The U.S. Labor Department is cracking down on health care fraud, proposing rules under President Obama's 2010 health law to protect businesses and workers whose health benefits are provided through a multiple employer welfare arrangement (MEWA).

The two rules proposed Monday call for enhanced reporting requirements for MEWAs and increased Labor Department enforcement authority in order to protect participants and shut down fraudulent arrangements.

Through MEWAs, unrelated employers, typically small businesses, seek to provide health care and other benefits to their workers at what is represented to be a lower cost than other traditional forms of coverage. MEWAs have been used by scam artists and criminals to defraud consumers, resulting in an inability to pay medical claims.

"Too many MEWAs are taking advantage of good employers who want to make health insurance available to their workers, and too many hardworking Americans have suffered," said Secretary of Labor Hilda L. Solis. "These proposed rules under the Affordable Care Act will crack down on those who want to use MEWAs to defraud American families."

The proposals issued require that:

  • MEWAs must register with the Department of Labor prior to operating in a state or be subject to substantial penalties. This step will allow the department to track MEWAs as they move from state to state and to identify their principals, which will provide the department with important information regarding potentially fraudulent MEWAs.
  • The secretary of labor will be able to issue a cease and desist order when it appears that fraud is taking place or an arrangement is causing immediate danger to the public safety or welfare.
  • The secretary of labor could seize assets from a MEWA when there is probable cause that the plan is in a financially hazardous condition.

Complete details on all the proposed provisions are published in the Dec. 6 Federal Register.