By Chuck White, Vice President of Regulatory Affairs
U.S. District Judge John Bates in Washington, D.C., ruled in favor of the plaintiffs in an Association Health Plan (AHP) lawsuit filed by 12 states who claimed that the U.S. Department of Labor (DOL) exceeded its statutory authority in a rulemaking that opened up opportunities for multiemployer AHPs. The full District Court ruling may be read here.
In his ruling, Judge Bates ruled that the rule’s expansion of the definition of a “bona fide association” and the inclusion of working owners were “unreasonable.” His finding states that DOL interpreted the commonality of interest provision of the law too broadly when it allowed groups to form based on geographical commonality and when groups would form for the express purpose of providing health insurance although those groups may have an additional (non-primary) function.
Judge Bates concluded that it appears that associations that act in the interest of employers would continue to be compliant with statutory language. Similarly, the judge found that Congress had clear intent that ERISA programs are intended for benefits arising out of employment relationships which cannot exist when there are no employees working for a sole proprietor. Businesses with common work interest that have employees would be viewed as compliant with statutory language.
PHCC National continues to be compliant with the original DOL ruling defining associations that act in the interest of employers and the commonality of interest provision. The Court ruling would not impact this status. PHCC will continue to advocate for the inclusion of sole proprietors amongst the national insurance carriers. PHCC will monitor the DOL response to this recent ruling, which will determine the association’s next steps.
Vice President of Regulatory Affairs , PHCC-National Association