September 19, 2019

September 19, 2019

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September 18, 2019

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September 17, 2019

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SCOTUS to Review Subsidy Issue

On November 7, the U.S. Supreme Court announced it was going to review King v. Burwell.  At issue in the case is whether Fourth Circuit correctly determined that the IRS did not exceed its authority when it released a rule in 2012 providing that federal subsidies under the Affordable Care Act are available in both state and federally operated exchanges, but rather was simply clarifying the statute by also providing subsidies in federal exchanges.

While the Supreme Court often waits for a true “split in the federal circuits” to review a case, it has the authority, when it deems appropriate, to hear cases that present important national issues.  The administration had asked the Supreme Court to wait until further action was taken in the lower courts on the issues, particularly in the Halbig v. Burwell case, where the entire Federal Circuit Court for the District of Columbia has agreed to review an earlier ruling by a three-judge panel that the IRS had exceeded its authority.  The Administration was hopeful that after the Halbig en banc review the full panel would reverse the Halbig decision and there would be no split in the circuit (at least for now).

But the Supreme Court has elected not to wait.  It will hear King in the current term.  This means that unless the President and Congress can work together to craft a compromise to affect a fix to the statutes, the Supreme Court will decide whether federal subsidies are available in the 36 federal exchange states.

A Supreme Court decision ruling that the IRS had exceeded its authority by authorizing subsidies in federal exchanges would be disastrous for the Affordable Care Act and the millions of lower paid people who are currently receiving subsidies under federal exchanges.  It also would mean that pay-or-play penalties, which are triggered only if subsidies are received by full-time employees, would not apply with respect to individuals residing in those 36 states.

We will provide future updates as they become available.

© 2019 Proskauer Rose LLP.


About this Author

Peter Marathas, Attorney, Proskauer Law Firm

Peter Marathas is a Partner in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center and heads both the Employee Benefits Practice in the Boston office and Proskauer’s Health Care Reform Task Force. As demonstrated by his “Band One” ranking in Chambers USA, Peter has a solid reputation as being among a short list of U.S. employee benefits lawyers who can guide his clients through complex federal and state benefits laws and tax, securities, ERISA and corporate governance issues in a...

Stacy H Barrow, Proskauer Rose Law Firm, Labor Employment Attorney

Stacy H. Barrow is an Associate in the Labor & Employment Law Department and a member of the Employee Benefits, Executive Compensation and ERISA Litigation Practice Center and the Health Care Reform Task Force, resident in the Boston office.