VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Repeal >> Pending Legal/Constitutional Challenges (last updated 8.15.16)
- 1 Overview
- 2 Employer Mandate
- 3 Individual Mandate–Cutler v. United States Department of Health and Human Services (D.C. Circuit Court of Appeals)
- 4 U.S. House of Representatives v. Burwell (U.S. District Court, District of Columbia
- 5 Extension of Cancelled Plans
- 6 Contraception Mandate
- 7 Congressional Exemption–Johnson and Ericson v. Office of Personnel Management (Seventh Circuit Court of Appeals)
- 8 State Payment of Health Insurance Tax–States of Texas, Kansas and Lousiana v. DHHS (District Court, Northern District of Texas, Wichita Falls Division)
- 9 State Health Plan Reinsurance Payments–State of Ohio v. United States (U.S. District Court, Southern District of Ohio, Eastern Division)
- 10 Medicaid Coercion–Scott v. HHS (U.S. District Court, Northern District of Florida, Pensacola Division)
As of January 20, 2016, there are 11 major cases in the pipeline, most having cleared preliminary hurdles to being heard on their merits (details). In 2 cases, U.S. appeals courts have ruled against plaintiffs and a decision is being made about whether to petition the Supreme Court for review.
- Employer Mandate
- Individual Mandate–Cutler v. U.S. DHHS (D.C. Circuit Court of Appeals)
- U.S. House of Representatives v. Burwell (U.S. District Court, District of Columbia)
- Extension of Cancelled Plans
- State of West Virginia Ex Rel. Patrick Morrissey v. DHHS (U.S. District Court, District of Columbia)
- American Freedom Law Center v. Obama (D.C. Circuit Court of Appeals)
- Contraception Mandate–Seven Cases (U.S. Supreme Court)
- Congressional Exemption–Johnson and Ericson v. Office of Personnel Management (Seventh Circuit Court of Appeals)
- State Health Plan Payment of Health Insurance Tax–State of Ohio v. U.S. DHHS (U.S. District Court, Southern District of Ohio, Eastern Division)
- Medicaid Coercion–Scott v. HHS (U.S. District Court, Northern District of Florida, Pensacola Division)
Each of these court cases raise constitutional or significant legal questions. They are listed in approximate order of the extent to which a ruling against the administration has the potential to significantly disrupt implementation of the law.
State of Indiana v. Internal Revenue Service (U.S. District Court, Southern District of Indiana)
Summary. On October 8, 2013, Indiana State Attorney General Greg Zoeller, joined by 15 public school districts, filed a suit challenging the employer mandate on grounds that it imposes an unconstitutional tax on sovereign states. Because the penalty for employers not providing at least 95% of workers with health coverage could greatly exceed the actual cost of providing excluded workers with subsidized exchange coverage, Indiana argues that the mandate amounts to a punitive tax designed to force public employers to cover their workers.
Current Status. Another 24 school districts joined the case on December 9, 2013. On 10.9.14, the State et al. v. IRS case was argued before U.S. District Court Judge William Lawrence, but the case was stayed pending the Supreme Court ruling in King v. Burwell, which impacted which portions of the Indiana case can move forward. In light of the 6.25.15 ruling in that case, the Attorney General’s Office planned to ask the U.S. District Court to schedule State et al. v. IRS case for additional proceedings. The King v. Burwell ruling still leaves unresolved the question of whether government employers can be subject to tax penalties in violation of intergovernmental tax immunity.
Prospects. An earlier challenge to the employer mandate on 10th amendment grounds was rejected by Judge Roger Vinson even though he later ruled the ACA’s individual mandate was unconstitutional. Washington and Lee law professor Timothy Jost is dubious about Indiana’s chances of success given that it was a plaintiff in the earlier employer mandate challenge that was dismissed.
Documents. Complaint filed October 8, 2013.
Hotze v. Burwell (Fifth Circuit Court of Appeals)
Summary. This case, filed in May 2013, challenged the constitutionality of the employer mandate. The Fifth Amendment prohibits the government from taking private property for public use without “just compensation.” Steve Hotze, a doctor in Texas, is arguing that Obamacare violates this “takings clause” by mandating that his business give money to another business, specifically an insurance company, without any compensation. The suit also argues that the law violates the Origination Clause and the Tenth Amendment (because it is not a constitutional tax).
Current Status. According to a Morning Beacon contributor (2.13.14): “A district court in Texas ruled against Hotze on January 10, 2014 by calling the Obamacare business mandate a tax and not a ‘taking’ under the Fifth Amendment. The judge based her decision on the Supreme Court’s ruling in 2012, which characterized the individual mandate as a tax.” The Fifth Circuit Court of Appeals subsequently ruled on 4.24.15 that a) Hotze lacked standing to challenge the individual mandate on grounds he had showed no injury; b) the challenge to the employer mandate was barred by the Anti-Injunction Act (which prohibits suits against collection of taxes); and c) the district court lacked subject-matter jurisdiction to entertain an Origination Clause challenge; accordingly the court vacated the district court’s judgment and remanded it to that court with instructions to dismiss the complaint for lack of jurisdiction.
Prospects. In a companion case, AAPS v. Sebelius, Supreme Court Chief Justice Roberts denied an appeal without comment on January 6, 2014. On June 8, 2015, the plaintiffs sought en banc review by the full Fifth Circuit, which was denied on August 17. The plaintiffs have 90 days from the en banc denial to petition the Supreme Court for review of the Fifth Circuit’s decision.
Documents. All documents related to case are here.
Kawa Orthodontics v. Lew (Supreme Court Review Requested)
Summary. Plaintiff challenged the delay of the employer mandate. Kawa had argued that he wasted money on lawyers’ fees and other expenses in preparation for compliance with the mandate. Kawa said that by the time the delay was announced, he had already incurred expenses preparing for implementation of the provision. His suit claimed that the ACA didn’t give the IRS or the Treasury the authority to delay portions of the law, and that they thus violated the Administrative Procedure Act.
Current Status. A divided panel of the Eleventh Circuit held that the plaintiff had not shown that it was injured by the delay or that an injunction could resolve any injury. The suit was dismissed without prejudice because the court found a lack of subject matter jurisdiction and thus could not make a judgment on the merits. The Eleventh Circuit rejected a rehearing by the full circuit. The plaintiffs have requested Supreme Court review.
Individual Mandate–Cutler v. United States Department of Health and Human Services (D.C. Circuit Court of Appeals)
Summary. On December 31, 2013, according to Wikipedia, Jeffrey Cutler, a Pennsylvania township official, filed a suit “challenging the constitutionality of the Act, both on its face and as applied to him and his constituents. Cutler asserts that the provision requiring individuals to obtain health insurance coverage or face monetary penalties violates the religion clause of the First Amendment to the United States Constitution and a previous Supreme Court Decision, ‘1947 Everson v Board of Education,’ and allows the government to favor one religion over another religion. The process of empowering the United States Government to Certify that applicable individual is part of EXEMPT RELIGION or SECT, Cutler seeks a declaration that the Act is unconstitutional, invalid, and unenforceable. Cutler also seeks to ‘rollback’ the law to the status it had prior to 2014 on various grounds, arguing that under newly issued rules, the law now violates the Fourteenth Amendment by allowing unequal protection under the law. (If You Like Your Plan, You Can Keep Your Plan till October 1, 2016, but only if the insurance commissioner of your state agrees.”
Current Status. According to Timothy Jost (6.23.15), Cutler’s claim was dismissed by the district court on standing grounds, as the plaintiffs had not shown an injury. The case is now on appeal to the D.C. Circuit.
Prospects. Although it does not affect this case, legal scholar Jonathan Adler has noted that “The characterization of the mandate’s penalty as a tax has other legal implications that could also end up in court. One reason the penalty functioned as a tax, Chief Justice Roberts explained, is that it was small enough to leave covered individuals with a meaningful choice — but this also means the mandate cannot serve its intended purpose of inducing more people to obtain health coverage. A larger tax, however, would begin to look like a ‘penalty’ and exceed the scope of the federal government’s regulatory authority. Thus, should Congress ever seek to increase the mandate’s tax penalty, more litigation would certainly follow.”
Documents. Documents are available on PACER (subscription required).
Extension of Cancelled Plans
State of West Virginia Ex Rel. Patrick Morrissey v. DHHS (D.C. Circuit Court of Appeals)
Summary. Due to public outcries over millions of cancelled health plans in fall 2013, the president announced an administrative fix to allow insurance companies through the end of 2014 to renew health insurance policies that don’t meet Obamacare’s standards — but only if as state insurance officials approve such extensions. In March 2014, the Obama administration extended this administrative for another two years by barring DHHS from enforcing new requirements on insurance plans until October 2016. “West Virginia claims that the policy unconstitutionally imposes on states an obligation to enforce provisions of the ACA that should be enforced by the federal government and is otherwise unlawful” (Timothy Jost, 6.23.15). According to the plaintiff, “Adopted without any advance notice or opportunity for public comment, the Administrative Fix unilaterally suspends federal enforcement of the ACA against individual plans made illegal by the ACA and fundamentally transforms what Congress intended to be a regime of ‘cooperative federalism.’”
Current Status. On 7.29.14, Republican Attorney General Patrick Morrisey filed a complaint against the administration arguing that this administrative fix violates the Tenth Amendment because “abdicated its enforcement role and left the states solely responsible — and accountable — for deciding whether federal law would be enforced.” Briefs were filed 9.16.14. As of 6.23.15, the case is pending in the federal D.C. district court awaiting decision (Timothy Jost, 6.23.15). On 10.30.15, the district court rejected the suit on grounds that West Virginia lacked standing to sue. On 11.6.15, the state appealed the case to the D.C. Circuit Court of Appeals.
Prospects. According to Law360, “the state’s contention that the federal government had ‘conscripted’ it into enforcing the law when the U.S. Department of Health and Human Services issued an administrative fix that extended a deadline for insurance policies to meet ACA requirements, and that the law was causing political blowback to state officials, wasn’t enough to grant West Virginia standing to sue, U.S. District Judge Amit P. Mehta found in Friday’s order. West Virginia isn’t claiming in its suit that the rule caused it financial injury, or that it was forced by the state to take a specific action, the judge said. Nor is the state contending it brought suit on behalf of its citizens to protect their interests, the judge said.” It remains to be seen whether the appeals court concurs with this view.
American Freedom Law Center v. Obama (D.C. Circuit Court of Appeals)
Summary. “This case challenged the administration’s transition policy — which allows individuals to maintain health plans that are not compliant with all ACA requirements — and the hardship exemption to the individual mandate that the agencies created for individuals who lost affordable coverage because of the enforcement of the 2014 health insurance reforms” (Timothy Jost, 6.23.15). The lawsuit alleges: “By executive fiat, [Obama and his executive agencies] altered the requirements of the Affordable Care Act and thus established with an unconstitutional and illegal claim of executive authority that otherwise-prohibited conduct—in particular, maintaining non-compliant health care plans—will not violate the Act, in direct violation of the separation of powers set forth in the United States Constitution.”
Current Status. The district court threw the case out because the plaintiffs could not show that they had been injured by the administration’s action and thus lacked standing. As of 6.23.15, it was on appeal to the D.C. Circuit (Timothy Jost, 6.23.15).
On August 10, 2016 the Circuit Court of Appeals for the District of Columbia denied a motion for rehearing en banc due to lack of standing to sue (Timothy Jost, 8.11.16).
Prospects. In the 2014 term, the Supreme Court in Utility Air Regulatory Group v. EPA, made clear that “[t]he power of executing the laws necessarily includes both authority and responsibility to resolve some questions left open by Congress that arise during the law’s administration. But it does not include a power to revise clear statutory terms that turn out not to work in practice.”
As summarized by Health Care Lawsuits blog: “In August 2011, the Department of Health and Human Services issued a mandate that, as part of the Affordable Care Act’s requirements for minimum essential coverage, Women’s Preventative Care would include comprehensive coverage for all FDA-approved methods of contraception. This mandate also includes coverage for emergency contraception and sterilization services. Many religious and conscientious objectors oppose the mandate, especially because employers will be forced to pay for the coverage of these drugs and procedures for their employees, even if employers morally object. Employers who are not in compliance with the mandate can face fines of $100 per worker per day. “
Health Care Lawsuits lists several different blog pieces about these cases. See also HHS Contraceptives Mandate Policy Focus and HHS Contraceptives Mandate Fact Sheet. The Beckett Fund for Religious Liberty maintains a complete score card, current updates, resources, and details on all 100 cases related to the HHS mandates (which collectively involve over 300 plaintiffs):
- 49 for-profit lawsuits have been filed over the HHS mandate. As of 11.6.15, 1 case has been dismissed on procedural grounds. Of the 45 for-profit plaintiffs that have obtained rulings touching on the merits of their claims against the Mandate, 3 have gotten temporary injunctive relief, 44 have secured injunctive relief against it, while 1 had an injunction denied, and 1 case was dismissed on procedural grounds, for a current score of 47-2.
- 56 non-profit lawsuits involving 140 plaintiffs have been filed against Secretary Burwell over the HHS mandate. This includes lawsuits by religious organizations such as hospitals, religious charities (40), religious colleges (37), and Catholic dioceses (15). As of 11.6.15, 9 cases have been dismissed on procedural grounds. 22 have secured injunctive relief, while 10 have had their injunction denied for a current score of 22-10. Seven cases have appealed to the Supreme Court; of these 5 so far have been granted orders protecting the ministries.
Seven Cases Under Supreme Court Review
According to SCOTUSBlog (10.23.15), “The Court is currently facing seven petitions for certiorari from four separate decisions by four different circuits, each of which rejected challenges to the Obama administration’s plan to accommodate objections to the birth-control mandate. However, the Eighth Circuit recently weighed in to invalidate the plan to accommodate those objections, creating the kind of clear conflict among the federal appeals courts for which the Justices look in deciding whether to take up a legal question.”
Summary. As summarized by SCOTUSBlog (10.23.15), “The regulations allowed religious non-profits to opt out of providing contraceptive coverage for their employees. When a group opts out, coverage for birth control for its female employees is provided directly by the insurer rather than through the employer’s policy; for groups that self-insure, the coverage is handled by a third party. Religious organizations now can opt out of the birth-control coverage by either submitting the federal form or sending a letter to federal officials. A broad range of religious non-profits, from religious organizations that provide social services and charitable work to private colleges and universities with religious affiliations, have challenged this opt-out system. Their argument is essentially that, although they are opposed to contraception for religious reasons, they must nonetheless take some step — notifying either their insurer or federal authorities — that has the effect of triggering birth control coverage for their employees through alternate means. This, they argue, puts them in the position of facilitating contraception in violation of their group’s religious beliefs.
According to Above the Law, “the Court will rule on whether the mandate and the accommodation violate RFRA, but refused specifically to hear claims under RFRA and the First Amendment that the government discriminated among those allowed an exemption and those not.” SCOTUBlog (11.17.15) summarizes: The Court will be reviewing one overall question in these cases: does the ACA’s birth control mandate violate the Religious Freedom Restoration Act for religious non-profit schools, colleges, hospitals, and charities that have objections based on their faith, and does the government arrangement for exemptions cure any problem under the Act? The Court, in one case, also accepted a second question: can the mandate be enforced when the non-profit has a health coverage plan that does not have a mandatory duty to obey the mandate?
Current Status. On May 16, 2016, in a unanimous decision, the Supreme Court “sent Zubik v. Burwell back down to the lower courts in pursuit of a compromise regarding the accommodation of the religious objections of the petitioner nonprofit organizations to covering contraceptives.
Timothy Jost writes that “at the same time that the court vacated and remanded the decisions it was reviewing in Zubik, it granted certiorari to and vacated and remanded decisions of the Fifth, Seventh, and Eighth circuits, which also addressed the contraceptive issue. The Eighth Circuit decision in Sharpe Holdings v. Burwell (discussed here) was the only appellate court decision invalidating the HHS regulation.”
“The court expresses no view on the merits of the cases,” the justices wrote. “Given the gravity of the dispute” and the fact that the parties have clarified their positions during the course of the case, they “should be afforded an opportunity to arrive at an approach going forward.”
The decision was thought to represent one consequence of a 4-4 Court after the death of Justice Antonin Scalia in February 2016. Steve Vladeck, professor of law at American University Washington College of Law, remarked that “it’s not the first time they’ve punted since Scalia’s death, but it may well be the most brazen one.”
According to Justices Ruth Bader Ginsburg and Sonia Sotomayor, ”Today’s opinion does only what it says it does: ‘affords an opportunity’ for the parties and Courts of Appeals to reconsider the parties’ arguments” in light of the information gleaned from the order.
Impact. As Jost points out, the opinion “does not resolve the merits of the case,” seems to “overstate the degree of consensus between the parties as to the existence of a least restrictive alternative for addressing the contraceptive issue,” and “ignores the intractable question of how to provide contraceptive coverage to employees of employers that offer coverage through self-insured plans.” He believes the matter will not be resolved during the Obama administration’s remaining months.
History. In its Conference of 11.6.15, the Court granted (at least in part) all seven of the challenges to the Obama administration’s accommodation for religious non-profits that object to providing their female employees with health insurance that includes access to certain forms of birth control (SCOTUSBlog, 11.6.15). The seven cases, originating in the Third, Fifth, Tenth, and District of Columbia Circuits, will be consolidated for hearing before the Court (list of cases here). The case will be argued in one of the final two weeks of March 2016. A decision is expected in June (SCOTUSBlog, 10.23.15).
- Eternal Word Television Network v. Burwell. As reported by The Beckett Fund for Religious Liberty (2.18.16), put its ruling on hold until the Supreme Court addresses this issue on March 23 in the Little Sisters of the Poor case. Catholic World Report writes that “in a 2-1 decision delivered Feb. 18, the 11th Circuit U.S. Court of Appeals ruled against the Eternal Word Television Network (EWTN) in its challenge to the federal contraception mandate… In its decision, the federal court said, ‘We accept the plaintiffs’ sincere belief . . . that the accommodation puts them to a choice between honoring their religious beliefs and facing significant penalties. We nonetheless conclude that the accommodation imposes no substantial burden.’ Directly after delivering its ruling, the court placed its effects on hold until the Supreme Court rules on the mandate later this year. This protects EWTN from accumulating fines while waiting for the Supreme Court’s decision… ‘This 2-1 decision is not the end. The government’s unconstitutional mandate has lost repeatedly at the Supreme Court, and we believe it will lose again.’”
Prospects. Seven out of eight federal appeals courts have agreed with the administration that requiring the faith-based groups to make their objection known and identify their insurer or insurance administrator does not violate a federal religious freedom law (AP, 11.6.15). According to SCOTUSBlog (10.23.15),”Among the federal appeals courts, then, four have generally found that the opt-out provisions do not impose a substantial burden, but the most recent ruling by the Eighth Circuit found that the opt-out provisions do impose a substantial burden: the threat of fines against nonprofits that refuse to comply with the mandate. The Eighth Circuit also found that the law was not sufficiently narrow to justify the burden on religious non-profits.”
Potential Impact. According to Timothy Jost, “this litigation does not challenge the ACA itself, and is rather concerned with the legality of a particular regulation under the Religious Freedom Restoration Act. However, it is resolved, it will not otherwise affect the implementation of the ACA.”
- Cooper, Horace. The Birth Control Mandate is Unconstitutional. National Center for Public Policy Research. February 2012.
- Gunter, Jen. The Medical Facts About Birth Control and Hobby Lobby—From an OB/GYN. New Republic. July 6, 2014. Author argues that the 4 methods of contraception objected to by Hobby Lobby work by preventing ovulation or fertilization rather than preventing implantation or affecting the fetus following implantation. Only the copper UID possibly prevents implantation (this is unlikely but cannot be ruled out). The author asserts: “Plan B, which is one form of the morning-after pill, clearly wouldn’t. It works by inhibiting ovulation when given during a specific 48 hour window of the cycle. It has no other method of action. This is undisputed scientific fact. (Plan B is one of the best studied of all the methods of contraception).”
- FDA Required Labeling. “Plan B One-Step is believed to act as an emergency contraceptive principally by preventing ovulation or fertilization (by altering tubal transport of sperm and/or ova). In addition, it may inhibit implantation (by altering the endometrium).” This appears to directly contradict Gunter’s claim above.
Congressional Exemption–Johnson and Ericson v. Office of Personnel Management (Seventh Circuit Court of Appeals)
Summary. A provision in the ACA stipulates that on January 1, 2014, Members of Congress and their staff would lose their current employer-sponsored health insurance provided through the Federal Employees Health Benefits Program (FEHBP). Sloppy language left substantial ambiguity over four issues: a) which staff were affected; b) whether they were required to actually enroll in the Exchange; c) what would happen to subsidies (roughly 75% of premiums) that historically have been paid by Office of Personnel Management (OPM) to help offset the cost of coverage, but which legally cannot be paid to any plans except those in the FEHBP; and d) whether OPM or DHHS has implementation authority. OPM ruled in 2013 that the government could continue to make employer contributions to the health insurance plans of 535 members of Congress and their staff – even when they purchase coverage through the Exchanges.
Senator Ron Johnson and Brooke Ericson filed suit on 1.3.14 against U.S. Office of Personnel Management and Katherine Archuleta, OPM’s director. As reported at Reuters, Senator Johnson filed this suit on grounds that OPM exceeded its legal authority in making this ruling. “Johnson said this violated the intent of Congress, which was that Congress would participate in the healthcare exchanges on the same terms as other Americans.” Plaintiffs also allege the OPM rule violates the Equal Protection Clause of the U.S. Constitution by treating members of Congress and their staffs differently from other similarly situated employees who obtain insurance coverage under the terms of the ACA and do not receive tax-free subsidies.
Current Status: On July 21, 2014, U.S. District Judge William Griesbach dismissed the case on grounds that the plaintiffs lacked standing to sue. According to an AP reporter, “Johnson’s belief that subsidies provided to lawmakers and their staffs are illegal isn’t a strong enough reason to disqualify him from the rule put in place under the Affordable Care Act, Griesbach said. The judge also said Johnson failed to show voters would view him negatively if his staff received subsidized insurance. And, the judge said, Johnson could simply avoid the problem by failing to designate any employees as official congressional office staff, a classification that qualifies them for the benefit.” On September 15, 2014, Sen. Johnson filed an appeal in the 7th Circuit Court of Appeals, arguing a lower court’s ruling that he lacked standing to challenge a portion of the law is “fatally flawed.” Attorney Paul Clement was hired to represent plaintiffs. On 4.14.15, a three-judge panel at the 7th U.S. Circuit of Appeals ruled that Sen. Ron Johnson, R-Wis., and one of Johnson’s aides, Brooke Ericson, have no standing to sue. In granting OPM’s motion, Judge William C. Griesbach said that any injury arising from an administrative burden “is too speculative and undeveloped to constitute a redressable injury.” While administrative costs can in some cases constitute an injury, the “essentially ministerial act” at issue here is not such a case, Judge Griesbach said. According to Timothy Jost (6.23.15), “Senator Johnson may request Supreme Court review.”
Current Prospects. There have been at least 23 significant changes made to the ACA through unilateral action. While many of these have been of dubious constitutionality/legality, most have been executed in a way that prevents them from being litigated because no one has standing to sue. This is a rare case in which individuals affected by unilateral administrative change in the law potentially have standing to sue.
Potential Impact. The immediate specific impact would affect only members of Congress and their staff. According to Heritage Foundation scholars, “Congress could keep its current health coverage by repealing Section 1312(d)(3)(D) of Obamacare. Yet, the political price for doing so is that Members of Congress must repeal the rest of Obamacare as well—so that their constituents are allowed to keep their health plans, too.”
State Payment of Health Insurance Tax–States of Texas, Kansas and Lousiana v. DHHS (District Court, Northern District of Texas, Wichita Falls Division)
Summary. The Affordable Care Act imposed a health-insurance providers’ fee on insurance companies, for the purpose of taxing the windfall they were expected to receive from increased enrollment. In March 2015 publication of Actuarial Standard of Practice Number 49 for the first time notified the several States that, functionally, they were being assessed or taxed the Health Insurance Providers Fee. States were assessed this fee because they use managed-care organizations to provide Medicaid services. According to Ilya Shapiro, nothing in the ACA allows the federal government to force states to pay the fee, so the administration left it to the “private” Actuarial Standards Board to determine what makes a state’s payments to managed-care organizations “actuarially sound,” as required by law. The board then interpreted that “actuarially sound” standard to require states to pay the taxes assessed on their managed-care organizations. This assessment raises serious coercion issues, as the states have no choice but to pay the tax or lose their federal Medicaid funds.
Most states, including Texas, contract with private managed-care organizations to cover much of their Medicaid and Children’s Health Insurance Program (CHIP) populations. CMS relies on standards created by the Actuarial Standards Board to ensure that rates for these managed-care plans are actuarially sound. The decision to impose this new fee means that unless states cover their portion of the cost, the federal government can decertify those Medicaid managed-care plans and thus legally withhold federal Medicaid funds from those states. On 10.22.15, Texas, joined by Kansas and Louisiana, sued the government on grounds that DHHS has no authority to delegate rulemaking authority to a private entity and that forcing states to pay the tax is unconstitutionally coercive.
Current Status. As described by Timothy Jost (8.8.16), on August 4, 2016, Judge Reed O’Connor of the Northern District of Texas, Wichita Falls Division, refused to dismiss the action, currently filed by the states of Texas, Kansas, Louisiana, Indiana, Nebraska, and Wisconsin… “The ruling only addressed a motion to dismiss and only held that the plaintiffs could proceed on the claims they raised. It did not finally resolve those claims. Whatever Judge O’Connor decides will also certainly be appealed. But this is a remarkable decision, repeatedly stretching to the furthest bounds authority in support of the plaintiffs’ claims.”
Potential Impact. According to John Davidson, “the health-insurance-provider fee amounts to a federal tax on state governments — one that will allow the feds to collect between $13 and $15 billion from states over the next decade.”
State Health Plan Reinsurance Payments–State of Ohio v. United States (U.S. District Court, Southern District of Ohio, Eastern Division)
Summary. According to Timothy Jost (1.7.16), the state of Ohio filed a lawsuit challenging the requirement that state employee health plans contribute to the transitional reinsurance program. The State of Ohio, four of its state universities, Warren County, and the Ohio Turnpike Authority had sued claiming that the fee imposed on insurers and group health plans under the ACA’s Transitional Reinsurance Program did not apply to them, and that Congress lacked the constitutional authority to impose the fee on them. Ohio and the other plaintiffs were assessed contributions for their group health plans. They paid, but sued for a refund of the money.
Current Status. According to Timothy Jost (1.7.16), on January 5, 2016, Judge Algenon Marbley of the federal district court for the Southern District of Ohio dismissed Ohio v. United States. The court held that under the ACA, the Public Health Services Act (PHSA) definitions that it incorporates, and the Employee Retirement Income Security Act (ERISA) provisions that the ACA and the PHSA in turn rely on, state employee plans are clearly group health plans subject to the reinsurance fee.
Potential Impact. Any immediate impact would be restricted to Ohio, although if the suit is eventually successful, it might induce other states to seek similar relief.
Medicaid Coercion–Scott v. HHS (U.S. District Court, Northern District of Florida, Pensacola Division)
Summary. According to Timothy Jost (6.23.15), in this case, governor Rick Scott has claimed that HHS terminated Florida’s low-income hospital payment Medicaid waiver to coerce it into expanding Medicaid.
Potential Impact. Any immediate impact would be restricted to Florida.