ACA Court Win
Manhattanlife Saves Fixed Indemnity for Industry and Insured
ManhattanLife played “David” to the U.S. Department of Health and Human Services’ (HHS) “Goliath” in 2014 when the Company sued HHS, HHS Secretary Sylvia Mathews Burwell and other members of the Obama administration to protect consumers’ access to fixed indemnity health insurance products.
Prior to the Affordable Care Act (ACA) taking effect, consumers across the country, who were either unable or unwilling to pay for or unable to qualify to purchase major medical coverage, were using indemnity insurance as an effective alternative to help cover a variety of planned and unplanned healthcare expenses.
Once ACA was in effect, government regulators began taking active steps to prevent consumers from purchasing fixed indemnity health insurance unless they could prove they already had “minimum essential coverage” and were only using the indemnity insurance to fill gaps left by the major medical policy.
Taking a Stand on Behalf of Producers and Policyholders
Upon closer investigation, ManhattanLife concluded that the regulators’ actions were challenging the use of “excepted benefits,” as defined by Section 201 of the Public Health Service Act (PHSA), in lieu of major medical coverage. “Fixed indemnity” is clearly among the forms of insurance listed as excepted benefits in the PHSA. The Company believed this was a misinterpretation and that HHS was depriving Americans from a valuable tool to help them maintain their health, wealth and security.
So, under the guidance of CEO David Harris, ManhattanLife stepped forward as the only insurance provider in the country willing to challenge the government’s actions in court.
Judge Royce C. Lamberth, the senior judge of the District Court for the District of Columbia, agreed with ManhattanLife in September 2015, granting an injunction that prohibited HHS from requiring insurance buyers to have minimum essential coverage in place prior to purchasing fixed indemnity coverage.
Keeping Fixed Indemnity in Play
Not at all pleased with the outcome and the precedent it would set, HHS immediately appealed the ruling, with the hope a federal appeals court would reverse the ruling.
A three-judge panel at the District of Columbia U.S. Court of Appeals ruled unanimously in favor of ManhattanLife, and ultimately for producers and policyholders, affirming the permanent injunction originally granted by the district court judge.
“At issue is whether HHS colored outside the lines of its authority. The district court held that it did, and we agree.” Circuit Judge Janice Rogers Brown wrote in an opinion for the panel that heard the case. “At no point does the ACA give even the slightest indication the definition of “excepted benefit” was suddenly debatable; rather, the Act doubled down on the PHSA’s existing requirements.”
The panel determined, as a result of this, that HHS has no authority under ACA to regulate how consumers use fixed indemnity or other “excepted benefits” products.
“HHS lacked the authority to demand more of fixed indemnity providers than Congress required.” wrote Brown.
“Sometimes a situation calls for you to take a stand for what’s fair regardless of what’s in favor,” says ManhattanLife CEO David Harris. “ManhattanLife was in a position to step forward and do what we felt was right based on our commitment to indemnity products being a critical offering for many of our policyholders. I am very pleased that all four judges validated our interpretation of this matter.”