Tuesday, February 16, 2016

St. Louis Effort for AIDS v. Huff

Opinion handed down April 10, 2015

             Following the passing of the controversial Patient Protection and Affordable Care Act (“ACA”), the Missouri legislature passed the Health Insurance Marketplace Innovation Act (“HIMIA”), seeking to regulate certain aspects of health care exchanges within the state of Missouri.[1] Acting under the authority of the ACA, the United States Department of Health and Human Services (“HHS”) promulgated regulations that conflicted with the Missouri laws pertaining to healthcare marked facilitators.[2]  The petitioners, a group of healthcare-related organizations and businesses, challenged the HIMIA, seeking a preliminary injunction enjoining the enforcement of the HIMIA that were contrary to federal law.[3]  The district court granted the preliminary injunction and enjoined the HIMIA from being enforced in its entirety.[4]

              The U.S. Court of Appeals for the Eighth Circuit affirmed in part and vacated in part, holding: (1) the petitioners were likely to succeed on their claims that three specific provisions of the HIMIA were preempted by federal regulation; and (2) the preempted specific provisions of the HIMIA were severable from the remainder of the Missouri law, resulting in a preliminary injunction only enjoining the State from enforcing the three challenged provisions, leaving the remainder of the HIMIA in effect.[5] 

I.  Facts and Holding
As a part of the ACA, the Secretary of HHS established federal navigators and certified application counselors (“CACs”) to facilitate enrollment in federal health care exchanges.[6] In response, the Missouri legislature enacted the HIMIA, which sought to regulate “persons that, for compensation, provide information or services in connection with eligibility, enrollment, or program specifications of any health benefit exchange operating in Missouri,” or in other words, federal navigators and CACs.[7]  The HIMIA regulations included limits on what federal navigators and CACs could and could not do in Missouri, and also allowed the Director of the Missouri Department of Insurance, Financial Institutions and Professional Regulations, John Huff, to impose fines on navigators and restrict their licenses.[8]

A group of health-related businesses filed a preliminary injunction seeking to enjoin the HIMIA before its enforcement.[9]  The district court granted the preliminary injunction, finding the plaintiffs were likely to succeed on the merits because the HIMIA frustrated Congress’s purpose of having HHS operate federal facilitators in states without healthcare exchanges, and in light of the conflict, the entire HIMIA was preempted by federal law.[10] 

On appeal, Missouri’s Department of Insurance argued that it was error for the district court to grant the preliminary injunction, challenging its finding that the plaintiffs were likely to succeed on the merits.[11]  The U.S. Court of Appeals for the Eighth Circuit affirmed the district court’s ruling in respect to the HIMIA’s enforcement against CACs.[12]  However, with regard to navigators and other non-CAC portions of the HIMIA, the Eighth Circuit vacated the preliminary injunction.[13] 

II.  Legal Background

“The general law of preemption is grounded in the Constitution’s command that federal law ‘shall be the supreme Law of the Land.’”[14]  But courts “will not find a [state] law preempted unless it ‘was the clear and manifest purpose of Congress,’ through express language or through the practical effect of the statutes.[15] 

The ACA contains a narrow express preemption clause, aimed at state law that hinders or impedes the implementation of the ACA.[16] The clause is titled “No interference with State regulatory authority” and states, “Nothing in this title shall be construed to preempt any State law that does not prevent the application of the provisions of this title.”[17] 

Missouri statutes, furthermore, are severable, meaning that when a federal court finds a part of a Missouri statute preempted by federal law, the remaining provisions of the statute are valid unless “the valid provisions of the statute are so essentially and inseparably connected with, and so dependent upon, the void provision that it cannot be presumed the legislature would have enacted the valid provisions without the void one . . . .”[18]  The HIMIA also contained similar severability language.[19]

III.  Instant Decision

The U.S. Court of Appeals for the Eighth Circuit determined that the parts of the HIMIA that applied to the CACs were likely preempted by the ACA, and therefore upheld the district court’s preliminary injunction as it related to CACs.[20]  With regard to the rest of the HIMIA, the Eighth Circuit vacated the preliminary injunction, relying on the severability of the statute.[21]

First, the court examined several aspects of the ACA, including HHS regulations pertaining to CACs.[22]  As a part of the ACA, Congress assigned HHS broad authority to issue standards and regulations for health care navigators and exchanges.[23]  HHS therefore had authority to preempt state laws that conflicted with its regulations.[24]  The court determined that the HHS regulation regulating CACs[25] had the force of law and thus had the power to preempt conflicting state laws.[26]

Next, the Eighth Circuit looked to specific provisions of the HIMIA concerning the CACs and determined that those provisions were preempted by the HHS regulations.[27]  The first conflict between the HIMIA and the federal regulations pertained to a navigator or CACs’ ability to give advice to health plan customers.[28]  While the HIMIA prevented navigators from providing advice about specific health plans, the federal regulation mandated the CACs to provide such information.[29]  Next, the court found the HIMIA’s rule forbidding CACs from providing information on health plans off of the exchange to be at odds with the federal regulation’s rule requiring CACs to clarify health coverage options including off-exchange health plans.[30]  

Finally, the court determined that federal regulation preempted the HIMIA’s provision that navigators shall advise customers to consult with licensed insurance producers about the private market.[31]  The court held that the HIMIA provision was contrary to the federal regulation stating that CACs have a duty to provide “fair, impartial, and accurate information” about insurance options.[32]

The Eighth Circuit concluded that those three provisions of the HIMIA were preempted by the regulations of the HHS through the ACA.[33]  However, the court went on to vacate the remainder of the preliminary injunction, finding the three preempted provisions severable from the remainder of the HIMIA.[34]

IV.  Comment

The court carefully examined the three challenged provisions of the Missouri law and the conflicting regulations promulgated by the HHS.  In light of the general rules deferring to the supremacy of federal law, the Eighth Circuit announced that the petitioners were likely to succeed on the merits of the issues pertaining to the enforcement of parts of the HIMIA in nearly direct conflict with the federal regulations.  However, unlike the district court, the Eighth Circuit permitted the remainder of the HIMIA to remain in force for the time being.  The court exercised reasonable judgment in affirming the preliminary injunction only on the issues initially challenged by the petitioners.

- Joseph Krispin

[1] St. Louis Effort for AIDS v. Huff, 782 F.3d 1016, 1019 (8th Cir. 2015).
[2] Id. at 1019-20.
[3] Id. at 1019.
[4] Id.
[5] Id.
[6] Id. at 1019-20.
[7] Id. at 1020.
[8] Id.
[9] Id.
[10] Id. (citing St. Louis Effort for Aids v. Huff, 996 F. Supp. 2d 798, 807 (W.D. Mo. 2014)).
[11] Id.
[12] Id.
[13] Id.
[14] In re Aurora Dairy Corp. Organic Milk Mktg. & Sales Practices Litig., 621 F.3d 781, 791 (8th Cir. 2010) (quoting U.S. Const. art. VI, cl. 2).
[15] Id. at 792 (8th Cir. 2010) (quoting Medtronic Inc. v. Lohr, 518 U.S. 470, 485 (1990)).
[16] St. Louis Effort for AIDS v. Huff, 782 F.3d at 1022 (citing 42 U.S.C. § 18041(e)(1) (2012)).
[17] Id.
[18] Mo. Rev. Stat. § 1.140 (Cum. Supp. 2013).
[19] Id. § 376.2014.1.
[20] St. Louis Effort for AIDS, 782 F.3d at 1023.
[21] Id.
[22] Id. at 1023-24.
[23] Id. (citing 42 U.S.C. § 18031(i)(4)(a) (2012)).
[24] Id. (citing Wyeth v. Levine, 555 U.S. 555, 576 (2009)).
[25] 45 C.F.R. § 155.225(c)(1) (2014).
[26] St. Louis Effort for AIDS, 782 F.3d at 1024.
[27] Id. at 1025-27.
[28] Id. at 1025.
[29] Id.
[30] Id. at 1026.
[31] Id.
[32] Id.
[33] Id. at 1027.
[34] Id. at 1028.