Jul 29, 2014

Conflicting Rulings on Health Care Law By Two Federal Appeals Courts

On Tuesday, July 22, two federal appeals courts handed down conflicting rulings on whether the government could help pay health insurance premiums via subsidies for consumers who purchased health insurance through the Affordable Care Act. 

A panel for the United States Court of Appeals for the District of Columbia Circuit ruled that subsidies are not valid for consumers who purchased health insurance through the federal exchange. The Internal Revenue Service had issued a regulation that permitted the subsidies.

In Halbig v. Burwell, the panel of judges for the D.C. Circuit said that the way the law is written allows for subsidies to be distributed to those who purchased health insurance through participating state exchanges, not to those who purchased health insurance through the federal exchange. 36 states opted out of setting up state exchanges.

Conversely, the United States Court of Appeals for the Fourth Circuit in Richmond, Va., upheld the decision that subsidies could be provided to consumers who purchased health insurance on the federal exchange. In King v. Burwell, the Fourth Circuit panel said that it would defer to the I.R.S. because the language of the law on this issue is ambiguous.

It is expected that the Justice Department will ask the full court of the appeals court to review Halbig v. Burwell. If this ruling is upheld, 4.5 million people who signed up for health care insurance through the federal exchange could have their financial assistance cut off.

Due to the conflicting decisions by the two Courts of Appeals, it is anticipated that the issue will be decided ultimately, by the Supreme Court of the United States.

Schenck, Price, Smith & King, LLP will continue to monitor developments on this issue.  If you have any questions or wish to discuss it, contact one of our attorneys in the Health Care Practice Group.