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May 24, 2024 at 01:22 PM
What You Need to Know
- The Labor Department has imposed new notice rules on fixed indemnity health insurance issuers.
- The department recently set new sales standards for retirement investment advice givers.
- Suits challenging both actions have showed up in the same federal court in Texas.
Health insurance market players have started a lawsuit that could collide with annuity market players’ litigation over the U.S. Labor Department’s retirement investment advice fiduciary regulations.
ManhattanLife Insurance and Annuity Co., a supplemental health insurance issuer, filed the complaint Tuesday in the U.S. District Court for the Eastern District of Texas along with Paschall and Associates, a health insurance agency, and the agency’s owner, William Paschall.
The plaintiffs accused the U.S. Department of Health and Human Services, the U.S. Treasury Department and the U.S. Labor Department of using an arbitrary and capricious process to adopt a regulation requiring sellers of fixed indemnity health insurance to include a notice declaring that the product is “NOT health insurance” if they want the product to be exempted from the Affordable Care Act major medical insurance requirements.
The plaintiffs are asking the court to vacate the notice rule.
Representatives from HHS, the Treasury Department and the Labor Department did not respond to emails seeking their comments.
What it means: The plaintiffs in the ManhattanLife case filed their complaint in the same federal court in Texas where the Federation of Americans for Consumer Choice and several independent insurance agents filed a suit objecting to the Labor Department’s new effort to impose a fiduciary standard of care on efforts to help retirement savers roll assets out of 401(k) accounts, IRAs and similar accounts.
The new Labor department investment advice fiduciary requirements could have the biggest effect on sellers of non-variable indexed annuities.
Like the plaintiffs in the annuity regulation case, the plaintiffs in the ManhattanLife case have accused federal officials of violating the federal Administrative Procedures Act.
District Judge J. Barker Campbell is handling the ManhattanLife case, and District Judge Jeremy Kernodle is handling the annuity case.
How Campbell or other judges apply APA requirements in the ManhattanLife case could subtly influence, or be influenced by, how judges apply APA requirements in the annuity case.
Federal judges in Texas have issued a number of rulings blocking regulations adopted by the administration of former President Barack Obama, and appeals of decisions by the district’s judges go to the U.S. Court of Appeals for the 5th Circuit, which has issued rulings blocking several Obama administration regulation efforts, including the Labor Department fiduciary rule effort.
