Health Reform WK-EDGE Federal court poo-poos ACA preemption of state insurance law (1)
Wednesday, March 27, 2019

Federal court poo-poos ACA preemption of state insurance law

By Cathleen Calhoun, J.D.

No court has yet ruled that the ACA has completely preempted state insurance laws—in fact, several courts have ruled against such.

The Affordable Care Act (ACA) (P.L. 111-148) did not take the place of state insurance laws, a district court in Ohio held. In a class action lawsuit, the plaintiffs claimed, among other allegations, that the company through which they purchased health insurance on the ACA health insurance exchange, breached its contract. The plaintiffs moved to remand the case from federal court, arguing that no federal claim was made. The court agreed stating that the plaintiffs’ claims were not preempted by the ACA (Desai v. CareSource, Inc., March 11, 2019, Rose, T.).

Claims. The plaintiffs purchased health insurance from the defendant, CareSource, through the federal health insurance marketplace exchange under the ACA. They alleged that CareSource damaged them by misrepresenting its network of providers and marketplace directory. The damage, according to the plaintiffs, was that they had to pay increased premiums. Six specific claims were alleged: (1) violations of Ohio statutory health insuring corporation law-deceptive practices; (2) breach of contract; (3) insurance bad faith; (4) negligent misrepresentation; and (5) constructive fraud. The plaintiffs also claimed unjust enrichment as an alternative pleading and sought declaratory and injunctive relief.

Federal court. The plaintiffs entered a motion to remand the case to the Montgomery County, Ohio Court of Common Pleas. The defendant CareSource wanted the court to rule that the ACA preempted state insurance laws, or at least the causes of action in the case at hand. The court disagreed and stated that no court has yet ruled that the ACA has completely preempted state insurance law, and that two courts have ruled against that idea. The court quoted another decision that held that if a plaintiff can support his or her claim with even one theory that does not call for an interpretation of federal law, the claim does not arise under federal law. The court found that the plaintiff could assert that CareSource failed to uphold the promises made irrespective of whether they were made to comply with federal law and remanded the case to the county court.

Attorneys: Edward A. Proctor (Connick Law, LLC) for Neha Desai. Donald Jeffrey Ireland (Faruki Ireland Cox Rhinehart & Dusing PLL) and James P. Schuck (Bricker & Eckler) for CareSource, Inc.

Companies: CareSource, Inc.

Cases: CaseDecisions AccessNews HealthInsuranceExchangeNews InsurerNews OhioNews

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