(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 Sec. 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 Sec. 2520.101-2. The term ``administrator''
is defined in Sec. 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 Sec. 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
Sec. 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 Sec. 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 Sec. 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.
(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
Sec. 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 Sec. 2570.90 et seq., and files and answer to the
notice. The request for hearing and answer shall be filed in accordance
with Sec. 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
Sec. 2570.91(g), shall be personally liable for the payment of such
penalty.
(k) Cross-reference. See Secs. 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 Sec. 2520.101-2 filing that is due in the Year 2000.
[65 FR 7181, Feb. 11, 2000]
