453 F.Supp.3d 770
D. Maryland2020Background
- Plaintiffs (City of Columbus, Baltimore Mayor & City Council, Cities of Cincinnati, Chicago, Philadelphia, and two individuals) sued President Trump, HHS, CMS, and CMS Administrator Seema Verma challenging a set of executive actions and CMS’s 2019 Notice of Benefit and Payment Parameters (the “2019 Rule”).
- Plaintiffs assert (1) an APA challenge to nine discrete provisions of the 2019 Rule (e.g., removal of direct notice for APTC reconciliation, outsourcing QHP review to states, reduced direct-enrollment oversight, elimination of standardized options, changes to the Navigator program, SHOP changes, income-verification burdens, narrowed rate review, altered MLR/QIA credit) and (2) a Take Care Clause claim alleging a broader campaign to “sabotage” the ACA that has raised premiums and increased uncompensated care costs for cities.
- Plaintiffs allege predictable market effects: higher premiums, reduced enrollment (especially of healthy individuals), poorer plan quality, and increased municipal uncompensated-care expenditures.
- Defendants moved to dismiss for lack of subject-matter jurisdiction (standing, ripeness) and failure to state a claim (12(b)(6)); administrative record for rulemaking had not yet been produced.
- Court disposition: motion to dismiss denied in part and granted in part — standing and ripeness found adequate to proceed; APA arbitrary-and-capricious review deferred as premature without the administrative record and contrary-to-law arguments were not resolved at dismissal; Take Care Clause claim dismissed in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | Plaintiffs suffer concrete injuries: individuals pay higher premiums; cities incur greater uncompensated-care costs; harms are traceable to defendants’ actions and redressable by relief. | Defendants: plaintiffs’ alleged injuries are speculative or result from third-party insurer decisions and other factors (attenuated causation); some premium trends contradict plaintiffs’ claims. | Court: Article III standing satisfied for Individual and City plaintiffs — injuries concrete, traceable (predictable third-party reactions), and redressable. |
| Ripeness | Claims are fit (legal questions exist) and plaintiffs face immediate hardship from ongoing market harms. | Defendants: many claims rest on speculative future effects and are not ripe. | Court: claims are ripe; many issues are legal and hardships are occurring. |
| APA challenge to 2019 Rule (arbitrary & capricious / contrary to law) | The nine challenged provisions are arbitrary, capricious, and some conflict with ACA text; agency failed to justify changes and ignored comments/evidence. | CMS: provided reasoned bases in the rule, invocation of agency expertise, and argues Chevron deference where statutes are ambiguous. | Court: Dismissal premature on arbitrary-and-capricious grounds because the administrative record is required; contrary-to-law arguments were not resolved at MTD stage and are underdeveloped. |
| Take Care Clause (freestanding) | Executive actions collectively violate President’s duty to “take care” that laws are faithfully executed; equitable/declaratory relief appropriate to stop sabotage. | Defendants: Take Care Clause claims against the President are non-justiciable or not a freestanding private cause of action; presidential discretion and political questions preclude relief. | Court: Count II dismissed in full — injunctive relief and a Take Care Clause cause of action are not available here; declaratory relief also fails because the alleged Presidential duties are discretionary, non-ministerial. |
Key Cases Cited
- Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012) (background on the ACA and its reforms)
- King v. Burwell, 576 U.S. 473 (2015) (statutory interpretation of ACA subsidy provisions)
- Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29 (1983) (APA arbitrary-and-capricious standard)
- Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) (agency statutory-interpretation/deference framework)
- Dep’t of Commerce v. New York, 139 S. Ct. 2551 (2019) (standing can rest on predictable third‑party responses to government action)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (concrete and particularized injury requirement)
- Mississippi v. Johnson, 71 U.S. 475 (1866) (limits on judicial mandamus to compel presidential execution of discretionary duties)
- Nat’l Treasury Emps. Union v. Nixon, 492 F.2d 587 (D.C. Cir. 1974) (discussion of Take Care Clause and ministerial vs. discretionary duties)
- Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477 (2010) (equitable relief and separation-of-powers principles)