Health Care

New York v. United States Department of Labor

In New York v. United States Department of Labor, the United States District Court for the District of Columbia considered whether the Department of Labor’s new Rule that would permit individuals and small employers to form Association Health Plans and thereby skirt requirements the Affordable Care Act (ACA) imposes on individual and small group health plans is unlawful.

Case Summary

On October 17, 2017, President Trump signed an executive order directing his administration to find ways to expand Association Health Plans (AHPs), organizations composed of employers and individuals formed for the purpose of providing health insurance. Fulfilling that order, the Department of Labor promulgated a new Rule that would expand the ability of small employers and individuals to form AHPs. Once formed, the members of these AHPs would be able to avoid providing certain protections that the Affordable Care Act (ACA) required small-employer and individual health plans to provide, like the requirements that they provide essential health benefits and that they not discriminate on certain specified bases. In July 2018, eleven states and the District of Columbia filed a complaint in the U.S. District Court for the District of Columbia, alleging that the Department of Labor’s new Rule is unlawful. The Department of Justice filed a motion for summary judgment, and CAC filed a brief on behalf of Members of Congress as amici curiae in support of the plaintiffs.

Our brief argues that the Department of Labor’s Rule is inconsistent with the text, structure, and history of the ACA, and is therefore unlawful. First, the brief argues that the Rule violates the text of the ACA, which defines a large employer as having more than 50 employees. The new Rule treats AHPs as large employers even though the member employers in the AHP do not meet the ACA’s requirement of having more than 50 employees. In addition, self-employed individuals with zero employees are also treated as employers, which is at odds with the ACA’s requirement that the term “employer” “shall include only employers of two or more employees.”

Second, the brief argues that the new Rule is at odds with the purpose of the ACA. Congress specifically created the ACA to distinguish between individual and small group markets on the one hand, and large employers on the other, after finding that prior to the Act’s passage, the former failed to provide certain important benefits and tended to charge higher premiums. The Department of Labor’s new Rule contravenes Congress’s plan by allowing small employers and individuals to band together in AHPs, thus exempting them from both small-group and individual plan requirements, as well as avoiding the employer mandate that applies only to large employers.

Finally, the Rule is at odds with the history of the ACA’s enactment because Congress considered and rejected an amendment permitting AHPs in drafting the ACA, and it also rejected similar proposals in the years before the ACA’s passage.

In March 2019, the district court held that the rule promulgated by the Department of Labor is unlawful. Echoing our argument that the Rule is not consistent with the ACA, the opinion explains that the Department’s interpretation of the word “employer” is “clearly an end-run around the ACA.”  It also concludes that the Rule’s definition of “employer” is at odds with the text and purpose of another federal law called the Employee Retirement Income Security Act of 1974, which governs employee benefit plans.

Case Timeline

  • November 29, 2018

    CAC files amicus brief

    D.D.C. Amicus Brief
  • January 24, 2019

    The district court hears oral arguments

  • March 28, 2019

    The district court issues its decision