health insurance plan), but does not include (except
for purposes of sections 2211(d), 2211(e), 2218, and
2219)—
‘‘(A) coverage only for accident, dental, vi-
sion, disability, or long-term care, medicare
supplemental health insurance, or any combina-
tion thereof,
‘‘(B) coverage issued as a supplement to li-
ability insurance,
‘‘(C) workers’ compensation or similar in-
surance, or
‘‘(D) automobile medical-payment insur-
ance.
‘‘(4) The term ‘insurer’ means any entity that
offers a health insurance plan under which that en-
tity is at risk for all or part of the cost of benefits
under the plan, and includes any agent of that en-
tity.
‘‘(5) The term ‘NAIC’ means the National As-
sociation of Insurance Commissioners.
‘‘(6) The term ‘provider’ means a physician,
hospital, pharmacy, laboratory, or other person li-
censed or otherwise authorized under applicable
State laws to furnish health care items or services.
‘‘(7) The term ‘administrator of a self-insured
employee plan’ means an insurer that is an adminis-
trator of an employee welfare benefit plan.
‘‘(8) The term ‘utilization review’ means review
of the medical necessity, appropriateness, and qual-
ity of health care items and services.’’.
SEC. 203. CONFORMING AMENDMENT.
The first sentence of section 1866(a)(1) of the Social
Security Act is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (P),
(2) by striking the period at the end of sub-
paragraph (Q) and inserting a comma and ‘‘and’’,
and
(3) by adding at the end the following:
‘‘(R) in the case of hospitals, to comply with
the requirements of section 2231.’’.
SEC. 204. FAILURE TO SATISFY CERTAIN HEALTH INSUR-
ANCE REQUIREMENTS.
(a) IN GENERAL.—Chapter 47 of the Internal Reve-
nue Code of 1986 (relating to taxes on group health plans)
is amended by adding at the end the following new section:
‘‘SEC. 5000B. FAILURE TO SATISFY CERTAIN HEALTH IN-
SURANCE REQUIREMENTS.
‘‘(a) GENERAL RULE.—
‘‘(1) ADMINISTRATORS OF SELF-INSURED EM-
PLOYEE PLANS.—There is hereby imposed, on any
administrator of a self-insured employee plan, a tax
on any failure to comply with a requirement under
section 2214, 2215, 2216, 2217, 2218, or 2219 of
that Act. The Secretary of Health and Human Serv-
ices, in consultation with the Secretary of Labor,
shall determine whether any administrator of a self-
insured employee plan meets the requirements of
those sections.
‘‘(2) OTHER INSURERS.—There is hereby im-
posed, on any insurer other than an administrator of
a self-insured employee plan, a tax on any failure to
comply with a requirement under section 2214,
2215, 2216, 2217, 2218, or 2219 of that Act with
respect to an activity in a State that is subject to
Federal regulation pursuant to section 2213(b) of
the Social Security Act. The Secretary of Health
and Human Services shall determine whether any in-
surer meets the requirements of those sections.
‘‘(3) RESEARCH DATA REQUIREMENTS.—There
is hereby imposed on any insurer a tax on any fail-
ure to comply with a requirement under paragraph
(2) of section 2200(f) of the Social Security Act.
The Secretary of Health and Human Services shall
determine whether any insurer meets the require-
ments of that paragraph.
‘‘(b) AMOUNT OF TAX.—The amount of tax imposed
by subsection (a) for a taxable year in which an insurer
fails to comply with a requirement described in that sub-
section shall be equal to $100 for each such failure.
‘‘(c) CONTROLLED GROUPS.—
‘‘(1) EMPLOYERS.—In the case of an insurer
that is an employer, for purposes of this section all
persons that are treated as part of the same em-
ployer (within the meaning of section 414) as the in-
surer shall be treated as the same person.
‘‘(2) OTHER INSURERS.—In the case of an in-
surer that is not an employer, for purposes of this
section—
‘‘(A) CONTROLLED
GROUP
OF
CORPORA-
TIONS.—All corporations which are members of
the same controlled group of corporations shall
be treated as one person. For purposes of the
preceding sentence, the term ‘controlled group
of corporations’ has the meaning given to such
term by section 1563(a), except that—
‘‘(i) ‘more than 50 percent’ shall be
substituted for ‘at least 80 percent’ each
place it appears in section 1563(a)(1), and
‘‘(ii) the determination shall be made
without regard to subsections (a)(4) and
(e)(3)(C) of section 1563.
‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,
ETC., WHICH ARE UNDER COMMON CONTROL.—
Under regulations prescribed by the Secretary,
all trades or businesses (whether or not incor-
porated) which are under common control shall
be treated as one person. The regulations pre-
scribed under this subparagraph shall be based
on principles similar to the principles which
apply in the case of subparagraph (A).
‘‘(d) LIMITATIONS ON TAX.—
‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT
DISCOVERED
EXERCISING
REASONABLE
DILI-
GENCE.—No tax shall be imposed by subsection (a)
with respect to any failure for which it is established
to the satisfaction of the Secretary that the person
liable for tax did not know, and by exercising rea-
sonable diligence would not have known, that the
failure existed.
‘‘(2) TAX NOT TO APPLY TO FAILURES COR-
RECTED WITHIN THIRTY DAYS.—No tax shall be im-
posed by subsection (a) on any failure if—
‘‘(A) the failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) the failure is corrected during the
thirty-day period beginning on the 1st date the
person liable for the tax knew, or by exercising
reasonable diligence would have known, that the
failure existed.
‘‘(3) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that the payment of that tax would be excessive rel-
ative to the failure involved.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) the terms ‘insurer’ and ‘administrator of a
self-insured employee plan’ have the meanings given
to those terms by section 2230 of the Social Security
Act, and
‘‘(2) the term ‘State’ has the meaning given to
that term by section 1101(1) of the Social Security
Act.’’.
(b) NONDEDUCTIBILITY OF TAX.—Paragraph (6) of
section 275(a) of that Code (relating to nondeductibility
of certain taxes) is amended by inserting ‘‘47,’’ after
‘‘46,’’.
(c) CLERICAL AMENDMENTS.—The table of sections
for chapter 47 of that Code is amended by adding at the
end the following new item:
‘‘Sec. 5000B. Failure to satisfy certain health insurance require-
ments.’’
EFFECTIVE DATE.—The amendments made by this
section shall take effect on January 1, 1995.
TITLE III—MEWA ENFORCEMENT
IMPROVEMENTS
SEC. 301. SHORT TITLE.
This title may be cited as the ‘‘Multiple Employer
Welfare Arrangements Enforcement Improvements Act of
1993’’.
SEC. 302. AMENDMENT TO DEFINITION OF EMPLOYEE WEL-
FARE BENEFIT PLAN.
Section 3(1) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1002(1)) is amended—
(1) by redesignating clauses (A) and (B) as
clauses (i) and (ii), respectively;
(2) by inserting ‘‘(A)’’ after ‘‘(1)’’; and
(3) by adding at the end the following new sub-
paragraphs:
‘‘(B) Notwithstanding subparagraph (A), a plan,
fund, or program shall not fail to be an ‘employee welfare
benefit plan’ solely because the plan, fund, or program
covers individuals who are not employees or former em-
ployees of the employer (or members or former members
of the employee organization) which established or main-
tains the plan, or their beneficiaries, if at no time during
the plan year the number of such individuals exceeds five
percent of the aggregate number of individuals covered
under the plan.
‘‘(C) A plan, fund, or program shall not fail to be
an ‘employee welfare benefit plan’ solely because the plan,
fund, or program is established or maintained by a fran-
chise network (as defined in paragraph (40)(B)(vi)).
‘‘(D) A plan, fund, or program shall not fail to be
an ‘employee welfare benefit plan’ solely because the plan,
fund, or program is established or maintained by two or
more trades or businesses, whether or not incorporated,
that are within the same control group or were within the
same control group at any time during the period com-
mencing with the preceding one-year period. For purposes
of this subparagraph, the term ‘control group’ shall have
the meaning provided in clauses (ii) and (iii) of paragraph
(40)(B).’’.
SEC. 303. AMENDMENT TO DEFINITION OF MULTIPLE EM-
PLOYER WELFARE ARRANGEMENT.
Section 3(40) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(40)) is amended—
(1) in subparagraph (A), by striking clause (i)
and inserting the following:
‘‘(i) pursuant to one or more collective bargain-
ing agreements, if, under such arrangements, cov-
erage under such arrangements is limited to—
‘‘(I) employees covered by a collective bar-
gaining agreement,
‘‘(II) employees of the plan,
‘‘(III) employees of an employee organiza-
tion which is a party to such collective bargain-
ing agreement, and
‘‘(IV) beneficiaries of participants de-
scribed in subclauses (I), (II), and (III), or’’;
(2) in subparagraph (A), by striking ‘‘or’’ at
the end of clause (ii), by striking the period at the
end of clause (iii) and inserting a comma, and by
adding after clause (iii) the following new clauses:
‘‘(iv) by a franchise network, or
‘‘(v) by an insurer (as defined in section
401(b)(2)(A)) or by a health maintenance organiza-
tion, if such insurer or organization is licensed to do
business in a State.’’;
(3) in subparagraph (B)(i), by striking ‘‘if such
trades or businesses are within the same control
group’’ and inserting ‘‘for any plan year of any such
plan, or any fiscal year of any other arrangement,
if such trades or businesses are within the same con-
trol group during such year or at any time during
the preceding one-year period.’’; and
(4) in subparagraph (B), by redesignating
clauses (iv) and (v) as clauses (viii) and (ix), respec-
tively, and by inserting after clause (iii) the follow-
ing new clauses:
‘‘(iv) the term ‘employee’ includes any former
employee who is receiving benefits under the plan or
under part 6 of subtitle B,
‘‘(v) the term ‘collective bargaining agreement’
means a written agreement between an employer or
a group of employers and one or more employee or-
ganizations which has been negotiated through a
process of arm’s length, good faith bargaining, pur-
suant to the National Labor Relations Act or other
applicable law, where a broad range of matters per-
taining to the employment relationship such as
wages, rates of pay, hours of employment, griev-
ances, and conditions of employment, in addition to
employee benefits, have been negotiated,
‘‘(vi) the term ‘franchise network’ means a
group or association of franchisees (which may in-
clude the franchisor), if each of such franchisees is
a party to a franchise with the same franchisor, ex-
cept that, for purposes of this clause—
‘‘(I) the terms ‘franchise’, ‘franchisor’, and
‘franchisee’ shall have the meanings provided
such terms in the regulations of the Federal
Trade Commission, as in effect on January 1,
1991, under paragraphs (1) and (2) of section
436.2(a) of title 16 of the Code of Federal Reg-
ulations, without regard to paragraph (5) of
such section 436.2(a), if the franchise has as its
primary economic basis a business activity in
fact apart from the provision of health care
benefits to employees of the franchisees,
‘‘(II) a franchise that is exempted from the
provisions of part 436 of title 16 of the Code
of Federal Regulations pursuant to section
436.2(a)(3) of such title 16, or is an arrange-
ment that is excluded under section 436.2(a)(4)
of such title 16, is not a franchise for purposes
of this part, and
‘‘(III) the Secretary may by regulation
amend the definition of ‘franchise network’ for
purposes of maintaining consistency with any
changes in the definition of ‘franchise’ adopted
by the Federal Trade Commission under the
Federal Trade Commission Act,
‘‘(vii) an employee welfare benefit plan which is
maintained by a single employer shall not be deemed
to be a multiple employer welfare arrangement for
any plan year solely because the plan covers individ-
uals who are not employees or former employees of
the employer, or their beneficiaries, if, at no time
during the plan year, the number of such individuals
exceeds five percent of the aggregate number of indi-
viduals covered under the plan,’’.
SEC. 304. COVERAGE.
Section 4 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1003) is amended by adding
at the end the following new subsection:
‘‘(c) Except as provided in subsection (b), this title
shall apply to any multiple employer welfare arrangement
engaged in commerce or in any industry or activity affect-
ing commerce.’’.
SEC. 305. REGISTRATION REQUIREMENT.
Section 101 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1021) is amended—
(1) by redesignating subsection (f) as sub-
section (g); and
ness or intends to conduct business within the
following 12-month period,
‘‘(B) contain a certification that copies of
such registration statement have been filed with
the Insurance Commissioner (or other similar
official) of each State in which the multiple em-
ployer welfare arrangement currently offers or
provides benefits, or intends to offer or provide
benefits during the following 12-month period,
and
‘‘(C) indicate whether the multiple em-
ployer welfare arrangement has obtained, ap-
plied for, or intends to apply for an exemption
from 
State 
regulation 
under 
section
514(b)(6)(B).
‘‘(4) PERSONS RESPONSIBLE FOR FILING.—The
person or persons responsible for filing the annual
registration statement with respect to a multiple em-
ployer welfare arrangement are—
‘‘(A) the trustee or trustees so designated
by the terms of the instrument under which the
multiple employer welfare arrangement is estab-
lished or maintained, or
‘‘(B) in the case of a multiple employer
welfare arrangement for which the trustee or
trustees cannot be identified, the person or per-
sons actually responsible for the acquisition,
disposition, control, or management of the cash
or property of the multiple employer welfare ar-
rangement, irrespective of whether such acquisi-
tion, disposition, control, or management is ex-
ercised directly by such person or persons or
through an agent designated by such person or
persons.’’.
SEC. 306. ENFORCEMENT AND CIVIL PENALTIES.
(a) IN GENERAL.—Section 502 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1132)
is amended—
(1) in subsection (a)(6), by inserting ‘‘or
(c)(4)’’ after ‘‘(c)(2)’’; and
(2) in subsection (c), by adding at the end the
following new paragraph:
‘‘(4) The Secretary may assess, against the person
or persons responsible for filing with the Secretary an an-
nual registration statement with respect to a multiple em-
ployer welfare arrangement as required under section
101(f), a civil penalty of up to $1,000 a day from the date
of such person’s or persons’ failure or refusal to timely
file such statement. For purposes of this paragraph, an
annual registration statement which the Secretary deter-
mines to be materially incomplete, and which is not refiled
in a manner satisfactory to the Secretary within 45 days
after the Secretary makes such determination, shall not
be treated as having been filed with the Secretary.’’.
(b) COURT ORDERS.—Section 502 of such Act is fur-
ther amended by adding at the end the following new sub-
section:
‘‘(m)(1) Upon application by the Secretary showing
the operation, promotion, or marketing of a multiple em-
ployer welfare arrangement that—
‘‘(A) offers or provides benefits to participants
covered by an employee welfare benefit plan, and
‘‘(B) is neither—
‘‘(i) licensed, registered, or otherwise ap-
proved under the insurance laws of all States in
which the arrangement offers or provides bene-
fits, nor
‘‘(ii) operating in accordance with the
terms of an exemption granted by the Secretary
pursuant to section 514(b)(6)(B),
a district court of the United States shall enter an order
requiring that the arrangement cease activities.
‘‘(2) Paragraph (1) shall not apply if it is shown that
the arrangement—
‘‘(A) is fully insured, within the meaning of sec-
tion 514(b)(6)(D),
‘‘(B) meets the requirements of paragraph
(2)(A), except to the extent that all or some of the
States in which the arrangement offers or provides
benefits do not require licensing, registration, or ap-
proval of fully-insured multiple employer welfare ar-
rangements, and
‘‘(C) with respect to such States, is operating in
accordance with applicable State insurance laws that
are not superseded pursuant to section 514.
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 arrange-
ment.’’.
SEC. 307. EXEMPTION PROCEDURE.
(a) IN GENERAL.—Section 514(b)(6) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1144(b)(6)) is amended—
(1) in subparagraph (A)(i), by striking ‘‘(or
which is a multiple employer welfare arrangement
subject to an exemption under subparagraph (B))’’;
(2) by subparagraph (A)(ii), by striking ‘‘the
preceding sections of’’;
(3) in subparagraph (B), by striking ‘‘(B) The
Secretary’’ and all that follows through the end of
the first sentence and inserting the following:
‘‘(B)(i) The Secretary may exempt from subpara-
graph (A), for a period not to exceed three years, in-
dividually or by class, multiple employer welfare ar-
rangements which are not fully insured and which
provide benefits of medical care (within the meaning
of section 213(d) of the Internal Revenue Code of
1986). This exemption may be renewed by the Sec-
retary upon application.’’; and
(4) by adding at the end of subparagraph (B)
the following new clauses:
‘‘(ii) The Secretary may not grant an exemption
under this subparagraph unless the Secretary finds that
such exemption is—
‘‘(I) administratively feasible,
‘‘(II) not adverse to the interests of the partici-
pants and beneficiaries of the employee welfare ben-
efit plan which is a multiple employer welfare ar-
rangement, and
‘‘(III) protective of the rights and benefits of
such participants and beneficiaries.
‘‘(iii) Before granting an exemption under this sub-
paragraph, the Secretary shall—