With the passing of the March 31st deadline for the initial open-enrollment under the Affordable Care Act (“ACA” or “ObamaCare”), the resignation of Health and Human Services (HHS) Secretary Kathleen Sebelius, and the enrollment at a little over 8 million, we are providing update on developments surrounding the implementation of the ACA.
The first issue we identified was the question of whether the federal government could offer subsidies for coverage obtained through the federal exchanges under the ACA. We continue to monitor developments in Halbig v. Sebelius, No. 1:13-cv-00623 (D.D.C. 2013), and three other cases involving challenges by small business owners to the Internal Revenue Service (IRS) interpretation of the ACA to permit subsidies for policies purchased on the federal exchange. On January 15, 2014, the district court granted the government’s motion for summary judgment and upheld the IRS rule implementing ACA subsidies and enforcing the ACA’s employer mandate. Halbig v. Sebelius, 2014 U.S. Dist. LEXIS 4853 (D.D.C. Jan. 15, 2014). The D.C. Court of Appeals heard oral arguments in this matter on March 25, 2014. (No. 14-5018 (D.C. Cir.).
Another hot topic relates to benefits under ACA and the various challenges to the contraception mandate. In the 2014 term, the U.S. Supreme Court will resolve a split in the circuits: Kathleen Sebelius v. Hobby Lobby Stores, Inc., 723 F.3d 1114 (10th Cir.), cert. granted, 134 S. Ct. 678 (2013), and Conestoga Wood Specialties Corp. v. Secretary of the United States HHS, 724 F.3d 377 (3d Cir.), cert. granted, 134 S. Ct. 678 (2013). The court heard oral arguments on March 25, 2014. The highly-contested issue involves the extent to which the government-mandated contraception coverage can be imposed on for profit-corporations that object to it based on a religion-based exemption. The upcoming ruling could address whether the protections under the 1993 Religious Freedom Restoration Act are limited to “persons” as opposed to entities. Under the act, the government must seek the “least burdensome” and narrowly tailored means for any law that interferes with religious convictions.
On a separate note, on March 31, 2014, the U.S. Supreme Court declined to hear the petition for writ of certiori filed by the Roman Catholic Archbishop of Washington’s push to block the government from enforcing the ACA’s contraception mandate on nonprofit religious organizations on religious freedom grounds.
Litigation arising from ACA enrollment and pricing is likely to become more prevalent. On January 21, 2014, former Humana policyholders filed a class action complaint against Humana Inc. in Missouri federal district court. See Doyle v. Humana, Inc., (4:14-cv-00061-FP). The suit alleges that the company took advantage of the implementation of the individual mandate requirements of the ACA by raising its health insurance premiums and ignoring policyholder’s requests for cancellation.
In addition, problems with the federal and state websites have been notorious. The severity of the network issues for several state exchanges crippled their networks and ability to complete the enrollment process as promised. The Chicago Tribune reported on March 30, 2014, that officials in Oregon, Massachusetts, and Maryland are exploring legal options as they terminate contracts with those who created their websites. Although some states are considering moving to the federal exchange in the future, the potential for litigation between vendors and states continues to percolate.
Finally, given the increase in data breach security matters, it is not surprising that the U.S. House of Representatives approved security-related legislation pertaining to the exchanges, Health Exchange Security and Transparency Act, H.R. 3811. Under the proposed legislation, HHS would have no more than two business days to notify an individual whose “personally identifiable information” was stolen or improperly viewed on “HealthCare.gov.,” the federally run web site. The Obama Administration opposed the bill but stopped short of threatening a veto. On January 13, 2013, the bill was referred to the Senate Committee on Health, Education, Labor and Pensions. We expect privacy issues relating to ACA implementation to remain fluid and, ultimately, subjects for judicial resolution.
We will continue to provide regular updates on the ACA and the implications on those affected by the changes.