II

105TH CONGRESS

1ST SESSION S. 1307

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

to rules governing litigation contesting termination or reduction of retiree

health benefits and to extend continuation coverage to retirees and their

dependents.

IN THE SENATE OF THE UNITED STATES

OCTOBER 22, 1997

Mr. DASCHLE introduced the following bill; which was read twice and referred

to the Committee on Labor and Human Resources

A BILL

To amend the Employee Retirement Income Security Act

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

and to extend continuation coverage to retirees and their

dependents.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Retiree Health Bene5 fits Protection Act’’.
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1 TITLE I—RETIREE HEALTH

2 BENEFITS PROTECTION

3 SEC. 101. RULES GOVERNING LITIGATION INVOLVING RE4 TIREE HEALTH BENEFITS.

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

6 the Employee Retirement Income Security Act of 1974

7 (29 U.S.C. 1131 et seq.) is amended by adding at the end

8 the following new section:

9 ‘‘SEC. 516. RULES GOVERNING LITIGATION INVOLVING RE10 TIREE HEALTH BENEFITS.

11 ‘‘(a) MAINTENANCE OF BENEFITS.—

12 ‘‘(1) IN GENERAL.—If—

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

14 sponsor payments in connection with such bene15 fits are to be or have been terminated or re16 duced under an employee welfare benefit plan;

17 and

18 ‘‘(B) an action is brought by any partici19 pant or beneficiary to enjoin or otherwise mod20 ify such termination or reduction,

21 the court without requirement of any additional

22 showing shall promptly order the plan and plan

23 sponsor to maintain the retiree health benefits and

24 payments at the level in effect immediately before

25 the termination or reduction while the action is
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1 pending in any court. No security or other undertak2 ing shall be required of any participant or bene3 ficiary as a condition for issuance of such relief. An

4 order requiring such maintenance of benefits may be

5 refused or dissolved only upon determination by the

6 court, on the basis of clear and convincing evidence,

7 that the action is clearly without merit.

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

9 apply to any action if—

10 ‘‘(A) the termination or reduction of re11 tiree health benefits is substantially similar to

12 a termination or reduction in health benefits (if

13 any) provided to current employees which oc14 curs either before, or at or about the same time

15 as, the termination or reduction of retiree

16 health benefits, or

17 ‘‘(B) the changes in benefits are in connec18 tion with the addition, expansion, or clarifica19 tion of the delivery system, including utilization

20 review requirements and restrictions, require21 ments that goods or services be obtained

22 through managed care entities or specified pro23 viders or categories of providers, or other spe24 cial major case management restrictions.
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1 ‘‘(3) MODIFICATIONS.—Nothing in this section

2 shall preclude a court from modifying the obligation

3 of a plan or plan sponsor to the extent retiree bene4 fits are otherwise being paid by the plan sponsor.

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

6 authorized in subsection (a) or otherwise available, if, in

7 any action to which subsection (a)(1) applies, the terms

8 of the employee welfare benefit plan summary plan de9 scription or, in the absence of such description, other ma10 terials distributed to employees at the time of a partici11 pant’s retirement or disability, are silent or are ambigu12 ous, either on their face or after consideration of extrinsic

13 evidence, as to whether retiree health benefits and pay14 ments may be terminated or reduced for a participant and

15 his or her beneficiaries after the participant’s retirement

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

17 terminated or reduced for the participant and his or her

18 beneficiaries unless the plan or plan sponsor establishes

19 by a preponderance of the evidence that the summary plan

20 description or other materials about retiree benefits—

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

22 90 days in advance of retirement or disability;

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

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

25 and
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1 ‘‘(3) clearly and specifically disclosed that the

2 plan allowed such termination or reduction as to the

3 participant after the time of his or her retirement or

4 disability.

5 The disclosure described in paragraph (3) must have been

6 made prominently and in language which can be under7 stood by the average plan participant.

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

9 provision of law, an employee representative of any retired

10 employee or the employee’ spouse or dependents may—

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

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

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

14 employee, spouse or dependents.

15 ‘‘(d) RETIREE HEALTH BENEFITS.—For the pur16 poses of this section, the term ‘retiree health benefits’

17 means health benefits (including coverage) which are pro18 vided to—

19 ‘‘(1) retired or disabled employees who, imme20 diately before the termination or reduction, have a

21 reasonable expectation to receive such benefits upon

22 retirement or becoming disabled; and

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

24 (b) CONFORMING AMENDMENT.—The table of con25 tents in section 1 of such Act is amended by inserting
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1 after the item relating to section 515 the following new

2 item:

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

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

4 this section shall apply to actions relating to terminations

5 or reductions of retiree health benefits which are pending

6 or brought, on or after January 1, 1998.

7 TITLE II—RETIREE

8 CONTINUATION COVERAGE

9 SEC. 201. EXTENSION OF COBRA CONTINUATION COV10 ERAGE.

11 (a) PUBLIC HEALTH SERVICE ACT.—

12 (1) TYPE OF COVERAGE.—

13 (A) IN GENERAL.—Section 2202(1) of the

14 Public Health Service Act (42 U.S.C. 300bb–

15 2(1)) is amended—

16 (i) by striking ‘‘The coverage’’ and in17 serting the following:

18 ‘‘(A) IN GENERAL.—Except as provided in

19 subparagraph (B), the coverage’’; and

20 (ii) by adding at the end the follow21 ing:

22 ‘‘(B) CERTAIN RETIREES.—In the case of

23 an event described in section 2203(6), the

24 qualified beneficiary may elect to continue cov-
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1 erage as provided for in subparagraph (A) or

2 may elect coverage—

3 ‘‘(i) under any other plan offered by

4 the State, political subdivision, agency, or

5 instrumentality involved; or

6 ‘‘(ii) notwithstanding paragraphs (4)

7 and (5) of section 2741(b), through any

8 health insurance issuer offering health in9 surance coverage (as defined in section

10 2791(b)(1)) in the individual market in the

11 State.’’.

12 (B) TECHNICAL AMENDMENT.—Section

13 2202(2)(D)(i) of the Public Health Service Act

14 (42 U.S.C. 300bb–2(2)(D)(i)) is amended by

15 striking ‘‘covered under any other’’ and insert16 ing ‘‘except with respect to coverage obtained

17 under paragraph (1)(B), covered under any

18 other’’.

19 (2) PERIOD OF COVERAGE.—Section

20 2202(2)(A) of the Public Health Service Act (42

21 U.S.C. 300bb–2(2)(A)) is amended by adding at the

22 end thereof the following new clause:

23 ‘‘(v) QUALIFYING EVENT INVOLVING

24 SUBSTANTIAL REDUCTION OR ELIMI25 NATION OF A RETIREE GROUP HEALTH
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1 PLAN.—In the case of an event described

2 in section 2203(6), the date on which such

3 covered qualified beneficiary becomes enti4 tled to benefits under title XVIII of the

5 Social Security Act.’’.

6 (3) QUALIFYING EVENT.—Section 2203 of the

7 Public Health Service Act (42 U.S.C. 300bb–3) is

8 amended by adding at the end thereof the following

9 new paragraph:

10 ‘‘(6) The substantial reduction or elimination of

11 group health coverage as a result of plan changes or

12 termination with respect to a qualified beneficiary

13 described in section 2208(3)(A).’’.

14 (4) NOTICE.—Section 2206 of the Public

15 Health Service Act (42 U.S.C. 300bb–6) is amend16 ed—

17 (A) in paragraph (2), by striking ‘‘or (4)’’

18 and inserting ‘‘(4), or (6)’’; and

19 (B) in paragraph (4)(A), by striking ‘‘or

20 (4)’’ and inserting ‘‘(4), or (6)’’.

21 (5) DEFINITION.—Section 2208(3) of the Pub22 lic Health Service Act (42 U.S.C. 300bb–8(3)) is

23 amended by adding at the end thereof the following

24 new subparagraph:
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1 ‘‘(C) SPECIAL RULE FOR RETIREES.—In

2 the case of a qualifying event described in sec3 tion 2203(6), the term ‘qualified beneficiary’ in4 cludes a covered employee who had retired on

5 or before the date of substantial reduction or

6 elimination of coverage and any other individual

7 who, on the day before such qualifying event, is

8 a beneficiary under the plan—

9 ‘‘(i) as the spouse of the covered em10 ployee;

11 ‘‘(ii) as the dependent child of the

12 covered employee; or

13 ‘‘(iii) as the surviving spouse of the

14 covered employee.’’.

15 (b) EMPLOYEE RETIREMENT INCOME SECURITY ACT

16 OF 1974.—

17 (1) TYPE OF COVERAGE.—

18 (A) IN GENERAL.—Section 602(1) of the

19 Employee Retirement Income Security Act of

20 1974 (29 U.S.C. 1162(1)) is amended—

21 (i) by striking ‘‘The coverage’’ and in22 serting the following:

23 ‘‘(A) IN GENERAL.—Except as provided in

24 subparagraph (B), the coverage’’; and
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1 (ii) by adding at the end the follow2 ing:

3 ‘‘(B) CERTAIN RETIREES.—In the case of

4 an event described in section 603(7), the quali5 fied beneficiary may elect to continue coverage

6 as provided for in subparagraph (A) or may

7 elect coverage—

8 ‘‘(i) under any other plan maintained

9 by the plan sponsor involved; or

10 ‘‘(ii) notwithstanding paragraphs (4)

11 and (5) of section 2741(b) of the Public

12 Health Service Act, through any health in13 surance issuer offering health insurance

14 coverage (as defined in section 2791(b)(1)

15 of such Act) in the individual market in

16 the State.’’.

17 (B) TECHNICAL AMENDMENT.—Section

18 602(2)(D)(i) of the Employee Retirement In19 come Security Act of 1974 (29 U.S.C.

20 1162(2)(D)(i)) is amended by striking ‘‘covered

21 under any other’’ and inserting ‘‘except with re22 spect to coverage obtained under paragraph

23 (1)(B), covered under any other’’.

24 (2) PERIOD OF COVERAGE.—Section 602(2)(A)

25 of the Employee Retirement Income Security Act of
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1 1974 (29 U.S.C. 1162(2)(A)) is amended by adding

2 at the end thereof the following new clause:

3 ‘‘(vi) QUALIFYING EVENT INVOLVING

4 SUBSTANTIAL REDUCTION OR ELIMI5 NATION OF A GROUP HEALTH PLAN COV6 ERING RETIREES, SPOUSES AND DEPEND7 ENTS.—In the case of an event described

8 in section 603(7), the date on which such

9 covered qualified beneficiary becomes enti10 tled to benefits under title XVIII of the

11 Social Security Act.’’.

12 (3) QUALIFYING EVENT.—Section 603 of the

13 Employee Retirement Income Security Act of 1974

14 (29 U.S.C. 1163) is amended by adding at the end

15 thereof the following new paragraph:

16 ‘‘(7) The substantial reduction or elimination of

17 group health plan coverage as a result of plan

18 changes or termination with respect to a qualified

19 beneficiary described in section 607(3)(C).’’.

20 (4) NOTICE.—Section 606(a) of the Employee

21 Retirement Income Security Act of 1974 (29 U.S.C.

22 1166) is amended—

23 (A) in paragraph (2), by striking ‘‘or (6)’’

24 and inserting ‘‘(6), or (7)’’; and
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1 (B) in paragraph (4)(A), by striking ‘‘or

2 (6)’’ and inserting ‘‘(6), or (7)’’.

3 (5) DEFINITION.—Section 607(3)(C) of the

4 Employee Retirement Income Security Act of 1974

5 (29 U.S.C. 1167(2)) is amended by striking

6 ‘‘603(6)’’ and inserting ‘‘603(6) or 603(7)’’.

7 (c) INTERNAL REVENUE CODE OF 1986.—

8 (1) TYPE OF COVERAGE.—

9 (A) IN GENERAL.—Section 4980B(f)(2)(A)

10 of the Internal Revenue Code of 1986 is

11 amended—

12 (i) by striking ‘‘The coverage’’ and in13 serting the following:

14 ‘‘(i) IN GENERAL.—Except as pro15 vided in clause (ii), the coverage’’; and

16 (ii) by adding at the end the follow17 ing:

18 ‘‘(ii) CERTAIN RETIREES.—In the

19 case of an event described in paragraph

20 (3)(G), the qualified beneficiary may elect

21 to continue coverage as provided for in

22 clause (i) or may elect coverage—

23 ‘‘(I) under any other plan main24 tained by the plan sponsor involved;

25 or
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1 ‘‘(II) notwithstanding paragraphs

2 (4) and (5) of section 2741(b) of the

3 Public Health Service Act, through

4 any health insurance issuer offering

5 health insurance coverage (as defined

6 in section 2791(b)(1) of such Act) in

7 the individual market in the State.’’.

8 (B) TECHNICAL AMENDMENT.—Section

9 4980B(f)(2)(B)(iv)(I) of the Internal Revenue

10 Code of 1986 is amended by striking ‘‘covered

11 under any other’’ and inserting ‘‘except with re12 spect to coverage obtained under paragraph

13 (1)(B), covered under any other’’.

14 (2) PERIOD OF COVERAGE.—Section

15 4980B(f)(2)(B)(i) of the Internal Revenue Code of

16 1986 is amended by adding at the end thereof the

17 following new subclause:

18 ‘‘(VI) QUALIFYING EVENT IN19 VOLVING SUBSTANTIAL REDUCTION

20 OR ELIMINATION OF A RETIREE

21 GROUP HEALTH PLAN.—In the case of

22 an event described in paragraph

23 (3)(G), the date on which such cov24 ered qualified beneficiary becomes en-
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1 titled to benefits under title XVIII of

2 the Social Security Act.’’.

3 (3) QUALIFYING EVENT.—Section 4980B(f)(3)

4 of the Internal Revenue Code of 1986 is amended by

5 adding at the end thereof the following new subpara6 graph:

7 ‘‘(G) The substantial reduction or elimi8 nation of group health coverage as a result of

9 plan changes or termination with respect to a

10 qualified beneficiary described in subsection

11 (g)(1)(D).’’.

12 (4) NOTICE.—Section 4980B(f)(6) of the Inter13 nal Revenue Code of 1986 is amended—

14 (A) in subparagraph (B), by striking ‘‘or

15 (F)’’ and inserting ‘‘(F), or (G)’’; and

16 (B) in subparagraph (D)(i), by striking

17 ‘‘or (F)’’ and inserting ‘‘(F), or (G)’’.

18 (5) DEFINITION.—Section 4980B(g)(1)(D) of

19 the Internal Revenue Code of 1986 is amended by

20 striking ‘‘(f)(3)(F)’’ and inserting ‘‘(f)(3)(F) or

21 (f)(3)(G)’’.

22 SEC. 202. EFFECTIVE DATE.

23 This title shall take effect as if enacted on January

24 1, 1998.

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