42 U.S.C. § 300e–9 — Employees’ health benefits plans

**(a) Regulations; membership option** In accordance with regulations which the Secretary shall prescribe— (1) each employer— (A) which is required during any calendar quarter to pay its employees the minimum wage prescribed by [section 206 of title 29](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title29-section206&num=0&edition=prelim) (or would be required to pay its employees such wage but for [section 213(a) of title 29](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title29-section213/a&num=0&edition=prelim)), and (B) which during such calendar quarter employed an average number of employees of not less than 25, and (2) any State and each political subdivision thereof which during any calendar quarter employed an average number of employees of not less than 25, as a condition of payment to the State of funds under section 247b, 247c, or 300a of this title, which offers to its employees in the calendar year beginning after such calendar quarter the option of membership in a qualified health maintenance organization which is engaged in the provision of basic health services in a health maintenance organization service area in which at least 25 of such employees reside shall meet the requirements of subsection (b) with respect to any qualified health maintenance organization offered by the employer or State or political subdivision. **(b) Nondiscriminatory contributions for services; payroll deductions; effect on costs** (1) If a health benefits plan offered by an employer or a State or political subdivision includes contributions for services offered under the plan, the employer or State or political subdivision shall make a contribution under the plan for services offered by a qualified health maintenance organization in an amount which does not financially discriminate against an employee who enrolls in such organization. For purposes of the preceding sentence, an employer’s or a State’s or political subdivision’s contribution does not financially discriminate if the employer’s or State’s or political subdivision’s method of determining the contributions on behalf of all employees is reasonable and is designed to assure employees a fair choice among health benefits plans. (2) Each employer or State or political subdivision which provides payroll deductions as a means of paying employees’ contributions for health benefits or which provides a health benefits plan to which an employee contribution is not required shall, with the consent of an employee who exercises option of membership in a qualified health maintenance organization, arrange for the employee’s contribution for membership in the organization to be paid through payroll deductions. (3) No employer or State or political subdivision shall be required to pay more for health benefits as a result of the application of this subsection than would otherwise be required by any prevailing collective bargaining agreement or other legally enforceable contract for the provision of health benefits between the employer or State or political subdivision and its employees. **(c) “Qualified health maintenance organization” defined** For purposes of this section, the term “qualified health maintenance organization” means (1) a health maintenance organization which has provided assurances satisfactory to the Secretary that it provides basic and supplemental health services to its members in the manner prescribed by [section 300e(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section300e/b&num=0&edition=prelim) and that it is organized and operated in the manner prescribed by [section 300e(c) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section300e/c&num=0&edition=prelim), and (2) an entity which proposes to become a health maintenance organization and which the Secretary determines will when it becomes operational provide basic and supplemental health services to its members in the manner prescribed by [section 300e(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section300e/b&num=0&edition=prelim) and will be organized and operated in the manner prescribed by [section 300e(c) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section300e/c&num=0&edition=prelim). **(d) Civil penalty; notice and presentation of views; review** (1) Any employer who knowingly does not comply with one or more of the requirements of paragraph (1) or (2) of subsection (b) shall be subject to a civil penalty of not more than $10,000. If such noncompliance continues, a civil penalty may be assessed and collected under this subsection for each thirty-day period such noncompliance continues. Such penalty may be assessed by the Secretary and collected in a civil action brought by the United States in a United States district court. (2) In any proceeding by the Secretary to assess a civil penalty under this subsection, no penalty shall be assessed until the employer charged shall have been given notice and an opportunity to present its views on such charge. In determining the amount of the penalty, or the amount agreed upon in compromise, the Secretary shall consider the gravity of the noncompliance and the demonstrated good faith of the employer charged in attempting to achieve rapid compliance after notification by the Secretary of a noncompliance. (3) In any civil action brought to review the assessment of a civil penalty assessed under this subsection, the court shall, at the request of any party to such action, hold a trial de novo on the assessment of such civil penalty and in any civil action to collect such a civil penalty, the court shall, at the request of any party to such action, hold a trial de novo on the assessment of such civil penalty unless in a prior civil action to review the assessment of such penalty the court held a trial de novo on such assessment. **(e) “Employer” defined** For purposes of this section, the term “employer” does not include (1) the Government of the United States, the government of the District of Columbia or any territory or possession of the United States, a State or any political subdivision thereof, or any agency or instrumentality (including the United States Postal Service and Postal Regulatory Commission) of any of the foregoing, except that such term includes nonappropriated fund instrumentalities of the Government of the United States; or (2) a church, convention or association of churches, or any organization operated, supervised or controlled by a church, convention or association of churches which organization (A) is an organization described in [section 501(c)(3) of title 26](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section501/c/3&num=0&edition=prelim), and (B) does not discriminate (i) in the employment, compensation, promotion, or termination of employment of any personnel, or (ii) in the extension of staff or other privileges to any physician or other health personnel, because such persons seek to obtain or obtained health care, or participate in providing health care, through a health maintenance organization. **(f) Termination of payment for failure to comply** If the Secretary, after reasonable notice and opportunity for a hearing to a State, finds that it or any of its political subdivisions has failed to comply with paragraph (1) or (2) of subsection (b), the Secretary shall terminate payments to such State under sections 247b, 247c, and 300a of this title and notify the Governor of such State that further payments under such sections will not be made to the State until the Secretary is satisfied that there will no longer be any such failure to comply.