The Labor Department isn’t letting its Association Health Plan rule go down without a fight.
On Friday, the Labor Department filed notice that it intends to appeal a March ruling by U.S. District Judge John Bates to the United States Court of Appeals for the District of Columbia.
A month ago Bates struck down the Labor Department’s AHP rule, noting that, ““the Final Rule exceeds the statutory authority delegated by Congress in ERISA,” and that “the Final Rule’s provisions defining ‘employer’ to include associations of disparate employers and expanding membership in these associations to include working owners without employees are unlawful and must be set aside.”
The AHP rule, finalized last June, claimed to make insurance more affordable for small businesses, allowing plans to be customizable to tailor benefit design to small businesses’ needs, as well as providing a way to reduce administrative costs and strengthen negotiating power with providers from larger risk pools and greater economies of scale. It did so by interpreting ERISA’s definition of “employer” to let small businesses and the self-employed band together to buy employee health care plans from the large-group insurance market.
A month later, the District of Columbia and 11 states (California, Delaware, Kentucky, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Virginia and Washington) filed suit challenging the finalized AHP rule, claiming that it violated the “text, structure and purpose” of the ACA. That suit put the issue before Judge Bates.
Earlier this month, Sens. Chuck Grassley (R-IA) and Joni Ernst (R-IA) joined Sen. Mike Enzi (R-WY) and a group of colleagues in introducing legislation to “prevent thousands of people from losing their health care coverage,” according to a press release. The legislation would “ensure the new pathway remains available for small businesses to offer Association Health Plans under the Department of Labor’s final rule,” according to the bill’s sponsors.
UPDATED APRIL 29 AT 4:00 PM ET: In an April 29 press release, the DOL announced that it will not pursue enforcement actions for potential violations stemming from actions taken before the district court’s decision in good faith reliance on the AHP rule’s validity, as long as parties meet their responsibilities to association members and their participants and beneficiaries to pay health benefit claims as promised. Similarly, the DOL said it will not take action against existing AHPs for continuing to provide benefits to members who enrolled in good faith reliance on the AHP rule’s validity before the district court’s order, through the remainder of the applicable plan year or contract term that was in force at the time of the district court’s decision.
