Attorney General James Leads Coalition Of 12 AGs Urging The U.S. Department Of Labor To Clarify Consumers' Right To Comprehensive Health Benefits

Attorney General James Leads Coalition of 12 AGs Urging the U.S. Department of Labor to Clarify Consumers' Right to Comprehensive Health Benefits 

NEW YORK – Today, New York Attorney General Letitia James, leading a coalition of 12 Attorneys General, criticized a recent policy from the U.S Department of Labor (DOL) concerning Association Health Plans (AHPs), which fails to enforce provisions of the Affordable Care Act (ACA). 

The letter states that the Department of Labor’s policy is materially incomplete because it “does not inform consumers that key Affordable Care Act (ACA) requirements—such as the Essential Health Benefits Package —now apply to individuals and small groups enrolled in [Association Health Plans, or AHPs] formed under the rule.” The letter urges the Department of Labor to “clearly state, up front, what the law plainly requires: that AHPs formed under the now-vacated final rule must meet the ACA’s key requirements, including the Essential Health Benefits Package.”

“Our federal government should be doing everything in its power to protect and expand access to healthcare, not deny it,” said Attorney General Letitia James. “This new policy is both deceiving and dangerous – it fails to adequately inform policyholders of the true extent of the coverage that they have a legal right to, and that plans should be providing. All Americans deserve access to quality healthcare and we will continue to fight to ensure this basic right.” 

The letter further makes clear that the Department of Labor’s policy “does not change applicable law or relieve AHPs of their legal obligations,” or “affect other remedies available to enforce the ACA requirements,” such as private lawsuits. 

The letter also stresses the serious risk imposed by the Department’s policy on consumers and their families: “By failing to state clearly that these requirements now apply to AHPs formed under the rule, the Department’s statement fails to fully reflect the state of the law. Moreover, it threatens to impose financial and health consequences on consumers and their families—where they may be dire—instead of insurance companies and commercial AHPs, who are sophisticated entities with counsel and are in the business of bearing such risk.”  

“When the federal government abdicates its legal responsibility to protect healthcare consumers through evasive statements constructed to obscure and confuse, you can count on New York to tell it like it is,” said Acting Financial Services Superintendent Linda A. Lacewell. “Association Health Plans must now, at a minimum, meet key ACA provisions, such as the Essential Health Benefits Package, regardless of whether these vital benefits were originally covered under the plan’s terms. Anything less violates the law.”

On March 28, 2019, the U.S. District Court for the District of Columbia ruled for the States in their challenge to the Department of Labor’s AHP rule, concluding that the AHP rule “does violence” to laws enacted by Congress, is “clearly an end-run around the ACA,” and “creates absurd results.”

In July 2018, the New York State Attorney General’s Office filed a lawsuit to block efforts by the Trump Administration to dismantle the ACA using the AHP Rule, which would undo critical federal consumer protections and unduly expand access to AHPs without sufficient justification or consideration of the consequences.  

The lawsuit alleged that the Department of Labor violated the Administrative Procedure Act when it promulgated the AHP rule, and argued that the rule violates both the ACA and the Employee Retirement Income Security Act (ERISA). It argues that the rule unlawfully reverses decades of agency and judicial interpretation of ERISA’s key terms, with the primary purpose of undermining the ACA and without accounting for increased risk of fraud and harm to consumers based on a longstanding history of such conduct by similar plans.   

President Trump himself cited the sabotage of the ACA as the clear purpose of the AHP Rule, proclaiming that it was a “truly historic step in our efforts to rescue Americans from Obamacare and the Obamacare nightmare” and would “escape some of Obamacare’s most burdensome mandates.”  

On August 23, 2018, the States moved for summary judgment arguing that the AHP rule “violates the ACA by seeking to overturn Congress’s reforms of the individual and small group markets,” including that plans offered to individuals and small businesses include the Essential Health Benefits Package. The States also argued that the AHP rule “violates ERISA and unlawfully upends nearly forty years of ERISA precedent.”  

In addition to New York, the lawsuit was filed with the Attorneys General of Massachusetts, District of Columbia, California, Delaware, Kentucky, Maryland, New Jersey, Oregon, Pennsylvania, Virginia, and Washington.