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‘‘(i) the death of the participant or
beneficiary within 120 days, or
‘‘(ii) the immediate, serious, and irre-
versible deterioration of the health of the
participant or beneficiary within 120 days
which will significantly increase the reason-
able likelihood of death of the participant
or beneficiary.
‘‘(I) EMERGENCY
MEDICAL
CARE.—The
term ‘emergency medical care’ means medical
care in any case in which a physician with ap-
propriate expertise has certified in writing—
‘‘(i) that failure to immediately pro-
vide the care to the participant or bene-
ficiary could reasonably be expected to re-
sult in—
‘‘(I) placing the health of such
participant or beneficiary (or, with re-
spect to such a participant or bene-
ficiary who is a pregnant woman, the
health of the woman or her unborn
child) in serious jeopardy,
‘‘(II) serious impairment to bod-
ily functions, or
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‘‘(III) serious dysfunction of any
bodily organ or part,
or
‘‘(ii) that immediate provision of the
care is necessary because the participant
or beneficiary has made or is at serious
risk of making an attempt to harm himself
or herself or another individual.
‘‘(J) FILING
COMPLETION
DATE.—The
term ‘filing completion date’ means, in connec-
tion with a group health plan, the date as of
which the plan is in receipt of all information
reasonably required to make an initial decision
to approve or deny a claim for benefits, a re-
quest for preauthorization, a request for emer-
gency preauthorization, a request for a utiliza-
tion review determination, or a request for an
emergency utilization review determination.
‘‘(K) REVIEW
FILING
DATE.—The term
‘review filing date’ means, in connection with a
group health plan, the date as of which the ap-
propriate fiduciary is in receipt of all informa-
tion reasonably required to make a decision
upon a full and fair review of the denial, in
whole or in part, of a claim for benefits, a re-
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quest for preauthorization, a request for emer-
gency preauthorization, a request for a utiliza-
tion review determination or a request for an
emergency utilization review determination.
‘‘(L) APPROPRIATE FIDUCIARY.—The term
‘appropriate fiduciary’ means, with respect to
any determination under a group health plan,
the fiduciary designated under section 404(e) to
make such determination.
‘‘(M) MEDICAL CARE.—The term ‘medical
care’ means medical care referred to in section
3(42)(A).’’.
(b) DEFINITION OF GROUP HEALTH PLAN.—
(1) IN GENERAL.—Section 3 of such Act (29
U.S.C. 1002) is amended by adding at the end the
following new paragraph:
‘‘(42)(A) The term ‘group health plan’ means an em-
ployee welfare benefit plan providing medical care (as de-
fined under regulations that are consistent and coextensive
with section 213(d) of the Internal Revenue Code of 1986,
as of January 1, 1995) to participants or beneficiaries di-
rectly or through insurance, reimbursement, or otherwise.
‘‘(B) Any plan, fund, or program which would be a
group health plan (as defined in subparagraph (A)), if the
term ‘employer’ in paragraph (1) included a partnership
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and the term ‘participant’ in paragraph (1) included a
partner in connection with such partnership—
‘‘(i) shall be treated as a group health plan, and
‘‘(ii) shall be treated as an employee welfare
benefit plan.’’.
(2) INCLUSION
OF
ELIGIBLE
EMPLOYEE
IN
DEFINITION OF PARTICIPANT.—Section 3(7) of such
Act (29 U.S.C. 1002(7)) is amended—
(A) by inserting ‘‘(A)’’ after ‘‘(7)’’; and
(B) by adding at the end the following new
paragraph:
‘‘(B) In the case of a group health plan, such term
includes an eligible employee (as defined in section
800(a)(3))’’.
(3) CONFORMING
AMENDMENT.—Section 607
of such Act (29 U.S.C. 1167) is amended by striking
paragraph (1).
(c) DESIGNATION OF APPROPRIATE FIDUCIARIES.—
Section 404 of such Act (29 U.S.C. 1104) is amended by
adding at the end the following new subsection:
‘‘(e) One or more fiduciaries shall be designated
under each group health plan, in accordance with proce-
dures specified under the plan, for making determinations
under the plan to which section 503(b) applies.’’.
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(d) STANDARD OF REVIEW UNAFFECTED.—Nothing
in this subtitle (or the amendments made thereby) shall
be construed to affect the standard of review applicable
under the provisions amended by this subtitle.
SEC. 1302. AVAILABLE COURT REMEDIES.
(a) IN GENERAL.—Section 502(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1132)
is amended by adding at the end the following new para-
graphs:
‘‘(5) In any action commenced under subsection (a)
by a participant or beneficiary with respect to a group
health plan in which the plaintiff alleges that a person,
in the capacity of a fiduciary and in violation of the terms
of the plan or this title, has taken an action resulting in
a denial of a claim for benefits in violation of the terms
of the plan, or has failed to take an action for which such
person is responsible under the plan and which is nec-
essary under the plan for approval of a claim for benefits
required under the terms of the plan, upon finding in favor
of the plaintiff, the court shall cause to be served on the
defendant an order requiring the defendant—
‘‘(A) to cease and desist from the alleged action
or failure to act,
‘‘(B) to remedy any such violation of the terms
of the plan by such person (including any such fail-
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ure by such person to take action necessary for ap-
proval of a claim for benefits as required under the
terms of the plan), and to otherwise comply with the
terms of the plan and the applicable requirements of
this title,
‘‘(C) to pay to the plaintiff prejudgment inter-
est on the claims for benefits at issue in the com-
plaint which were unpaid in violation of the terms of
the plan, and
‘‘(D) to pay to the plaintiff a reasonable attor-
ney’s fee and other reasonable costs relating to the
prosecution of the action on the charges on which
the plaintiff prevails.
The remedies provided under this paragraph shall be in
addition to remedies otherwise provided under this section
and shall apply only after exhaustion of the remedies avail-
able under section 503.
‘‘(6)(A) The Secretary may assess a civil penalty
against the plan administrator of, or the appropriate fidu-
ciary (as defined in section 503(b)(5)(L)) of, one or more
group health plans for any pattern or practice thereof of
repeated failures to provide benefits under the terms of
the plan or plans without any reasonable basis or repeated
violations thereby of the requirements of section 503 with
respect to such plan or plans. Such penalty shall be pay-
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able only upon proof by clear and convincing evidence of
such pattern or practice.
‘‘(B) Such penalty shall be in an amount not to ex-
ceed the lesser of—
‘‘(i) 5 percent of the aggregate value of claims
shown by the Secretary to have been denied, or un-
lawfully delayed in violation of section 503, under
such pattern or practice, or
‘‘(ii) $100,000.
‘‘(C) The plan administrator or the appropriate fidu-
ciary of any group health plan or plans who has engaged
in any such pattern or practice with respect to such plans,
upon the petition of the Secretary, may be removed by
the court from that position, and from any other involve-
ment, with respect to such plan or plans, for a period of
not less than 7 years.
‘‘(D) For purposes of this paragraph, the phrase
‘without any reasonable basis’ means, in connection with
any denial of claims for benefits under a group health
plan, that such denial does not have any reasonable basis,
support, or justification under—
‘‘(i) the facts regarding such claim of which the
plan administrator or the appropriate fiduciary was
in receipt at the time the claim was denied, and
‘‘(ii) the terms of the plan.’’.
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(b) CONFORMING AMENDMENT.—Section 502(a)(6)
of such Act (29 U.S.C. 1132(a)(6)) is amended by insert-
ing ‘‘or (c)(6)’’ after ‘‘(c)(2)’’.
SEC. 1303. EFFECTIVE DATE.
The amendments made by this subtitle shall take ef-
fect January 1, 1998, except that the Secretary of Labor
may issue regulations before such date under such amend-
ments. The Secretary shall issue all regulations necessary
to carry out the amendments made by this subtitle before
the effective date thereof.
Subtitle E—Funding and Plan Ter-
mination Requirements for Self-
Insured Group Health Plans
SEC. 1401. SPECIAL RULES FOR SELF-INSURED GROUP
HEALTH PLANS.
Part 6 of subtitle B of title I of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 1161 et
seq.) is amended by adding at the end the following new
sections:
‘‘SEC. 610. SPECIAL FUNDING RULES FOR SELF-INSURED
GROUP HEALTH PLANS.
‘‘(a) SELF-INSURED GROUP HEALTH PLANS.—For
purposes of this section, the term ‘self-insured group
health plan’ means a group health plan under which some
or all coverage is not fully insured (within the meaning
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of section 701(8)), other than a multiple employer health
plan (to which the funding requirements of section 707
apply).
‘‘(b) FUNDING REQUIREMENTS FOR SELF-INSURED
GROUP HEALTH PLANS OF SMALL EMPLOYERS.—
‘‘(1) IN
GENERAL.—The Secretary shall pre-
scribe by regulation provisions described in para-
graph (2) applicable to self-insured group health
plans which are not multiemployer plans and which
offer coverage only with respect to employees of
small employers (as defined in section 831(9)), for
the purpose of promoting adequate funding of such
plans.
‘‘(2) REQUIREMENTS.—
‘‘(A) GENERAL RULE.—Except as provided
in subparagraph (B), the provisions described
in paragraph (1) shall require the group health
plan to establish and maintain reserves in an
amount at least equal to the greater of—
‘‘(i) a reserve sufficient for payment
of claims reported and not yet paid and
claims incurred but not yet reported, and
for expected administrative costs with re-
spect to such claims, or
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‘‘(ii) 25 percent of the amount of ex-
pected incurred claims and expenses for
the plan year.
‘‘(B) EXCEPTION.—The Secretary may in
such regulations permit a group health plan to
substitute, for all or part of the reserves re-
quired under subparagraph (A), such security,
guarantee, or other financial arrangement as
the Secretary determines to be adequate to en-
able the plan to fully meet all its financial obli-
gations on a timely basis.
‘‘(3) CRITERIA FOR COMPLIANCE.—The criteria
that the Secretary shall take into account in deter-
mining compliance with the requirements described
in paragraph (2) shall include:
‘‘(A) the size of the employer involved;
‘‘(B) the benefit package provided under
the plan;
‘‘(C) whether the coverage provided under
the plan is in the form of a fee-for-service ar-
rangement, a health maintenance organization,
or any other type of coverage;
‘‘(D) the extent to which excess/stop loss
coverage (within the meaning of section 701(3))
is maintained for the plan and the extent to
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which such coverage is maintained for the plan
sponsor; and
‘‘(E) the nature of any security, guarantee,
or other financial arrangement described in
paragraph (2)(B) obtained for the plan.
‘‘(c) FUNDING REQUIREMENTS FOR PLANS SPON-
SORED BY LARGE EMPLOYERS WHEN PLAN SPONSORS
ARE IN DISTRESS.—
‘‘(1) NOTIFICATION OF PLAN DISTRESS.—Ex-
cept as provided in paragraph (5), in the case of any
self-insured group health plan (other than a multi-
employer plan) which offers coverage with respect to
employees of any employer who is not a small em-
ployer (as defined in section 831(4)), if—
‘‘(A) a named fiduciary of such plan deter-
mines that there is reason to believe that the
plan is in distress, or
‘‘(B) the Secretary makes such a deter-
mination and the Secretary notifies the named
fiduciary of such determination,
the named fiduciary shall immediately notify a quali-
fied actuary, who shall be engaged by the plan on
behalf of plan participants and beneficiaries, of such
determination and such actuary shall, not later than
the end of the next following month, provide to each
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named fiduciary under the plan all information nec-
essary to enable the fiduciary or fiduciaries to de-
velop and implement a strategy for plan mainte-
nance in accordance with paragraph (3). Not later
than 10 days after the named fiduciary receives such
information from the actuary, the named fiduciary
shall notify the participants and beneficiaries and
the Secretary (in such form and manner as the Sec-
retary may prescribe by regulation) of the deter-
mination that the plan had entered into distress and
the reasons for such determination (including the in-
formation provided by the actuary pursuant to this
paragraph), and shall include in such notification a
description of the strategy for plan maintenance for
the plan that the plan administrator or any named
fiduciary has implemented or plans to implement.
‘‘(2) DISTRESS.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, a plan is in ‘distress’ if each person
who is a plan sponsor of the plan or a substan-
tial member of the controlled group of the plan
sponsor of the plan satisfies the distress criteria
of clause (i), (ii), or (iii) of subparagraph (B).
‘‘(B) SATISFACTION
OF
DISTRESS
CRI-
TERIA.—