An individual and his employer had no standing to sue the Obama administration for implementation of its "transitional policy," which permitted health insurance companies to extend plans that did not comply with Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) requirements for nine months, nor could they bring an equal protection challenge for application of either the transitional policy or the hardship exemption to the individual mandate. The U.S. Court of Appeals for the District of Columbia Circuit determined that the appellants could not demonstrate that the transitional policy, which was applied evenhandedly, caused any alleged injury. The appellate court affirmed the district court’s decision and dismissed the case for lack of standing (American Freedom Law Center v. Obama, May 13, 2016, Wilkins, R).
Section 1201 of the ACA imposed market reforms, including essential health benefit standards, on all health insurance plans, which were scheduled to become effective on January 1, 2014. However, to aid consumers of non-compliant plans with the transition to compliant plans, HHS decided not to enforce the policy until October 2014, giving insurers the option of temporarily offering non-compliant plans. Meanwhile, the ACA also required individuals to purchase insurance coverage or pay a penalty, unless they qualified for a hardship exemption.
AFLC plan. Blue Cross Blue Shield of Michigan provided non-compliant insurance coverage to the American Freedom Law Center (AFLC) but chose not take advantage of the transitional policy. Instead, it transitioned to a compliant plan. In June 2014, it increased rates across products by an average of 2.7 percent, citing four main reasons for the change, including the fact that other individuals were retaining non-compliant coverage, resulting in "[l]ower than anticipated improvement of the ACA compliant market level risk pool." The co-founder and senior counsel of the AFLC and the AFLC (collectively AFLC) sued the Obama administration in July 2014, claiming that the transitional policy was an "unlawful executive action" that increased its insurance costs and violated the Fifth Amendment equal protection clause. The district court dismissed the case due to lack of standing.
Lack of standing. The appellate court noted that any alleged injury was solely prospective, since the AFLC alleged that the transitional policy would increase future costs. The AFLC offered the June 2014 rate increase as evidence, but the appellate determined that there was no causal connection, in part because the rate increase was an average across plans and there was no evidence that it applied to the plan at issue. In addition, Blue Cross decreased the rates across policies by an average of 3.3 percent in March 2015, citing two main reasons for the change, including "[s]hifts in market risk assumptions after the allowance by the government for carriers to extend offerings of pre-reform plans," which credited the transitional policy. The appellate court noted that various factors, including the size of risk pools, influenced the rate changes, and that the AFLC did not attempt to separate them out.
The AFLC’s equal protection argument failed with respect to the transitional policy, which applied to insurers rather than consumers, since HHS applied the policy evenhandedly by offering the option to all insurers. Furthermore, the AFLC could not allege that HHS unfairly treated some "applicable individuals" eligible for the hardship exemption differently than its co-founder and senior counsel, since he was insured and not subject to the penalty for failure to carry insurance.
The appellate court affirmed the district court ruling and dismissed the case for lack of standing.
Attorneys: Robert Joseph Muise (Robert Joseph Muise, Attorney At Law) for American Freedom Law Center. Katherine Twomey Allen, U.S. Department of Justice, for Barack Hussein Obama.
Companies: American Freedom Law Center
Cases: CaseDecisions AgencyNews EssentialBenefitNews IndividualMandateNews InsurerNews DistrictofColumbiaNews NewsFeed
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