Am. Freedom Law Ctr. v. Obama

Decision Date13 May 2016
Docket NumberNo. 15–5164.,15–5164.
Citation821 F.3d 44
PartiesAMERICAN FREEDOM LAW CENTER and Robert Joseph Muise, Appellants v. Barack Hussein OBAMA, in his Official Capacity as President of the United States of America, et al., Appellees.
CourtU.S. Court of Appeals — District of Columbia Circuit

Robert Joseph Muise argued the cause for appellants. With him on the briefs was David Yerushalmi.

Katherine Twomey Allen, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, and Mark B. Stern and Alisa B. Klein, Attorneys.

Before: GRIFFITH, SRINIVASAN and WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILKINS

.

WILKINS

, Circuit Judge:

Appellants Robert Muise and American Freedom Law Center allege that their health insurance premiums increased by 57% at the end of 2014, and claim that the Affordable Care Act (“ACA”) is to blame. Specifically, Appellants contend that in late 2013, the Department of Health and Human Services (“HHS”) unlawfully implemented two policies: a “Transitional Policy,” which permitted health insurance companies to temporarily continue providing health insurance plans that do not comply with ACA requirements; and a “Hardship Exemption,” which permitted some individuals whose policies were cancelled for noncompliance to avoid the penalty under the individual mandate. These actions, Appellants argue, caused fewer people to purchase ACA-compliant plans. They assert that the Transitional Policy drove up the cost of ACA-compliant plans, such as the one purchased by Appellants. They also claim that HHS violated equal protection principles by applying either the Transitional Policy or the Hardship Exemption in a discriminatory fashion. At issue in this case is whether Appellants have standing to raise their challenges.

We affirm the District Court's determination that Appellants lack standing. Appellants have failed to demonstrate that the Transitional Policy caused Appellants' insurer, Blue Cross Blue Shield of Michigan (“Blue Cross”), to increase the premium for their health care plan specifically. Additionally, any alleged injury to Appellants from the Transitional Policy stemmed not from the Policy itself, which HHS applied evenhandedly, but from Blue Cross's decision not to take advantage of the Policy. Accordingly, Appellants also lack standing to bring their equal protection challenge.

I.
A.

The ACA, enacted by Congress in 2010, “aims to increase the number of Americans covered by health insurance and decrease the cost of health care.” Nat'l Fed'n of Indep. Bus. v. Sebelius, ––– U.S. ––––, 132 S.Ct. 2566, 2580, 183 L.Ed.2d 450 (2012)

. Among other things, the ACA institutes an individual mandate, which requires each “applicable individual” to purchase health insurance by maintaining “minimum essential coverage,” and requires those who fail to do so to pay a “penalty.” 26 U.S.C. § 5000A(a)(c). In enacting the ACA, Congress acknowledged that the individual mandate was an important part of the overall functioning of the law, noting that “significantly increasing health insurance coverage ... will minimize ... adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums.” 42 U.S.C. § 18091(2)(I).

The ACA also imposes a number of new “market reforms,” setting forth minimum standards that all offered health insurance plans must meet. See, e.g., id. § 300gg (prohibiting discriminatory premium rates); id. § 300gg–1 (guaranteeing issuance of coverage); id. § 300gg–3 (prohibiting preexisting conditions exclusions); id. § 18022 (defining essential health benefits requirements). These reforms were scheduled to take effect on January 1, 2014. See Cutler v. HHS, 797 F.3d 1173, 1177 (D.C.Cir.2015)

(citing 42 U.S.C. § 300gg (note) ). Prior to that time, certain health insurance providers began cancelling some health insurance plans that did not comply with the ACA's reforms.

In a letter HHS sent to state insurance commissioners in November 2013, it explained that

[a]lthough affected individuals and small businesses may access quality health insurance coverage through the new Health Insurance Marketplaces, in many cases with federal subsidies, some of them are finding that such coverage would be more expensive than their current coverage, and thus may be dissuaded from immediately transitioning to such coverage.

J.A. 43. To ameliorate this problem, HHS announced in its letter a Transitional Policy, whereby HHS would not enforce the ACA's market reform requirements against health insurance providers until October 2014. J.A. 43–45. It later extended that deadline ultimately to October 2017.1 The Transitional Policy thus allowed individuals whose plans otherwise would have been terminated to keep their original health insurance during this transitional period, so long as their health insurance provider agreed to continue issuing their plan. The Policy, however, applies solely to health insurance providers, which are given the option of temporarily providing non-ACA-compliant plans, though they are not required to do so. The Policy does not apply to individuals, who still are required to comply with the ACA's individual mandate, unless they qualify for the Hardship Exemption.

B.

Robert Muise is the co-founder and senior counsel of AFLC, a nonprofit corporation whose “mission ... is to fight for faith and freedom through litigation, education, and public policy programs.” Muise Decl. ¶¶ 2–4 (internal quotation marks omitted). Muise receives health insurance through AFLC's group health plan, which is issued by Blue Cross. Id. ¶ 6. After passage of the ACA, Blue Cross informed AFLC that its “current plan [was] changing” and that it would “be transitioning [AFLC] into a reform-compliant plan.” J.A. 60. Thus, Blue Cross chose not to continue offering Appellants' original health insurance plan, even though it could have continued to do so during the period established by the Transitional Policy. Appellants allege that when Blue Cross transitioned to that reform-compliant plan, the monthly premium AFLC paid for Muise's health insurance plan increased from $1,349.96 to $2,121.59—an increase of 57% ($771.63). See Muise Decl. ¶ 13.

In a June 2014 rate filing, Blue Cross explained that there would be a 2.7% rate increase for 2015 “for all small group products that were offered in 2014,” such as Appellants' plan. J.A. 80. They listed four [s]ignificant drivers of the rate change,” one of which was [l]ower than anticipated improvement of the ACA compliant market level risk pool in 2014 and 2015 due to the market being allowed to extend pre-ACA ... plans into 2016.” Id. In other words, Blue Cross blamed the rate increase, in part, on the ability of individuals to retain non-ACA-compliant coverage, presumably due to HHS's Transitional Policy. In a later, March 2015 rate filing,2 Blue Cross reversed course, and noted that there would be a 3.3% decrease for policies issued between July 1, 2015, and December 31, 2015. 2015 Blue Cross Filing 6. It listed two [s]ignificant drivers” for the rate change: (1) 2014 trend results coming in much lower than anticipated”; and (2) [s]hifts in market risk assumptions after the allowance by the government for carriers to extend offerings of pre-reform plans.” Id. Thus, although Blue Cross appeared to blame its initial rate increase, in part, on the consequences of the Transitional Policy, it seemed to also credit, in part, the Policy with the later rate decrease.

Appellants filed suit in July 2014, challenging the Transitional Policy as an “unlawful executive action[ ] issued by “executive fiat.” Compl. ¶¶ 33, 46. They claim that the Policy caused their health insurance costs to increase. Id. ¶ 49. Additionally, they assert an equal protection challenge, claiming that Appellees violated the Fifth Amendment by allowing certain individuals to benefit from the Policy, thereby exempting them from the individual mandate, but not providing this exemption to others, including Appellants. Id. ¶ 62.

The District Court granted Appellees' motion to dismiss the case pursuant to Rule 12(b)(1) of the Federal Rules of Civil procedure

, holding that Appellants lacked standing. Am. Freedom Law Ctr. v. Obama, 106 F.Supp.3d 104, 113 (D.D.C.2015). It determined, among other things, that Appellants had failed to demonstrate that whatever injury they alleged to have suffered was caused by HHS's Transitional Policy, noting that “health insurance premiums fluctuate for myriad reasons, ranging from the particular terms of coverage to various other actuarial factors.” Id. at 109.

II.

The only question in this appeal is whether Appellants have standing to bring this suit. Because they have failed to show that the increase in their health care premiums stems from HHS's Transitional Policy, Appellants have not demonstrated that they have standing. We affirm the District Court's dismissal pursuant to Rule 12(b)(1)

.

A.

We review a District Court's decision regarding standing de novo. Info. Handling Servs., Inc. v. Def. Automated Printing Servs., 338 F.3d 1024, 1029 (D.C.Cir.2003)

. The “irreducible constitutional minimum of standing contains three elements”: (1) injury-in-fact, (2) causation, and (3) redressability.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Stated differently, “a litigant must demonstrate a ‘personal injury fairly traceable to the [opposing party's] allegedly unlawful conduct and likely to be redressed by the requested relief.’ Ass'n of Flight Attendants–CWA, AFL–CIO v. U.S. Dep't of Transp., 564 F.3d 462, 464 (D.C.Cir.2009) (quoting Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) ).

When [t]he existence of one or more of the essential elements of standing ‘depends on the unfettered choices...

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