267 F. Supp. 3d 1119
N.D. Cal.2017Background
- The ACA provides premium tax credits and cost‑sharing reductions (CSRs) to make exchange coverage affordable; the government pays insurers in advance for both subsidies.
- The ACA expressly created a permanent appropriation for premium tax credits by amending 31 U.S.C. § 1324 to include 26 U.S.C. § 36B; it did not expressly add the CSR provision (codified at 42 U.S.C. § 18071) to that appropriation.
- The Obama Administration treated CSRs as effectively appropriated and made monthly payments to insurers beginning in 2014; the House sued and a D.D.C. judge held no permanent appropriation existed but stayed relief pending appeal.
- The Trump Administration concluded CSRs lack a permanent appropriation and ceased making payments in October 2017; California and 17 other states + D.C. sued seeking emergency relief to compel continued payments pending litigation.
- States alleged standing based on administrative costs and harms to residents; many states had already coordinated with insurers to adjust 2018 rates (often loading increases onto silver plans) to mitigate consumer harm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Congress made a permanent appropriation for CSRs | ACA’s structure, coordination of tax credits and CSRs, and statutory purpose imply CSRs are covered by the permanent appropriation for §36B | Text and placement: CSRs codified at §18071 are not included in §1324’s appropriation language; appropriations rules favor a narrower reading | Court: Close question but initially favors the Administration’s argument that no clear permanent appropriation exists |
| Whether plaintiffs have Article III standing | States incur real administrative costs and harms from termination; those costs suffice for standing | Gov’t contends plaintiffs show no concrete, particularized injury | Court: States’ alleged costs and evidence are sufficient at this stage to confer standing |
| Whether preliminary injunctive relief is warranted | States: cessation will raise premiums, cause insurer exits, and injure consumers imminently | Gov’t: many states prepared rate changes; emergency relief could harm lower‑income consumers by lowering tax credits if payments resumed without rate recalibration | Court: Denied preliminary injunction because balance of equities/public interest and mitigation by states counsel against emergency relief |
| Whether forum choice/procedural defect bars suit here | States: D.C. appeal is stayed; prompt relief in this district is appropriate; states were not earlier parties | Gov’t: overlapping D.C. litigation and states’ intervention there make this forum improper | Court: Discretionary refusal not warranted; district suit permitted given urgency and procedural posture |
Key Cases Cited
- King v. Burwell, 135 S. Ct. 2480 (2015) (statutory ambiguity may be resolved by reading provisions in context and considering statutory purpose)
- Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008) (preliminary injunction factors)
- Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) (serious questions test for preliminary injunction when balance of hardships tips sharply)
- U.S. House of Representatives v. Burwell, 185 F. Supp. 3d 165 (D.D.C. 2016) (district court holding no permanent appropriation for CSR payments)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (jurisdictional issues and limits on adjudication)
- Golden Gate Restaurant Ass’n v. City & County of San Francisco, 512 F.3d 1112 (9th Cir. 2008) (courts weigh harms to lower‑income persons when balancing equities)