EBSA Final Rule
Interim Rule Governing Procedures for Administrative Hearings Regarding the Assessment of Civil Penalties under Section 502(c)(5) of ERISA [02/11/2000]
[PDF Version]
Volume 65, Number 29, Page 7185-7191
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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.
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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 Sec. 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).
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\1\ Both 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.
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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 Sec. 2560.502c-5.
[[Page 7186]]
This document contains an interim final rule that establishes
procedures for hearings before an Administrative Law Judge (ALJ) with
respect to an assessment by the Department of Labor (the Department) of
a civil penalty under section 502(c)(5), and for appeals of an ALJ
decision to the Secretary or the Secretary's delegate. In this regard,
the Secretary has established the Pension and Welfare Benefits
Administration (PWBA) within the Department for the purpose of carrying
out most of the Secretary's responsibilities under ERISA. See Secretary
of Labor's Order 1-87, 52 FR 13139 (April 21, 1987).
The Department has published rules of practice and procedure for
administrative hearings before the Office of Administrative Law Judges
in Subpart A of 29 CFR Part 18, 48 FR 32538 (1983). As explained in 29
CFR 18.1, those provisions generally govern administrative hearings
before ALJs assigned to the Department and are intended to provide
maximum uniformity in the conduct of administrative hearings. However,
in the event of an inconsistency or conflict between the provisions of
Subpart A of 29 CFR Part 18 and a rule or procedure required by
statute, executive order, or regulation, the latter controls.
The Department has reviewed the applicability of the provisions of
Subpart A of 29 CFR Part 18 to the assessment of civil penalties under
ERISA section 502(c)(5) and has decided to adopt many, though not all,
of the provisions of Subpart A of 29 CFR Part 18 for these proceedings.
Accordingly, adjudications relating to civil penalties under ERISA
section 502(c)(5) will be governed by the following sections \2\ of
Subpart A of 29 CFR Part 18:
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\2\ To the extent that any provision of Subpart A of 29 CFR Part
18 is not incorporated, the provisions detailed in this section are
intended to govern the rules of practice and procedure for
administrative hearings relating to civil penalties under ERISA
section 502(c)(5).
Sec. 18.4 Time computations.
Sec. 18.5 (c) through (e) Responsive pleadings--answer and request
for hearing.
Sec. 18.6 Motions and requests.
Sec. 18.7 Prehearing statements.
Sec. 18.8 Prehearing conferences.
Sec. 18.11 Consolidation of hearings.
Sec. 18.12 Amicus curiae.
Sec. 18.13 Discovery methods.
Sec. 18.15 Protective orders.
Sec. 18.16 Supplementation of responses.
Sec. 18.17 Stipulations regarding discovery.
Sec. 18.18 Written interrogatories to parties.
Sec. 18.19 Production of documents and other evidence; entry upon
land for inspection and other purposes; and physical and mental
examination.
Sec. 18.20 Admissions.
Sec. 18.21 Motion to compel discovery.
Sec. 18.22 Depositions.
Sec. 18.23 Use of depositions at hearings.
Sec. 18.24 Subpoenas.
Sec. 18.25 Designation of administrative law judge.
Sec. 18.26 Conduct of hearings.
Sec. 18.27 Notice of hearing.
Sec. 18.28 Continuances.
Sec. 18.29 Authority of administrative law judge.
Sec. 18.30 Unavailability of administrative law judge.
Sec. 18.31 Disqualification.
Sec. 18.32 Separation of functions.
Sec. 18.33 Expedition.
Sec. 18.34 Representation.
Sec. 18.35 Legal assistance.
Sec. 18.36 Standards of conduct.
Sec. 18.37 Hearing room conduct.
Sec. 18.38 Ex parte communications.
Sec. 18.39 Waiver of right to appear and failure to participate or
to appear.
Sec. 18.40 Motion for summary decision.
Sec. 18.42 Expedited proceedings.
Sec. 18.43 Formal hearings.
Sec. 18.44 Evidence.
Sec. 18.45 Official notice.
Sec. 18.46 In camera and protective orders.
Sec. 18.47 Exhibits.
Sec. 18.48 Records in other proceedings.
Sec. 18.49 Designation of parts of documents.
Sec. 18.50 Authenticity.
Sec. 18.51 Stipulations.
Sec. 18.52 Record of hearings.
Sec. 18.53 Closing of hearings.
Sec. 18.54 Closing the record.
Sec. 18.55 Receipt of documents after hearing.
Sec. 18.56 Restricted access.
Sec. 18.59 Certification of official record.
This interim final rule relates specifically to procedures for
assessing civil penalties under section 502(c)(5) of ERISA and are
controlling to the extent they are inconsistent with any portion of
Subpart A of 29 CFR Part 18. This interim final rule is designed to
maintain the maximum degree of uniformity with the rules set forth in
Subpart A of 29 CFR Part 18 consistent with the need for an expedited
procedure, while recognizing the special characteristics of proceedings
under ERISA section 502(c)(5). For purposes of clarity, where a
particular section of the existing procedural rules would be affected
by these interim final rules, the entire section of the existing
procedural rules (with the appropriate modifications) has been set out
in this document. Thus, only a portion of the provisions of the
procedural rules set forth below involve changes from, or additions to,
the rules in Subpart A of 29 CFR Part 18. The specific modifications to
the rules in Subpart A 29 CFR Part 18, and their relationship to the
conduct of these proceedings generally, are outlined below.
C. Discussion of the Interim Final Rules
1. In General
The applicability of these procedural rules under section
502(c)(5) is set forth in Sec. 2570.90. In this regard, it should be
noted that the procedural rules contained herein apply only to
adjudicatory proceedings before ALJs of the U.S. Department of Labor.
The interim rule in Sec. 2560.502c-5, also being published today, sets
forth the procedures relating to issuance by PWBA of notices of intent
to assess a penalty under ERISA section 502(c)(5), as well as
procedures for agency review of statements of reasonable cause filed by
persons against whom a penalty is assessed. Under the interim final
rule contained in this notice, an adjudicatory proceeding before an ALJ
is commenced only when a person against whom the Department intends to
assess a penalty under section 502(c)(5) files an answer to a notice of
the agency's determination on a statement of reasonable cause. See
Sec. 2570.91(c) and (d) below, and Sec. 2560.502c-5(h), published
separately in this issue of the Federal Register.
The definitional section (Sec. 2570.91) of these interim final
rules incorporates the basic adjudicatory principles set forth in
Subpart A of 29 CFR Part 18, but includes terms and concepts of
specific relevance to proceedings under ERISA section 502(c)(5). In
this respect, it differs from its more general counterpart at Sec. 18.2
of this title. In particular, Sec. 2570.91 states that the term
``Secretary'' means the Secretary of Labor and includes various persons
to whom the Secretary may delegate authority. This definition is not
intended to suggest any limitation on the authority that the Secretary
has delegated to the Assistant Secretary for Pension and Welfare
Benefits. As noted above, the Secretary of Labor has delegated most of
his or her authority under ERISA to the Assistant Secretary for Pension
and Welfare Benefits. Thus, the Department contemplates that the duties
assigned to the Secretary under the procedural regulation will in fact
be discharged by the Assistant Secretary for Pension and Welfare
Benefits or a properly authorized delegate.
2. Proceedings Before Administrative Law Judges
In general, the burden to initiate adjudicatory proceedings before
an ALJ will be on the party against whom the Department is seeking to
assess a civil penalty under ERISA section 502(c)(5) (the respondent).
However, a respondent must have complied with the procedures relating
to agency review set forth in Sec. 2560.502c-5 before
[[Page 7187]]
initiating adjudicatory proceedings under this section. In this regard,
it should be noted that both the notice of intent to assess a penalty,
as described in Sec. 2560.502c-5(c), and the notice of determination on
a statement of reasonable cause, as described in Sec. 2560.502c-5(g),
will be issued by PWBA, the agency responsible for administration and
enforcement of ERISA section 502(c)(5), in accordance with the service
of notice provisions described in Sec. 2560.502c-5(i). Paragraph (c) of
Sec. 2570.91 (relating to respondent's answer), paragraph (d) of
Sec. 2570.91 (relating to commencement of proceedings), and paragraph
(h) of Sec. 2570.91 (relating to administrative hearings) contemplate
that adjudicatory proceedings will be initiated with the filing by a
respondent of an answer to a notice of the agency's determination on a
statement of reasonable cause.
The service of documents by the parties to an adjudicatory
proceeding, as well as by the ALJ, will be governed by Sec. 2570.92 of
these interim final rules.
In general, the rules in Subpart A of 29 CFR Part 18 concerning the
computation of time, pleadings and motions, and prehearing conferences
and statements, are adopted in these procedures for adjudications under
ERISA section 502(c)(5). The section on the designation of parties
(Sec. 2570.93) differs from its counterpart under Sec. 18.10 of this
title in that it specifies that the respondent in these proceedings
will, as indicated above, be the party against whom the Department
seeks to assess a civil penalty under ERISA section 502(c)(5).
Section 2590.94 describes the consequences of default. This section
provides that if the respondent fails to file an answer to the
Department's notice of determination, described in Sec. 2560.502c-5(g),
within the 30-day period provided by Sec. 2560.502c-5(h), such failure
shall be deemed to constitute a waiver of the right to appear and
contest the facts alleged in the notice and 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). Section 2570.94
clarifies that, in the event of such a failure, the assessment of the
penalty becomes final.
Section 2590.95 addresses consent orders or settlements. This
section permits parties, up to 5 days prior to a scheduled hearing, to
request that a hearing be deferred for a reasonable period of time to
permit negotiation of a settlement or agreement resolving the whole or
any part of the issues relating to assessment of a penalty under ERISA
section 502(c)(5). The section also states that the ALJ's decision
shall include the terms and conditions of any consent order or
settlement that has been agreed to by the parties. That section also
provides that the decision of the ALJ, which incorporates such consent
order, shall become a final agency action within the meaning of 5
U.S.C. 704. Finally, this section prescribes rules for the content,
submission and disposition of any settlement agreement under this
section, and a process for settling the whole or any part of the issues
where all parties have not consented to the terms of the proposed
settlement.
Section 2570.96 states that discovery may be ordered by the ALJ
only upon a showing of good cause by the party seeking discovery. This
differs from the more liberal standard for discovery contained in 29
CFR 18.14. In cases in which discovery is ordered by the ALJ, the order
shall expressly limit the scope and terms of discovery to that for
which good cause has been shown. To the extent that the order of the
ALJ does not specify rules for the conduct of the discovery permitted
by such order, the rules governing the conduct of discovery from
Subpart A of 29 CFR Part 18 are to be applied in these proceedings
under section 502(c)(5). For example, if the order of the ALJ states
only that interrogatories on certain subjects may be permitted, the
rules under Subpart A of 29 CFR Part 18 concerning the service and
answering of such interrogatories shall apply. The procedures under
Subpart A of 29 CFR Part 18 for the submission of facts to the ALJ
during the hearing are also to be applied in proceedings under ERISA
section 502(c)(5).
The section on summary decisions (Sec. 2570.97) provides the
requisite authorization for an ALJ to issue a summary decision which
may become final when there are no genuine issues of material fact in a
case arising under ERISA section 502(c)(5). The section concerning the
decision of the ALJ (Sec. 2570.98) differs from its counterpart at
Sec. 18.57 of this title in that it states that the decision of the ALJ
in a section 502(c)(5) case shall become the final decision of the
Secretary unless a timely appeal is filed.
3. Review by the Secretary
The procedures for appeals of ALJ decisions under ERISA section
502(c)(5) are governed solely by the rules set forth in Secs. 2570.99
through 2570.101, and without any reference to the appellate procedures
contained in Subpart A of 29 CFR Part 18. Section 2570.99 establishes a
20-day time limit within which such appeals must be filed, the manner
in which the issues for appeal are determined, and the procedures for
making the entire record before the ALJ available to the Secretary.
Section 2570.100 provides that review by the Secretary shall not be on
a de novo basis, but rather on the basis of the record before the ALJ,
and without an opportunity for oral argument. Section 2570.101 sets
forth the procedure for establishing a briefing schedule for such
appeals, and states that the decision of the Secretary on such an
appeal shall be a final agency action within the meaning of 5 U.S.C.
704. As noted above, the authority of the Secretary with respect to the
appellate procedures has been delegated to the Assistant Secretary for
Pension and Welfare Benefits. As required by the Administrative
Procedure Act (5 U.S.C. 552(a)(2)(A)), all final decisions of the
Department under section 502(c)(5) of ERISA shall be compiled in the
Public Documents Room of the Pension and Welfare Benefits
Administration, Room N-5638, U.S. Department of Labor, 200 Constitution
Avenue NW., Washington, DC 20210.
D. Interim 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 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 enforce the
reporting requirements of section 101(g)(h) of ERISA and the
implementing regulations under Sec. 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
[[Page 7188]]
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 Sec. 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 competition,
employment, investment, productivity, innovation, or on the ability of
United States-based enterprises to compete with foreign-based
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 rules set forth herein are 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. 1194), and under Secretary of Labor's Order 1-87, 52 FR
13139, April 21, 1987.
List of Subjects in 29 CFR Part 2570
Administrative practice and procedure, Claims, Employee benefit
plans, Employee Retirement Income Security Act, Law enforcement,
Pension and Welfare Benefits Administration, Reporting and disclosure.
For the reasons set out in the preamble, Part 2570 of Chapter XXV
of Title 29 of the Code of Federal Regulations is amended as follows:
PART 2570--[AMENDED]
1. The authority for Part 2570 is revised to read:
Authority: 29 U.S.C. 1132(c)(2), 1132(c)(5), 1132(i), 1135,
1194, and Secretary's Order 1-87, 52 FR 13139 (April 21, 1987).
2. By adding in the appropriate place in Part 2570 the following
new Subpart E:
Subpart E `` Procedures for the Assessment of Civil Penalties Under
ERISA Section 502(c)(5)
2570.90 Scope of rules.
2570.91 Definitions.
2570.92 Service: Copies of documents and pleadings.
2570.93 Parties, how designated.
2570.94 Consequences of default.
2570.95 Consent order or settlement.
2570.96 Scope of discovery.
2570.97 Summary decision.
2570.98 Decision of the administrative law judge.
2570.99 Review by the Secretary.
2570.100 Scope of review.
2570.101 Procedures for review by the Secretary.
Subpart E--Procedures for the Assessment of Civil Penalties Under
ERISA Section 502(c)(5)
Sec. 2570.90 Scope of rules.
The rules of practice set forth in this subpart are applicable to
``502(c)(5) civil penalty proceedings'' (as defined in Sec. 2570.91(n)
of this subpart) 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 rules of procedure for
administrative hearings published by the Department's Office of
Administrative Law Judges in Subpart A of Part 18 of this title will
apply to matters arising under ERISA section 502(c)(5) except as
modified by this section. These proceedings shall be conducted as
expeditiously as possible, and the parties shall make every effort to
avoid delay at each stage of the proceedings.
Sec. 2570.91 Definitions.
For 502(c)(5) civil penalty proceedings, this section shall apply
in lieu of the definitions in Sec. 18.2 of this title.
(a) Adjudicatory proceeding means a judicial-type proceeding before
an administrative law judge leading to the formulation of a final
order;
(b) Administrative law judge means an administrative law judge
appointed pursuant to the provisions of 5 U.S.C. 3105;
(c) Answer means a written statement that is supported by reference
to specific circumstances or facts surrounding the notice of
determination issued pursuant to Sec. 2560.502c-5(g);
[[Page 7189]]
(d) Commencement of proceeding is the filing of an answer by the
respondent;
(e) Consent agreement means any written document containing a
specified proposed remedy or other relief acceptable to the Department
and consenting parties;
(f) ERISA means the Employee Retirement Income Security Act of
1974, as amended;
(g) Final Order means the final decision or action of the
Department of Labor concerning the assessment of a civil penalty under
ERISA section 502(c)(5) against a particular party. Such final order
may result from a decision of an administrative law judge or the
Secretary, the failure of a party to file a statement of reasonable
cause described in Sec. 2560.502c-5(e) within the prescribed time
limits, or the failure of a party to invoke the procedures for hearings
or appeals under this title within the prescribed time limits. Such a
final order shall constitute final agency action within the meaning of
5 U.S.C. 704;
(h) Hearing means that part of a proceeding which involves the
submission of evidence, either by oral presentation or written
submission, to the administrative law judge;
(i) Order means the whole or any part of a final procedural or
substantive disposition of a matter under ERISA section 502(c)(5);
(j) Party includes a person or agency named or admitted as a party
to a proceeding;
(k) Person includes an individual, partnership, corporation,
employee benefit plan, association, exchange or other entity or
organization;
(l) Petition means a written request, made by a person or party,
for some affirmative action;
(m) Pleading means the notice as defined in Sec. 2560.502c-5(g),
the answer to the notice, any supplement or amendment thereto, and any
reply that may be permitted to any answer, supplement or amendment;
(n) 502(c)(5) civil penalty proceeding means an adjudicatory
proceeding relating to the assessment of a civil penalty provided for
in section 502(c)(5) of ERISA;
(o) Respondent means the party against whom the Department is
seeking to assess a civil sanction under ERISA section 502(c)(5);
(p) Secretary means the Secretary of Labor and includes, pursuant
to any delegation of authority by the Secretary, any assistant
secretary (including the Assistant Secretary for Pension and Welfare
Benefits), administrator, commissioner, appellate body, board, or other
official of the Department of Labor; and
(q) Solicitor means the Solicitor of Labor or his or her delegate.
Sec. 2570.92 Service: Copies of documents and pleadings.
For 502(c)(5) penalty proceedings, this section shall apply in lieu
of Sec. 18.3 of this title.
(a) In general. Copies of all documents shall be served on all
parties of record. All documents should clearly designate the docket
number, if any, and short title of all matters. All documents to be
filed shall be delivered or mailed to the Chief Docket Clerk, Office of
Administrative Law Judges (OALJ), 800 K Street, N.W., Suite 400,
Washington, DC 20001-8002, or to the OALJ Regional Office to which the
proceeding may have been transferred for hearing. Each document filed
shall be clear and legible.
(b) By parties. All motions, petitions, pleadings, briefs, or other
documents shall be filed with the Office of Administrative Law Judges
with a copy, including any attachments, to all other parties of record.
When a party is represented by an attorney, service shall be made upon
the attorney. Service of any document upon any party may be made by
personal delivery or by mailing a copy to the last known address. The
Department shall be served by delivery to the Associate Solicitor, Plan
Benefits Security Division, ERISA section 502(c)(5) Proceeding, P.O.
Box 1914, Washington, DC 20013. The person serving the document shall
certify to the manner and date of service.
(c) By the Office of Administrative Law Judges. Service of orders,
decisions and all other documents shall be made by regular mail to the
last known address.
(d) Form of pleadings-- (1) Every pleading shall contain
information indicating the name of the Pension and Welfare Benefits
Administration (PWBA) as the agency under which the proceeding is
instituted, the title of the proceeding, the docket number (if any)
assigned by the Office of Administrative Law Judges and a designation
of the type of pleading or paper (e.g., notice, motion to dismiss,
etc.). The pleading or paper shall be signed and shall contain the
address and telephone number of the party or person representing the
party. Although there are no formal specifications for documents, they
should be typewritten when possible on standard size 8\1/2\ x 11 inch
paper.
(2) Illegible documents, whether handwritten, typewritten,
photocopies, or otherwise, will not be accepted. Papers may be
reproduced by any duplicating process provided all copies are clear and
legible.
Sec. 2570.93 Parties, how designated.
For 502(c)(5) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.10 of this title.
(a) The term party wherever used in these rules shall include any
natural person, corporation, employee benefit plan, association, firm,
partnership, trustee, receiver, agency, public or private organization,
or government agency. A party against whom a civil penalty is sought
shall be designated as ``respondent.'' The Department shall be
designated as the ``complainant.''
(b) Other persons or organizations shall be permitted to
participate as parties only if the administrative law judge finds that
the final decision could directly and adversely affect them or the
class they represent, that they may contribute materially to the
disposition of the proceedings and their interest is not adequately
represented by existing parties, and that in the discretion of the
administrative law judge the participation of such persons or
organizations would be appropriate.
(c) A person or organization not named as a respondent wishing to
participate as a party under this section shall submit a petition to
the administrative law judge within fifteen (15) days after the person
or organization has knowledge of or should have known about the
proceeding. The petition shall be filed with the administrative law
judge and served on each person or organization who has been made a
party at the time of filing. Such petition shall concisely state:
(1) Petitioner's interest in the proceeding;
(2) How his or her participation as a party will contribute
materially to the disposition of the proceeding;
(3) Who will appear for petitioner;
(4) The issues on which petitioner wishes to participate; and
(5) Whether petitioner intends to present witnesses.
(d) Objections to the petition may be filed by a party within
fifteen (15) days of the filing of the petition. If objections to the
petition are filed, the administrative law judge shall then determine
whether petitioners have the requisite interest to be a party in the
proceedings, as defined in paragraph (b) of this section, and shall
permit or deny participation accordingly. Where petitions to
participate as parties are made by individuals or groups with common
interests, the administrative law judge may request all such
petitioners to designate a single representative, or he or she may
[[Page 7190]]
recognize one or more of such petitioners. The administrative law judge
shall give each such petitioner as well as the parties, written notice
of the decision on his or her petition. For each petition granted, the
administrative law judge shall provide a brief statement of the basis
of the decision. If the petition is denied, he or she shall briefly
state the grounds for denial and shall then treat the petition as a
request for participation as amicus curiae.
Sec. 2570.94 Consequences of default.
For 502(c)(5) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.5 (a) and (b) of this title. Failure of the
respondents to file an answer to the notice of determination described
in Sec. 2560.502c-5(g) within the 30-day period provided by
Sec. 2560.502c-5(h) shall be deemed to constitute a waiver of his or
her right to appear and contest the allegations of the notice of
determination, and such failure shall be deemed to be an admission of
the facts as 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.
Sec. 2570.95 Consent order or settlement.
For 502(c)(5) civil penalty proceedings, the following shall apply
in lieu of Sec. 18.9 of this title.
(a) In general. At any time after the commencement of a proceeding,
but at least five (5) days prior to the date set for hearing, the
parties jointly may move to defer the hearing for a reasonable time to
permit negotiation of a settlement or an agreement containing findings
and an order disposing of the whole or any part of the proceeding. The
allowance of such deferment and the duration thereof shall be in the
discretion of the administrative law judge, after consideration of such
factors as the nature of the proceeding, the requirements of the public
interest, the representations of the parties and the probability of
reaching an agreement which will result in a just disposition of the
issues involved.
(b) Content. Any agreement containing consent findings and an order
disposing of a proceeding or any part thereof shall also provide:
(1) That the order shall have the same force and effect as an order
made after full hearing;
(2) That the entire record on which any order may be based shall
consist solely of the notice and the agreement;
(3) A waiver of any further procedural steps before the
administrative law judge;
(4) A waiver of any right to challenge or contest the validity of
the order and decision entered into in accordance with the agreement;
and
(5) That the order and decision of the administrative law judge
shall be final agency action.
(c) Submission. On or before the expiration of the time granted for
negotiations, but, in any case, at least five (5) days prior to the
date set for hearing, the parties or their authorized representative or
their counsel may:
(1) Submit the proposed agreement containing consent findings and
an order to the administrative law judge; or
(2) Notify the administrative law judge that the parties have
reached a full settlement and have agreed to dismissal of the action
subject to compliance with the terms of the settlement; or
(3) Inform the administrative law judge that agreement cannot be
reached.
(d) Disposition. In the event that a settlement agreement
containing consent findings and an order is submitted within the time
allowed therefore, the administrative law judge shall issue a decision
incorporating such findings and agreement within thirty (30) days of
receipt of such document. The decision of the administrative law judge
shall incorporate all of the findings, terms, and conditions of the
settlement agreement and consent order of the parties. Such decision
shall become a final agency action within the meaning of 5 U.S.C. 704.
(e) Settlement without consent of all parties. In cases in which
some, but not all, of the parties to a proceeding submit a consent
agreement to the administrative law judge, the following procedure
shall apply:
(1) If all of the parties have not consented to the proposed
settlement submitted to the administrative law judge, then such non-
consenting parties must receive notice, and a copy, of the proposed
settlement at the time it is submitted to the administrative law judge;
(2) Any non-consenting party shall have fifteen (15) days to file
any objections to the proposed settlement with the administrative law
judge and all other parties;
(3) If any party submits an objection to the proposed settlement,
the administrative law judge shall decide within thirty (30) days after
receipt of such objections whether to sign or reject the proposed
settlement. Where the record lacks substantial evidence upon which to
base a decision or there is a genuine issue of material fact, then the
administrative law judge may establish procedures for the purpose of
receiving additional evidence upon which a decision on the contested
issues may reasonably be based;
(4) If there are no objections to the proposed settlement, or if
the administrative law judge decides to sign the proposed settlement
after reviewing any such objections, the administrative law judge shall
incorporate the consent agreement into a decision meeting the
requirements of paragraph (d) of this section.
Sec. 2570.96 Scope of discovery.
For 502(c)(5) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.14 of this title.
(a) A party may file a motion to conduct discovery with the
administrative law judge. The motion for discovery shall be granted by
the administrative law judge only upon a showing of good cause. In
order to establish ``good cause'' for the purposes of this section, a
party must show that the discovery requested relates to a genuine issue
as to a material fact that is relevant to the proceeding. The order of
the administrative law judge shall expressly limit the scope and terms
of discovery to that for which ``good cause'' has been shown, as
provided in this paragraph.
(b) A party may obtain discovery of documents and tangible things
otherwise discoverable under paragraph (a) of this section and prepared
in anticipation of or for the hearing by or for another party's
representative (including his or her attorney, consultant, surety,
indemnitor, insurer, or agent) only upon showing that the party seeking
discovery has substantial need of the materials or information in the
preparation of his or her case and that he or she is unable without
undue hardship to obtain the substantial equivalent of the materials or
information by other means. In ordering discovery of such materials
when the required showing has been made, the administrative law judge
shall protect against disclosure of the mental impressions,
conclusions, opinions, or legal theories of an attorney or other
representative of a party concerning the proceeding.
Sec. 2570.97 Summary decision.
For 502(c)(5) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.41 of this title.
(a) No genuine issue of material fact. (1) Where no issue of
material fact is found to have been raised, the administrative law
judge may issue a decision which, in the absence of an appeal pursuant
to 2570.99 through
[[Page 7191]]
2570.101 of this subpart, shall become a final order.
(2) A decision made under this paragraph shall include a statement
of:
(i) Findings of fact and conclusions of law, and the reasons
therefor, on all issues presented; and
(ii) Any terms and conditions of the rule or order.
(3) A copy of any decision under this paragraph shall be served on
each party.
(b) Hearings on issues of fact. Where a genuine question of
material fact is raised, the administrative law judge shall, and in any
other case may, set the case for an evidentiary hearing.
Sec. 2570.98 Decision of the administrative law judge.
For 502(c)(5) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.57 of this title.
(a) Proposed findings of fact, conclusions, and order. Within
twenty (20) days of the filing of the transcript of the testimony or
such additional time as the administrative law judge may allow, each
party may file with the administrative law judge, subject to the
judge's discretion, proposed findings of fact, conclusions of law, and
an order together with a supporting brief expressing the reasons for
such proposals. Such proposals and briefs shall be served on all
parties, and shall refer to all portions of the record and to all
authorities relied upon in support of each proposal.
(b) Decision of the administrative law judge. Within a reasonable
time after the time allowed for the filing of the proposed findings of
fact, conclusions of law, and order, or within thirty (30) days after
receipt of an agreement containing consent findings and an order
disposing of the disputed matter in whole, the administrative law judge
shall make his or her decision. The decision of the administrative law
judge shall include findings of fact and conclusions of law with
reasons therefor upon each material issue of fact or law presented on
the record. The decision of the administrative law judge shall be based
upon the whole record. In a contested case in which the Department and
the Respondent have presented their positions to the administrative law
judge pursuant to the procedures for 502(c)(5) civil penalty
proceedings as set forth in this subpart, the penalty (if any) which
may be included in the decision of the administrative law judge shall
be limited to the penalty expressly provided for in section 502(c)(5)
of ERISA. It shall be supported by reliable and probative evidence. The
decision of the administrative law judge shall become a final agency
action within the meaning of 5 U.S.C. 704 unless an appeal is made
pursuant to the procedures set forth in Secs. 2570.99 through 2570.101.
Sec. 2570.99 Review by the Secretary
(a) The Secretary may review a decision of an administrative law
judge. Such a review may occur only when a party files a notice of
appeal from a decision of an administrative law judge within twenty
(20) days of the issuance of such decision. In all other cases, the
decision of the administrative law judge shall become final agency
action within the meaning of 5 U.S.C. 704.
(b) A notice of appeal to the Secretary shall state with
specificity the issue(s) in the decision of the administrative law
judge on which the party is seeking review. Such notice of appeal must
be served on all parties of record.
(c) Upon receipt of a notice of appeal, the Secretary shall request
the Chief Administrative Law Judge to submit to him or her a copy of
the entire record before the administrative law judge.
Sec. 2570.100 Scope of review.
The review of the Secretary shall not be a de novo proceeding but
rather a review of the record established before the administrative law
judge. There shall be no opportunity for oral argument.
Sec. 2570.101 Procedures for review by the Secretary.
(a) Upon receipt of the notice of appeal, the Secretary shall
establish a briefing schedule which shall be served on all parties of
record. Upon motion of one or more of the parties, the Secretary may,
in his or her discretion, permit the submission of reply briefs.
(b) The Secretary shall issue a decision as promptly as possible
after receipt of the briefs of the parties. The Secretary may affirm,
modify, or set aside, in whole or in part, the decision on appeal and
shall issue a statement of reasons and bases for the action(s) taken.
Such decision by the Secretary shall be final agency action within the
meaning of 5 U.S.C. 704.
3. By revising paragraph (a) of Sec. 2570.3 as follows:
Sec. 2570.3 Service: Copies of documents and pleadings.
* * * * *
(a) General. Copies of all documents shall be served on all parties
of record. All documents should clearly designate the docket number, if
any, and short title of all matters. All documents shall be delivered
or mailed to the Chief Docket Clerk, Office of Administrative Law
Judges, 800 K Street, NW., Suite 400, Washington, DC 20001-8002, or to
the OALJ regional Office to which the proceedings may have been
transferred for hearing. Each document filed shall be clear and
legible.
* * * * *
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. 00-2937 Filed 2-10-00; 8:45 am]
BILLING CODE 4510-29-P
