means of application for an 
exemption in accordance with section 704.
    ``(b) Suspension or Revocation of Exemption by Secretary.--The 
Secretary may suspend or revoke an exemption granted to a multiple 
employer welfare arrangement under this part--
            ``(1) for any cause that may serve as the basis for the 
        denial of an initial application for such an exemption under 
        section 704, or
            ``(2) if the Secretary finds that--
                    ``(A) the arrangement, or the sponsor thereof, in 
                the transaction of business while under the exemption, 
                has used fraudulent, coercive, or dishonest practices, 
                or has demonstrated incompetence, untrustworthiness, or 
                financial irresponsibility,
                    ``(B) the arrangement, or the sponsor thereof, is 
                using such methods or practices in the conduct of its 
                operations, so as to render its further transaction of 
                operations hazardous or injurious to participating 
                employers, or covered individuals,
                    ``(C) the arrangement, or the sponsor thereof, has 
                refused to be examined in accordance with this part or 
                to produce its accounts, records, and files for 
                examination in accordance with this part, or
                    ``(D) any of the officers of the arrangement, or 
                the sponsor thereof, has refused to give information 
                with respect to the affairs of the arrangement or the 
                sponsor or to perform any other legal obligation 
                relating to such an examination when required by the 
                Secretary in accordance with this part.
Any such suspension or revocation under this subsection shall be 
effective only upon a final decision of the Secretary made after notice 
and opportunity for a hearing is provided in accordance with section 
710.
    ``(c) Suspension or Revocation of Exemption Under Court 
Proceedings.--An exemption granted to a multiple employer welfare 
arrangement under this part may be suspended or revoked by a court of 
competent jurisdiction in an action by the Secretary brought under 
paragraph (2), (5), or (6) of section 502(a), except that the 
suspension or revocation under this subsection shall be effective only 
upon notification of the Secretary of such suspension or revocation.
    ``(d) Notification of Participating Employers.--All participating 
employers in a multiple employer welfare arrangement shall be notified 
of the expiration, suspension, or revocation of an exemption granted to 
such arrangement under this part, by such persons and in such form and 
manner as shall be prescribed in regulations of the Secretary, not 
later than 20 days after such expiration or after receipt of notice of 
a final decision requiring such suspension or revocation.
    ``(e) Publication of Expirations, Suspensions, and Revocations.--
The Secretary shall publish all expirations of, and all final decisions 
to suspend or revoke, exemptions granted under this part.

``SEC. 710. REVIEW OF ACTIONS OF THE SECRETARY.

    ``(a) In General.--Any decision by the Secretary which involves the 
denial of an application by a multiple employer welfare arrangement for 
an exemption under this part or the suspension or revocation of such an 
exemption shall contain a statement of the specific reason or reasons 
supporting the Secretary's action, including reference to the specific 
terms of the exemption and the statutory provision or provisions 
relevant to the determination.
    ``(b) Denials of Applications.--In the case of the denial of an 
application for an exemption under this part, the Secretary shall send 
a copy of the decision to the applicant by certified or registered mail 
at the address specified in the records of the Secretary. Such decision 
shall constitute the final decision of the Secretary unless the 
arrangement, or any party that would be prejudiced by the decision, 
files a written appeal of the denial within 30 days after the mailing 
of such decision. The Secretary may affirm, modify, or reverse the 
initial decision. The decision on appeal shall become final upon the 
mailing of a copy by certified or registered mail to the arrangement or 
party that filed the appeal.
    ``(c) Suspensions or Revocations of Exemption.--In the case of the 
suspension or revocation of an exemption granted under this part, the 
Secretary shall send a copy of the decision to the arrangement by 
certified or registered mail at its address, as specified in the 
records of the Secretary. Upon the request of the arrangement, or any 
party that would be prejudiced by the suspension or revocation, filed 
within 15 days of the mailing of the Secretary's decision, the 
Secretary shall schedule a hearing on such decision by written notice, 
sent by certified or registered mail to the arrangement or party 
requesting such hearing. Such notice shall set forth--
            ``(1) a specific date and time for the hearing, which shall 
        be within the 10-day period commencing 20 days after the date 
        of the mailing of the notice, and
            ``(2) a specific place for the hearing, which shall be in 
        the District of Columbia or in the State and county thereof (or 
        parish or other similar political subdivision thereof) in which 
        is located the arrangement's principal place of business.
The decision as affirmed or modified in such hearing shall constitute 
the final decision of the Secretary, unless such decision is reversed 
in such hearing.''.
    (b) Conforming Amendment to Definition of Plan Sponsor.--Section 
3(16)(B) of such Act (29 U.S.C. 1002(16)(B)) is amended by adding at 
the end the following new sentence: ``Such term also includes the 
sponsor (as defined in section 701(5)) of a multiple employer welfare 
arrangement, or a multiple employer health plan (as defined in section 
701(10)), with respect to which there is or has been in effect an 
exemption granted under part 7.''.
    (c) Alternative Means of Distribution of Summary Plan 
Descriptions.--Section 110 of such Act (29 U.S.C. 1030) is amended by 
adding at the end the following new subsection:
    ``(c) The Secretary shall prescribe, as an alternative method for 
distributing summary plan descriptions in order to meet the 
requirements of section 104(b)(1) in the case of multiple employer 
welfare arrangements providing benefits consisting of medical care 
described in section 607(1), a means of distribution of such 
descriptions by participating employers.''.
    (d) Clerical Amendment.--The table of contents in section 1 of the 
Employee Retirement Income Security Act of 1974 is amended by inserting 
after the item relating to section 608 the following new items:

                ``Part 7--Multiple Employer Health Plans

``Sec. 701. Definitions.
``Sec. 702. Exempted multiple employer welfare arrangements treated as 
                            employee welfare benefit plans and exempt 
                            from certain restrictions on preemption.
``Sec. 703. Exemption procedure.
``Sec. 704. Eligibility requirements.
``Sec. 705. Additional requirements applicable to exempted 
                            arrangements.
``Sec. 706. Disclosure to participating employers by arrangements 
                            providing medical care.
``Sec. 707. Maintenance of reserves.
``Sec. 708. Corrective actions.
``Sec. 709. Expiration, suspension, or revocation of exemption.
``Sec. 710. Review of actions of the Secretary.''.

SEC. 3. CLARIFICATION OF SCOPE OF PREEMPTION RULES.

    (a) In General.--Section 514(b)(6)(A)(ii) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1144(b)(6)(A)(ii)) is 
amended by inserting ``, but only, in the case of an arrangement which 
provides medical care described in section 607(1) and with respect to 
which an exemption under part 7 is not in effect,'' before ``to the 
extent not inconsistent with the preceding sections of this title''.
    (b) Cross-Reference.--Section 514(b)(6) of such Act (29 U.S.C. 
1144(b)(6)) is amended by adding at the end the following new 
subparagraph:
    ``(E) For additional rules relating to exemption from subparagraph 
(A)(ii) of multiple employer welfare arrangements providing medical 
care, see part 7.''.

SEC. 4. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER ARRANGEMENTS.

    Section 3(40)(B) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002(40)(B)) is amended--
            (1) in clause (i), by inserting ``for any plan year of any 
        such plan, or any fiscal year of any such other arrangement,'' 
        after ``single employer'', and by inserting ``during such year 
        or at any time during the preceding 1-year period'' after 
        ``common control'';
            (2) in clause (iii), by striking ``common control shall not 
        be based on an interest of less than 25 percent'' and inserting 
        ``an interest of greater than 25 percent may not be required as 
        the minimum interest necessary for common control'', and by 
        striking ``and'' at the end,
            (3) by redesignating clause (iv) as clause (v), and
            (4) by inserting after clause (iii) the following new 
        clause:
            ``(iv) in determining, after the application of clause (i), 
        whether benefits are provided to employees of two or more 
        employers, the arrangement shall be treated as having only 1 
        participating employer if, at the time the determination under 
        clause (i) is made, the number of individuals who are employees 
        and former employees of any one participating employer and who 
        are covered under the arrangement is greater than 95 percent of 
        the aggregate number of all individuals who are employees or 
        former employees of participating employers and who are covered 
        under the arrangement.''.

SEC. 5. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY BARGAINED 
              ARRANGEMENTS.

    (a) In General.--Section 3(40)(A)(i) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1002(40)(A)(i)) is amended to 
read as follows:
            ``(i) under or pursuant to one or more collective 
        bargaining agreements,''.
    (b) Limitations.--Section 3(40) of such Act (29 U.S.C. 1002(40)) is 
amended by adding at the end the following new subparagraphs:
                    ``(C) Clause (i) of subparagraph (A) shall apply 
                only if--
                            ``(i) the plan or other arrangement, and 
                        the employee organization or any other entity 
                        sponsoring the plan or other arrangement, do 
                        not--
                                    ``(I) utilize the services of any 
                                licensed insurance agent or broker for 
                                soliciting or enrolling employers or 
                                individuals as participating employers 
                                or covered individuals under the plan 
                                or other arrangement, or
                                    ``(II) pay a commission or any 
                                other type of compensation to a person 
                                that is related either to the volume or 
                                number of employers or individuals 
                                solicited or enrolled as participating 
                                employers or covered individuals under 
                                the plan or other arrangement, or to 
                                the dollar amount or size of the 
                                contributions made by participating 
                                employers or covered individuals to the 
                                plan or other arrangement,
                            ``(ii) not less than 85 percent of the 
                        covered individuals under the plan or other 
                        arrangement are individuals who--
                                    ``(I) are employed within a 
                                bargaining unit covered by at least one 
                                of the collective bargaining agreements 
                                with a participating employer (or are 
                                covered on the basis of an individual's 
                                employment in such a bargaining unit), 
                                or
                                    ``(II) are present or former 
                                employees of the sponsoring employee 
                                organization, of an employer who is or 
                                was a party to at least one of the 
                                collective bargaining agreements, or of 
                                the plan or other arrangement or a 
                                related plan or arrangement (or are 
                                covered on the basis of such present or 
                                former employment),
                            ``(iii) the plan or other arrangement does 
                        not provide benefits to individuals (other than 
                        individuals described in clause (ii)(II)) who 
                        work outside the standard metropolitan 
                        statistical area in which the sponsoring 
                        employee organization represents employees (or 
                        to individuals (other than individuals 
                        described in clause (ii)(II)) on the basis of 
                        such work by others), except that in the case 
                        of a sponsoring employee organization that 
                        represents employees who work outside of any 
                        standard metropolitan statistical area, this 
                        clause shall be applied by reference to the 
                        State in which the sponsoring organization 
                        represents employees,
                            ``(iv) the employee organization or other 
                        entity sponsoring the plan or other arrangement 
                        certifies to the Secretary each year, in a form 
                        and manner which shall 
                        be prescribed in regulations of the Secretary--
                                    ``(I) that the plan or other 
                                arrangement meets the requirements of 
                                clauses (i), (ii), and (iii), and
                                    ``(II) if, for any year, 10 percent 
                                or more of the covered individuals 
                                under the plan are individuals not 
                                described in subclause (I) or (II) of 
                                clause (ii), the total number of 
                                covered individuals and the total 
                                number of covered individuals not so 
                                described.
                    ``(D)(i) Clause (i) of subparagraph (A) shall not 
                apply to a plan or other arrangement that is 
                established or maintained pursuant to one or more 
                collective bargaining agreements which the National 
                Labor Relations Boards determines to have been 
                negotiated or otherwise agreed to in a manner or 
                through conduct which violates section 8(a)(2) of the 
                National Labor Relations Act (29 U.S.C. 158(a)(2)).
                    ``(ii)(I) Whenever a State insurance commissioner 
                has reason to believe that this subparagraph is 
                applicable to part or all of a plan or other 
                arrangement, the State insurance commissioner may file 
                a petition with the National Labor Relations Board for 
                a determination under clause (i), along with sworn 
                written testimony supporting the petition.
                    ``(II) The Board shall give any such petition 
                priority over all other petitions and cases, other than 
                other petitions under subclause (I) or cases given 
                priority under section 10 of the National Labor 
                Relations Act (29 U.S.C. 160).
                    ``(III) The Board shall determine, upon the 
                petition and any response, whether, on the facts before 
                it, the plan or other arrangement was negotiated, 
                created, or otherwise agreed to in a manner or through 
                conduct which violates section 8(a)(2) of the National 
                Labor Relations Act (29 U.S.C. 158(a)(2)). Such 
                determination shall constitute a final determination 
                for purposes of this subparagraph and shall be binding 
                in all Federal or State actions with respect to the 
                status of the plan or other arrangement under this 
                subparagraph.
                    ``(IV) A person aggrieved by the determination of 
                the Board under subclause (III) may obtain review of 
                the determination in any United States court of appeals 
                in the circuit in which the collective bargaining at 
                issue occurred. Commencement of proceedings under this 
                subclause shall not, unless specifically ordered by the 
                court, operate as a stay of any State administrative or 
                judicial action or proceeding related to the status of 
                the plan or other arrangement, except that in no case 
                may the court stay, before the completion of the 
                review, an order which prohibits the enrollment of new 
                individuals into coverage under a plan or 
                arrangement.''.

SEC. 6. EMPLOYEE LEASING HEALTHCARE ARRANGEMENTS.

    (a) Employee Leasing Healthcare Arrangement Defined.--Section 3 of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002) is 
amended by adding at the end the following new paragraph:
    ``(43) Employee Leasing Healthcare Arrangement.--
            ``(A) In general.--Subject to subparagraph (B), the term 
        `employee leasing healthcare arrangement' means any labor 
        leasing arrangement, staff leasing arrangement, extended 
        employee staffing or supply arrangement, or other arrangement 
        under which--
                    ``(i) one business or other entity (hereinafter in 
                this paragraph referred to as the `lessee'), under a 
                lease or other arrangement entered into with any other 
                business or other entity (hereinafter in this paragraph 
                referred to as the `lessor'), receives from the lessor 
                the services of individuals to be performed under such 
                lease or other arrangement, and
                    ``(ii) benefits consisting of medical care 
                described in section 607(1) are provided to such 
                individuals or such individuals and their dependents as 
                participants and beneficiaries.
            ``(B) Exception.--Such term does not include an arrangement 
        described in subparagraph (A) if, under such arrangement, the 
        lessor retains, both legally and in fact, a complete right of 
        direction and control within the scope of employment over the 
        individuals whose services are supplied under such lease or 
        other arrangement, and such individuals perform a specified 
        function for the lessee which is separate and divisible from 
        the primary business or operations of the lessee.''.
    (b) Treatment of Employee Leasing Healthcare Arrangements as 
Multiple Employer Welfare Arrangements.--Section 3(40) of such Act (29 
U.S.C. 1002(40)) (as amended by the preceding provisions of this Act) 
is further amended by adding at the end the following new subparagraph:
    ``(E) The term `multiple employer welfare arrangement' includes any 
employee leasing healthcare arrangement, except that such term does not 
include any employee leasing healthcare arrangement which is a multiple 
employer health plan (as defined in section 701(10)).''.
    (c) Special Rules for Employee Leasing Healthcare Arrangements.--
            (1) In general.--Part 7 of subtitle B of title I of such 
        Act (as added by the preceding provisions of this Act) is 
        amended by adding at the end the following new section:

``SEC. 711. SPECIAL RULES FOR EMPLOYEE LEASING HEALTHCARE ARRANGEMENTS.

    ``(a) In General.--The requirements of paragraphs (1), (2), and (3) 
of section 704(b) shall be treated as satisfied in the case of a 
multiple employer welfare arrangement that is an employee leasing 
healthcare arrangement if the application for exemption includes 
information which the Secretary determines to be complete and accurate 
and sufficient to demonstrate that the following requirements are met 
with respect to the arrangement:
            ``(1) 3-year tenure.--The lessor has been in operation for 
        not less than 3 years.
            ``(2) Solicitation restrictions.--Employee leasing services 
        provided under the arrangement are not solicited, advertised, 
        or marketed through licensed insurance agents or brokers acting 
        in such capacity.
            ``(3) Creation of employment relationship.--
                    ``(A) Disclosure statement.--Written notice is 
                provided to each applicant for employment subject to 
                coverage under the arrangement, at the time of 
                application for employment and before commencing 
                coverage under the arrangement, stating that the 
                employer is the lessor under the arrangement.
                    ``(B) Informed consent.--Each such applicant signs 
                a written statement consenting to the employment 
                relationship with the lessor.
                    ``(C) Informed recruitment of lessee's employees.--
                In any case in which the lessor offers employment to an 
                employee of a lessee under the arrangement, the lessor 
                informs each employee in writing that his or her 
                acceptance of employment with the lessor is voluntary 
                and that refusal of such offer will not be deemed to be 
                resignation from or abandonment of current employment.
            ``(4) Requisite employer-employee relationship under 
        arrangement.--Under the employer-employee relationship with the 
        employees of the lessor--
                    ``(A) the lessor retains the ultimate authority to 
                hire, terminate, and reassign such employees,
                    ``(B) the lessor is responsible for the payment of 
                wages, payroll-related taxes, and employee benefits, 
                without regard to payment by the lessee to the lessor 
                for its services,
                    ``(C) the lessor maintains the right of direction 
                and control over its employees, except to the extent 
                that the lessee is responsible for supervision of the 
                work performed consistent with the lessee's 
                responsibility for its product or service, and
                    ``(D) in accordance with section 301(a) of the 
                Labor Management Relations Act, 1947 (29 U.S.C. 
                185(a)), the lessor retains in the absence of an 
                applicable collective bargaining agreement, the right 
                to enter into arbitration and to decide employee 
                grievances, and
                    ``(E) no owner, officer, or director of, or partner 
                in, a lessee is an employee of the lessor, and not more 
                than 10 percent of the individuals covered under the 
                arrangement consist of owners, officers, or directors 
                of, or partners in, such a lessee (or any combination 
                thereof).
    ``(b) Definitions.--For purposes of this section--
            ``(1) Lessor.--The term `lessor' means the business or 
        other entity from which services of individuals are obtained 
        under an employee leasing healthcare arrangement.
            ``(2) Lessee.--The term `lessee' means a business or other 
        entity which receives the services of individuals provided 
        under an employee leasing healthcare arrangement.''.
            (2) Clerical amendment.--The table of contents in section 1 
        of such Act (as amended by the preceding provisions of this 
        Act) is further amended by inserting after the item relating to 
        section 710 the following new item:

``Sec. 711. Employee leasing healthcare arrangements.''.

SEC. 7. ENFORCEMENT PROVISIONS RELATING TO MULTIPLE EMPLOYER WELFARE 
              ARRANGEMENTS AND EMPLOYEE LEASING HEALTHCARE 
              ARRANGEMENTS.

    (a) Enforcement of Filing Requirements.--Section 502 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132) is 
amended--
            (1) in subsection (a)(6), by striking ``subsection (c)(2) 
        or (i) or (l)'' and inserting ``paragraph (2) or (4) of 
        subsection (c) or subsection (i) or (l)''; and
            (2) by adding at the end of subsection (c) the following 
        new paragraph:
    ``(4) The Secretary may assess a civil penalty against any person 
of up to $1,000 a day from the date of such person's failure or refusal 
to file the information required to be filed with the Secretary under 
section 101(e).''.
    (b) Actions by States in Federal Court.--Section 502(a) of such Act 
(29 U.S.C. 1132(a)) is amended--
            (1) in paragraph (5), by striking ``or'' at the end;
            (2) in paragraph (6), by striking the period and inserting 
        ``, or''; and
            (3) by adding at the end the following:
            ``(7) by a State official having authority under the law of 
        such State to enforce the laws of such State regulating 
        insurance, to enjoin any act or practice which violates any 
        provision of part 7 which such State has the power to enforce 
        under part 7.''.
    (c) Criminal Penalties for Certain Willful Misrepresentations.--
Section 501 of such Act (29 U.S.C. 1131) is amended--
            (1) by inserting ``(a)'' after ``Sec. 501.''; and
            (2) by adding at the end the following new subsection:
    ``(b) Any person who, either willfully or with willful blindness, 
falsely represents, to any employee, any employee's beneficiary, any 
employer, the Secretary, or any State, an arrangement established or 
maintained for the purpose of offering or providing any benefit 
described in section 3(1) to employees or their beneficiaries as being 
a multiple employer welfare arrangement granted an exemption under part 
7, as being an employee leasing healthcare arrangement under such an 
exemption, or as having been established or maintained under or 
pursuant to a collective bargaining agreement shall, upon conviction, 
be imprisoned not more than five years, be fined under title 18, United 
States Code, or both.''.
    (d) Cease Activities Orders.--Section 502 of such Act (29 U.S.C. 
1132) is amended by adding at the end the following new subsection:
    ``(m)(1) Subject to paragraph (2), upon application by the 
Secretary showing the operation, promotion, or marketing of a multiple 
employer welfare arrangement providing benefits consisting of medical 
care described in section 607(1) that--
            ``(A) is not licensed, registered, or otherwise approved 
        under the insurance laws of the States in which the arrangement 
        offers or provides benefits, or
            ``(B) is not operating in accordance with the terms of an 
        exemption granted by the Secretary under part 7,
a district court of the United States shall enter an order requiring 
that the arrangement cease activities.
    ``(2) Paragraph (1) shall not apply in the case of a multiple 
employer welfare arrangement if the arrangement shows that it--
            ``(A) is fully insured, within the meaning of section 
        701(9),
            ``(B) is licensed, registered, or otherwise approved in 
        each State in which it offers or provides benefits, except to 
        the extent that such State does not require licensing, 
        registration, or approval of fully insured multiple employer 
        welfare arrangements, and
            ``(C) with respect to each such State, is operating in 
        accordance with applicable State insurance laws that are not 
        superseded under section 514.
    ``(3) The court may grant such additional equitable or remedial 
relief, including any relief available under this title, as it deems 
necessary to protect the interests of the public and of persons having 
claims for benefits against the arrangement.''.
    (e) Responsibility for Claims Procedure.--Section 503 of such Act 
(29 U.S.C. 1133) is amended by adding at the end (after and below 
paragraph (2)) the following new sentence: ``The terms of each multiple 
employer welfare arrangement to which this section applies and which 
provides benefits consisting of medical care described in section 
607(1) shall require the operating committee or the named fiduciary (as 
applicable) to ensure that the requirements of this section are met in 
connection with claims filed under the arrangement.''.

SEC. 8. FILING REQUIREMENTS FOR HEALTH BENEFIT MULTIPLE EMPLOYER 
              WELFARE ARRANGEMENTS.

    Section 101 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1021) is amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e)(1) Each multiple employer welfare arrangement shall file with 
the Secretary a registration statement described in paragraph (2) 
within 60 days before commencing operations (in the case of an 
arrangement commencing operations on or after January 1, 1994) and no 
later than February 15 of each year (in the case of an arrangement in 
operation since the beginning of such year), unless, as of the date by 
which such filing otherwise must be made, such arrangement provides no 
benefits consisting of medical care described in section 607(1).
    ``(2) Each registration statement--
            ``(A) shall be filed in such form, and contain such 
        information concerning the multiple employer welfare 
        arrangement and any persons involved in its operation 
        (including whether the arrangement is fully insured), as shall 
        be provided in regulations which shall be prescribed by the 
        Secretary, and
            ``(B) if the arrangement is not fully insured, shall 
        contain a certification that copies of such registration 
        statement have been transmitted by certified mail to--
                    ``(i) in the case of an arrangement with respect to 
                which an exemption under part 7 is in effect, the State 
                insurance commissioner of the domicile State of such 
                arrangement, or
                    ``(ii) in the case of an arrangement which is not 
                so exempt, the State insurance commissioner of each 
                State in which the arrangement is located.
    ``(3) The person or persons responsible for filing the annual 
registration statement are--
            ``(A) the trustee or trustees so designated by the terms of 
        the instrument under which the multiple employer welfare 
        arrangement is established or maintained, or
            ``(B) in the case of a multiple employer welfare 
        arrangement for which the trustee or trustees cannot be 
        identified, or upon the failure of the trustee or trustees of 
        an arrangement to file, the person or persons actually 
        responsible for the acquisition, disposition, control, or 
        management of the cash or property of the arrangement, 
        irrespective of whether such acquisition, disposition, control, 
        or management is exercised directly by such person or persons 
        or through an agent designated by such person or persons.
    ``(4) Any agreement entered into under section 506(c) with a State 
as the primary domicile State with respect to any multiple employer 
welfare arrangement shall provide for simultaneous filings of reports 
required under this subsection with the Secretary and with the State 
insurance commissioner of such State.''.

SEC. 9. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

    Section 506 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1136) is amended by adding at the end the following new 
subsection:
    ``(c) Responsibility With Respect to Multiple Employer Welfare 
Arrangements.--
            ``(1) State enforcement.--
                    ``(A) Agreements with states.--A State may enter 
                into an agreement with the Secretary for delegation to 
                the State of some or all of the Secretary's authority 
                under sections 502 and 504 to enforce the provisions of 
                this title applicable to multiple employer welfare 
                arrangements with respect to which an exemption under 
                part 7 is or has been in effect. The Secretary shall 
                enter into the agreement if the Secretary determines 
                that the delegation provided for therein would not 
                result in a lower level or quality of enforcement of 
                the provisions of this title.
                    ``(B) Delegations.--Any department, agency, or 
                instrumentality of a State to which authority is 
                delegated pursuant to an agreement entered into under 
                this paragraph may, if authorized under State law and 
                to the extent consistent with such agreement, exercise 
                the powers of the Secretary under this title which 
                relate to such authority.
                    ``(C) Concurrent authority of the secretary.--If 
                the Secretary delegates authority to a State in an 
                agreement entered into under subparagraph (A), the 
                Secretary may continue to exercise such authority 
                concurrently with the State.
                    ``(D) Recognition of primary domicile state.--In 
                entering into any agreement with a State under 
                subparagraph (A), the Secretary shall ensure that, as a 
                result of such agreement and all other agreements 
                entered into under subparagraph (A), only one State 
                will be recognized, with respect to any particular 
                multiple employer welfare arrangement, as the primary 
                domicile State to which authority has been delegated 
                pursuant to such agreements.
            ``(2) Assistance to states.--The Secretary shall--
                    ``(A) provide enforcement assistance to the States 
                with respect to multiple employer welfare arrangements, 
                including, but not limited to, coordinating Federal and 
                State efforts through the establishment of cooperative 
                agreements with appropriate State agencies under which 
                the Pension and Welfare Benefits Administration keeps 
                the States informed of the status of its cases and 
                makes available to the States information obtained by 
                it,
                    ``(B) provide continuing technical assistance to 
                the States with respect to issues involving multiple 
                employer welfare arrangements and this Act,
                    ``(C) assist the States in obtaining from the 
                Office of Regulations and Interpretations timely and 
                complete responses to requests for advisory opinions on 
                issues described in subparagraph (B), and
                    ``(D) distribute copies of all advisory opinions 
                described in subparagraph (C) to the State insurance 
                commissioner of each State.''.

SEC. 10. EFFECTIVE DATE; TRANSITIONAL RULES.

    (a) Effective Date.--The amendments made by this Act shall take 
effect January 1, 1994, except that the Secretary of Labor may issue 
regulations before such date under such amendments. The Secretary shall 
issue all regulations necessary to carry out the amendments made by 
this Act before the effective date thereof.
    (b) Transitional Rules.--If the sponsor of a multiple employer 
welfare arrangement which, as of January 1, 1994, provides benefits 
consisting of medical care described in section 607(1) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1167(1)) files with 
the Secretary of Labor an application for an exemption under part 7 of 
subtitle B of title I of such Act within 180 days after such date and 
the Secretary has not, as of 90 days after receipt of such application, 
found such application to be materially deficient, section 514(b)(6)(A) 
of such Act (29 U.S.C. 1144(b)(6)(A)) shall not apply with respect to 
such arrangement during the 18-month period following such date. If the 
Secretary determines, at any time after the date of enactment of this 
Act, that any such exclusion from coverage under the provisions of such 
section 514(b)(6)(A) of a multiple employer welfare arrangement would 
be detrimental to the interests of individuals covered under such 
arrangement, such exclusion shall cease as of the date of the 
determination. Any determination made by the Secretary under this 
subsection shall be in the Secretary's sole discretion.

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