Federal shutdown delays some healthcare lawsuits while others proceed

(Updated on Jan. 12)

Several major healthcare lawsuits are moving ahead despite the partial federal government shutdown, while federal judges have delayed others.

Oral arguments in several cases remain on track this month, even though the shutdown has cut off funding for the U.S. Department of Justice. The agencies' attorneys are prohibited from working on civil cases except in very limited circumstances.

The pending cases include litigation over the Affordable Care Act, Trump administration rules on short-term and association health plans, and Medicaid work requirements in Arkansas and Kentucky. Other cases involve ACA cost-sharing reductions and risk adjustment.

In addition, U.S. District Judge Richard Leon in Washington, D.C., is reviewing a consent decree approved by the Justice Department allowing the $69 billion merger between CVS Health and Aetna to proceed. The Justice Department indicated it would need until February to respond to public comments about the merger due to the shutdown. But on Friday, Leon angrily denied the department's motion to halt its consideration of the public comments until the shutdown ends.

"In short, the Government's internal, political squabble over funding is NO reason to postpone the congressionally mandated evaluation of the Government's proposal to remedy the antitrust concerns allegedly raised by the merger's consummation!" Leon wrote.

As of Friday, there was no end in sight to the political standoff between President Donald Trump and congressional Democratic leaders over Trump's demand for funding to build a wall on the U.S.-Mexico border. That impasse has blocked appropriations for the Justice Department and other federal agencies.

"Most of the parties that have sued oppose the delays, arguing that this creates uncertainty," said Katie Keith, a professor at Georgetown University's Center on Health Insurance Reforms, who is tracking these cases. "But maybe the shutdown will end and none of this matters much."

Texas v. Azar lawsuit over the ACA's constitutionality

The 5th U.S. Circuit Court of Appeals on Friday granted a Justice Department request to delay the case after the U.S. House of Representatives' asked to intervene.

U.S. District Judge Reed O'Connor in Fort Worth ruled last month that the law is unconstitutional because Congress repealed its individual mandate tax penalty in 2017. A group of 20 Republican attorneys general initially sued to strike down the ACA, a group of Democrat state lawyers are defending the statute.

Maryland ACA constitutionality case

U.S. District Judge Ellen Hollander in Baltimore denied a Justice Department request to stay a lawsuit brought by Maryland Attorney General Brian Frosh seeking a declaratory judgment that the ACA is constitutional and that the Trump administration must enforce it. On Wednesday, she received briefings from both sides on whether Maryland has legal standing to bring the suit.

Association health plans

U.S. District Judge John Bates in Washington, D.C. has ordered oral arguments to go ahead on Jan. 24 in a lawsuit filed by Democratic attorneys general challenging a Trump administration rule making it easier for small firms and individuals to band together in association health plans free from many Affordable Care Act rules.

The suit, filed last July, alleges the U.S. Department of Labor's final rule last June violated the ACA, the Administrative Procedure Act and the Employee Retirement Income Security Act.

ACA cost-sharing payments

Oral arguments are scheduled to go ahead in several cases brought by insurers to recover ACA cost-sharing reduction payments that the Trump administration halted in 2017.

Judge Margaret Sweeney of the U.S. Court of Federal Claims has scheduled arguments on Jan. 29 in three of the cases. Those include a class action involving more than 90 insurers, brought by Common Ground Healthcare Cooperative, and two separate cases brought by Maine Community Health Options and Community Health Choice.

On Jan. 4, Judge Thomas Wheeler of the U.S. Court of Federal Claims heard arguments in a separate case brought by the L.A. Care Health Plan over CSR payments. He did not indicate when he would issue an opinion.

Short-term plans

On Dec. 31, Judge Leon granted the Justice Department's request for a stay in a lawsuit brought by healthcare industry and advocacy groups last September to block the Trump administration's rule expanding the availability of short-term health plans that don't comply with ACA consumer protection rules for the individual market.

The Association for Community Affiliated Plans, the American Psychiatric Association and several other groups alleged that the rule flies in the face of the intent of the ACA to make low-cost comprehensive insurance available to Americans.

Leon asked both sides for a status report within 14 days.

Margaret Murray, CEO of the Association for Community Affiliated Plans, lamented the delay in the case. "Plans need to start their applications for 2020 and begin work on pricing," she said. "Clarity on the question of these short-term plans will help them make informed decisions."

Medicaid work requirement waivers

U.S. District Judge James Boasberg in Washington granted the Justice Department's request for a delay on its brief in a case challenging the CMS' approval of Arkansas' Medicaid work requirement waiver.

Nearly 17,000 low-income Arkansas adults were disenrolled from the Medicaid last year due to the new requirements, and thousands more are expected to lose coverage this year.

Kevin De Liban, an attorney for Legal Aid of Arkansas, said he did not expect the stay to push the court's ruling beyond March 31, the date when Arkansas Medicaid enrollees could start losing coverage for non-compliance with the state's work and reporting requirements in 2019.

Boasberg, who last June blocked the CMS' approval for Kentucky's Medicaid work requirement waiver in a similar lawsuit, has not changed the briefing schedule in that case, which is still before the court.

After his ruling, Kentucky held a new public comment period on the waiver proposal, and the CMS re-approved it in largely identical form. The advocacy groups plan to file an amended complaint on Jan. 14, said Jane Perkins, legal director of the National Health Law Program.