While Republican efforts to repeal and/or replace the Affordable Care Act are likely to resurface after the congressional summer recess, lawsuits challenging the health law continue to wind their way through the courts.
Judges recently ruled in three ACA cases regarding the contraceptive mandate, risk corridors program, and cost-sharing reduction payments.
Real Alternatives Inc. v. HHS
Secular groups are not entitled to a religious exemption to the ACA’s contraceptive mandate and must offer plans to employees that cover birth control, the United States Court of Appeals for the Third Circuit ruled in an Aug. 4 opinion .
The appellate ruling upholds a federal court decision that had dismissed a challenge to the mandate by Real Alternatives Inc., a group that provides alternatives to abortion services, abstinence education, and pregnancy support programs in Pennsylvania, Michigan, and Indiana. Although not affiliated with a religious body, Real Alternatives opposes abortion and the use of all contraceptives. In its challenge, Real Alternatives said that maintaining a health insurance plan that covers contraceptives violated the group’s religious rights under the Religious Freedom Restoration Act. If a religious organization can be exempted from the mandate, then nonreligious entities that have an identical stance on contraceptives should also be exempted as provided by the Equal Protection Clause of the Fifth Amendment, attorneys for Real Alternatives argued in the suit.
But a majority of appeal judges disagreed, concluding that Real Alternatives is not similar to a religious denomination or one of its nontheistic counterparts, “not in structure, not in aim, not in purpose, and not in function.”
“We do not doubt that Real Alternative’s stance on contraceptives is grounded in sincerely-held moral values, but religion is not generally confined to one question or one moral teaching, it has a broader scope,” Judge Marjorie O. Rendell wrote in the majority opinion. “Real Alternatives is functionally similar not to a church, but to the countless nonreligious nonprofit organizations that take morally informed positions on some discrete set of issues … While commitment to an anti-abortion platform may be important to the people who hold them, that commitment is not a religion in any legally or theologically accepted sense; and organizations do not become quasi-churches for equal-protection purposes merely by espousing a commitment of that sort.”
Molina Healthcare v. HHS
The federal Heath & Human Services department may have to dish out millions to marketplace insurers after a recent decision by the U.S. Court of Federal Claims. In an Aug. 4 opinion , a federal claims judge ruled the federal government owes Long Beach, Calif.–based insurer Molina Healthcare $52 million in risk corridor payments under the ACA.
The decision stems from a lawsuit by Molina and dozens of other insurers against HHS over the ACA’s risk corridor program. The program requires HHS to collect funds from excessively profitable insurers that offer qualified health plans (QHP) under the exchanges, while paying out funds to QHP insurers with excessive losses. Collections from profitable insurers under the program fell short in 2014 and again in 2015, resulting in HHS paying about 12 cents on the dollar in payments to insurers.
Insurers allege they’ve been shortchanged and that the government must reimburse them full payments for 2014 and 2015. Under the Obama administration, the Department of Justice requested to dismiss the cases, arguing that riders attached to appropriations bills in 2015 and 2016 barred it from making full risk corridor payments.
In his decision, Judge Thomas Wheeler said the ACA mandates that HHS pay insurers what they are owed under the risk corridor program, regardless of the riders.
“The undisputed facts show the government entered into an implied-in-fact contract with Molina and subsequently breached the contract when it failed to make full risk corridor payments,” Judge Wheeler wrote. “Importantly, Molina prevails on its argument of breach of an implied-in-fact contract regardless of the government’s appropriation law defenses – later appropriation restrictions cannot erase a previously created contractual obligation …The government is liable for its breach of a statutory and contractual obligation to make full annual payments to insurers who participated in the risk corridor program.”
Judge Wheeler ruled similarly in February when he concluded the federal government owes Portland, Ore.–based Moda Health $214 million in risk corridor payments.
The issue is far from over. More than 25 lawsuits have been filed in the Court of Federal Claims by insurers seeking risk corridor money. Several of the cases have moved onto federal appeals courts, while other cases have been dismissed. Analysts say the issue is likely to reach the U.S. Supreme Court. It’s unclear where the Trump administration would get the funds to reimburse insurers if the payback rulings stand. About $19.3 billion in risk corridor payments are at stake for 2014 and 2015 and an estimated $3 billion is in play for 2016, the final risk corridor year.
House v. Price
A U.S. appeals court has allowed 16 states to intervene in a lawsuit over whether subsidy payments made to insurers under the ACA are legal. The decision comes as President Trump recently threatened to cut off the cost sharing reduction (CSR) payments to marketplace insurers, calling them a “bailout.”
On Aug. 1, the U.S. Court of Appeals for the District of Columbia Circuit granted a motion by 18 attorneys general to enter the lawsuit. The attorneys general represent California, New York, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, North Carolina, Pennsylvania, Vermont, Virginia, Washington, and the District of Columbia.
Under the ACA, the federal government provides CSR payments to insurers to offset the costs for providing discount plans to patients who earn up to 200% of the federal poverty level. Plans on the individual exchanges are required to cover a package of essential benefits with pricing limitations to ensure that out-of-pocket costs are low enough for low-income patients.
Republican members of the House of Representatives sued the HHS over the CSR payments under the Obama administration, claiming the funding was illegal because it was never appropriated by Congress. A court ruled in favor of the House in 2016, but an appeal filed by the Obama administration allowed the CSR payments to continue. President Trump has not indicated whether he plans to drop the appeal or carry on the case. But if he fails to continue the suit, the move would immediately end the CSR payments.
On July 29, President Trump tweeted, “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!”
The state attorneys general are ready to defend the ACA and the cost sharing reduction payments, California Attorney General Xavier Becerra said in a statement .
“If Donald Trump won’t defend these vital subsidies for American families, then we will,” Mr. Becerra said in the statement. “This ruling gives my fellow attorneys general and me the ability to stand up for the millions of families who otherwise would lack access to affordable health care. It’s time Americans knew we were working for them, not against them.”
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