Federal Court Rules for DC Health Benefit Exchange Authority, Rejecting Funding Challenge of Life Insurance Companies

WASHINGTON, D.C. – A federal district court has ruled in favor of the District of Columbia Health Benefit Exchange Authority, finding  that the method used by the District to fund the exchange is constitutional and consistent with  federal legislation, D.C. Attorney General Irvin B. Nathan announced today.  A lawsuit by the American Council of Life Insurers claimed that the District’s implementation of the federal Affordable Care Act (ACA) was unconstitutional because the District charged assessments to insurance companies which did not participate in the sale of health insurance through the D.C. Exchange.

In a 65-page opinion, U.S. District Judge Beryl Howell found that the ACA and its implementing regulations authorized the funding mechanism used by the D.C. Exchange and thus did not preempt the local law setting up the D.C. Exchange.  The Court held that the assessments were not an unconstitutional “taking” under the Fifth Amendment of the U.S. Constitution, given the minimal economic impact of the assessments on the insurers. The ruling said the assessments did not violate due process or equal protection, as they were rationally related to the legislative purposes of the ACA and the D.C. law implementing the ACA.

Finally, Judge Howell found that the D.C. law was not a violation of the “non-delegation doctrine,” which prohibits a legislature from delegating legislative authority, because the law contained sufficient guidance for the District’s exercise of discretion in the funding of the exchange.
 
Attorney General Nathan commended Assistant Attorneys General William F. Causey and Andrew Saindon, who handled the case under the supervision of Grace Graham, chief of the Equity Section, and Ellen Efros, Deputy Attorney General of the Public Interest Division. Nathan said, “This decision permits the D.C. Exchange to continue receiving sufficient revenues so that more than 50,000 District of Columbia residents and countless small businesses can purchase affordable health insurance.”

“The Office of the Attorney General did an incredible job. And as a result District residents and small businesses will have access to affordable quality health insurance coverage,” said Mila Kofman, J.D., Executive Director of the Health Benefit Exchange Authority.