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HHS Appeals Adverse Decision on Fixed Indemnity Attestations

As expected, on Monday, November 9, 2015, the U.S. Department of Health & Human Services (HHS) filed a Notice of Appeal from the decision issued by Judge Royce Lamberth of the United States District Court for the District of Columbia in the case of Central United Life, Inc. v. Burwell.

The Burwell decision enjoined enforcement by HHS of that portion of a new rule it issued in 2014 which, effective January 1, 2015, prohibited insurers from selling new fixed indemnity health insurance policies in the individual market unless they first obtain an attestation from the policyholder, in their application, stating that they have other health coverage that meets the minimum essential coverage required under the Affordable Care Act (ACA). Fixed indemnity health insurance products provide limited and fixed medical benefits, and thus they are not designed or intended to provide comprehensive medical coverage and do not satisfy the individual mandate contained in the ACA. For that reason, some federal and state regulators have tried to regulate and limit the sale of such products – ostensibly to prevent consumers from confusing the coverage provided under a fixed indemnity policy with comprehensive medical coverage – and the attestation requirement imposed by HHS is another example of that regulatory objective.

In addition to the attestation requirement for new policies issued after January 1, 2015, the new HHS rule also provided that the attestation requirement would have to be met at the time of the first renewal after October 1, 2016, for any policies that were already issued and in-force as of January 1, 2015.

However, in a decision dated September 11, 2015, Judge Lamberth concluded that the attestation requirement in the new rule reflected an attempt by HHS to interpret and define the concept of fixed indemnity insurance “in a way that imports wholly foreign concepts” and “contravene[s] the very statute they are implementing.” He therefore permanently enjoined HHS from enforcing the attestation requirement (other less controversial aspects of the new rule were left untouched).

Given that, under the current political environment, there would not seem to be a viable legislative path available to HHS to clarify its authority to issue the attestation requirement, the appeal by HHS to the Federal Circuit Court of Appeals was expected.

© 2020 Foley & Lardner LLPNational Law Review, Volume V, Number 316
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Kevin G. Fitzgerald, Foley Lardner, regulatory insurance lawyer, insurance insolvency attorney
Partner

Kevin G. Fitzgerald is a partner and insurance lawyer with Foley & Lardner LLP. His practice is concentrated in the fields of corporate and regulatory insurance law, insurance insolvency, premium taxation, privacy legislation, captive insurance matters, agent and agency licensing and reinsurance transactions. He is a member and former chair of the firm’s Insurance & Reinsurance Industry Team and is a member of the Finance & Financial Institutions; Transactional & Securities; and Privacy, Security & Information Management Practices, as well as the...

414.297.5841
Thomas R. Hrdlick, Foley Lardner, Transactional Work Attorney, Reinsurance Runoff Management lawyer
Partner

Tom Hrdlick is a partner and insurance and reinsurance attorney with Foley & Lardner LLP. Mr. Hrdlick's practice is concentrated in the fields of corporate and regulatory insurance and reinsurance law, with a particular emphasis on transactional work within the insurance and reinsurance industries and reinsurance runoff management. He is co-chair of the firm's Insurance & Reinsurance Industry Team. Mr. Hrdlick is also a member of the firm's Health Care Industry Team due to his experience working with health insurers.  

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Morgan J. Tilleman, Foley Lardner, Insurance and Reinsurance Lawyer, Health Care Matters Attorney
Senior Counsel

Morgan J. Tilleman is an associate and business lawyer with Foley & Lardner LLP and is a member of the Insurance & Reinsurance Industry Team and the Health Care Industry Team. Mr. Tilleman’s practice is concentrated on corporate and regulatory insurance and reinsurance law and on the intersection of health care and insurance.

Mr. Tilleman represents insurers, and reinsurers in transactions, restructurings, reinsurance transactions, mergers, acquisitions, shell transactions, affiliations, joint ventures and insurance program arrangements...

414-297-5871
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