In a major victory for the ACA, on January 23, 2014, Judge Ortie Smith of the federal court for the Western District of Missouri enjoined the Missouri Department of Insurance from enforcing a Missouri law that requires federal navigators, certified application counselors (CACs), and counselor-designated organizations to obtain a state license and limits their activities.
State laws imposing licensure requirements on navigators and CACs and restricting their activities have been enacted by at least seventeen states. The enactment of these laws, almost all of which have been adopted by Republican-dominated states, appear to be driven by a combination of concern for consumer protection, political opposition to the Affordable Care Act, and lobbying by agent and broker groups trying to protect their turf from competition. The laws require navigators and other counselors and assisters authorized under the auspices of the ACA to obtain state licenses, impose licensure obligations beyond those imposed by federal law, and limit what navigators and assisters can say to consumers whom they are assisting.
The Affordable Care Act creates a navigator program to educate consumers about the availability of qualified health plans, to distribute fair and impartial information about QHPs and about the availability of premium tax credits and cost-sharing reduction payments, and to facilitate enrollment in QHPs. The Department of Health and Human Services has awarded grants to non-profit organizations to serve as navigators in federal exchange states. State exchanges have also established navigator programs. The federal regulations additionally recognize CACs, non-profit or governmental organizations such as community health centers, hospitals, or social service agencies trained to assist consumers to enroll in QHPs through the exchanges. The federal regulations impose educational and certification requirements on individuals who wish to qualify to serve as navigators or CACs.
What’s in the Missouri law? The Missouri navigator law specifically requires anyone who “for compensation, provides information or services in connection with eligibility, enrollment, or program specifications of any health benefit exchange operating in this state,” to be licensed as a “state navigator” and to meet state licensure requirements in addition to those imposed by the federal law. It also prohibits state navigators who are not licensed as insurance agents or brokers from providing “advice concerning the benefits, terms and features of a particular health plan or offer[ing] advice about which exchange health plan is better or worse for a particular individual or employer.” The Missouri law further prohibits navigators from providing “any information or services related to health benefit plans or other products not offered in the exchange,” and requires navigators to advise persons with private insurance to “consult with a licensed insurance producer [agent] regarding coverage in the private market.”
The lawsuit challenging the Missouri navigator licensure law was brought by the Saint Louis Effort for AIDS and Planned Parenthood of the Saint Louis Region and Southwest Missouri, which are both counselor-designated organizations, CACs, and navigators under the ACA, as well as by a variety of other consumer advocacy and economic justice organizations and individual doctors and others who provide or want information about coverage under the ACA. The plaintiffs were represented by Jay Angoff, the first director of the HHS Office of Consumer Information and Insurance Oversight (which became the current CMS Center for Consumer Information and Insurance Oversight), who is now in private practice, other members of his firm Mehri and Skalet, and Jane Perkins and Abbi Coursolle of the National Health Law Program. The defendant was the Missouri Department of Insurance.
The plaintiffs’ claims. The lawsuit claimed that the Missouri navigator law is preempted by the ACA’s navigator provisions and thus is unconstitutional under the Supremacy Clause of the Constitution. It also claimed that the Missouri law violates the First Amendment by restricting the free speech rights of the plaintiffs and the Due Process Clause because it does not give adequate notice of proscribed activities. The court limited its consideration to the Supremacy Clause preemption argument because it was dispositive of the case.
The case was before Judge Smith on the plaintiffs’ motion for a preliminary injunction and the defendant’s motion to dismiss the case for failure to state a legal claim. To award a preliminary injunction — which blocks the defendant from taking action (in this case from enforcing the law) until a final decision of the case — a court must find that the plaintiffs are likely to succeed in their legal argument; that they will suffer “irreparable harm” if they are not granted relief; that the plaintiffs will suffer greater hardship than the defendants if relief is granted; and that the public interest supports granting relief.
The court’s decision. The court granted the plaintiffs’ motion for a preliminary injunction. This presumably stops the enforcement of the law until the court can reach a final decision. But the court also rejected the defendant’s motion to dismiss, stating that it rejected most of the defendant’s legal arguments and that the defendant had failed to demonstrate that the plaintiffs’ legal claim was inadequate. The court also denied a request for a hearing because the only issues in the case are legal. If the only issues in the case are legal, and the defendant has lost the case on the law, it is not clear what remains to be decided. It looks like the plaintiffs won.
The court began its decision by describing the structure of the exchanges and the navigator and CAC program under the ACA. It noted that Missouri has a federal exchange, so that these programs are regulated by HHS. The court also noted that although the ACA provides that it does not “preempt any State law that does not prevent the application” of its provisions, it impliedly preempts any state law that does prevent its application. Under the Supremacy Clause, state laws that “make the operation of the FFE more difficult or onerous run afoul of the ACA’s purpose and are subject to preemption.” The court concluded that any law that frustrates the ACA’s purpose by imposing additional burdens on federally designated counselors or threatening to punish them for performing their duties under the ACA is preempted.
The court next turned to addressing the Missouri law’s applications to the plaintiffs. The Missouri law defines a “state navigator,” as described above, as one who “for compensation” provides information relevant to exchange plans, but also specifically includes federal navigators within its purview. The law, however, excludes “any not-for-profit entity disseminating to a general audience public health information.” The court held that the two plaintiffs that are federal navigators and CACs are “compensated” through their grants, but also are specifically covered by the law. They are also not disseminating “public health information,” but rather specific information about ACA exchange plans. The court concluded that the other plaintiffs, however, who are not federal CACs or navigators, are not providing information about exchange plans for compensation, and are thus not subject to the law and cannot challenge it.
The court next addressed Missouri’s navigator licensure requirements. The court noted that the plaintiff had already complied with federal licensure requirements. Additional state licensure requirements obstruct and frustrate the federal government’s operation of the federal exchange, and thus are unconstitutional.
The court concluded, however, that the licensure requirements are not as problematic as the “far more significant” state limitations on navigator activities. Provisions of the Missouri law prohibiting navigators from providing “advice concerning the benefits, terms and features of a particular health plan or offer[ing] advice about which exchange health plan is better or worse for a particular individual or employer” conflict directly with the federal law requirement that navigators “distribute fair and impartial information” about health plans. The court held that providing information is indistinguishable from providing advice.
Legal provisions prohibiting navigators from providing information about health plans not offered on the exchange are also preempted by federal law. The court was less convinced that the Missouri requirement that navigators and CACs refer people with private insurance to talk to insurance agents conflicts with federal requirements, but concluded that “any attempt by Missouri to regulate the conduct of those working on behalf of the” federal exchange is preempted. Missouri can establish its own exchange if it wants to, but cannot impede the operation of the federal exchange.
The court concluded by determining that enforcement of the public law would cause the plaintiffs irreparable harm by requiring them either to violate their obligations under federal law or fulfill their federal duties and risk punishment under state law. The court also determined that the public interest is not served by permitting the state to frustrate the implementation of the ACA through an unconstitutional law, and thus entered an injunction. Missouri can still, presumably, prohibit unlicensed individuals from selling insurance for compensation, but cannot obstruct the implementation of the ACA.
The Missouri law follows earlier litigation brought both in federal and state court in Tennessee challenging that state’s restrictive navigator regulations. Tennessee settled the state court case, allowing navigators and CACs to carry out their duties under federal law. A temporary injunction was entered in the federal case. The Missouri litigation has obvious ramifications for the restrictive regulations recently enacted by Texas, as well as for navigator laws and regulations in other states. Until now, litigation has mainly served as a tool for attempting to obstruct or block the implementation of the ACA. The Missouri case demonstrates that litigation can also be used as a tool to remove obstruction of the law.