On December 28, 2016, two shots were filed in quick succession in the battle over the cost-sharing reduction (CSR) payments, followed on January 29 by an order from the court. The House of Representatives has challenged the CSR payments (which reimburse insurers for reducing cost sharing for low-income marketplace enrollees) in House v. Burwell, claiming that the payments are illegal because they were never appropriated. The lower court ruled for the House, but the Obama administration appealed, arguing that money had been appropriated and that the payments were legal. With the election of Donald Trump, the House asked for a stay of the litigation, suggesting to the court that it might be able to settle the case with the Trump administration. The court stayed the appeal until late February.

On December 20, two of the 5.9 million cost-sharing reduction recipients asked the appellate court to allow them to intervene in the litigation, claiming that their interests were no longer represented with the end of the Obama administration and that they would be seriously injured by the termination of the payments. Both the government and the House refused to respond to the intervention request, claiming that the proceedings were stayed and thus no further action could be taken until the stay was lifted. The interveners then filed on December 2, an emergency motion, asking that the court lift the stay for the sole cause of ruling on the motion, and that it do so before the Trump administration begins on January 20.

On December 28, 2017, the House of Representatives responded to the emergency motion forcefully urging the court to reject it. A few hours later the petitioners replied to the House’s response.

The House accused the interveners of “inexcusable delay” and “unjustified dilatoriness” in waiting to file their motion to intervene until a month after the initial motion to hold briefing in abeyance and six weeks after the election. The movants should not, the House asserted, “be permitted to sit on their hands for weeks and then impose the burden of expedited briefing and ‘emergency’ decision making on the Court and the parties.”

The interveners replied that the need for an emergency motion was created by the House, which had requested the stay of the proceedings. Absent the stay, the motion could have been briefed according to the court’s regular rules and been resolved before the new administration. Moreover, the motion was filed only 30 days after the House’s motion for a stay and 15 days after the court granted that motion. This is not, the reply noted, an unreasonable period of time for parties not previously represented in the litigation to find lawyers and for those lawyers to prepare and file legal pleadings. They could have noted that the emergency motion was in fact filed one day after Donald Trump was actually elected president by the Electoral College, and that the House did not file its lawsuits until late November 2014, almost a year after the allegedly illegal proceedings began, and that much of the delay was due to the House’s own problems in securing counsel.

The House next responded that the motion was based on “unsubstantiated conjecture regarding a hypothetical chain of speculative future events,” beginning with a potential settlement of the litigation between the House and the Trump administration. The interveners in reply note that the House has initially requested the stay specifically because of the “significant possibility of a meaningful change in policy in the new Administration that could . . . obviate the need for resolution of this appeal,” and later in the December 27 brief itself stated that “[s]ettlement is highly favored” as a resolution of the case. The possibility of the House and Trump administration settling the case is anything but speculative.

Finally, the House argued that the interveners could not be injured by further delay in the resolution of their motion because the district court’s stay of its order remains in effect, the position of the Trump administration remains unclear, and the Trump administration could in any event unilaterally terminate the cost-sharing reduction reimbursements. The House further asserted that the Affordable Care Act requires insurers to reduce cost sharing for eligible enrollees and that the litigation only concerns the reimbursement that the insurers would receive for doing so, not the provision of CSRs. This final contention (and indeed much of the December 27 brief), goes to the question of whether intervention should be allowed as much as it does to the question of whether the House should have to respond to the intervention motion before the stay is lifted, the purported subject of the brief.

The interveners reply notes that the House and the new administration could indeed settle the case before the stay was lifted, lifting the district court’s stay and making it impossible for the interveners to present their case to the court. This indeed seems to be the reason for the House seeking the stay. The interveners recognize that the administration could unilaterally change its interpretation of the provision that the Obama administration believed gave it the ability to reimburse the insurers without a separate appropriation, but they would have to do so by executive action and would not be able to claim judicial imprimatur for doing so, which the interveners seek to forestall.

Finally, the reply brief argues that the assertion that the insurers would simply absorb $7 billion in unanticipated losses without the recipients of the CSRs suffering significant harm is not credible. Although the ACA does require the insurers to reduce cost sharing regardless of the reimbursement they receive, insurers would likely challenge the constitutionality of such an uncompensated obligation and in any event would withdraw from the market for 2018 leaving the interveners without affordable coverage.

The interveners also challenge the House’s interpretation of the clause in the contract between the Centers for Medicare and Medicaid Services and the marketplace insurers which allows the insurers to terminate participation in the marketplaces if the CSRs cease to be “available to qualifying Enrollees.” The House argued that this provision only allows the insurers to withdraw from the marketplaces if enrollees cease to receive the CSRs, which cannot happen since the ACA requires the insurers to reduce cost sharing. The interveners argue that for that very reason, the contract provision only makes sense if it is interpreted to allow the insurers to withdraw from the marketplaces if the government ceases to fund the CSRs.

On December 29, 2016, the court lifted the stay for the purposes of hearing the motion to intervene and ordered the parties to respond to the motion by January 6, 2017, giving the interveners until January 11, 2017 to reply to their response. This should give the court sufficient time to decide the motion before the change of administration.  Judge Henderson, one of the three judges on the panel that decided the motion, would have denied the emergency motion.

IRS Releases Updated Forms On Premium Tax Credits

The Internal Revenue Service has recently released the 2016 version of Publication 974, explaining the availability of premium tax credits and how to claim them in detail. The 2016 version of form 8962, which is used for reporting premium tax credits, and its instructions, were released by the IRS earlier this year, as was the 2016 version of form 8965, used for reporting or applying for individual responsibility tax exemptions, and its instructions. The new Publication 974 does not identify changes from the 2015 version.