42 U.S.C. § 300gg–22 — Enforcement

(a) State enforcement. (1) State authority. Subject to section 300gg–23 of this title, each state may require that health insurance issuers selling coverage in its individual or group market meet the requirements of this part (other than section 300gg–121 of this title). (2) Failure to implement provisions. If the Secretary decides a state has failed to substantially enforce one of these requirements against its issuers, the Secretary will enforce that requirement directly, under subsection (b), for coverage sold or renewed in that state. (b) Secretarial enforcement authority. (1) Limitation. The Secretary's direct enforcement under this subsection applies only (A) where a state has failed to enforce, as described above, and (B) to individual coverage or to group health plans that are nonfederal governmental plans. (2) Imposition of penalties. (A) In general. A nonfederal governmental group plan, or an issuer, that fails to meet a covered requirement is subject to a civil money penalty. (B) Liability for penalty. (i) An issuer is liable for its own penalty. (ii) For a nonfederal governmental group plan: (I) if the plan is sponsored by two or more employers, the plan itself is liable; (II) otherwise, the employer is liable. (C) Amount of penalty. (i) The maximum penalty is $100 per day for each affected individual. (ii) The Secretary considers the entity's compliance history and how serious the violation was. (iii) Limits: (I) no penalty applies for any period when, using reasonable diligence, none of the responsible parties could have known about the failure; (II) no penalty applies if the failure was due to reasonable cause (not willful neglect) and was fixed within 30 days of when it was discovered, or should have been discovered. (D) Administrative review. (i) The entity being penalized can request a hearing within 30 days of the penalty notice; the decision is made on the record. If no hearing is requested, the penalty becomes final. (ii) If a hearing happens, an administrative law judge decides first; that decision becomes final unless the Secretary changes or cancels it within 30 days. (E) Judicial review. (i) The penalized entity can appeal to federal district court within 30 days, notifying the Secretary. (ii) The Secretary must file the administrative record with the court. (iii) The court can only overturn the Secretary's findings if they are unsupported by substantial evidence. (iv) Further appeal follows the normal federal appeals process. (F) Failure to pay assessment. (i) If an entity doesn't pay a final penalty, the Secretary refers the matter to the Attorney General to collect it in court. (ii) In that collection case, the validity of the penalty itself cannot be challenged again. (G) Payment of penalties. Penalties collected go to the Secretary (or other collecting official) and stay available, without needing a new appropriation, to help enforce these requirements. (3) Enforcement authority relating to genetic discrimination. (A) General rule. A special, stricter set of penalty rules — described below — applies specifically when the Secretary is enforcing the genetic-information protections against an issuer connected to a group health plan. (B) Amount. (i) The penalty is $100 for each day of the "noncompliance period" for each affected participant or beneficiary. (ii) The noncompliance period runs from when the failure first happened until it is corrected. (C) Minimum penalties where failure is discovered. Even with the limits in (D) below: (i) if a failure affecting an individual isn't fixed before the Secretary notifies the plan of the violation, the penalty for that individual is at least $2,500. (ii) if a person's violations for the year are more than minor ("de minimis"), that minimum rises to $15,000. (D) Limitations. (i) No penalty applies if, using reasonable diligence, the responsible party couldn't have known about the failure. (ii) No penalty applies if the failure was due to reasonable cause (not willful neglect) and was fixed within 30 days of discovery. (iii) For unintentional failures, the total penalty for the year is capped at the lesser of 10 percent of what the employer spent on group health plans the prior year, or $500,000. (E) Waiver by Secretary. For a failure due to reasonable cause, the Secretary may waive part or all of the penalty if paying it in full would be excessive compared to the violation.