On September 19, 2012, the State of Oklahoma amended its initial complaint filed on January 21, 2011 in the Eastern District of Oklahoma originally challenging the “individual mandate” of the Affordable Care Act (ACA), to now challenge final Internal Revenue Code rules implementing what is commonly known as the “employer mandate.”  To incentivize employers to provide health insurance coverage to their employees, ACA requires a large employer to essentially pay an assessment if the federal government makes or could have made a subsidy payment to an insurer on behalf of an employee of the large employer.  As a result of a technical glitch in ACA’s language, however, ACA only implements the large “employer mandate” in states that have adopted their own state insurance exchanges.  Oklahoma argues that the Treasury Department and HHS have interpreted final Internal Revenue Code rules in a way that exceeds ACA’s statutory authority by also authorizing the imposition of assessments on large employers in states that have chosen not to create an insurance exchange.  Oklahoma challenges the final rules in its capacity both as a State and as a large employer.  The State maintains that it has elected not to create a state insurance exchange in order to prevent Oklahoma employers from paying this assessment and thus “preserve a competitive advantage in the area of job growth.”

Oklahoma seeks a declaration that the terms used in the final Internal Revenue Code rule do not apply the large employer assessment to states where the state has not elected to create a state insurance exchange.  The State also requests that a permanent injunction be imposed forbidding the Treasury Department and HHS from acting in a manner that would interpret the regulations as applying the assessment to such states.  Click here for a copy of the complaint. 

Reporter, Kate Stern, Atlanta, +1 404 572 4661, kstern@kslaw.com.