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Regulation and Compliance > State Regulation

ACA Cost-Sharing Reduction Deal Helps States’ Suit Proceed

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The Trump administration, House Republicans and a coalition of Democratic state attorneys general have settled a lawsuit over the legality of the cost-sharing reduction subsidy (CSR) payments. But that doesn’t mean that litigation regarding the Affordable Care Act program is over.

The settlement reached in the case filed in the District of Columbia federal circuit court is apparently due to Trump’s cessation of insurer reimbursements.

“In light of changed circumstances, the House, the agencies and the states have determined to resolve the dispute that is pending,” it said.

Spokeswomen for both California Attorney General Xavier Becerra and New York AG Eric Schneiderman said that the agreement paves the way for the 19 states’ lawsuit aimed at forcing federal regulators to continue paying billions of dollars in cost-sharing reduction payments (CSRs), designed to offset the cost of discounts that insurers were required to give eligible lower-income Americans under the ACA.

(Related: ACA Subsidy Lawsuit Settled by White House, Democrats)

In the House Republicans’ 2014 lawsuit challenging the legality of the cost-sharing reduction payments, U.S. District Judge Rosemary Collyer in Washington, D.C., ruled that the group had standing to do so and that the Obama administration, in the absence of congressional appropriation, unlawfully paid the CSRs. The judge stayed an injunction that would block further payments to insurance companies in order to give the executive branch the opportunity to appeal, which the Obama administration did. A coalition of 19 state AGs led by Becerra and Schneiderman intervened.

While the case was pending in the U.S. Court of Appeals for the District of Columbia Circuit, Trump announced in October that he would end the subsidy payments, prompting the AGs to sue in federal court in California to block such action.

The settlement asks Collyer to vacate her injunction blocking payments of the CSRs. It also states that the parties agree that her ruling that the House had standing to challenge the appropriations remains but does not “control” decisions in future litigation over this issue.

“We believe that California can now move forward with our litigation,” the spokeswoman for Becerra said.

The judge in that October case denied the states’ request for a preliminary injunction forcing the government to continue to make the CSR payments. The case, California v. Trump, is pending in San Francisco, with a hearing scheduled for March.

—Read Judge Denies States’ ACA Payment Injunction Bid on ThinkAdvisor.

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