Federal judge: Association health plan expansion challenged during Chevron two-step

A federal judge threw out a Trump administration rule designed to expand association health plans (AHP). The Department of Labor (DOL) rule allowed self-employed people to join associations that provided group health insurance plans like those offered by employers. United States District Court Judge John Bates’ 43-page opinion, issued on March 28th, said that the DOL rule used an unreasonable interpretation of federal law that he must set aside under the Administrative Procedure Act (APA) and the Chevron doctrine.
 
The Chevron doctrine is a two-step framework that compels federal judges to defer to agency interpretations of laws in some cases. When judges review agency interpretations of law under Chevron they must first determine whether the law was clear. If the law is ambiguous, then the judge will defer to the agency interpretation unless it is unreasonable. The APA requires judges to invalidate agency actions that are arbitrary, capricious, an abuse of discretion, or otherwise contrary to law.
 
In this case, Judge Bates held that the DOL rule was designed as an end-run around the Affordable Care Act (ACA) that ignored the language and purpose of both the ACA and the Employee Retirement Income Security Act of 1974 (ERISA).
 
Bates held that ERISA defined employer in an ambiguous way, but that the DOL rule’s definition was unreasonable. He wrote that the DOL rule failed at Chevron step two because its definition of employer stretched beyond the limits of ERISA in an unlawful way. He held that Congress did not intend for ERISA to regulate commercial healthcare insurance providers directly or to expand citizen access to healthcare benefits outside of employment relationships. He held that the DOL rule also contradicted the Affordable Care Act. He said Congress did not intend “that fifty-one distinct individuals employing no others could exempt themselves from the individual market’s requirements by loosely affiliating through a so-called ‘bona fide association’ without real employment ties.”
 



About the author

Jace Lington

Jace Lington is a staff writer at Ballotpedia and can be reached at jace.lington@ballotpedia.org

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