Health Reform WK-EDGE States dismiss CSR payments case without prejudice, vow to monitor administration actions
Friday, August 3, 2018

States dismiss CSR payments case without prejudice, vow to monitor administration actions

By Harold Bishop, J.D.

In a case in which California, 17 other states, and the District of Columbia failed to obtain an emergency ruling to require the Trump Administration to continue making payments to health insurance companies subsidizing the cost of copayments and deductibles for low-income consumers, a California federal district court has accepted an unopposed request by the states to dismiss the case with prejudice, allowing a similar suit to be filed again, if necessary (California v. Trump, N.D. Cal., July 18, 2018, Chhabria, V.).

The case arose when the Trump administration terminated the cost-sharing reduction (CSR) payments after deciding that the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) did not explicitly make the necessary appropriation. Section 1402 of the ACA requires insurers to offer plans with reduced cost-sharing payments to lower-income individuals. In exchange for reduced cost-sharing, the federal government provides CSR reduction payments to insurers to cover their costs for providing those plans (see 42 U.S.C. §18071).

According to the court, while the ACA required the insurance companies to give people the reductions, and it required the government to pay the insurance companies in advance for the reductions, it did not explicitly make a permanent appropriation for the CSR payments to the insurance companies. On this basis, the court denied the states’ request for a preliminary injunction (see Court denies states’ request to require Trump to continue CSR payments, November 1, 2017). The states argued that the appropriations were implied by virtue of other ACA provisions. The court, however, concluded that the Administration’s argument that there was no explicit language providing for appropriations for CSR payments was the stronger legal position.

California AG’s statement. In dismissing the case, California Attorney General Becerra stated: "Today’s decision to close our cost-sharing reduction litigation for now is the end of a battle, but not the war. Today’s decision is an acknowledgement of the determined and strategic action by States to mitigate the Trump Administration’s irresponsible actions and continue providing affordable care under the ACA. More importantly, this decision leaves the door open for California and its coalition to continue fighting if and when the Trump Administration takes action to dismantle the states’ alternative approach to maintaining Americans’ affordable health plans. We will continue to monitor the Administration’s actions and stand ready to take any legal action necessary to safeguard Americans’ healthcare."

Related case. In a related case, House of Representatives v. Hargan (previously, Burwell), House Republicans brought a lawsuit against the Obama Administration challenging the legality of CSR payments. The court granted summary judgment to the House, but, pending appeal, the court permitted subsidies to continue being paid during the abeyance (see Court puts cost-sharing appeal on hold, awaits possible Trump policy, December 7, 2016). Abeyance was granted after the 2016 election. On March 2, 2017, the court continued the abeyance for 90 days, and required a status report by May 22, 2017. On May 22, 2017, the parties requested another 90-day delay, after 15 state AGs filed a motion to intervene (see State AGs allowed to intervene in ACA subsidies case, August 9, 2017).

Then, on December 15, 2017, the parties notified the court of appeals they had reached a conditional settlement agreement for the resolution of House v. Hargan, and filed with the district court a motion for an indicative ruling in accordance with that agreement. The indicative ruling stated that, if the case was remanded by the court of appeals, the district court would vacate the portion of its final order providing that reimbursements paid to issuers of qualified health plans for the cost-sharing reductions mandated by the ACA are enjoined pending an appropriation for such payments. The reason for the settlement was apparently the change in circumstances occasioned by President Trump’s decision to stop CSR payments.

The case is No. 17-cv-05895-VC.

Attorneys: Nimrod Pitsker Elias, California State Attorney General's Office, for State of California, State of Connecticut and State of Delaware. Steven Andrew Myers, U.S. Department of Justice, for Donald J. Trump.

Companies: State of California; State of Connecticut; State of Delaware

Cases: CaseDecisions CostSharingNews HealthInsuranceExchangeNews InsurerNews GCNNews NewsFeed FedTracker HealthCare

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More
Health Reform WK-EDGE

Health Reform WK-EDGE: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on health reform legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.

Free Trial Learn More