April 8, 2019 Ken Ruotolo, Chief Operating Officer
On March 29, 2019, a District of Columbia judge sided with the attorneys general of twelve states who argued that major provisions in the Department of Labor’s (DOL) final rule on AHPs should be considered invalid since they conflict with either the Affordable Care Act (ACA) or ERISA.
The judge agreed that the final rule’s:
definitions of employer and employee were stretched beyond belief by permitting, for example, sole proprietors to be considered both employer and employee at the same time;
definition of “commonality of interest” is in direct conflict with the DOL’s own precedent by permitting employers, whose only commonality is that they are located in the same general area;
definition of a bona fide organization permits AHP’s that are created for the primary purpose of offering health benefits – again in contravention of the DOL’s own precedent.
The effect of the judge’s ruling is to put a hold on the establishment of new AHPs and to cast doubt over the validity of AHPs established since the effective date of the final rule. The DOL can respond to this ruling by appealing it or by modifying the offending key provisions of the final rule to eliminate the judge’s concerns.
The judge’s ruling will be more widely felt in states other than California since the legislature in California outlawed the creation of new AHPs soon after the DOL issued its final rule.
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