Health Care in the Courts

Note: This is an unedited transcript. For direct quotes, please see video at: https://www.youtube.com/watch?v=uzmvQkwS4Hw 

Sarah Dash:                        Good afternoon, or good morning for those joining us from the West Coast and welcome to Alliance for Health Policies Webinar on Health Care in the Courts. Part of our Beyond the Beltway Health Webinars for Journalists Series. Sarah Dash:                        I am Sarah Dash, President and CEO of the Alliance for Health Policy and I will be moderating today’s discussion. Sarah Dash:                        For those who are not familiar with the Alliance, we are a nonpartisan organization dedicated to advancing knowledge and understanding of health policy issues. We do not lobby, advocate, or take any policy regulatory or legal positions ourselves. Our intention is to educate the health policy community on the issues. Sarah Dash:                        Today we will be unpacking the many active healthcare cases regarding the affordable care act and related regulations and we’re going to take a closer look at the legal and policy implications that they may have. Sarah Dash:                        You will hear from two excellent speakers whom I will introduce in a moment. Each of them brings a different perspective to this discussion. We are very grateful to have them shed some light on this critical and evolving topic. Sarah Dash:                        The Alliance for Health Policy gratefully acknowledges the National Institute for Health Care Management Foundation for supporting this series. If you are interested in joining the Twitter conversation use the #allhealthlive and follow @Allhealthpolicy. Sarah Dash:                        Before we get started with the program I’d like to briefly orient all of you to the go-to webinar platform and review some technical notes. We’ve taken a screenshot of the attendee interface. You should see something that looks like this on your own computer or desktop in the upper right corner. You can click the orange arrow to minimize and maximize this menu. Sarah Dash:                        When you joined today’s webinar you were muted and you will be throughout the presentation. Please use the question panel to chat with us about any technical issues you may be experiencing. You may also send in questions that you have for the panelist at any time. We will collect these and address them during the Q&A session. Sarah Dash:                        Finally, presentation slides and other materials are available to download in the handout section of your attendee interface. Sarah Dash:                                  Finally, on our website allhealthpolicy.org you’ll find all of the additional materials that accompany this webinar including a resource list, expert list, and speaker biographies. A recording of today’s webinar will be available there soon as well. Sarah Dash:                        Next, let’s move to the agenda for our conversation today. Each of the panelists will give some opening remarks and outline the current court cases. Then we have saved plenty of time for Q&A. Sarah Dash:                        Here is our esteemed panel of experts. Joining us today we have Timothy Jost, Emeritus Professor at the Washington and Lee University School of Law. Tim has written numerous monographs on legal issues and health care reform for national organizations and until this year blogged regularly for Health Affairs covering nearly every ACA regulation that came out. We are grateful to have him here with us to give us a broad introduction to the current health care law landscape. Sarah Dash:                        Next, we will hear from Mary Anne Pazanowski Pazanowski, a legal reporter with Bloomberg Law. Mary Anne Pazanowski’s beat include litigation surrounding the Affordable Care Act and its repeal, health industry transactions, and state and federal regulation of health care providers. We are fortunate to have her expertise with us today. Sarah Dash:                        With that, I will turn it over to Tim to get us started. Timothy Jost:                     Thank you very much. First slide please. The first lawsuits … Next slide. The first lawsuits involving the Affordable Care Act were filed within minutes of its signing and lawsuits have been coming steadily ever since. If one counts lawsuits involving the contraceptive services rules promulgated under the ACA’s preventative services requirement, there have been well over 100 lawsuits involving the ACA, 4 of which have reached the Supreme Court. Timothy Jost:                     In the next few minutes I will give you a thumbnail sketch of lawsuits currently pending, which I will place in three categories, lawsuits challenging the ACA itself or policies promulgated by the Obama administration under the ACA, lawsuits challenging Trump administration policies related to the ACA, and lawsuits brought by insurers mainly in the court of claims trying to recover damages they have suffered because of policy changes under the ACA. Timothy Jost:                     I’m not really an expert on Medicaid and do not intend to cover Medicaid cases. Mary Anne Pazanowski will talk about some of them, although I do have some familiarity with them and will be happy to answer questions. Timothy Jost:                     Next slide. The most important currently pending challenge to the ACA is the lawsuit that has been brought by the Attorney General of Texas joined by AGs and governors of 19 other Republican-led states claiming that the ACA is currently unconstitutional and should be invalidated. Texas claims that the Supreme Court held in 2012 that the individual mandate was unconstitutional as a legal requirement but upheld it as a tax that the 2017 tax bill zeros out that tax as of 2019, so that the mandate will be totally unconstitutional and that the entire ACA collapses once the mandate is removed. Timothy Jost:                     Much to everyone’s surprise, including apparently its own career lawyers, the Department of Justice decided to side with Texas on the constitutionality of the mandate, but said that only the ACA’s guaranteed issue and community rating requirements and preexisting condition exclusion ban should go with it. AGs from California and 16 other Democratic-led states has intervened to defend the ACA. Timothy Jost:                     At the oral argument on September 5, Judge O’Connor who is no friend of the ACA, demonstrated a strong inclination to invalidate at least the guaranteed issue community rating and preexisting condition exclusion ban. The DOJ, the Department of Justice, however, seemed to be having cold feet urging him to not do anything precipitance that would cause “chaos in insurance markets” and presumably also chaos in the midterms. Timothy Jost:                     Two other important cases challenging Obama-era regulations are pending also in the Texas courtroom of Judge O’Connor, who seems to be the go-to judge for plaintiffs challenging the ACA. Timothy Jost:                     In the first case, Judge O’Connor invalidated the Obama-era Section 1557 rules prohibiting discrimination against transgender persons or persons who have had an abortion. Judge O’Connor refused to allow the organizations to intervene that thought to defend the rule or to enter a final judgment on their request so they could appeal. The Department of Justice is currently drafting new rules that will presumably not protect transgender individuals. However, a number of courts, including two in the past couple of weeks, have held that Section 1557 does prohibit discrimination against transgender individuals and any rules promulgated by the Trump administration to the contrary are likely to be challenged. Timothy Jost:                     In the other case, Judge O’Connor invalidated a rule that requires state Medicaid programs to reimburse Medicaid managed care plans that must pay the ACA’s health insurance provider tax. He also ordered the federal government to “equitably disgorge,” which means pay back the money the states had paid in taxes. This ruling, which could award up to $840 million to the plaintiff’s states and is based on some very, very old law, will be appealed by the United States and is almost certain to be overturned. Timothy Jost:                     Next slide, conflicting district court decisions have been issues in lawsuits challenging the risk adjustment transfer formula used by HHS in 2017 and 2018 to move funds from insurers that cover healthy populations to those that cover enrollees with more medical problems. The court in Massachusetts upheld the rule, but a court in New Mexico vacated it for lack of sufficient explanation. After a week or so of confusion mid-summer HHS republished the rule which should satisfy the court with added and additional explanation. Timothy Jost:                     Another rule that the Trump administration is reconsidering is that governing employer wellness programs, which a court has vacated as of next year pending reconsideration by federal departments. Timothy Jost:                     Next slide, the first round of cases brought by Democratic Attorney’s General were filed in 2017 against the Trump administration’s contraceptive rule. The Trump interim final rule allowed any employer, school, insurer, or insured individual to opt out of covering contraceptive coverage or purchasing coverage of contraceptives if the institutional or individual objected to contraceptives for any religious or moral reason. That rule provoked four lawsuits by several Democratic states and an injunction blocking the Trump rule and reinstating the Obama administration contraceptive rule is currently in place and on appeal. Timothy Jost:                     Also in 2017, California and 18 other states filed a lawsuit challenging the Trump administration’s termination of cost-sharing reduction payments in October of 2017. Virtually all states allowed insurers to raise benchmark planned premiums to cover the cost of the cost-sharing reductions and the judge in the California case ruled that no one was really injured and therefore an injunction or an order to block the rule was not warranted. The California case has been dismissed without prejudice which means it could be revived if the administration changes its policies and prohibits insurers from covering their cost sharing reductions by increasing premiums. Timothy Jost:                     Attorney’s General from New York, Massachusetts and 10 other states have filed a lawsuit challenging the Trump administration’s regulation broadening the rules governing sponsorship of Association health plans. They claim that the Trump rule violates the Affordable Care Act, ERISA and the Administrative Procedure’s Act. Among other claims the lawsuit assets that the ACA clearly distinguishes between the individual, small group, and large group markets and has different rules for each, as well as clear rules to aggregate groups and that do not allow small groups to be aggregated to form large groups through Association health plans. The states have moved for summary judgment and that motion is being briefed. Timothy Jost:                     Next slide. On September 13th, 2018, organizations representing community insurers, psychiatrists, and patients filed a lawsuit in federal court challenging the Trump administration’s short-term limited duration rule. That complaint alledges that the rule’s definition of short-term as lasting up to 364 days and has limited duration as lasting up to 36 months violates the ACA and that the rule is arbitrary and capricious, and not supported by reason, explanation, or adequate notice, and thus violates the APA. The plaintiffs ask that the rule be declared invalid and enjoined. Timothy Jost:                     The broadest challenge to the Trump administration stewardship of the ACA is a lawsuit brought by the cities of Chicago, Columbus, Cincinnati, Baltimore, and a couple of individuals that asserts that the Trump administrations actions and regulations have violated the Affordable Care Act in a host of ways and also violates the Take Care clause of the Constitution, which requires the president to take care that the laws be faithfully executed. Although there is little precedent for a Take Care lawsuit, it is also hard to think of a situation where the president has to blatantly and publicly asserted opposition to the implementation of the law. Timothy Jost:                     On September 13th also, the Maryland Attorney General filed a lawsuit in the federal district court in Maryland asking the court to declare the ACA’s individual responsibility provision to be constitutional or failing that to hold it to be independent of the rest of the ACA. The complaint notes this is basically the reverse of the case that is being litigated in Texas. The complaint notes that the refusal of the Department of Justice to fully defend the ACA in the Texas case and the serious harm that would be done to Maryland if the ACA were invalidated, and also points to instances where the Trump administration has used pending litigation as an excuse to make policy changes it could not otherwise make. Timothy Jost:                     Final slide, finally a host of cases continue in the court of claims brought by insurers challenging the failure of the government to reimburse them under the risk corridor program which was partially defunded by Congress in 2014. Under President Trump’s cut-off of cost-sharing reduction payments in 2017, the federal court of appeals decided against the insurers in a two-to-one decision on a risk corridor case this summer the insurers have asked the full federal circuit to re-hear the case en banc. Timothy Jost:                     A recent court of claims decision held that a Montana co-op was entitled to cost-sharing reduction payments withheld by the Trump administration in 2017. Other cases are pending on this issue and this judgment could result in millions of dollars in judgments against the United States. Timothy Jost:                     Thank you and I’ll turn it over to Mary Anne Pazanowski. Mary Anne Pazanowski:         Hi everyone. My name is Mary Anna Pazanowski. I am a legal reporter for Bloomberg Law. I’ve been covering health care for about 11 years now. For the past eight of those years the Affordable Care Act has been a big part of that coverage. Mary Anne Pazanowski:         Couple of caveats, my beat is health care litigation, that is I jump in whenever a court is asked to rule on a health care related subject, not necessarily ACA or Medicaid, but those are part of my beat. I don’t cover Congress, I don’t cover the agencies except to the extent that they are involved in any litigation. Mary Anne Pazanowski:         We first really became aware of litigation involving the ACA almost immediately after President Obama signed the legislation, as Tim said earlier. Those earlier cases we farmed out to correspondents because we weren’t sure they really had any legs. We hadn’t seen anything done on this scale before. I took over when it really appeared that the cases were going to go somewhere and that was in November 2010. Those early cases, that Tim talked about of course, Florida versus HHS, National Federation of Independent Business versus Sibelius, which is of course the one that actually got decided in the Supreme Court. There were a couple of other states, Virginia, for example, that filed lawsuits also seeking to hold the Affordable Care Act unconstitutional. Failing that, the individual mandate, which is the section that requires everyone to have health insurance or pay a fine, NFIB of course held that fine as a tax and Congress had the authority to … Oh I’m sorry, can we put my slides up? Mary Anne Pazanowski:         Yeah thank you. Congress had the authority under the Tax and Spending Clause of the Constitution to go ahead and enact that legislation. Mary Anne Pazanowski:         Couple of things, now of course we have 2018 and 20 states sued the government in federal district court in Texas saying the ACA is unconstitutional because that tax has been repealed, almost the exact opposite of what the Supreme Court decided, well not all, is the exact opposite of what the Supreme Court decided. They’re trying to use the Supreme Court’s ruling against it. Mary Anne Pazanowski:         A couple of interesting aspects of this case … Can we change slides now? I am paid to ask questions. So these are a couple of things that I’ve seen in that Texas case that I think deserve noting or maybe subsequent reporting is needed on these. One is just the huge coordinated effort by states. We have 20 red states brought this suit in Texas, 16 states, including the District of Columbia, intervened to defend the ACA after the Department of Justice said it wouldn’t. Mary Anne Pazanowski:         There are a couple of other cases on this slide. Also, you can see that many, many, many states that are involved in these and they are almost evenly split. Mary Anne Pazanowski:         If we go to the next slide you can see this red/blue state split is very apparent. Planned Parenthood versus Himes, that is not an ACA case, but I want to talk about that a little bit too because I think it’s an important policy case. Mary Anne Pazanowski:         The other thing we’re seeing in these cases is the Department of Justice openly opposing federal law saying it won’t defend the federal law or regulations, happened in both Texas versus Azar and Franciscan Alliance, as Tim said. Mary Anne Pazanowski:         The next is judge-shopping. Texas versus Azar and Franciscan Alliance again are primary examples. They were both filed in the northern district of Texas in I believe the Abilene division which has only one federal judge and that is Reed O’Connor who is not a friend of the ACA, as Tim also said. Mary Anne Pazanowski:         Can we go to the next slide, please? Before we get to the Medicaid litigation, I did mix slides on these because I believed that somebody else was going to be covering them, but the risk corridor and the cost-sharing reduction cases, my question here really is what do these mean for insurers, what do these mean for individuals. A lot of people have speculated that if insurers don’t receive the cost reduction payments or their risk corridor payments, which, by the way, are in the billions and billions of dollars, I think $7 billion was the last figure I heard, what’s going to happen, are they going to raise premiums to the extent that people can’t afford to buy insurance? Insurance rates right now I think are running about the same as they were in 2017 for the 2019 sign ups. They expect to be about the same as the 2018 sign ups. Mary Anne Pazanowski:         The silver loading, which is a way that the states that were involved in the California cost-sharing litigation against the government have used to make up for the money they’re losing and that involves putting higher premiums on the middle tier or silver plans. Well what that has done is it’s enabled a lot of people to instead buy gold plans at a lower premium rate because they’re getting tax credit, they qualify for tax credits from the federal government. That will help defer the extra cost of the gold plan, or they can get bronze plans, the lower tier for pretty much nothing. Mary Anne Pazanowski:         Let’s see, moving on to the Medicaid litigation, the most important cases out there in my mind at the moment are these cases in which Planned Parenthood affiliates have sued states that want to kick Planned Parenthood off of their Medicaid roles. Again, this looks like a blue state/red state thing. The states that have planned or put out policies to stop paying Medicaid money to Planner Parenthood affiliates include Alabama, Arizona, Arkansas, Indiana, Kansas, Louisiana, South Carolina, and Texas. I think all of those have been challenged in federal courts. They’ve gone up to the federal appeals courts and so far four or five of them have said, “No state, you can’t do that. You have to continue operating your Medicaid program with Planned Parenthood in place.” Only one federal court, the 8th Circuit said Arkansas could remove Planned Parenthood from its Medicaid role. Mary Anne Pazanowski:         These cases are already at the Supreme Court, several of those were denied review last year and the past couple of years. There are two cases that went to conference yesterday, that means the justices talked about them, or supposedly talked about them at their first big meeting which took place on Monday the 24th. We could know tomorrow, yes, Thursday, if the Supreme Court has decided that it wants to consider these cases. Grants are expected on Thursday. If the Supreme Court decides it’s not going to hear these cases we won’t find that out until Monday the 1st. In all likelihood they could also relist those cases. The two, by the way, that are up there right now are Kansas and Louisiana. The issue involved is whether there is a private right of action to enforce a provision known as the free choice of provider provision. That provision says that individuals who are Medicaid beneficiaries have the right to choose their provider unless that provider isn’t qualified for some medical reason. Planned Parenthood providers are qualified for those reasons, it’s just the states wanted to kick them off because they don’t want any of their taxpayer money going to fund abortions. Mary Anne Pazanowski:         Let’s see, that’s two. Okay, I think that’s … Oh, there also are a couple of work requirement cases that are making their way up through the courts right now. I don’t have a whole lot of information about work requirements, because again, that’s a policy issue that I don’t really follow, but the one case that’s most important I don’t think I have a slide on it, is Stewart versus Azar, this was in the district court in the District of Columbia. The court said the HHS secretary exceeded his authority when he granted a Medicaid waiver that allowed Kentucky to adopt work requirements for its citizens who are Medicaid. The secretary reopened the comment period, the comments were overwhelmingly negative according to what I’ve heard. I don’t know exactly where that case is going. As far as the future of some of these cases, as I said, we will know hopefully within the next week or so whether the Supreme Court is going to hear the Planned Parenthood and Medicaid cases. I think Azar versus Texas could eventually wind up in the Supreme Court, although it’s going to take a long time before it gets there. It has to go from Judge O’Connor to the 5th Circuit, and from the 5th Circuit possibly up to the Supreme Court from there. Mary Anne Pazanowski:         The cost-sharing reduction cases, one of the individual insurers just won a case interestingly enough on the same reasoning that prevailed in the risk corridor cases. That is, in these risk corridor cases the case, federal circuit said that the statute required the government to make those payments to the insurers, but Congress had changed the rules. It decided that that provision was going to be budget neutral, which meant that the government could only pay out as much money as it took in from insurers that made a profit. Mary Anne Pazanowski:         In the cost-sharing reduction case the judge who decided that just a couple of weeks ago said well that who uses the same must make payments language as the risk corridor cases so under the Moda ruling we have to rule for the insurer there. Congress didn’t go back and revisit that, as they did there was no budget neutral requirement for those payments. Mary Anne Pazanowski:         For all the journalists out there, the important thing is really to just think about what questions you want to ask. If these 1515 regulations go away what happens, does that mean that the anti-discrimination rule is no longer in effect? Several courts actually have said that, “Well no, there’s still cause of action under the statute itself.” Mary Anne Pazanowski:         For Medicaid, if the Supreme Court takes it and it rules against Planned Parenthood then what does that mean for the Medicaid recipients? Are they going to be able to get care? Are they going to be able to afford care? Mary Anne Pazanowski:         Quickly about Planned Parenthood of Great Ohio versus Himes, which was on one of my earlier slides, Ohio passed a law saying that the Department of Health could not pass on its federal grant money to any recipient that performed abortions or advocated for abortions. The 3 judge panel 6th Circuit held that violated the Unconstitutional Conditionals Clause of the Constitution. I’m sorry, there is not Unconstitutional Clause, it just imposed unconstitutional conditions on the recipient of a federal grant, can’t do that. Ohio petitioned for rehearing en banc. The DOJ joined the request for en banc rehearing and argued in amicus brief that this law should be upheld. There should be a hearing coming up on the en banc request within the next couple of weeks. Mary Anne Pazanowski:         Okay, that’s all I have to say. Take it back please Sarah. Timothy Jost:                     Sarah, we can’t hear you. Sarah Dash:                        Sorry about that everybody. All right, now we’re good to go. Sarah Dash:                        Thank you Tim and thank you Mary Anne Pazanowski for those opening remarks and for that overview of what is a tremendous amount of volume of court cases. I can see we already have a lot of questions to explore this topic further. Sarah Dash:                        As a reminder, if you’re watching us you can still submit questions through the question panel in your attendee control panels. Sarah Dash:                        Let me start by asking Tim and Mary Anne Pazanowski both, talk a little bit about the intersectionality of any of these cases. Is there a question of if one case goes one way then that could affect the way that other cases go and what impact could that have on the on the ground in terms of what happens in the policy or practical context. Timothy Jost:                     Well one of the most obvious examples of that is the Texas case and the Maryland case because in the Texas case the Republic state AGs are asking the court to hold that the individual mandate is unconstitutional and therefore the rest of the act is void, whereas, in the Maryland case, Maryland is asking the Maryland court to hold that the individual mandate is constitutional and that in any event, the rest of the ACA is severable from the individual mandate and therefore should be upheld. I think it does illustrate I think an increasingly important aspect in these cases, which is forum shopping. Texas has been quite successful in getting it’s cases before Judge O’Connor and a couple of other judges in Texas who have demonstrated a very, very strong predisposition to rule against the Affordable Care Act whenever they can. Now I think the Democratic states are starting to file cases in districts where they feel that the judges are likely to be more friendly. We have the possibility of battling injunctions I suppose. I think that’s one illustration of that. Timothy Jost:                     The other thing is, and I strongly affirm what Mary Anne Pazanowski has said, that the most important cases right now are these two circ petitions that the court presumably considered, the Supreme Court presumably considered on Monday and we may hear from them on Thursday involving the lawsuits brought by Medicaid recipients to enforce the free choice of provider provision of the Medicaid statute and ensure that Planned Parenthood continues to be available as a provider of family planning services, of Medicaid services in their state. The court could deny in these cases and not hear them, in which case, we would continue to have a situation where in most parts of the country Planned Parenthood is available but not in Arkansas or in the 8th Circuit, or they could take the case and decide it on some fairly narrow grounds like judge say that particular statutory provision is not enforceable by recipients or the court could take it and enter a very, very broad ruling that recipients can’t enforce any part of the Medicaid statute, which I think would be a very dramatic change in the law and would basically mean that states can do anything they want as long as they have a sympathetic federal HHS. I think the decision in that case could affect many other cases that have been brought or could be brought by Medicaid recipients to enforce federal law when states fail to follow federal law. Mary Anne Pazanowski:         Right, I agree with Tim there. I think the Medicaid cases are probably the most significant at the moment. I’ve been told that cases involving different provisions in the Medicaid act are very provision specific and very fact specific. Some of my sources have said they don’t expect the Supreme Court, assuming it takes the case, to issue one of those really broad, really, really broad rulings that no part of the Medicaid act could be enforced by individuals or by beneficiaries. But, if it were to do that, that would be a major, major change in Medicaid law right now. Mary Anne Pazanowski:         As far as other suits, I think the court of claims decision in that cost-sharing suit, that was a Montana health case, the way that the judge in that case took the ruling in Moda Health, which was in favor of the government and against the insurers and turned that back around and said, “Well, but these two provisions of the ACA use the same language and you said that language obligates the government to make these payments.” There’s been no other changes. There was with the risk corridors payments being declared to be budget neutral. I think that’s a very interesting example of where one court’s decision, the federal circuit’s in this case, had a major impact on the case. Mary Anne Pazanowski:         Now, there are lots of other cost-sharing cases making their way up through the claims court, lots of different judges. It’s possible a different judge sitting on that same court could reach the opposite result. Sarah Dash:                        Thank you both. Let me ask another question related to the risk corridor, cost-sharing reduction cases in particular, which is going back to the policy implication and the implication on consumers, can you speak more about the premium implications that these cases might have on plans particularly in the individual market? The question from the audience asks that premiums for families and middle income people who do not qualify for subsidies continue to be pretty high. The question is can you talk more about the premium implications of the court cases and then can you talk about what actions, if any, the states might be taking with respect to premiums? Timothy Jost:                     Well that’s a pretty big question. The- Mary Anne Pazanowski:         I’m going to differ to Tim on that. Timothy Jost:                     Thanks. With respect to the direct consequences, what we’re talking about here are two situations. One was the situation of the risk corridor program, which was a program included in the ACA and which was supposed to share the risk with insurers who entered the program for the first three years. It was pretty uncertain what the market was going to look like, where the premiums had to be set. The idea was that we, the federal government, will share the risk with you if you enter this market, and if you take big losses we’ll help you out, and if you make really big gains then we’ll share those too. It turned out that the insurers had really big losses and few of them made really big gains. Timothy Jost:                     In the meantime, after they had set their rates for the first year the Congress passed the amendment which limited payouts to the amount collected. So the insurers did take some pretty big losses, which I think over 3 years were about $12 billion. Cost-sharing reduction payments, again, the way it works is that insurers reduce cost-sharing for l