October 11, 2024

Braidwood Management v. Becerra – Questions about the ACA’s preventive coverage requirements

On September 19, 2024 the Department of Health and Human Services (HHS) filed a “writ of certiorari” (essentially an appeal) for SCOTUS to review the appellate court decision in Braidwood Management v. Becerra – a closely-watched case relating to the ACA’s preventive care mandate. We expect this case could be considered by SCOTUS during its 2024 term.

Under the Affordable Care Act (ACA), health plans must generally cover a set of preventive items and services at no additional cost to the beneficiary. Examples include screenings for certain cancers, high blood pressure, high cholesterol, Hepatitis B and C, coverage of certain medications, including PrEP for HIV prevention, and certain other immunizations. The U.S. Preventive Services Task Force (USPSTF), Advisory Committee on Immunization Practices (ACIP), and the Health Resources and Services Administration (HRSA) each have authority over certain areas to identify and decide on coverage requirements.

The Braidwood plaintiffs argued generally that the ACA’s preventive services requirement is unconstitutional and violates the Religious Freedom Restoration Act for a variety of reasons. The Fifth Circuit’s primary focus in this decision was the constitutionality of the USPSTF’s authority under the Appointments Clause. Article II of the Constitution vests the executive authority of the United States in the President but allows executive authority to be exercised by officers nominated by the President and confirmed by the Senate (“principal officers”) or by other “inferior officers.” The decision parses through the arguments of whether the 16 members of the USPSTF are “principal” or “inferior” officers, as well as the relevant factors for consideration.

The U.S. Court of Appeals for the Fifth Circuit issued a decision at the end of June generally ruling in favor of the plaintiffs, exempting them from the ACA requirements – but declining to apply the ruling universally to all plans. On potentially the most broadly applicable issue, the Appellate Court agreed with the District Court that the United States Preventive Services Task Force (USPSTF) was unconstitutionally appointed and therefore its recommended items and services could not be required for plans to cover. However, the Appellate Court limited the scope of the relief, i.e., the judicial order granting the exception from the requirement, only to the plaintiffs in the case. Although courts have principles they follow regarding whether to apply a decision narrowly to the litigants or more broadly to all impacted stakeholders, the limited relief here for only the parties seemed somewhat at odds with the overarching determination by the Appellate Court that the appointment violated the U.S. Constitution – which by its nature would apply broadly. This may give SCOTUS some additional interest in reviewing this matter.

Procedurally, the appellate decision allowed HHS the opportunity to file for SCOTUS review, which they ultimately did. If SCOTUS chooses to hear and decide on all or a portion of the case, the outcome could have far-reaching implications. For employers and plan sponsors, the decision could introduce significant uncertainty regarding compliance with ACA preventive care mandates.

Regarding whether the Supreme Court will choose to hear Braidwood, the court has their conference days scheduled starting this month, during which the justices will determine many of the cases they will hear. The court issues orders granting or denying certiorari on a rolling basis through the early to mid-part of the term.

Mulready v. Pharmaceutical Care Management Association (PCMA) – Questions on ERISA Preemption

Mulready involves a challenge to Oklahoma’s laws regulating pharmacy benefit managers (PBMs) and raises key questions about ERISA preemption. The state law in question, Patients' Right to Pharmacy Choice Act, included provisions such as network adequacy requirements, "any willing provider" mandates and restrictions on pharmacy contracts for pharmacies with employees under probation. These provisions were challenged by PCMA, which argued that they interfered with ERISA-covered plans by imposing state-level requirements that dictate benefit design and disrupt the uniform administration of such plans. (Patients' Right to Pharmacy Choice Act inspired similar legislation and regulations in other states as well, including North Dakota and Florida; those respective laws are also facing legal challenges.)

In the most recent decision, the Tenth Circuit Court of Appeals sided with PCMA, agreeing that the Oklahoma law was preempted by ERISA, a conclusion with which the Business Group on Health agrees. The court found that the provisions, particularly the network restrictions and AWP mandates, went beyond cost regulation and directly interfered with the structure of ERISA plans by forcing plans to include specific pharmacies and network configurations. If SCOTUS decides to hear Mulready, it could significantly shape the future of ERISA preemption and the ability of states to regulate PBMs in ways that intersect with plans subject to the 1974 law.

The State of Oklahoma filed a request for review with the Supreme Court on May 10, 2024 and briefing has continued among the parties. On October 7, the first day of its 2024 term, the Supreme Court invited the U.S. Solicitor General (working with the Department of Labor) to submit briefs on the federal government’s view of ERISA preemption and the questions presented to the court for review. The federal government’s prior brief in the underlying case was not generally considered to be helpful in defending ERISA preemption. In this new brief, the Solicitor may express a position on the merits of the claims or may assert that, in their view, SCOTUS review is not necessary or appropriate in this matter. We would hope for and support either a strong defense of ERISA preemption or an assertion that SCOTUS review is not warranted. With this additional briefing, we expect that SCOTUS will not announce whether it will hear the Mulready case for several weeks or even into early 2025.

Review Denied: The Center for Reproductive Medicine, et al. v. Felicia Burdick-Aysenne, et al. – Questions of due process in newly defining “extrauterine children” under Alabama state law

On August 1, 2024 The Center for Reproductive Medicine filed a request for review arising from the Alabama Supreme Court’s decision on IVF and “extrauterine children” from February, 2024. The Business Group previously provided a summary and explanation of the Alabama Supreme Court decision in What Your CEO Is Reading: Alabama’s Supreme Court IVF Ruling on "Extrauterine Children" and Employer Health Plan Considerations.

On October 7, without any detail, SCOTUS denied The Center for Reproductive Medicine’s request for certiorari review along with dozens of unrelated cases in its initial order of the 2024 term. It is not unusual for SCOTUS to summarily act granting or denying petitions and other requests. Such action, however, is conclusive and means that the Center for Reproductive Medicine’s assertions about the constitutionality of the Alabama Supreme Court decision will not be considered and thus the decision stands as valid/constitutional for at least the time being.

Background

The underlying Alabama case is a civil lawsuit that raised questions about the legal status of frozen embryos routinely produced during in vitro fertilization (IVF) procedures. At a high-level, the court determined that the Alabama Wrongful Death of a Minor Act (WDMA) covers cryogenically stored (frozen) embryos as “minor children” for which damages could be sought. This caused uncertainty for IVF providers and patients undergoing or contemplating IVF in the State of Alabama. Shortly after the decision the Alabama legislature amended the WDMA to provide retroactive and prospective “civil and criminal immunity” for IVF services – however, any claims in lawsuits then already in process (including the case here) would not be immune.

IVF procedures have resumed in Alabama following the legislative amendment. But the civil liability case against The Center for Reproductive Medicine was remanded back to the trial court to continue given that it was already in process.

The SCOTUS appeal – focus on notice and due process – is it unfair to change the definition after the fact?

The Center for Reproductive Medicine’s appeal to the Supreme Court generally focused on the 14th Amendment to the U.S. Constitution’s protections for notice and due process before the government acts or makes a change that would deprive a person of life, liberty, or property. At a high level this means that the petitioners believed the Alabama Supreme Court’s new interpretation of the WDMA was an unfair surprise and materially changed the government’s definition in a way that resulted in a loss to them without telling them in advance that the definition would change or giving them a chance to oppose the change or to make adjustments to their business. The petitioners also raised an issue about whether the plaintiffs in the lawsuit against them had appropriate “standing” to sue, and how that may relate to the 14th Amendment.

In dismissing the request for review, SCOTUS will not consider whether the “shocking” change in the interpretation alleged by the petitioners as after-the-fact and unfair is a violation of the 14th Amendment. Effectively meaning in this case, at least for the time being, the Alabama Supreme Court’s decision, as surprising as it may have been, is not a violation of the notice and due process clause of the 14th Amendment.

What does this denial mean for IVF, reproductive coverage, and Employer Plans?

Although the denial of the petition does not trigger a change to the current circumstances in Alabama or beyond, and although we are not asserting that the Alabama Supreme Court’s decision was unconstitutional or violative of due process in some way – the underlying questions and moving pieces of this case seem to exemplify and highlight the continued uncertainty and shifting sands through which employers strive to provide meaningful benefits and programs.

Although the Alabama decision will never be considered on the merits, certain jurisdictions and stakeholders may be emboldened by SCOTUS’s denial here to adopt or assert new interpretations of existing standards even if that materially changes the civil or criminal exposure for impacted parties. This possibility may be troubling for employer plans. Generally, policymakers change laws and rules through legislation or rulemaking, and courts reviewing statutes hew towards certainty in their interpretations. This process and stability allows stakeholders to plan and make decisions in response to expected changes. Any additional tolerance for fluidity in definitions and interpretations may exacerbate more polarized positions and cause unexpected liabilities for stakeholders.

While health care, including reproductive services and IVF, has faced uncertainty in the policymaking and judicial spheres for several years now, less formal and even retrospective changes could have broad implications beyond health care and reproductive items and services. For employers, any heightened prospect of shifting definitions and interpretations potentially adds to the ambiguity they face trying to craft plans and programs that appropriately follow the laws and regulations – and would be particularly challenging if the fundamental meaning of those laws and regulations are less stable than previously expected.

We will continue to monitor and provide updates and analysis for SCOTUS developments on these cases as well as other federal litigation impacting employer plans.

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