Washington v. Azar
| Decision Date | 09 April 2020 |
| Docket Number | No. 2:20-CV-00047-SAB,2:20-CV-00047-SAB |
| Citation | 461 F.Supp.3d 1016 |
| Parties | State of WASHINGTON, Plaintiff, v. Alex M. AZAR II, in his official capacity as Secretary of the United States Department of Health and Human Services; United States Department of Health and Human Services; Seema Verma, in her official capacity as Administrator of the Centers for Medicare and Medicaid Services ; and Centers for Medicare and Medicaid Services, Defendants. |
| Court | U.S. District Court — District of Washington |
Laura K. Clinton, Spencer W. Coates, Kristin Beneski, Washington State Attorney General, Seattle, WA, for Plaintiff.
Cormac A. Early, Bradley P. Humphreys, United States Department of Justice, Washington, DC, for Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
Before the Court are Plaintiff's Motion for Partial Summary Judgment on Non-Preemption, ECF No. 6, and Defendants' Cross-Motion for Partial Summary Judgment, ECF No. 10. Plaintiff is represented by Kristin Beneski, Laura K. Clinton, and Spencer W. Coates. Defendants are represented by Bradley P. Humphreys.
In 2019, Washington State enacted the Single-Invoice Statute, which requires health insurance carriers to bill enrollees with a single invoice. Wash. Rev. Code § 48.43.074. The intent of the Legislature in passing the statute was to codify the State's current practice of requiring healthcare carriers to bill enrollees with a single invoice and to segregate into a separate account the premium attributable to abortion services for which federal funding is prohibited. Id. Specifically, the Single-Invoice Statute requires an issuer offering a qualified health plan ("QHP")1 to bill enrollees and collect payment though a single invoice that includes all benefits and services covered by the QHP and provide a certification that the issuer's billing and payment processes meet these requirements.
Wash. Rev. Code § 48.43.074(2)(a)-(b)
Prior to the passage of this law, Washington had created the State's Health Benefit Exchange, where private insurance carriers offered QHPs on the Exchange.2 See Wash. Rev. Code Chap. 43.71. These private insurance carriers are subject to oversight by the Washington State Office of the Insurance Commissioner ("OIC"). Under Washington law, any plan that includes coverage for maternity care or services must also include substantially equivalent coverage for abortion services. Wash. Rev. Code § 48.43.073. According to the OIC, neither federal nor Washington law require separate premium billing to enrollees for a plan's coverage of such abortion services. Wash. Admin. Code § 284-07-540.
Section 1303 of the Patient Protection and Affordable Care Act ("ACA") provides certain prohibitions, restrictions, and requirements with respect to coverage of abortion care by QHP offered through the state Exchanges. 42 U.S.C. § 18023. It prohibits the use of certain federal funds to pay for coverage of abortion services by a QHP for which payment would not be permitted under the Hyde Amendment.3 42 U.S.C. § 18023(b)(2). QHP issuers may not use premium tax credits or cost-sharing reductions to pay for abortion care. 42 U.S.C. § 18023(b)(2)(B)(i). Other requirements include that if the QHP includes coverage for abortion care, issuers must provide notice of such coverage; charge and collect at least $1 per enrolled per month for coverage of abortion care; deposit the collected funds into a separate account; maintain the segregation of such funds; and use only such finds to pay for abortion care. 42 U.S.C. § 18023(b).
Currently, federal law does not specify the method an issuer must use to comply with the segregation of funds requirement. Neither do the Department of Health and Human Services ("HHS") regulations that have been in place since 2012. See 45 C.F.R. § 156.280(e). Notably, in 2015, HHS promulgated a final rule explaining that section 1303 "do[es] not specify the method an issuer must use to comply with the separate payment requirement."4 The 2015 Final Rule informed health plan issuers and state regulators that the requirement "may be satisfied in a number of ways," including, but not limited to (i) sending the enrollee a single monthly invoice that separately itemizes the premium amount for abortion services, (ii) sending a separate monthly bill for abortion services, or (iii) sending the enrollee a notice upon enrollment that the monthly invoice will include a separate, specified charge for abortion services. 80 Fed. Reg. 10,840 The Rule allowed enrollees to make the separate payments for abortion services and other services in a "single transaction." Id. The purpose of this was to offer "several ways to comply with [§ 1303's] requirements, while minimizing burden on QHP issuers and consumers. Id. at 10,841.
In October 2017, the Centers for Medicare and Medicaid Services (CMS) issued its own guidance listing the same options for complying with § 1303's funding segregation requirements.5
Notwithstanding its prior Rules, in December 2019, HHS published a new Rule that would require all plan issuers whose QHP covers abortion care to send enrollees two separate bills each month, with instructions to pay the separate bills in two separate transactions. Patient Protection and Affordable Care Act: Exchange Program Integrity, 84 Fed. Reg. 71,674 (Dec. 27, 2019). Under this Rule, one bill must cover the premium cost of coverage for all health care services except abortion care, and the second bill must address only the cost of covering abortion care. Id. at 71,684. If the Double-Billing Rule is enforced in Washington state, it would preempt Washington's Single-Invoice Statute.
Plaintiff, the State of Washington, sued Defendants for declaratory and injunctive relief. Plaintiff is bringing seven claims:
(Count I) the Double-Billing Rule violates the Administrative Procedures Act ("APA") as contrary to law, specifically § 1303 of the ACA;
(Count II) the Double-Billing Rule violates the APA as contrary to law, specifically § 1321 of the ACA;
(Count III) the Double-Billing Rule violates the APA because HHS acted in excess of its statutory authority;
(Count IV) the Double-Billing Rule violates the APA as contrary to law, specifically § 1554 of the ACA;
(Count V) the Double-Billing Rule violates the APA because it is arbitrary and capricious.
(Count VI) the Double-Billing Rule violates the Notice and Comment requirement of the APA; and
(Count VII) the Double-Billing Rule violates the 10th Amendment.
Plaintiff asks the Court to declare the Double-Billing Rule to be unauthorized and contrary to the Constitution and the laws of the United States; declare the Double-Billing Rule invalid and without force of law, and vacate the Rule in full; issue preliminary and permanent injunctions prohibiting Defendants from implementing or enforcing the Double-Billing Rule; and award costs and reasonable attorneys fees.
It now moves for summary judgment on Counts 1 and II of its Complaint. Plaintiff asks the Court to declare that the Rule does not apply and has no force or effect in Washington State.
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). There is no genuine issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict in that party's favor. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the initial burden of showing the absence of a genuine issue of fact for trial.
Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets its initial burden, the non-moving party must go beyond the pleadings and "set forth specific facts showing that there is a genuine issue for trial." Anderson , 477 U.S. at 248, 106 S.Ct. 2505.
In addition to showing there are no questions of material fact, the moving party must also show it is entitled to judgment as a matter of law. Smith v. Univ. of Wash. Law Sch. , 233 F.3d 1188, 1193 (9th Cir. 2000). The moving party is entitled to judgment as a matter of law when the non-moving party fails to make a sufficient showing on an essential element of a claim on which the non-moving party has the burden of proof. Celotex , 477 U.S. at 323, 106 S.Ct. 2548. The non-moving party cannot rely on conclusory allegations alone to create an issue of material fact. Hansen v. United States , 7 F.3d 137, 138 (9th Cir. 1993).
When considering a motion for summary judgment, a court may neither weigh the evidence nor assess credibility; instead, "the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson , 477 U.S. at 255, 106 S.Ct. 2505.
Federal administrative agencies are required to engage in "reasoned decisionmaking." Michigan v. E.P.A. , 576 U.S. 743, 135 S.Ct. 2699, 2706, 192 L.Ed.2d 674 (2015). "Not only must an agency's decreed result be within the scope of its lawful authority, but the process by which it reaches that result must be logical and rational." Id. (quoting Allentown Mack Sales & Service, Inc. v. N.L.R.B. , 522 U.S. 359, 374, 118 S.Ct. 818, 139 L.Ed.2d 797 (1998) ).
The Administrative Procedure Act "sets forth the full extent of judicial authority to review executive agency action for procedural correctness." F.C.C. v. Fox Television Stations, Inc. , 556 U.S. 502, 513, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). Under 5 U.S.C. § 706, the Court must "hold unlawful and set aside agency action, findings, and conclusions found to be (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."
Plaintiff argues that HHS is prohibited from issuing regulations that would effectively preempt state law, given the ACA's clear non-preemption...
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