The U.S. Department of Labor (DOL) says it disagrees with the district court’s ruling in The State of New York v. United States Department of Labor vacating portions of the department’s final rule on association health plans (AHPs), and the U.S. Department of Justice filed an appeal on April 26.
The DOL has issued a policy statement which provides that for an interim period of time, it will not pursue enforcement actions against parties 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. Nor will it 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.
A statement from the DOL’s Employee Benefits Security Administration (EBSA) says, “The Department recognizes that many businesses and employees have obtained health coverage from AHPs in reliance on the final rule before the district court ruling. Many of these businesses and employees have advised the Department that they are concerned that their health coverage must terminate, which will cause significant disruption.” It adds, “The Department is committed to taking all appropriate action within its legal authority to minimize undue consequences on employees and their families. Employers participating in insured AHPs can generally maintain that coverage through the end of the plan year or, if later, the contract term.”
According to the EBSA, the Department of Health and Human Services (HHS) advised the DOL that employer members of an insured AHP have an independent right under the guaranteed renewability provision of the Public Health Service Act (PHS Act) to continue insurance coverage (including maintaining all out-of-pocket accumulators for employees and their families) through the end of the applicable plan year, unless an exception applies.HHS has advised the DOL that HHS will not pursue enforcement against nonfederal governmental plans or health insurance issuers for potential violations of title XXVII of the PHS Act caused by actions taken before the district court’s decision in good faith reliance on the rule’s validity, through the remainder of the applicable plan year or contract term that was in force at the time of the district court’s decision. HHS has also advised the DOL that it will not consider states to not be substantially enforcing the applicable requirements under title XXVII of the PHS Act in cases where the state adopts a similar approach with respect to health insurance coverage issued within the state.