ACA § 1557 (42 U.S.C. § 18116(a)) made several existing non-discrimination laws applicable to “any health program or activity, any part of which is receiving Federal financial assistance, including credits, subsidies or contracts of insurance, or under any program or activity that is administered by an Executive Agency or any entity established under this title,” while also borrowing those laws’ existing enforcement processes. On first reading, § 1557 seemed simpler and less toothy than § 1558, the ACA’s completely new anti-retaliation law (29 U.S.C. § 218C). But the HHS was assigned to write implementing rules, so we suspended judgment.
On August 1, 2013, HHS instead published a summary of its concerns, soliciting comments about these, among others:
- How to distinguish covered health programs and activities from others;
- The nature and severity of existing, systemic discrimination in health programs and activities;
- Requiring communications and services in languages other than English;
- Requiring disability accommodations;
- Requiring compliance self-audits;
- § 1557’s application to programs that serve only one sex;
- The adequacy of private party suits under the existing laws.
HHS has not yet published proposed regulations.
On February 20, 2014, a former U.S. Attorney, aligned with the Lambda Legal Defense and Education Fund, and others, filed East v. Blue Cross and Blue Shield of Louisiana, Et Al., M.D. La. No. 3:14cv0015, a class action accusing the defendants of, among other things, violating § 1557. Our research suggests that this may be the first legal test of § 1557. The Complaint says that the health insurer defendants decided to reject charitable, third party premium payments on behalf of insureds in order to reduce the number of Ryan White AIDS patients, and other sick people, in their risk pools. Here’s the contested policy language, quoted from Complaint ¶ 87:
Premiums are owed by Subscriber. Premiums may not be paid by third parties unless related to the Subscriber by blood or marriage. Premiums may not be paid by Hospitals, Pharmacies, Physicians, automobile insurance carriers or other insurance carriers. Company will not accept premium payments by third parties unless required by law to do so. The fact that We may have previously accepted a premium from an unrelated third party does not mean that we will accept premiums from these parties in the future.
The suit asserts intentional discrimination and disparate impact theories. The Court temporarily ordered continued acceptance of such payments on behalf of the claimants, then dissolved the order after the insurers agreed to do so as a condition of delaying a preliminary injunction hearing (until March 10).
The suit may be dismissed for alleged procedural defects unrelated to the merit of the § 1557 claim. But if not, we may get a thoughtful opinion about whether an individual health insurance policy, not sold through an ACA Exchange, is a health program or activity subject to § 1557 and, if so, whether § 1557 over-rides a facially neutral policy term that prohibits third party premium payments. What the Court says about the Complaint’s disparate impact theory should be particularly interesting.
One of the issues disputed in East is whether HHS, through its sub-agency, CMS, has expressed a regulatory opinion to which courts should defer on the issue of third party premium payments. The insurers find support in a November 2013 regulatory guidance statement that the Complaint says was rendered irrelevant by a February 2014 update of that guidance. HHS has proposed no formal rule addressing this subject. If § 1557 is held broadly to bar such policy terms, the impact on some insurers in some markets might be financially material. Inversely, if such policy terms are broadly enforceable, many impoverished, ill, insureds may become uninsured.