Congress’s failure to include any appropriating language in the Patient Protection and Affordable Care Act did not reflect congressional intent to preclude the government’s liability for making cost-sharing reduction payments to qualified health plans on the health care exchanges in Maine, Wisconsin, and Texas.
Nonprofit corporations offering qualified health plans (QHPs) on the Maine, Wisconsin and Texas health care exchanges are entitled to recover unpaid cost-sharing reduction (CSR) payments to which they are entitled under the Patient Protection and Affordable Care Act (ACA) (P. L. 111-148) and its implementing regulations. The Trump administration had ceased making these payments effective October 12, 2017, resulting in the loss of millions of dollars in lost CSR payments to these insurers (Maine Community Health Options v. The United States ; Common Ground Healthcare Cooperative v. The United States ; and Community Health Choice, Inc. v. The United States, February 15, 2019, Sweeney, M.).
ACA reforms. Among the reforms included in the ACA are two aimed at ensuring that individuals have access to affordable insurance coverage and health care: (1) the premium tax credit enacted in section 1401 (26 U.S.C. § 36B (2012)), and the CSR program enacted in section 1402 (42 U.S.C. § 18071). The premium tax credits and the CSRs work together: the tax credits help people obtain insurance, and the CSRs help people get treatment once they have insurance.
Specifically, the CSRs reduce the out-of-pocket expenses (such as deductibles, copayments, and coinsurance) paid by individuals whose household income is between 100 and 250 percent of the poverty line (42 U.S.C. §§ 18022(c)(3), 18071(c)(2); 45 C.F.R. §§ 155.305(g), 156.410(a)). Insurers offering QHPs are required to reduce eligible individuals’ cost-sharing obligations by specified amounts, 42 U.S.C. § 18071(a), and the Secretary of HHS is required to reimburse the insurers for the CSRs they make (§ 18071(c)(3)(A)).
Court actions. Although Congress failed to specifically appropriate funds for CSR payments in the ACA, the Obama administration began making advance payments to insurers for CSRs in January 2014. On November 21, 2014, however, the House of Representatives sued the Obama administration to stop the payments.
The D.C. district court ruled for the House, holding that the ACA unambiguously appropriates money for Section 1401 premium tax credits but not for Section 1402 CSR reimbursements to insurers. The court entered judgment in favor of the House but stayed its injunction pending appeal by either or both parties (Court sides with House Republicans, finds no appropriation for cost-sharing reductions, May 18, 2016).
The Obama administration appealed the ruling but the D.C. Circuit stayed the appeal to allow President-elect Donald J. Trump and his future administration time to determine how to proceed. The Trump administration initially continued the practice of making advance CSR payments to insurers, however, on October 12, 2017, the CSR payments were stopped.
The insurers filed actions in the U.S. Court of Federal Claims to recover the unpaid CSR payments. They alleged that the government violated both the statutory and regulatory mandates in failing to make payments. The insurers moved for summary judgment and the court heard oral argument on February 14, 2019.
The courts’ analysis. The court found that the plain language, structure, and purpose of the ACA reflect the intent of Congress to require the Secretary of HHS to make CSR payments to insurers.
Despite this plain language, the government argued that by the absence of any explicit funding mechanism for CSR payments in the ACA, and Congress’s decision to specifically provide a funding mechanism for premium tax credit payments, reflected the intent of Congress to preclude liability for CSR payments. The court disagreed for several reasons.
- First, the court found it well settled that the government can create a liability without providing for the means to pay for it.
- Second, the fact that Congress provided a funding mechanism for premium tax credit payments and not for CSR payments did not reflect congressional intent to foreclose liability for the latter.
- Third, the court was unpersuaded by the government’s related contention that insurers’ ability to increase premiums for their silver-level QHPs to obtain greater premium tax credit payments, and thus offset any losses from the government’s nonpayment of CSR reimbursements, was evidence that Congress did not intend to provide a statutory damages remedy for the government’s failure to make the CSR payments.
- Fourth, the court felt it would defy common sense to conclude that Congress obligated the Secretary of HHS to reimburse insurers for their mandatory CSRs without intending to actually reimburse the insurers.
In sum, the court decided that Congress’s failure to include any appropriating language in the ACA did not reflect congressional intent to preclude liability for CSR payments. Nor did Congress’s failure to appropriate funds to make CSR payments through annual appropriations acts or otherwise reflect a congressional intent to foreclose, either temporarily or permanently, the government’s liability to make those payments.
Conclusion. The court concluded that the government’s failure to make CSR payments to the insurers violated 42 U.S.C. § 18071. It granted the insurers’ motions for summary judgment. The court further ordered that by no later than Thursday, February 28, 2019, the parties file a joint status report indicating the amount due to the insurers for the CSR payments they did not receive.
Attorneys: Stephen John McBrady (Crowell & Moring LLP) for Maine Community Health Options. Stephen Andrew Swedlow (Quinn Emanuel Urquhart & Sullivan, LLP) for Common Ground Healthcare Cooperative. William Lewis Roberts (Faegre & Benson LLP) for Community Health Choice, Inc. Eric Evan Laufgraben, and Christopher James Carney (U.S. Department of Justice) for the United States
Companies: Maine Community Health Options; Common Ground Healthcare Cooperative; and Community Health Choice, Inc.
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