Originally published on Forbes.com.
When the Affordable Care Act was passed, was there any discussion of it being a jobs bill for lawyers? Maybe it just seems that way. The latest is Montana Health Co-op v US which was decided by Judge Elaine D. Kaplan in the Court of Claims. So you may recall the Affordable Care Act passed in 2010 when Democrats had the Presidency and both houses. That didn’t last that long. Republicans took over Congress, but could never get enough votes to repeal the Affordable Care Act. They did what they could though, which included not appropriating money to fund aspects of it. That is what Montana Health Co-op was in the Court of Claims about.
The Decision
Certain plans under ACA had to have “cost-sharing reductions” to help enrollees with out-of-pocket costs such as deductibles. HHS made advance cost-sharing payments out of the permanent appropriation for tax credit refunds. The House of Representatives filed a lawsuit and got an injunction to prevent the continuation of the payments, but the injunction was stayed pending appeal. And then things changed.
While that litigation was pending in the district court and the D.C. Circuit, HHS continued to make cost-sharing reduction payments to insurers using funds appropriated under 31 U.S.C. § 1324. On October 11, 2017, however, Attorney General Sessions sent a letter to the Secretary of Treasury and the acting Secretary of HHS, advising them that the Justice Department had concluded that § 1324 did not appropriate funds to make payments under the CSR program. Letter from Att’y Gen. Sessions to Sec’y Mnuchin & Acting Sec’y Wright (Oct. II, 2017), f; see also California v. Trump, 267 F. Supp. 3d 1119, 1125 (N.D. Cal. 2017). The next day, HHS’s Acting Secretary issued a memorandum to the Centers for Medicare and Medicaid Services directing that, in light of the Attorney General’s legal opinion “and the absence of any other appropriation that could be used to fund CSR payments—CSR payments to issuers must stop, effective immediately.”
So Montana Health and other insurers brought the lawsuit. Both sides sought summary judgement.
The parties’ cross-motions present a single, purely legal issue: whether the federal government had a statutory obligation to provide Montana Health with the cost-sharing reduction payments described in § 1402 of the ACA, notwithstanding the lack of appropriations to fund such payments. Montana Health contends that such an obligation was imposed by the plain language of § 1402. The government’s central argument, on the other hand, is that Congress could not have intended to impose such an obligation because, while it made arrangements to fund the premium tax credits of § 1401 through a permanent appropriation, it has never appropriated money to fund § 1402 payments, whether on a permanent or annual basis
It gets pretty lawyerly from there, but the bottom line was that the government did have an obligation to pay Montana Health Co-op cost-sharing reimbursements for 2017.
Of course, Montana Health was unable to raise its premiums to make up for the shortfall in 2017, because by the time HHS issued its stop payment order, premiums for that year were set; in fact, the year was almost over. But in any event, even assuming that insurers could make up for the shortfall in CSR payments by raising their premiums, approval of premium rates is a matter for the states. There is no evidence in either the language of the ACA or its legislative history that Congress intended that the statutory obligation to make CSR payments should or would be subject to an offset based on an insurer’s premium rates. The Court concludes, therefore, that premium rates have no bearing on whether § 1402 created a statutory obligation to pay insurers compensation for the cost-sharing reductions they implemented.
For the reasons set forth above, the government was statutorily obligated to provide Montana Health with cost-sharing reduction payments for the remaining months of 2017. That obligation was not vitiated by Congress’s failure to appropriate funds for that purpose. Accordingly, Montana Health is entitled to judgment as to liability as a matter of law.
Why This Remains A Thing
Having health care policy set by litigation is probably less than ideal. A project of the Trump administration was to be the repeal and replacement of Obamacare. By lucky coincidence, Fear by Bob Woodward popped into my Kindle this morning. I’ll be reading it today, but I could not resist checking for blog fodder on taxes, but nothing leaped out at me. Then I realized that there might be something on Obamacare. Doesn’t seem to be a lot. Apparently blame for failure to repeal and replace went to Reince Priebus.
Early the morning of Friday, July 28, Trump’s promise to repeal and replace Obamacare had failed in Congress. Trump blamed Priebus. He was supposed to know the Hill and have close relationships with the Republican leaders. No matter how Priebus tried to explain, Trump would not buy it. “You didn’t get it done.” That day, Trump flew to Long Island to give a speech. Priebus accompanied him. They had a talk in the private cabin at the front of Air Force One. Priebus had submitted his resignation the night before. He was fed up and knew he had lost his usefulness to Trump.
That does not qualify as a big Woodward revelation. It is mentioned in this Politico story by Josh Dawsey and Eliana Johnson on July 28, 2017. As it happens, I was more worried about tax reform at that point in time.
Other Coverage
The decision seems to have made a splash in the health care blogosphere. Go figure. There are summaries in:
Healthcare Finance – by Susan Morse
Becker’s Hospital Review – by Morgan Haefner
Lexology – by Crowell & Moring LLP
And others.
The only piece that I found with further analysis was in Benefit Pro by Marlene Satter
Although the government is likely to appeal the ruling, the decision must bring hope to other filers—including Maine Community Health Options, Sanford Health Plan and Health Alliance. In addition, reports Modern Healthcare, “Judge Margaret Sweeney of the U.S. Court of Federal Claims in April granted Wisconsin-based Common Ground Healthcare Cooperative’s request for class-action status, allowing health insurers to sue together as a class to challenge the federal government’s failure to pay CSRs
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