Federal Register / Vol. 65, No. 29 / Friday, February 11, 2000 / Rules and Regulations 7181

1Both the Small Business Job Protection Act of

1996 (Pub. L. 104–188) and the Health Insurance

Portability and Accountability Act of 1996 (Pub. L.

104–191) created a new section 101(g) of EIRSA.

Accordingly, section 101(g) of ERISA that relates to

reporting by certain arrangements is referred to in

this document as section 101(g){h} of ERISA.

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

29 CFR Part 2560

RIN 1210–AA54

Interim Rule for the Assessment of

Civil Penalties Under Section 502(c)(5)

of ERISA

AGENCY: Pension and Welfare Benefits

Administration, Department of Labor.

ACTION: Interim final rule with request

for comments.

SUMMARY: This document contains an

interim final rule that describes

procedures relating to the assessment of

civil penalties under section 502(c)(5) of

the Employee Retirement Income

Security Act of 1974, (ERISA) as

amended by the Health Insurance

Portability and Accountability Act of

1996 (HIPAA). Section 502(c)(5)

authorizes the Secretary of Labor (the

Secretary) to assess a civil penalty

against any person of up to $1,000 a day

from the date of the person’s failure or

refusal to file the information required

to be filed by such person with the

Secretary under regulations prescribed

pursuant to section 101(g){h} of ERISA.

The interim final rule clarifies the

manner in which the Secretary will

assess penalties under ERISA section

502(c)(5), as amended by HIPAA, and

the procedures for agency review.

Separate documents containing interim

final rules implementing the reporting

requirement under section 101(g){h} of

ERISA and interim final rules relating to

procedures for administrative hearings

and appeals on assessments of penalties

under ERISA section 502(c)(5) appear

separately in this issue of the Federal

Register.

DATES: Effective date: This interim final

rule is effective April 11, 2000.

Comment date: Written comments are

invited and must be received by the

Department on or before March 13,

2000.

Applicability date: This section

applies to administrators of multiple

employer welfare arrangements that are

not group health plans beginning May 1,

2000.

ADDRESSES: Interested persons are

invited to submit written comments

(preferably with three copies) to:

Pension and Welfare Benefits

Administration, Room C–5331, U.S.

Department of Labor, 200 Constitution

Avenue, NW., Washington, DC 20210.

Attention: MEWA reporting. Written

comments may also be sent by Internet

to the following address:

‘‘MEWApen@pwba.dol.gov’’ (without

the quotation marks).

All submissions will be open to

public inspection and copying from 8:30

a.m. to 4:30 p.m. in the Public

Documents Room, Pension and Welfare

Benefits Administration, U.S.

Department of Labor, Room N–5638,

200 Constitution Avenue, NW.,

Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT:

Amy J. Turner, Pension and Welfare

Benefits Administration, U.S.

Department of Labor, Rm C–5331, 200

Constitution Avenue, NW., Washington,

DC 20210 (telephone (202) 219–7006).

This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

A. Background

This document contains an interim

final rule that provides guidance

relating to the assessment of civil

penalties under section 502(c)(5) of the

Employee Retirement Income Security

Act of 1974 (ERISA), as amended by the

Health Insurance Portability and

Accountability Act of 1996 (Pub. L.

104–191) (HIPAA), for the failure or

refusal to file a report pursuant to

section 101(g){h} 1 of ERISA, as

amended by HIPAA. This regulation is

designed to parallel the procedures set

forth in § 2560.502c–2 regarding civil

penalties under section 502(c)(2) of

ERISA relating to reports required to be

filed under ERISA section 101(b)(4).

B. Overview of the Interim Final Rule

Section 502(c)(5) provides that the

Secretary may assess a civil penalty

against any person of up to $1,000 a day

from the date of the person’s failure or

refusal to file the report required to be

filed under section 101(g){h}. In order

to implement this provision, the

Department is publishing this interim

final rule, and, in a separate document,

interim final rules relating to procedures

for administrative hearings and appeals

on assessments of civil penalties under

ERISA section 502(c)(5).

In general, the interim final rule in

§ 2560.502c–5, discussed in detail

below, addresses:

• The circumstances under which a

penalty may be assessed (§ 2560.502c–

5(a));

• Factors considered by the

Department in determining the amount

of a penalty (§ 2560.502c–5(b));

• The provision of notice to the

administrator of the Department’s

intention to assess a penalty

(§ 2560.502c–5(c));

• Waiver of all or part of the penalty

by the Department upon a showing of

reasonable cause and the requirements

relating to a showing of reasonable

cause (§ 2560.502c–5(d) and (e));

• The effect of a failure to file a

statement of reasonable cause

(§ 2560.502c–5(f));

• The provision of notice to the

administrator of the Department’s

findings as to reasonable cause and the

effect of such notice where a penalty is

assessed (§ 2560.502c–5(g));

• The effect of a request for a hearing

before an administrative law judge

(§ 2560.502c–5(h));

• Service of notices (§ 2560.502c–

5(i));

• The liability of the administrator for

assessed penalties (§ 2560.502c–5(j));

• A cross-reference to procedural

rules relating to administrative hearings

(§ 2560.502c–5(k)); and

• An applicability date provision

(§ 2560.502c–5(l)).

In general, the assessment of penalties

under section 502(c)(5) and

§ 2560.502c–5 would occur only in

those instances where the administrator

fails or refuses to file a report within the

prescribed time frames or, after

notification that the report has been

rejected and the reasons therefor, where

the administrator fails or refuses to file

a corrected report within the 45 day

period prescribed in § 2560.502c–

5(b)(3). Accordingly, in the case of a

report rejected under § 2520.101–

2(d)(2), the administrator can avoid the

assessment of any penalty under section

502(c)(5) by making the necessary

corrections to the filing within the

prescribed time frame. Moreover, as

reflected in paragraph (g) of the interim

final rule, penalties may be waived, in

whole or in part, upon the

administrator’s showing of reasonable

cause for the failure to file a complete

or timely report.

C. Discussion of the Interim Final Rule

1. Scope

Paragraph (a) of the interim final rule

addresses the general application of

section 502(c)(5). Paragraph (a)(1)

provides that the administrator of a

MEWA that is not a group health plan

and for which a report is required to be

filed under section 101(g){h} of ERISA

and § 2520.101–2 is liable for the

penalties assessed under section

502(c)(5) for each failure or refusal to

file a completed report. Accordingly, if

a person is required to file more than

7182 Federal Register / Vol. 65, No. 29 / Friday, February 11, 2000 / Rules and Regulations

one report because that person serves an

administrator with respect to several

entities for which a filing is required,

separate penalties may be assessed with

respect to each instance for which there

is a failure or refusal to file the required

report. Paragraph (a)(2) defines a failure

or refusal to file the report as a failure

or refusal to file, in whole or in part,

that information described in ERISA

section 101(g){h} and § 2520.101–2, at

the time and in the manner prescribed

for such filings. Accordingly, the filing

of an incomplete report will be treated

as a failure to file under section

502(c)(5). See § 2520.101–2(d)(2).

2. Amount Assessed

Paragraph (b)(1) of the interim final

rule provides that the Department shall

take into account the degree and/or

willfulness of the failure to file the

report in determining the amount to be

assessed under section 502(c)(5).

Consistent with the terms of section

502(c)(5), paragraph (b)(1) provides that

the penalty assessed by the Department

shall not exceed $1,000 a day. With

regard to the period for which a penalty

may be assessed, paragraph (b)(1)

provides that the penalty generally will

be computed from the date of the

administrator’s failure or refusal to file

the report and continue up to the date

on which a report meeting the

requirements of section 101(g){h} and

§ 2520.101–2, as determined by the

Secretary, is filed. Accordingly, under

paragraph (b)(1) of this section, liability

for penalties under section 502(c)(5)

would continue for each day up to the

date compliance is achieved. However,

under paragraph (b)(2), the interim final

rule provides for tolling of the daily

penalty where, upon receipt of a notice

of intent to assess a penalty (as

described in paragraph (c)), the

administrator files with the Department

a statement of reasonable cause for the

failure to file (as described in paragraph

(e)). Under paragraph (b)(2), the

administrator will not incur liability for

penalties for any day beginning with the

date the Department serves the

administrator a copy of the notice to

assess a penalty and ending with the

day after the Department issues the

notice of determination on the statement

of reasonable cause (as described in

paragraph(g)). This limited tolling of the

penalty will permit MEWA

administrators to present arguments to

the Department concerning any

reasonable cause for the failure to file

without incurring penalties for the

period of time during which the

administrator’s statement of reasonable

cause is being considered by the

Department.

Paragraph (b)(3) defines the date on

which an administrator failed or refused

to file the report as the date on which

the report was due (determined without

regard to any extension of time for

filing). In this regard, paragraph (b)(3)

provides that a report which is rejected

under § 2520.101–2(d)(2) shall be

treated as a failure to file the report

when a revised report meeting the

requirements of this section is not filed

within 45 days of the date of the

Department’s notice of rejection.

In those situations where an extension

of time is granted for the filing of the

report and the administrator fails either

to file a timely report or a complete

report within the extension period, the

administrator should not, for purposes

of the section 502(c)(5) penalty, benefit

from the requested extension.

Accordingly, the interim rule states that

for purposes of paragraph (b)(3), the

penalty is assessed beginning on the day

after the date of the administrator’s

failure or refusal to file the report.

3. Notice of Penalty

Paragraph (c) of the interim final rule

provides that, prior to the assessment of

any penalty under section 502(c)(5), the

Department shall provide the

administrator with a written notice

indicating the Department’s intent to

assess a penalty under section 502(c)(5),

the amount of the penalty, the period to

which the penalty applies, and a

statement of the facts and reasons for

the penalty. This notice is to be served

in accordance with the service of notice

provisions of § 2560.502c–5(i) of this

interim final rule. Under § 2560.502c–

5(f) of this interim final rule, this notice

becomes a final order of the Secretary,

within the meaning of § 2570.91(g) (see

interim final rules §§ 2570.90 et seq.,

published separately in this issue of the

Federal Register), within 30 days of the

service of notice, unless a statement of

reasonable cause, described in

§ 2560.502c–5(e) of the interim final

rule, is filed with the Department.

4. Waiver of Penalty

Paragraphs (d), (e), (f), (g) and (h) of

the interim final rule generally relate to

the waiver of penalties under section

502(c)(5). Paragraph (d) provides that

the Department may waive all or part of

the penalty to be assessed under section

502(c)(5) upon a showing of reasonable

cause for the failure to file the report.

Paragraph (e) provides that, subsequent

to the issuance of a notice of the

Department’s intent to assess a penalty,

the administrator shall have 30 days

from the date of the service of notice to

make an affirmative showing of

reasonable cause for the failure to file a

complete report or why the penalty, as

calculated, should not be assessed.

Paragraph (e) requires that the statement

of reasonable cause be in the form of a

written statement that sets forth all the

facts alleged in support of reasonable

cause and contains a declaration by the

administrator that the statement is made

under penalties of perjury.

Paragraph (f) describes the effect of a

failure to file the statement of

reasonable cause within the prescribed

30 day period. A failure on the part of

the administrator to file a timely

statement of reasonable cause will

constitute a waiver of the right to appear

and contest the facts alleged in the

Department’s notice and an admission

of the facts alleged in the notice for

purposes of any adjudicatory

proceeding involving the assessment of

a penalty under section 502(c)(5). Under

paragraph (f), the Department’s notice of

intent to assess a penalty, described in

paragraph (c), then becomes a final

order of the Secretary, within the

meaning of paragraph (g) of § 2570.91.

(See §§ 2570.90 et seq., published

separately in this issue of the Federal

Register).

Paragraph (g)(1) of the interim final

rule provides that, following a review of

the facts alleged in the statement of

reasonable cause, the Department, in a

notice of determination, shall notify the

administrator of its intention to waive

the penalty, in whole or in part, and/or

assess a penalty. If it is the intention of

the Department to assess a penalty, the

notice shall indicate the amount of the

penalty and a brief statement of the

reasons for assessing the penalty. Under

paragraph (g)(2), this notice becomes a

final order 30 days after the date of

service of the notice, except as provided

in paragraph (h). In general, paragraph

(h) provides that the notice described in

paragraph (g) shall not become a final

order unless, within 30 days of the date

of service of the notice, the

administrator or representative thereof

files a request for a hearing under

§ 2570.90 et seq. (published separately

in this issue of the Federal Register),

and files an answer to the notice. The

request for hearing and answer shall be

filed in accordance with § 2570.92. The

answer opposing the proposed sanction

shall be in writing, and supported by

reference to specific circumstances or

facts surrounding the notice of

determination issued pursuant to

paragraph (g).

5. Service of Notices

Paragraph (i) of the interim final rule

describes the manner in which the

notice of intent to assess a penalty,

described in paragraph (c), and the

Federal Register / Vol. 65, No. 29 / Friday, February 11, 2000 / Rules and Regulations 7183

notice of determination on a statement

of reasonable cause, described in

paragraph (g), will be served. Under

paragraph (i) of the interim final rule,

service of notice shall be made either:

(1) By delivering a copy to the

administrator or the administrator’s

representative; (2) by leaving a copy at

the principal office, place of business, or

residence of the administrator or the

administrator’s representative; or (3) by

mailing a copy to the last known

address of the administrator or the

administrator’s representative. If service

is accomplished by certified mail,

service is complete upon mailing. If

service is done be regular mail, service

is complete upon receipt by the

addressee.

6. Liability

Paragraph (j) of the interim final rule

clarifies the liability of the parties for

penalties assessed under section

502(c)(5). Paragraph (j)(1) provides that

if more than one person is responsible

as administrator for the failure to file the

report, all such persons shall be jointly

and severally liable for such failure.

Paragraph (j)(2) provides that any

person against whom a penalty is

assessed under section 502(c)(5) is

personally liable for the payment of

such penalty. Paragraph (j)(2) is

intended to make clear that liability for

the payment of penalties assessed under

section 502(c)(5) is the personal liability

of the person against whom the penalty

is assessed and not a liability of the

MEWA. Accordingly, assets of the

MEWA can not be used to pay the

penalty.

7. Applicability

Paragraph (l) of the interim rule

clarifies that this section generally

applies to administrators of multiple

employer welfare arrangements that are

not group health plans beginning May 1,

2000. Under a transition safe harbor

period, however, no civil penalty will

be assessed against an administrator that

has made a good faith effort to comply

with a § 2520.101–2 filing that is due in

the Year 2000. This transition rule was

created because, during this first year in

particular, the Department is focused on

educating administrators about this

filing requirement and is committed to

working with them to help them

comply. In this regard, the Department

has developed filers’ guides which may

be helpful in filing the Form M–1. These

filers’ guides will be made available on

the Pension and Welfare Benefits

Administration’s website at

www.dol.gov/dol/pwba and through

their toll-free publication hotline at 1–

800–998–7542. Also, the Pension and

Welfare Benefits Administration’s help

desk (202–219–8818) is available in case

administrators have questions or if they

need any assistance with filings.

D. Interim Final Rule With Request for

Comments

Section 734 of ERISA (formerly

section 707) authorizes the Secretary of

Labor, consistent with section 104 of

HIPAA, to promulgate any such

regulations as may be necessary or

appropriate to carry out the provisions

of Part 7 of ERISA. In addition, this

section specifically authorizes the

Secretary to promulgate any interim

final rules as the Secretary determines

are appropriate to carry out Part 7 of

ERISA. In addition, section 505 of

ERISA authorizes the Secretary to

prescribe such regulations as the

Secretary finds necessary or appropriate

to carry out the provisions of Title I of

ERISA. The report required to be filed

under section 101(g)(h) is for the

purpose of determining the extent to

which the requirements of Part 7 are

being carried out. Accordingly, the

Department has determined that issuing

this regulation in interim final form is

necessary in order for the Secretary to

continue to effectively enforce the

requirements of section 101(g){h} of

ERISA and the implementing

regulations under § 2520.101–2. Written

comments on these interim rules are

invited.

E. Executive Order 12866 Statement

Under Executive Order 12866, the

Department must determine whether a

regulatory action is ‘‘significant’’ and

therefore subject to the requirements of

the Executive Order and subject to

review by the Office of Management and

Budget (OMB). Under section 3(f) of the

Executive Order, a ‘‘significant

regulatory action’’ is an action that is

likely to result in a rule (1) having an

annual effect on the economy of $100

million or more, or adversely and

materially affecting a sector of the

economy, productivity, competition,

jobs, the environment, public health or

safety, or State, local or tribal

governments or communities (also

referred to as ‘‘economically

significant’’); (2) creating serious

inconsistency or otherwise interfering

with an action taken or planned by

another agency; (3) materially altering

the budgetary impacts of entitlement

grants, user fees, or loan programs or the

rights and obligations of recipients

thereof; or (4) raising novel legal or

policy issues arising out of legal

mandates, the President’s priorities, or

the principles set forth in the Executive

Order. On the basis of these criteria, the

Department has determined that this

regulatory action is not significant

within the meaning of the Executive

Order.

F. Paperwork Reduction Act

The rule being issued here is not

subject to the requirements of the

Paperwork Reduction Act of 1995 (44

U.S.C. 3501 et seq.) because it does not

contain an ‘‘information collection

request’’ as defined in 44 U.S.C. 3502(3).

G. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5

U.S.C. 601 et seq., (RFA) requires each

Federal agency to perform an initial

regulatory flexibility analysis for all

rules subject to the notice and comment

requirements of section 553(b) of the

Administrative Procedure Act (5 U.S.C

551 et seq.) unless the head of the

agency certifies that the rule will not, if

promulgated, have a significant

economic impact on a substantial

number of small entities. Small entities

include small businesses, organizations,

and governmental jurisdictions.

Because these rules are being issued

as interim final rules and not as a notice

of proposed rulemaking, the RFA does

not apply and the Department is not

required to either certify that the rule

will not have a significant impact on a

substantial number of small entities or

conduct a regulatory flexibility analysis.

The Department does not anticipate that

this interim final rule will impose a

significant impact on a substantial

number of small entities, however,

regardless of whether one uses the

definition of small entity found in

regulations issued by the Small

Business Administration (13 CFR

121.201) or one defines small entity, on

the basis of section 104(a)(2) of ERISA,

as an employee benefit plan with fewer

than 100 participants. The Department

invites comments on the effect of this

interim final rule on small entities.

H. Small Business Regulatory

Enforcement Fairness Act

The interim final rule being issued

here is subject to the provisions of the

Small Business Regulatory Enforcement

Fairness Act of 1996 (5 U.S.C. 801 et

seq.) and has been transmitted to

Congress and the Comptroller General

for review. The rule is not a ‘‘major

rule’’ as that term is defined in 5 U.S.C.

804, because it is not likely to result in

(1) an annual effect on the economy of

$100 million or more; (2) a major

increase in costs or prices for

consumers, individual industries, or

federal, State, or local government

agencies, or geographic regions; or (3)

significant adverse effects on

7184 Federal Register / Vol. 65, No. 29 / Friday, February 11, 2000 / Rules and Regulations

competition, employment, investment,

productivity, innovation, or on the

ability of United States-based

enterprises to compete with foreignbased enterprises in domestic or export

markets.

I. Unfunded Mandates Reform Act

For purposes of the Unfunded

Mandates Reform Act of 1995 (Pub. L.

104–4), as well as Executive Order

12875, this proposed rule does not

include any Federal mandate that may

result in expenditures by State, local, or

tribal governments, and will not impose

an annual burden of $100 million or

more on the private sector.

Statutory Authority

The interim final rule set forth herein is

issued pursuant to the authority contained in

section 502(c)(5) of ERISA (Pub. L. 104–191,

110 Stat. 1936, 1952, 29 U.S.C. 1132(c)(5)),

section 505 of ERISA (Pub. L. 93–406, 88

Stat. 892, 894, 29 U.S.C. 1135) and section

734 of ERISA (Pub. L. 104–204, 110 Stat.

2874, 2935, 29 U.S.C. 1194c), and under

Secretary of Labor’s Order 1–87, 52 FR

13139, April 21, 1987.

List of Subjects in 29 CFR Part 2560

Claims, Employee benefit plans,

Employee Retirement Income Security

Act, Law enforcement, Multiple

Employer Welfare Arrangements,

Pension and Welfare Benefits

Administration, Reporting and

disclosure.

For the reasons set out in the

preamble, Part 2560 of Chapter XXV of

Title 29 of the Code of Federal

Regulations is amended as follows:

PART 2560—[AMENDED]

1. The authority for Part 2560 is

revised to read:

Authority: 29 U.S.C. 1132, 1135, 1194 and

Secretary’s Order 1–87, 52 FR 13139 (April

21, 1987).

Section 2560.502–1 also issued under 29

U.S.C. 1132(b)(2).

Section 2560.502i–1 also issued under 29

U.S.C. 1132(i).

Section 2560.503–1 also issued under 29

U.S.C. 1133.

2. Part 2560 is amended by adding

§ 2560.502c–5 to read:

§ 2560.502c–5—Civil penalties under

section 502(c)(5).

(a) In general. (1) Pursuant to the

authority granted the Secretary under

section 502(c)(5) of the Employee

Retirement Income Security Act of 1974

Pub.L. 93–406, 88 Stat. 840–52, as

amended by Pub. L. 104–191, 101 Stat.

1936) (the Act), the administrator of a

multiple employer welfare arrangement

(MEWA) (within the meaning of section

3(40)(A) of the Act) that is not a group

health plan, and that provides benefits

consisting of medical care (within the

meaning of section 733(a)(2)), for which

a report is required to be filed under

section 101(g){h} of the Act and

§ 2520.101–2, shall be liable for civil

penalties assessed by the Secretary

under section 502(c)(5) of the Act for

each failure or refusal to file a

completed report required to be filed

under section 101(g){h} and § 2520.101–

2. The term ‘‘administrator’’ is defined

in § 2520.101–2(b).

(2) For purposes of this section, a

failure or refusal to file the report

required to be filed under section

101(g){h} shall mean a failure or refusal

to file, in whole or in part, that

information described in section

101(g){h} and § 2520.101–2, on behalf of

the MEWA, at the time and in the

manner prescribed therefor.

(b) Amount assessed.—(1) The

amount assessed under section 502(c)(5)

shall be determined by the Department

of Labor, taking into consideration the

degree and/or willfulness of the failure

to file the report. However, the amount

assessed under section 502(c)(5) of the

Act shall not exceed $1,000 a day,

computed from the date of the

administrator’s failure or refusal to file

the report and, except as provided in

paragraph (b)(2) of this section,

continuing up to the date on which a

report meeting the requirements of

section 101(g){h} and § 2520.101–2, as

determined by the Secretary, is filed.

(2) If, upon receipt of a notice of

intent to assess a penalty (as described

in paragraph (c) of this section), the

administrator files a statement of

reasonable cause for the failure to file,

in accordance with paragraph (e) of this

section, a penalty shall not be assessed

for any day from the date the

Department serves the administrator

with a copy of such notice until the day

after the Department serves notice on

the administrator of its determination

on reasonable cause and its intention to

assess a penalty (as described in

paragraph (g) of this section).

(3) For purposes of this paragraph, the

date on which the administrator failed

or refused to file the report shall be the

date on which the report was due

(determined without regard to any

extension of time for filing). A report

which is rejected under § 2520.101–2

shall be treated as a failure to file a

report when a revised report meeting

the requirements of this section is not

filed within 45 days of the date of the

Department’s notice of rejection. If a

revised report meeting the requirements

of this section, as determined by the

Secretary, is not submitted within 45

days of the date of the notice of rejection

by the Department, a penalty shall be

assessed under section 502(c)(5)

beginning on the day after the date of

the administrator’s failure or refusal to

file the report.

(c) Notice of intent to assess a penalty.

Prior to the assessment of any penalty

under section 502(c)(5), the Department

shall provide to the administrator of the

MEWA a written notice indicating the

Department’s intent to assess a penalty

under section 502(c)(5), the amount of

such penalty, the period to which the

penalty applies, and a statement of the

facts and the reason(s) for the penalty.

(d) Waiver of assessed penalty. The

Department may waive all or part of the

penalty to be assessed under section

502(c)(5) on a showing by the

administrator that there was reasonable

cause for the failure to file the report.

(e) Showing of reasonable cause.

Upon issuance by the Department of a

notice of intent to assess a penalty, the

administrator shall have 30 days from

the date of the service of notice, as

described in paragraph (i) of this

section, to file a statement of reasonable

cause for the failure to file a complete

report or why the penalty, as calculated,

should not be assessed. A showing of

reasonable cause must be made in the

form of a written statement setting forth

all the facts alleged as reasonable cause.

The statement must contain a

declaration by the administrator that the

statement is made under the penalties of

perjury.

(f) Failure to file a statement of

reasonable cause. Failure of an

administrator to file a statement of

reasonable cause within the 30 day

period described in paragraph (e) of this

section shall be deemed to constitute a

waiver of the right to appear and contest

the facts alleged in the notice, and such

failure shall be deemed an admission of

the facts alleged in the notice for

purposes of any proceeding involving

the assessment of a civil penalty under

section 502(c)(5). Such notice shall then

become a final order of the Secretary,

within the meaning of § 2570.91(g).

(g) Notice of the determination on

statement of reasonable cause—(1) The

Department, following a review of all

the facts alleged in support of a

complete or partial waiver of the

penalty, shall notify the administrator,

in writing, of its intention to waive the

penalty, in whole or in part, and/or

assess a penalty. If it is the intention of

the Department to assess a penalty, the

notice shall indicate the amount of the

penalty, not to exceed the amount

described in paragraph (c) of this

section, and a brief statement of the

reasons for assessing the penalty.

Federal Register / Vol. 65, No. 29 / Friday, February 11, 2000 / Rules and Regulations 7185

1Both the Small Business Job Protection Act of

1996 (Pub. L. 104–188) and the Health Insurance

Portability and Accountability Act of 1996 (Pub. L.

104–191) created a new section 101(g) of ERISA.

Accordingly, section 101(g) of ERISA that relates to

reporting by certain arrangements is referred to in

this document as section 101(g){h} of ERISA.

(2) Except as provided in paragraph

(h) of this section, a notice issued

pursuant to this paragraph indicating

the Department’s intention to assess a

penalty shall become a final order,

within the meaning of § 2570.91(g), 30

days after the date of service of the

notice.

(h) Administrative hearing. A notice

issued pursuant to paragraph (g) of this

section will become the final order of

the Department of Labor, unless, within

30 days from the date of the service of

the notice, the administrator or

representative thereof files a request for

a hearing under § 2570.90 et seq., and

files and answer to the notice. The

request for hearing and answer shall be

filed in accordance with § 2570.92. The

answer opposing the proposed sanction

shall be in writing, and supported by

reference to specific circumstances or

facts surrounding the notice of

determination issued pursuant to

paragraph (g).

(i) Service of notice—(1) Service of

notice shall be made either:

(i) By delivering a copy to the

administrator or representative thereof;

(ii) By leaving a copy at the principal

office, place of business, or residence of

the administrator or representative

thereof; or

(iii) By mailing a copy to the last

known address of the administrator or

representative thereof.

(2) If service is accomplished by

certified mail, service is complete upon

mailing. If done by regular mail, service

is complete upon receipt by the

addressee

(j) Liability—(1) If more than one

person is responsible as administrator

for the failure to file the report, all such

persons shall be jointly and severally

liable with respect to such failure.

(2) Any person against whom a civil

penalty has been assessed under section

502(c)(5) pursuant to a final order,

within the meaning of § 2570.91(g),

shall be personally liable for the

payment of such penalty.

(k) Cross-reference. See §§ 2570.90

through 101 of this chapter for

procedural rules relating to

administrative hearings under section

502(c)(5) of the Act.

(l) Applicability date—(1) In general.

This section applies to administrators of

multiple employer welfare arrangements

that are not group health plans

beginning May 1, 2000.

(2) Transitional safe harbor period.

No civil penalty will be assessed against

an administrator that has made a good

faith effort to comply with a § 2520.101–

2 filing that is due in the Year 2000.

Signed at Washington DC, this 4th day of

February, 2000.

Leslie B. Kramerich,

Acting Assistant Secretary, Pension and

Welfare Benefits Administration, Department

of Labor.

[FR Doc. 00–2936 Filed 2–10–00; 8:45 am]

BILLING CODE 4510–29–P

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

29 CFR Part 2570

RIN 1210–AA54

Interim Rule Governing Procedures for

Administrative Hearings Regarding the

Assessment of Civil Penalties under

Section 502(c)(5) of ERISA

AGENCY: Pension and Welfare Benefits

Administration, Department of Labor.

ACTION: Interim final rule with request

for comments.

SUMMARY: This document contains an

interim final rule that describes

procedures relating to administrative

hearings, in connection with the

assessment of civil penalties under

section 502(c)(5) of the Employee

Retirement Income Security Act of 1974

(ERISA), as amended by the Health

Insurance Portability and

Accountability Act of 1996 (HIPAA).

Section 502(c)(5) of ERISA authorizes

the Secretary of Labor (the Secretary) to

assess a civil penalty against any person

of up to $1,000 a day from the date of

the person’s failure or refusal to file the

information required to be filed by such

person with the Secretary under

regulations prescribed pursuant to

section 101(g){h} of ERISA. Separate

documents are also being published

today in the Federal Register containing

interim final rules implementing the

reporting requirement under section

101(g){h} of ERISA and interim final

rules describing the manner in which

the Department will assess civil

penalties under ERISA section 502(c)(5).

DATES: Effective date: This interim final

rule is effective April 11, 2000.

Comment date: Written comments are

invited and must be received by the

Department on or before March 13,

2000.

Applicability Date: This section

applies to administrators of multiple

employer welfare arrangements that are

not group health plans beginning May 1,

2000.

ADDRESSES: Interested persons are

invited to submit written comments

(preferably with three copies) to:

Pension and Welfare Benefits

Administration, Room C–5331, U.S.

Department of Labor, 200 Constitution

Avenue, NW., Washington, DC 20210.

Attention: MEWA reporting. Written

comments may also be sent by Internet

to the following address:

‘‘MEWAproc@pwba.dol.gov’’ (without

the quotation marks).

All submissions will be open to

public inspection and copying from 8:30

a.m. to 4:30 p.m. in the Public

Documents Room, Pension and Welfare

Benefits Administration, U.S.

Department of Labor, Room N–5638,

200 Constitution Avenue, NW.,

Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT:

Amy J. Turner, Pension and Welfare

Benefits Administration, U.S.

Department of Labor, Rm C–5331, 200

Constitution Avenue, NW., Washington,

DC 20210 (telephone (202) 219–7006).

This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

A. Background

This document contains an interim

final rule that provides guidance

relating to the procedures for

administrative hearings and appeals

regarding the assessment of civil

penalties under section 502(c)(5) of the

Employee Retirement Income Security

Act of 1974 (ERISA), as amended by the

Health Insurance Portability and

Accountability Act of 1996 (Pub. L.

104–191) (HIPAA), for the failure or

refusal to file a completed report

pursuant to section 101(g){h} 1 of

ERISA, as amended by HIPAA. This

regulation is designed to parallel the

procedures set forth in § 2570.502c–2

regarding civil penalties under section

502(c)(2) of ERISA relating to reports

required to be filed under ERISA section

104(b)(4).

B. Overview of the Interim Final Rule

Section 502(c)(5) provides that the

Secretary may assess a civil penalty

against any person of up to $1,000 a day

from the date of the person’s failure or

refusal to file the report required to be

filed under section 101(g){h}. In order

to implement this provision, the

Department is publishing this interim

final rule, and in a separate document,

an interim final rule describing the

manner in which the Department will

assess civil penalties under ERISA

section 502(c)(5). See § 2560.502c–5.