Central United Life Insurance v. Sylvia Burwell
827 F.3d 70
D.C. Cir.2016Background
- Central United Life and other insurers sold stand-alone fixed indemnity plans that pay fixed cash amounts for specified medical events.
- The PHSA defines certain "excepted benefits," including fixed indemnity, which qualify if provided under a separate policy and offered as independent, noncoordinated benefits.
- The ACA incorporated the PHSA excepted-benefit definition and excluded those benefits from "minimum essential coverage."
- In 2014 HHS promulgated a regulation adding a requirement that fixed indemnity plans be provided only to individuals who have minimum essential coverage, effectively eliminating stand-alone fixed indemnity as an excepted benefit.
- Insurers sued; the district court permanently enjoined HHS’s rule under Chevron Step One, holding HHS exceeded its statutory authority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HHS lawfully added a eligibility requirement for fixed indemnity excepted-benefits | HHS added an extra statutory condition beyond what Congress authorized; rule unlawfully amends PHSA | HHS reasonably read "offered as independent, noncoordinated benefits" as ambiguous and could require other coverage (i.e., MEC) | Court: HHS exceeded its authority; rule invalid under Chevron Step One |
| Whether the phrase "independent, noncoordinated benefits" allows regulating consumers' other coverage | Insurers: phrase addresses sellers' conduct, not buyers' coverage status | HHS: phrase presumes existence of other coverage and is ambiguous as to type | Court: Phrase addresses providers; HHS misread it to regulate consumers |
| Whether Chevron deference applies | Insurers: agency rewrote statute, so no deference | HHS: interpretation entitled to deference because of ambiguity | Court: No Chevron deference because interpretation goes beyond statutory meaning |
| Whether injunction was appropriate | Insurers: rule invalid and injunctive relief proper | HHS: rule permissible exercise of regulatory authority | Court: Affirmed permanent injunction against enforcement |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (establishes two-step deference framework for agency statutory interpretations)
- Brown v. Gardner, 513 U.S. 115 (1994) (context controls statutory ambiguity analysis)
- La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355 (1986) (agencies have no power beyond what Congress confers)
- MCI Telecommunications Corp. v. AT&T Co., 512 U.S. 218 (1994) (agency interpretation not owed deference when it exceeds statutory meaning)
- Jordan v. Secretary of Education, 194 F.3d 169 (D.C. Cir. 1999) (agency may not rewrite statute by adding obligations not found in text)
- Hearth, Patio & Barbecue Ass’n v. U.S. Dept. of Energy, 706 F.3d 499 (D.C. Cir. 2013) (courts first employ traditional statutory construction before deferring)