The ERISA Edit: ACA Preventive Services Mandate Remains in Effect Through Appeal
Employee Benefits Alert
Fifth Circuit Approves Braidwood Parties' Stipulation to Stay District Court Injunction
On June 13, 2023, the U.S. Court of Appeals for the Fifth Circuit Court stayed, in part, a lower court order that had partly vacated the Affordable Care Act's (ACA) preventive services mandate and enjoined the federal government from enforcing the U.S. Preventive Services Task Force's (PSTF) recommendations nationwide. Braidwood Mgmt., Inc. v. Becerra (No. 23-10326) (5th Cir., June 13, 2023). The Fifth Circuit issued the stay in response to the parties' Joint Stipulation and Proposed Order (Stipulation), filed on June 12, 2023.
Initially, the government sought a stay of the provisions of the district court's order that extended beyond the parties in the case and could impact ACA preventive services coverage for more than 150 million Americans. The plaintiffs opposed the government's request, and numerous amici, including many health advocates and medical associations, weighed in. After oral argument on the stay request on June 6, 2023, the Fifth Circuit sent the parties home with instructions to try to reach a compromise.
According to the parties' Stipulation, the plaintiffs determined that, under applicable law, despite the district court's nationwide order and remedy, they and others, including private insurers, face the potential of government enforcement actions and statutory penalties if they decide not to cover the PSTF-recommended preventive services (which the district court's decision allowed them to do) and that decision is later overturned on appeal. Plaintiff Braidwood Management, Inc., for example, stated that it "is unwilling to change its self-funded plan to exclude or limit coverage of preventive care recommended by the [PSTF] until the appeals process becomes final, or unless defendants commit to not seek statutory penalties or pursue enforcement action."
In the Stipulation, the government agreed to do just that, in exchange for the plaintiffs' consent to its partial stay motion, thereby limiting the reach of the district's court decision to only the parties in the case while the appeals proceed. The government stipulated that it would not seek penalties or take enforcement action against Braidwood for its refusal to cover the PSTF-recommended preventive care at issue (HIV-related preexposure prophylaxis (PrEP) drugs) through the time the Fifth Circuit issues a decision on the merits. The government also agreed that, until the Fifth Circuit issues its decision, it would not take any enforcement action against any Texas-based insurance issuer for offering to the individual plaintiffs a plan that excludes PrEP drugs or against the individual plaintiffs themselves for purchasing such a plan.
At the moment, the ACA's preventive services mandate, including the provisions relating to the PSTF's recommendations, remains in full force for all issuers, policies, and plans, other than those involving the Braidwood plaintiffs, at least until the Fifth Circuit issues its decision, which is not expected until sometime in 2024. The court set a briefing schedule with the following key dates:
- Amicus briefs in support of government: June 27, 2023
- Amicus briefs in support of plaintiffs: August 14, 2023
- Amicus briefs in support of government on issues raised in plaintiffs' cross-appeal: October 6, 2023
Briefing is scheduled to conclude in early November 2023.
Eighth Circuit 'Takes Another Look at Standing in Claims Against Former TPAs
In Shafer v. Zimmerman Transfer, Inc., No. 22-2275 (8th Cir. June 7, 2023), the plaintiff began working for his employer, Zimmerman Transfer, a few months after undergoing bariatric surgery. The plaintiff also became a participant in Zimmerman's self-insured employee benefit plan (Plan), which was administered at the time by Benefit Plan Administrators of Eau Claire, LLC (BPA).
A couple of years later, the plaintiff went to the emergency room with abdominal pain and other symptoms and ultimately required surgery to repair a bowel obstruction. Although BPA initially precertified the treatment, it later denied the plaintiff's claim for benefits, which were attributed to his years-earlier bariatric surgery, because the Plan did not cover treatment in connection with weight reduction or treatment due to complications of a non-covered expense. After several rounds of independent medical review, the status of his claim did not change, so the plaintiff brought suit in federal court against Zimmerman and BPA pursuant to ERISA § 502(a)(1)(B) to recover benefits he asserted were due to him.
The district court granted summary judgment in favor of Zimmerman and BPA and the plaintiff appealed. As a threshold matter, BPA argued that the plaintiff lacked standing to sue because it was no longer the Plan's third-party administrator (TPA), so his injury — being denied benefits — was no longer redressable by BPA. The Eighth Circuit, however, distinguished between claims-processing rules and limitations on subject-matter jurisdiction and pointed to Arbaugh v. Y&H Corporation, 546 U.S. 500, 516 (2006), where the Supreme Court held that "when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restrictions as nonjurisdictional in character." According to the Eighth Circuit, after Arbaugh, "the fact that a plan participant might not be able to enforce a money judgment against a former [TPA] does not mean that he lacks standing to sue that defendant."
The Eighth Circuit then reviewed de novo the district court's summary judgment decision, which hinged on whether the plan administrator's interpretation of the plan was reasonable. The plaintiff argued, among other things, that Zimmerman and BPA were required to cover his emergency treatment under Iowa state law and an implementing regulation of the ACA. The Eighth Circuit disagreed: "Those provisions do not require that a plan cover all emergency services; rather, they require plans that already cover emergency services to satisfy additional requirements like covering out-of-network treatment." According to the court, because the plaintiff's plan specifically excluded coverage of treatment for complications of weight-reduction surgery, neither Iowa law nor the ACA required that his treatment be covered.
The court's decision on standing contrasts starkly with Hall v. LHACO, 140 F.3d 1190, (8th Cir. 1998), where the court held that a plan participant lacked standing to pursue a denial of benefits claim against a former TPA. Also significant is the court's interpretation of the ACA's patient protection provision, 45 C.F.R. § 147.138(b)(2)(v)(A), to allow plan exclusions to trump the ACA's emergency services coverage requirements.
EBSA Announces Spring 2023 Regulatory Agenda
The U.S. Department of Labor (DOL) has published its Spring 2023 regulatory agenda. Here are some takeaways concerning upcoming rulemaking by the Employee Benefits Security Administration (EBSA).
- The following items are in the final rule stage, as they were at the time the Fall 2022 regulatory agenda was published earlier this year:
- Prohibited Transaction Exemption Procedures
- Amendment of Abandoned Plan Program
- Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement
- The number of items in the proposed rule stage has expanded to include:
- Adoption of Amended and Restated Voluntary Fiduciary Correction Program
- Improvement of the Form 5500 Series
- Conflict of Interest in Investment Advice
- Provider Non-Discrimination Requirements
- Mental Health Parity and Addiction Equity Act
- Short-Term Limited Duration Insurance
- Coverage of Certain Preventive Services Under the ACA
- Requirement Related to Advanced Explanation of Benefits (EOB)
- Association Health Plans
- Independent Dispute Resolution Operations
- EBSA has added the following topics to its regulatory agenda at the pre-rule stage:
- Emergency Savings Accounts Linked to Individual Account Plans
- Plan Reporting for Retirement Savings Lost and Found
- Worker Ownership, Readiness, and Knowledge
- Exemption for Certain Automatic Portability Transactions
- Review of Pension Risk Transfer Interpretive Bulletin 95-1
We will continue to report on these new proposals and other EBSA regulatory activities, so stay tuned.
The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.
This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.