Obamacare Mandate Case Shifts After Appeals Decision (Correct)

The Biden administration scored a partial win when a federal appeals court lifted a nationwide block against preventive-care mandates under Obamacare. As the case heads back to a conservative district court judge in Texas, it’s unclear how durable the victory will be.

Still at issue is whether two other US Department of Health and Human Services agencies tasked with deciding which services must be covered followed administrative law. The US Court of Appeals for the Fifth Circuit didn’t expressly overrule US District Judge Reed O’Connor’s decision that those boards were validly appointed, but it sent the case back to the lower court judge to decide if they followed proper procedures.

Although the Fifth Circuit largely restored the recommendations issued by one of the agencies, O’Connor must again weigh the validity of the other two agencies’ recommendations.

At stake in the case, which eventually may head to the US Supreme Court, is whether employers and private insurers must follow preventive care coverage requirements under the landmark 2010 health care law.

Cost of coverage might be a factor for employers looking to revamp benefits if the mandates are ultimately rejected, Laurie Sobel, associate director for women’s health policy at Kaiser Family Foundation said.

“In some cases they might decide to cover things but just impose cost-sharing,” she said, noting that most of the recommendations, like covering cholesterol drugs, are not controversial. Coverage also is really popular, and employers may want consider how they’ll look if they drop it, Sobel said.

For now, the coverage requirements “remain in effect” in most of the country, said Richard Hughes IV, a member of Epstein Becker Green in Washington. That means most employers subject to the Affordable Care Act will have to continue paying for the services.

O’Connor, of the US District Court for the Northern District of Texas, is one of judges often targeted by conservative plaintiffs looking for a sympathetic ear.

Improper Board

The Fifth Circuit on June 21 affirmed O’Connor’s decision that members of one of the three boards, the Preventive Services Task Force, weren’t properly appointed and that their coverage recommendations were invalid.

That board has recommended that employee health plans offer no-cost coverage for services ranging from colorectal cancer screenings to drugs to prevent new HIV infections.

The appeals court lifted a universal remedy that would have barred HHS from enforcing the mandates throughout the country, instead holding that only plaintiffs like Braidwood Management didn’t have to keep paying for the services.

The panel didn’t appear to disturb O’Connor’s decision that the other two agencies — the Health Resources and Services Administration and the Advisory Committee on Immunization Practices—were constitutionally appointed. The Fifth Circuit asked O’Connor to determine if the agencies followed the Administrative Procedure Act by seeking comment on their decisions before they issued mandates.

That question might prove decisive. O’Connor could upend the mandates issued by the other two agencies if he agrees with the plaintiffs that a 2022 memo from HHS Secretary Xavier Becerra purporting to ratify the boards’ recommendations was improperly retroactive, and that the recommendations should go through agency rulemaking procedures instead.

“If the secretary of HHS has to put each recommendation through a notice-and-comment period, that would be some major friction in the gears of the agency,” said Elizabeth Sepper, a law professor at the University of Texas at Austin.

Allowing Amendment

It’s “plausible” O’Connor also would allow the plaintiffs to amend their complaint to add an APA claim against the task force, which would cure the problem that led the appeals judges to set aside his nationwide injunction against its mandates, Hughes said.

Originally, O’Connor said HHS couldn’t require any employer anywhere in the country to pay for services the task force recommended. But that’s an APA remedy, and there was no APA claim, the Fifth Circuit said. Adding an APA claim likely would permit O’Connor to reinstate a nationwide ban.

That would be an unusual step because a procedural doctrine known as the “mandate rule” generally prevents parties from raising issues on remand that were decided by an appeals court, Hughes said.

New Plaintiffs?

The technical nature of the opinion opens the door for more employers to file stronger cases and ignores the practical impacts of striking down a broad mandate at the request of a very small group of people, said Sara Rosenbaum, professor emerita and founding chair of the Department of Health Policy at the George Washington University Milken Institute School of Public Health.

Any other party with standing could sue, Sobel agreed. And employers that bring new cases in Texas, Louisiana, and Mississippi are at an advantage because federal courts that sit in those three states must apply the Fifth Circuit’s ruling that the PSTF’s recommendations are invalid.

There’s nothing to stop an employer anywhere in the US from suing HHS to get out of paying for services it doesn’t want to cover, Stacy Lee, an attorney and associate professor at the Johns Hopkins Bloomberg School of Public Health in Baltimore, said. Courts governed by other circuits aren’t bound by the Fifth Circuit’s ruling, but they could find it persuasive, she said.

Employers likely will wait to see how it all plays out on remand and inevitable appeals—including a possible trip to the Supreme Court—before taking any further action, Lee said.

The case is Braidwood Mgmt., Inc. v. Becerra, 5th Cir., No. 23-10326, 6/21/24.