ACA Litigation Round-Up: A Status Check

With President Biden and a new Congress now in office, there are renewed opportunities to build on Affordable Care Act (ACA) and expand access to comprehensive, affordable coverage. Even as attention shifts to the executive and legislative branches, the judiciary will continue to play a significant role. Indeed, litigation has remained one of the few constants during the ACA’s decade-long existence. As we begin a new year, this post provides a status update on the many ACA cases to keep an eye on.

Supreme Court Happenings

The most significant ACA case remains California v. Texas, a global challenge to the entire ACA that is pending before the Supreme Court and has been covered extensively in prior posts. That lawsuit is about whether the ACA’s individual mandate remains constitutional after Congress set the penalty to $0 and, if the mandate is unconstitutional, how much of the rest of the law survives. This challenge is considered the weakest existential legal threat to the ACA to reach the Supreme Court thus far; many of the Justices seemed skeptical during oral argument that the Court should strike down all or parts of the ACA even if it finds the mandate to be unconstitutional.

With briefing and oral argument complete, a decision could come at any time before the end of the Supreme Court’s term this summer. The Biden administration, in contrast to the Trump administration, is likely to move to defend the ACA. Given the timing, any change in position is likely to be more symbolic than substantive, but the Biden administration could at least make its change in position known. And, as discussed more here, Congress could take matters into its own hands by amending the ACA to address perceived concerns about constitutionality or severability. Because doing so and failing presents some risk, it is not yet clear whether Congress will take this on or not.

Beyond Texas, the Supreme Court has already decided another significant health policy case, Rutledge v. Pharmaceutical Care Management Association. This decision could have far-reaching implications for state health policy efforts as discussed more here by Erin Fuse Brown and Elizabeth McCuskey. Another significant health policy case now pending before the Supreme Court is Azar v. Gresham, a dispute over the Trump administration’s approval of Medicaid work requirement waivers in Arkansas and New Hampshire. That litigation has been covered extensively on Health Affairs Blog by Sara Rosenbaum. Opening briefs were filed on January 19, and briefing will be completed in March absent any extensions. In the meantime, the Biden administration is expected to take a new position in the litigation and begin the process of reversing pending and approved work requirements waivers.

There are at least two other health policy lawsuits to keep an eye on that may reach the Supreme Court: these suits are over Trump-era regulations on the public charge rule and the Title X program. The Supreme Court has been asked to hear appeals in those cases, but it has not yet granted or denied the pending cert petitions in either case. These lawsuits, and several others mentioned in this post, are over Trump administration regulations that the Biden administration could reverse (via notice-and-comment rulemaking) or decline to defend; the Biden administration could also seek to settle the lawsuits, among other options.

Cases With Recent Decisions Or Where Decisions Are Pending

For many cases, briefing is complete and we are waiting for a court to issue a decision. This includes both appellate and district courts. In some instances, we are waiting to hear if appellate courts will rehear prior decisions en banc, meaning by the full panel of appellate court judges.

Association Health Plans

One pending appellate decision is focused on a Trump-era rule to expand association health plans. The district court sided with a coalition of Democratic attorneys general in concluding that the rule violated federal law and was “clearly an end-run around the ACA.” The government appealed that decision to the DC Circuit Court of Appeals (DC Circuit). Even though oral argument was held more than one year ago, a decision has not yet been issued. On January 28, the Biden administration asked the court to hold the appeal in abeyance, citing the need to consult with new agency leadership. This motion was unopposed by the plaintiffs and, if granted by the court, will require submission of status reports every 60 days.

Short-Term Plans

On January 26, the DC Circuit denied a request for rehearing and in banc review of a divided panel decision that upheld a Trump-era rule expanding access to short-term, limited-duration insurance. The majority had concluded that the government’s interpretation was entitled to deference and was neither inconsistent with nor impermissible under the ACA or HIPAA. The plaintiffs, a coalition of consumer advocates and safety-net health plans, filed their request for en banc review in August 2020. The government opposed this request in November 2020. From here, the plaintiffs could petition the Supreme Court for review, or wait to see if the Biden administration takes action to undo the Trump-era rule.

Health Insurance Tax For Medicaid Managed Care Entities

A coalition of states led by Texas asked the Fifth Circuit Court of Appeals (Fifth Circuit) for en banc review of a panel decision that held that states were not entitled to recoup the ACA’s health insurance tax as it applied to Medicaid managed care entities. The panel decision reversed a lower court ruling that held that the government owed six states about $479 million for the health insurance tax from 2014 to 2016. Texas filed its request for en banc review in September 2020; the government filed its response opposing this request in November 2020. We now await a decision.

Immigration Proclamation

Plaintiffs asked the Ninth Circuit Court of Appeals (Ninth Circuit) for en banc review to resolve conflicting decisions over a proclamation designed to prevent lawfully present immigrants from accessing subsidized ACA coverage and Medicaid. The proclamation, signed by President Trump in October 2019, requires immigrants to show that they will be covered by “approved health insurance” within 30 days of entry into the country or that they have the financial resources to pay for reasonably foreseeable medical costs. The list of “approved health insurance” did not include common sources of coverage for lawfully present people, including Medicaid for adults or subsidized ACA coverage, and instead encouraged enrollment in short-term plans and unsubsidized ACA coverage. The Ninth Circuit’s recent decision upheld the proclamation in part because the proclamation did not conflict with the ACA. The request for en banc review was filed on January 19; the government’s response is due by February 10.

COVID-19 Special Enrollment Period

In June 2020, Chicago sued the Trump administration, asking a federal district court in DC to require the Department of Health and Human Services (HHS) to authorize a special enrollment period due to the COVID-19 crisis. The move was opposed by the Trump administration which, argued that the city lacks standing to sue, that the lawsuit inappropriately challenges agency inaction, and that HHS is not required to establish a COVID-19 special enrollment period. Briefing was completed in August, and a district court decision could be issued at any time.

“Take Care” Case

Litigation continues before a district court in Maryland over a range of Trump administration policy changes. The plaintiffs—five cities and two individuals—had also argued that the Trump administration violated the Constitution’s requirement that the President “take care that the laws be faithfully executed” by attempting to undermine the ACA through executive action. In April, the district could held that the lawsuit could proceed under the APA but not the Take Care Clause. The plaintiffs did not appeal that ruling and turned to arguing that major provisions of the 2019 payment rule violate the Administrative Procedure Act (APA). Briefing was completed in December, and a decision will follow.

Cases Where Briefing Is Ongoing

Other cases are pending before district and appellate courts, and briefing is ongoing. Briefing in many of these lawsuits could be completed this spring or summer, with oral argument and decisions expected after that. In some instances, the Biden administration might revoke the underlying policies or ask to put the litigation on hold while it reconsiders a policy, among other options.

Provider Conscience Rule

The Trump administration appealed three federal district court decisions—in California, New York, and Washington—to vacate its provider conscience rule. These decisions were appealed to the Second Circuit (New York) and the Ninth Circuit (California and Washington). Some of those decisions included multiple underlying cases, and the appellate courts agreed to consolidate the various appeals. The Christian Medical and Dental Association intervened in the New York litigation to defend its interests alongside the government. Briefing is complete in both sets of appeals. Oral argument before the Ninth Circuit is scheduled for February 8 while argument before the Second Circuit is expected in mid-March.

On January 28, the Biden administration asked the court to hold the 9th Circuit appeal in abeyance, again citing the need to consult with new leadership and asking to put the appeal on hold. If granted, the government would submit status reports every 60 days.

Double Billing Rule

In a consistent theme, the Trump administration appealed three district court decisions—in California, Maryland, and Washington—that set aside HHS’s “double billing” rule. This rule, which has not gone into effect because of the pandemic and the litigation, requires insurers to send and enrollees to pay two separate monthly bills for certain abortion services and all other services. The ruling in Washington was limited to Washington State and decided on preemption grounds. The rulings in California and Maryland vacated the rule under the APA, setting aside the rule on a nationwide basis. The government appealed those decisions to the Ninth Circuit (for the California and Washington cases) and to the Fourth Circuit (for the Maryland case). Briefing in each case should be completed this spring, but the Biden administration has asked to put those appeals on hold, a request already granted by the Fourth Circuit.

Risk Corridors Payments

Litigation over unpaid risk corridors payments is largely settled following a Supreme Court ruling from April 2020. In Maine Community Health Options v. United States, the Supreme Court held that insurers were entitled to more than $12.2 billion in unpaid risk corridors payments. Since then, the lower courts have largely resolved more than five dozen pending lawsuits—including two class actions—over these payments. As of July 2020, more than $9.6 billion of the $12.2 billion was accounted for, with other cases expected to be resolved soon. Even cases that were expected to take more time to resolve, such as the two class actions, are wrapping up with additional filings due in February or March 2021.

Insurers can still file complaints for unpaid risk corridors payments. Piedmont Community Healthcare, for instance, filed a complaint in October 2020 for about $2 million. The government agreed with that amount, and the court quickly entered judgment in that amount in December 2020.

Cost-Sharing Reduction Payments

When we last revisited insurers’ request for unpaid cost-sharing reduction payments (CSRs), insurers had asked the Court of Appeals for the Federal Circuit (Federal Circuit) to reconsider one of two August decisions that concluded that insurers were entitled to unpaid CSRs, but that the total amount of unpaid CSRs must be offset by any excess amount of premium tax credits that insurers received due to premium loading. In September, insurers asked for a panel rehearing and en banc review of that decision. That request was denied in November. In December 2020, the Federal Circuit denied a separate request for a rehearing and en banc review for a class action lawsuit brought by Common Ground Health Cooperative.

From here, those parties could ask the Supreme Court to review the Federal Circuit decisions. (Under the Supreme Court’s COVID-19 extensions, the parties have until April 9 to file a petition for writ of certiorari.) Given that possibility, the lower courts stayed pending CSR litigation to conserve judicial resources. One example of such a stay order is here. If the insurers opt against a request for Supreme Court review, we are likely to see settlement negotiations and damages calculations before the lower courts as the government and insurers attempt to recalculate damages and offset any potential unpaid CSRs (for 2018 and beyond) with higher premium tax credits from premium loading.

In the meantime, other judgments have been issued, and insurers have filed new complaints for unpaid CSRs. Highmark, for instance, filed a complaint in November 2020 for about $87 million in total CSRs for 2017, 2018, and 2019. Blue Cross and Blue Shield of North Dakota was awarded about $8.85 million for unpaid CSRs for 2017 and 2018 in October, and Blue Cross and Blue Shield of Vermont was awarded about $7.2 million for unpaid CSRs for 2017 and 2018. The government appealed both judgments. In December 2020, Guidewell Mutual Holding Corporation (which includes Blue Cross and Blue Shield of Florida, Florida Health Care Plan, and Health Options) was awarded about $225 million for unpaid CSRs owed for 2015 through 2017.

Section 1557

Litigation continues over both the Obama- and Trump-era interpretations of Section 1557. One legal challenge to the Obama-era rule known as Franciscan Alliance is pending before the Fifth Circuit; oral argument has been scheduled for March 2. The plaintiffs in that case, a group of private religious entities and states led by Texas, succeeded in vacating parts of the 2016 rule but have pressed forward to ask for a permanent injunction. They want a court to enjoin HHS from taking enforcement action against them based on an interpretation of Section 1557 that includes gender identity or termination of pregnancy. On January 27, the plaintiffs informed the Fifth Circuit of the North Dakota decision discussed below and an executive order on LGBTQ nondiscrimination signed by President Biden on January 20.

A separate appeal over the Obama-era rule could be on its way to the Eighth Circuit Court of Appeals following a decision from a district court in North Dakota on January 19. North Dakota and a coalition of religious entities argued that the Obama-era rule compels them to provide insurance coverage for gender transition-related care and abortion in violation of the Religious Freedom Restoration Act, the APA, and the Spending Clause. (They also challenge an interpretation of Title VII by the Equal Employment Opportunity Commission and any interpretation of Title IX or any other federal law that could, in their view, compel transition-related care or abortions.) The litigation had been on hold until the plaintiffs asked the court to lift a stay in November 2020.

While the district court rejected many of the plaintiffs’ claims, it concluded that some plaintiffs face “a credible threat” of enforcement of Section 1557 by HHS. This is because the statute “is amenable” to being interpreted in a way that holds them liable for excluding transition-related care. Recognizing the ongoing litigation over Section 1557 and the potential for conflicting decisions, the court declined to address the plaintiffs’ APA claims. Instead, it concluded that the challenged interpretations of Section 1557 and Title VII violate the Religious Freedom Restoration Act as it pertains to the religious entities and issued a permanent injunction to prevent HHS and the EEOC from enforcing those interpretations against the religious plaintiffs and members of the Catholic Benefits Association. The court rejected North Dakota’s argument under the Spending Clause.

Turning to the Trump-era rule, district courts in New York and DC preliminarily enjoined the parts of that rule that would strip protections from LGBTQ people. The government appealed those decisions to the Second Circuit and DC Circuit, respectively, where briefing will continue through the spring. A third challenge was dismissed for lack of standing. Two separate challenges, one in New York and one in Massachusetts, remain pending, although briefing is complete in the New York litigation and a decision on summary judgment could be issued soon. That lawsuit was filed by a coalition of Democratic attorneys general led by the New York attorney general.

Contraceptive Mandate

Litigation continues over the scope of the ACA’s contraceptive mandate following the Supreme Court’s decision in Little Sisters of the Poor v. Pennsylvania. In Little Sisters, the Supreme Court upheld two Trump-era rules that allow religious and moral exemptions to the ACA’s contraceptive mandate, vacated a prior nationwide injunction, and remanded the case (and a separate Ninth Circuit case).

The Supreme Court held that the federal government had the authority to adopt broad exemptions under the ACA but did not rule on whether the regulations at issue were arbitrary and capricious under the APA. One question is whether the broad exemptions, without a mandatory accommodations process, fail to balance women’s health and access to contraceptives with religious freedom in a way that complies with Supreme Court precedent. This was suggested by Justices Breyer and Kagan; Chief Justice Roberts appeared skeptical during oral argument that the Trump-era rules adequately balance religious liberty and women’s health care access as the Supreme Court directed in Zubik v. Burwell.

We will have to wait and see since district courts will be the first to try to answer these questions. On January 15, a district court in Massachusetts issued the first decision following Little Sisters and ruled in favor of the government. The court concluded that the rules were not arbitrary and capricious under the APA and rejected constitutional claims under the First and Fifth Amendments. In considering the APA claims, the court found that the Trump administration satisfied the APA’s standards in justifying the rule change. It was not swayed by the Commonwealth’s arguments that the rules were overbroad and insufficiently tailored to the problem and that the government failed to consider the reliance interests of women who would lose contraceptive coverage given the expanded exemptions.

On January 26, Massachusetts filed a notice of appeal to the First Circuit. In the meantime, the Massachusetts district court will not be the only court to rule. Decisions are expected in other district courts now that briefing has been completed in the California and Pennsylvania lawsuits. In other words, more to come.

It is also worth flagging two separate but related lawsuits. The first is a class action lawsuit over the Obama-era rules on the contraceptive mandate, which is pending before the Fifth Circuit. The second is a lawsuit over the Trump-era rules and a settlement agreement between the Trump administration and objecting organizations; this lawsuit is pending before a district court in Indiana.

Georgia’s Section 1332 Waiver

In mid-January, Planned Parenthood Southeast and the Feminist Women’s Health Center sued HHS in district court in DC over its approval of Georgia’s waiver under Section 1332. The lawsuit alleges that prior guidance on Section 1332 and HHS’s approval of Georgia’s waiver are unlawful because these actions violate Section 1332 of the ACA and the Administrative Procedure Act. The government has not yet responded to the complaint, and briefing will be ongoing.

Data Marketing Partnership Arrangement

The government appealed a district court decision to bless yet another alternative to ACA coverage. The decision overturned an advisory opinion from the Department of Labor that would have restricted a new arrangement designed to avoid major ACA protections and state regulation of private health insurance. The government filed its notice of appeal to the Fifth Circuit in late November 2020. The government’s opening brief was initially due on January 13, but the court granted an extension through February 12. On January 28, the government asked for an additional 30-day extension to file its opening brief; if granted, the brief would be due on March 15.