U.S. Dist. Judge Orders Disgorgement of Certain ACA Payments

The ACA imposed a Health Insurance Provider Fee (the “HIPF”) on medical providers but exempted the states from paying it. Notwithstanding Congress’s exemption of the states in the ACA, HHS enacted a regulation that empowered a private actuarial board to require states to account for the HIPF in payments to their respective managed care organizations (“MCOs”)—the medical providers who contract with the states to service their Medicaid recipients.  Five states, Texas, Indiana, Kansas, Louisiana, Nebraska, and Wisconsin, challenged this rule and sought disgorgement of the amounts that they had paid. In March, the U.S.D.C. for the North District of Texas (per O’Conner) found that while the regulation was unlawful, the federal government was not required to disgorge the payments made by the five states.

The court subsequently reconsidered its March order.  On Tuesday, the Court ruled that equitable disgorgement was appropriate because:

Courts of equity exist for precisely these situations, to afford complete relief where a strict adherence to the text or precedent governing remedies at law prevents the plaintiff from fully recovering.

It should be noted that Judge O’Connor has:

• Blocked regulations prohibiting insurers, doctors, or hospitals from discriminating against transgender patients or women with an abortion in their medical history;
• Issued an injunction blocking the Obama administration’s rules forbidding schools to discriminate based on gender identity, including transgender status;  and
• Ended 43 years of judicial oversight of desegregation efforts at Richardson, Texas schools.

Judicial appointments have consequences.