Health Reform WK-EDGE Where will the U.S. Supreme Court take health law in 2020?
Monday, March 23, 2020

Where will the U.S. Supreme Court take health law in 2020?

By Cathleen Calhoun, J.D.

The high court has grabbed health law with both hands this year, taking four significant cases that will impact millions, although delays in the cases are likely due to the coronavirus pandemic.

On March 16, 2020, the U.S. Supreme Court suspended March and early April oral arguments due to the coronavirus pandemic and closed its doors to the public until further notice. The high court issued a press release that in part states:

"In keeping with public health precautions recommended in response to COVID-19, the Supreme Court is postponing the oral arguments currently scheduled for the March session (March 23-25 and March 30-April 1). The Court will examine the options for rescheduling those cases in due course in light of the developing circumstances...The Court’s postponement of argument sessions in light of public health concerns is not unprecedented. The Court postponed scheduled arguments for October 1918 in response to the Spanish flu epidemic..."

Although delays may occur for significant health law cases as well, in 2020, and into 2021, the high court is scheduled to take on important questions on the Affordable Care Act (ACA), abortion, and Medicare reimbursement. This Strategic Perspective examines four health law cases that are currently in motion in the U.S. Supreme Court that will mean so much to so many once they are decided: Trump v. Commonwealth of Pennsylvania; Leslie Rutledge v. Pharmaceutical Care Management Association; June Medical Services v. Russo; and The States of California, et al. v. The State of Texas.

Those who currently get their health insurance through the ACA, and those who provide it, will be most impacted by the decision in The States of California, et al. v. The State of Texas, since the survival of the ACA is on the line. Women will want to especially be aware of two of the other cases, Trump and Leslie Rutledge, since the cases involve access to contraception coverage and abortion. June Medical Services case relates the most to business reimbursement, with the question of the amount of Medicare reimbursements for pharmacy benefit managers questioned.

Trump v. Commonwealth of Pennsylvania - ACA conscience-based exemption

3rd Circuit decision. The Health Resources and Services Administration determined years ago that health plans covered by the ACA must provide contraceptive services. This mandate included a narrow exemption for certain religious organizations. In 2017, President Trump issued an executive order directing the relevant agencies to consider amending regulations to address conscience-based objections to the contraception mandate. These agencies promulgated two interim final rules (IFRs) that expanded the religious exemptions authorizing employers with religious or moral objections to limit employees’ access to health insurance coverage for contraception (See Contraception coverage exemptions extended for objecting employers on religious, moral grounds, October 11, 2017). States filed suit, and, ultimately, in 2019, the 3rd Circuit court found that the state plaintiffs were likely to succeed in proving that federal agencies did not follow the Administrative Procedures Act (APA) and that regulations expanding the religious exemptions authorizing employers to limit employees’ access to health insurance coverage for contraception are not authorized under the ACA (See States likely to succeed in lawsuit challenging contraceptive exemption regulations, July 15, 2019).

Questions before the High Court. On October 7, 2019, the Trump Administration filed a petition for writ of certiorari with the U.S. Supreme Court and it was granted on January 21, 2020. The following questions were presented:

  1. Whether the agencies had statutory authority under the ACA and the Religious Freedom Restoration Act to expand the conscience exemption to the contraceptive-coverage mandate.
  2. Whether the agencies’ decision to forgo notice and opportunity for public comment before issuing the interim final rules rendered the final rules—which were issued after notice and comment—invalid under the Administrative Procedure Act.
  3. Whether the court of appeals erred in affirming a nationwide preliminary injunction barring implementation of the final rules.

Reaction. In contrast with the large number of amicus briefs filed in other decisions pending before the high courtonly one amicus brief has been filed so far in this case. However, the one amicus brief is from a good number of groups: The United States Conference of Catholic Bishops; The Church of Jesus Christ of Latter-Day Saints; Ethics and Religious Liberty Commission of the Southern Baptist Convention; The Lutheran Church – Missouri Synod; and Samaritan’s Purse. The brief states, "We submit this brief out of a shared concern that the dangerous conception of third-party harm invoked by the 3rd Circuit threatens to undermine RFRA (Religious Freedom Restoration Act) as a meaningful defense for the free exercise of religion...Third-party burdens are no reason to strike down the final rule or to misconstrue RFRA."

What’s next? The U.S. Supreme Court is scheduled to hear oral arguments on the case on April 29, 2020.

Leslie Rutledge v. Pharmaceutical Care Management Association - Medicare reimbursement

8th Circuit decision. Pharmacy benefits managers (PBM) are third-party administrators of prescription drug programs for commercial health plans, employer plans, and government plans such as Medicare Part D and federal and state employee health plans. They contract with pharmacies and negotiate discounts and rebates with drug manufacturers. Arkansas passed Act 900 in 2015, with the goal of protecting pharmacies from being forced to sell drugs at a loss. Under Act 900, PBMs were required to reimburse pharmacies for generic drugs at a price at least equal to the pharmacies’ cost in acquiring the drug from a wholesaler. The state law also included what is known as a "decline-to-dispense" option, which permitted pharmacies to refuse to dispense a drug if they were to lose money on the transaction.

The Pharmaceutical Care Management Association (PCMA), an association of pharmacy benefits managers, filed suit in Arkansas federal district court, asking the court to declare Act 900 preempted by both the Employee Retirement Income Security Act (ERISA) and Medicare Part D. The court ruled that ERISA preempted Act 900 but that Medicare Part D did not. The state appealed the part of the ruling finding that ERISA preempted the law, while the PCMA cross-appealed the determination that Medicare Part D did not. The 8th Circuit ruled that both ERISA and Medicare Part D preempted Arkansas Act 900 (See Part D preempt Arkansas law regulating pharmacy benefits managers, June 11, 2018).

Question before the High Court. On October 22, 2018, a petition for writ of certiorari was filed, and the U.S. Supreme Court granted the petition on January 10, 2020. The plaintiffs ask whether the 8th Circuit erred in holding that Arkansas's statute regulating PBMs' drug-reimbursement rates is preempted by ERISA. Numerous briefs have been filed in the case, including amicus curiae briefs by the National Association of Chain Drug Stores, Inc., the National Council of Insurance Legislators, the AARP and AARP Foundation, and the American Medical Association, among others.

Reaction. In its brief amicus curiae, the American Medical Association said, "We respectfully submit that the Court of Appeals’ expansive interpretation of the preemption provision in Section 514 of the Employee Retirement Income Security Act (ERISA), is contrary both to the language and intent of that statute, wrongly interferes with the traditional police powers of each state to regulate the delivery of health care to its citizens, and given the absence of comprehensive federal regulation of PBMs in ERISA or elsewhere, will leave a regulatory vacuum—to the detriment of patients and their physicians." In contrast with this argument, the National Association of Specialty Pharmacy stated in its brief amicus curie that "…At stake in this case is whether States may regulate the abusive and anticompetitive business practices occurring within their borders at the hands of select pharmacy benefit managers ("PBMs"). These destructive practices now threaten our health system’s ability to provide critical pharmaceutical care to the most fragile and ill patients in the United States. Nothing in ERISA compels states to stand by and accept such a result."

What’s next? Oral argument before the U.S. Supreme Court is scheduled for April 27, 2020.

June Medical Services v. Russo - Abortion

5th Circuit decision. Louisiana enacted the Unsafe Abortion Protection Act (Act) in 2014 that requires abortion providers to have admitting privileges at a hospital located within thirty miles of the clinic where they perform abortions. The district court invalidated the Act as unconstitutional when it was on remand after the decision in Whole Woman’s Health v. Hellerstedt (WWH). On appeal, the U.S. Court of Appeals noted that unlike in Texas (where the WWH decision was decided), the Louisiana Act did not impose a substantial burden on a large number of women. The court said that detailed review of the record revealed strong differences between the record before it and the record that the U.S. Supreme court considered in WWH. Ultimately, the court found that a number of facts showed how less the impact was in Louisiana than in Texas. The court held that because the Act passed muster under the strict requirements of WWH and other Supreme Court decisions, the decision had to be reversed.

Question before the High Court. On April 17, 2019, a petition for writ of certiorari was filed with the U.S. Supreme Court by doctors and who perform abortions and abortion clinics. On October 4, 2019, the petition was granted. The question presented was whether the 5th Circuit’s decision upholding Louisiana’s law requiring physicians who perform abortions to have admitting privileges at a local hospital conflicts with the U.S. Supreme Court’s binding precedent in Whole Woman’s Health.

Oral arguments heard. On March 4, 2020, the U.S. Supreme Court heard oral arguments in the case, and the courtroom, according to reports, was packed. The justices did not give a clear indication, from their questioning or comments, of how they will decide. Justice Ginsburg asked, ""Is it not the fact that most hospitals in Louisiana, in order to get admitting privileges, you have to admit a certain number of patients?" She added, "Abortion providers…will never qualify because their patients don’t go to the hospital." Justice Breyer, who wrote the majority opinion in WWH, said "…I understand there are good arguments on both sides…people have very strong feelings and a lot of people morally think it’s wrong and a lot of people morally think the opposite is wrong…I think personally the court is struggling with the problem of what kind of rule of law do you have in a country that contains both sorts of people…"

What’s next? A decision is likely before or during the summer of 2020.

The States of California, et al. v. The State of Texas - ACA individual mandate

5th Circuit decision. The 5th Circuit, in a 2-1 opinion, upheld the Texas federal district court’s ruling that the individual mandate in the ACA was unconstitutional. As it is widely known, the ACA individual mandate provision gives individuals a healthcare choice – either purchasing health insurance or paying to the IRS what is called in the law a "shared responsibility payment," but Congress reduced the "shared responsibility payment" to zero without repealing the ACA. In its decision, the 5th Circuit found the issue of severability from the ACA difficult. The court said that the lower court failed to carry out "the inherently difficult task of severability analysis in the specific context of this case." The Court remanded the case to the district court for a more detailed analysis of whether the individual mandate was severable from the ACA without declaring the entire law invalid (See ACA individual mandate unconstitutional; remanded for further study of severability, December 19, 2019).

Questions before the High Court. On January 3, 2020, a petition for writ of certiorari was filed with the U.S. Supreme Court. On the same day, a motion to expedite consideration of the petition for a writ of certiorari filed. On March 2, 2020, the petition was granted by the U.S. Supreme Court. The questions presented are:

  1. Whether the individual and state plaintiffs in this case have established Article III standing to challenge the minimum coverage provision in Section 5000A(a) (of the ACA).
  2. Whether reducing the amount specified in Section 5000A(c) to zero rendered the minimum coverage provision unconstitutional.
  3. If so, whether the minimum coverage provision is severable from the rest of the ACA.

Reaction. Texas Attorney General Ken Paxton said, ""The federal government cannot order private citizens to purchase subpar insurance that they don’t want, and I look forward to finally settling the matter before the U.S. Supreme Court." However, Cynthia Cox, director for the Program on the Affordable Care Act at the Kaiser Family Foundation, warned of problems when she reportedly told Yahoo Finance, "There could be essentially total chaos…There’s no replacement plan…the immediate effect would be that literally tens of millions of people could lose coverage..."

What’s next? A decision is expected in the spring or summer of 2021.

Conclusion. With all four cases still in process, predictions can be made, especially with regard to the ACA. We know that the ACA will still be with us in 2020, but its fate in 2021 remains unknown. Most argue that the ACA will go on, in some form, while others predict its end. The ACA case on conscience-based objections to the ACA mandate on contraception, coming in 2020, may give some hints about how the court will decide the larger ACA individual mandate case. On April 29, the justices will pose their questions, and perhaps show their hands.

MainStory: StrategicPerspectives AccessNews AgencyNews ContraceptionCoverageNews DrugNews EmployerMandateNews EssentialBenefitNews GeneralNews GroupMarketReformNews IndividualMandateNews LargeEmployerNews MedicaidNews PremiumTaxNews

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