Beltway Buzz - October, 2017 #2

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Trump Signs New Executive Order Threatening ACA. Following last month’s senatorial defeat on full repeal-and-replace—after which Congress vowed to move on to tax reform and other lower hanging fruit—the Trump administration is trying a new tactic by issuing a comprehensive executive order (EO) on October 12, 2017. Though administration officials intend for the new EO to be the “first steps to providing millions of Americans with Obamacare relief,” critics fear the order might cause the present health care marketplace to implode like the Washington Nationals in the playoffs, resulting in widespread loss of quality coverage . Although details are few at this time, the EO expands the availability of three already existing alternatives to ACA-covered health plans:

  • association health plans (AHPs);
  • short-term, limited-duration insurance (STLDI); and
  • health reimbursement arrangements (HRAs).

Each of these alternative arrangements are exempt from certain “onerous and expensive insurance mandates and regulations,” such as the individual mandate.

The EO is drafted so as to shift responsibility for hammering out details to the secretaries of the Department of Labor (DOL), Internal Revenue Service (IRS), and Health and Human Services (HHS), who are directed to “consider proposing regulations or revising guidance, consistent with law” (emphasis added) to accomplish these goals within 60 or 120 days from the date of the EO (i.e., by December 11, 2017 or February 9, 2018, as applicable). The EO also imposes significant new reporting requirements on these federal agencies. By directing federal agencies to essentially rewrite the rules, opponents fear that the EO will accomplish what Congress could not—strip away significant patient protections and other ACA benefits. As a legal matter, there is likely to be buzz—and possibly litigation—over whether the EO exceeds the lawmaking authority granted to the executive branch. This is still developing, so we will, of course, keep you informed as further details emerge. (Hat tip to Stephanie A. Smithey, Timothy G. Verrall, and Richard C. Libert.)

Trump Announces Cutoff of Future Cost Sharing Reduction Subsidies. Coming within hours of Thursday’s new EO affecting the ACA, the president announced that he intends to cut off all future cost sharing reductions (CSRs) paid to insurers that sell on the ACA market exchanges. Though it might have come as a surprise, the move was not entirely unexpected—the administration has been under no legal obligation to fund these payments following a 2016 federal district judge’s ruling that Congress had not specifically authorized these payments. Although the Obama administration had appealed the decision, the current administration abandoned the appeal, essentially keeping the lower court ruling in place. The administration had been making CSRs on a monthly basis, but it was anticipated that the payments would be discontinued at some point. 

The announcement did not specify when the changes will become effective; however there are reports that place the effective date as early as November. Given the precarious legal situation surrounding CSRs, some stakeholders will welcome the move to cut off future CSRs. Critics, on the other hand, view the action as a calculated political move to further undermine the ACA and force Democrats to the negotiating table. However viewed, the maneuver is expected to cause temporary chaos in the insurance industry, and will most likely affect the ability of many lower-income residents to afford coverage. Like your ace pitcher melting down in a series-clinching playoff game, this is a significant development. (Hat tip to Stephanie A. Smithey, Timothy G. Verrall, and Richard C. Libert.)

Congressional Schedule and Nominations. The Senate was in recess this week, and the House will be in recess this coming week. This means that there was no progress on the nominations front, though the Senate Health, Education, Labor and Pensions (HELP) Committee has scheduled an executive session for Wednesday, October 18, to consider the following nominees:

  • Patrick Pizzella—Deputy Secretary of Labor
  • Cheryl Stanton—Wage and Hour Division Administrator
  • David Zatezalo—Assistant Secretary of Labor for Mine Safety and Health
  • Janet Dhillon—Member of the Equal Employment Opportunity Commission and upon confirmation designated chair 
  • Daniel M. Gade—Member of the Equal Employment Opportunity Commission 
  • Carlos G. Muniz—General Counsel, Department of Education
  • Peter Robb—General Counsel, National Labor Relations Board
  • Gerald Fauth, III—Member, National Mediation Board
  • Kyle Fortson—Member, National Mediation Board
  • Linda Puchala—Member, National Mediation Board

We’ll have more on this matter next week.

Disability Claims Procedure Regs Effective Date Delayed 90 Days.On October 12, the DOL issued proposed regulations that would delay, until April 1, 2018, the effective date of the final regulations issued last December for disability benefits provided under retirement plans or welfare benefit plans. Interested parties and members of Congress had expressed concern that the final regulations could drive up disability benefit costs and reduce coverage. Pursuant to Executive Order 13777, which directed federal agencies to evaluate existing regulations and recommend changes that might make them less burdensome, the DOL concluded that it is appropriate to grant additional time to seek further commentary on the final regulations. The 90-day extension is intended to provide this opportunity—but both commentators and employers that have been nervous about the impact of the final regulations might find the fleeting reprieve less than ideal. (Hat tip to Stephanie A. Smithey, Timothy G. Verrall, and Richard C. Libert.)

EBSA Nominee Announced Soon? In more benefits news, the White House will nominate Senate Finance Committee staffer Preston Rutledge to be assistant secretary for the Employee Benefits Security Administration. If confirmed, Rutledge will oversee, among other matters, the disability claim regulation discussed above, as well as the fiduciary rule, parts of which (like the best interest contract exemption) are postponed until July 1, 2019. And, speaking of the fiduciary rule, representatives Virginia Foxx (R-NC) and Phil Roe (R-TN) outline their legislative proposal to fix the rule here.

OSHA Injury Tracking Rule is . . . on Track. As we’ve previously reported, the administration has delayed the effective date of the Occupational Safety and Health Administration’s (OSHA) 2016 injury and illness reporting regulation from July 1, 2017 to December 1, 2017. Additionally, according to the Spring Regulatory Agenda, the administration has promised to issue a Notice of Proposed Rulemaking (NPRM) sometime this month “to reconsider, revise, or remove provisions” of the rule. Well, it looks like that timetable may actually still be somewhat accurate. In a status report filed this week in a lawsuit challenging the regulation, attorneys for the Department of Justice wrote, “OSHA has drafted substantial portions of the NPRM, including draft regulatory text and a summary and explanation of the proposed changes, and that OSHA’s economists have made significant progress on the economic analysis and continue to refine it. Once the analysis is finalized, the draft NPRM will proceed through the agency clearance process.” With about two weeks left in October, we will see if OSHA meets its own prediction for release of the NPRM.

DACA Update. On October 8, President Trump sent congressional leaders a letter that details “reforms that must be included as part of any legislation addressing the status of Deferred Action for Childhood Arrivals (DACA) recipients.” Among the priorities are the construction of a border wall (no surprise there), accelerating the return of Unaccompanied Alien Children, eliminating loopholes in the asylum system, addressing the immigration court backlog by seeking to hire an additional 370 immigration judges, blocking grants to sanctuary cities, strengthening the removal process for visa overstays, and mandatory use of E-Verify. These demands won’t go over well with Democrats and even some Republicans.

As for what is happening in Congress, take a look at the status of the SUCCEED Act in the Senate.

“I, For One, Welcome Our New Robot Overlords.” Technology and automation certainly have an impact on employment policy, and, in a glimpse of what’s to come, last week the Senate Commerce Committee reported out the bipartisan “American Vision for Safer Transportation Through Advancement of Revolutionary Technologies (AV START) Act” (S. 1885). The bill is intended to ease regulations that make it harder to get self-driving cars on the road. Some consumer groups worry that the legislation doesn’t do enough to ensure that driverless cars are sufficiently safe for passengers and other motorists. Conversely, disability advocates support the measure as a vital way to increase mobility for individuals with disabilities.

Gridlock Experts Take to The Gridiron. Our representatives certainly are both charitable and competitive. Indeed, we’ve recently covered their participation in baseball games and spelling bees. On Wednesday night, it was football, as members of Congress—with the help of former professional football players like Santana Moss and Herschel Walker—took on the Capitol Police officers in the Congressional Football Game for Charity. The game raises money for the U.S. Capitol Police Memorial Fund and other charities. In what must have been a riveting contest, the Capitol Police won 7–0 (it’s no wonder that the congressional team couldn’t get anything done). Perhaps the congressional team would have fared better if Steve Largent and Heath Shuler were still elected representatives. Next up for the winners? The N.Y. Giants, who are an early underdog.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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