May 10, 2019

A Timeline of the AHP Final Rule and Recent Litigation

On June 21, 2018, the Department of Labor (“DOL”) published an Association Health Plan Final Rule (“AHP Final Rule” or “Final Rule”) expanding the definition of “employer” under ERISA Section 3(5) for purposes of determining how an association health plan (“AHP”) can be considered a single-employer plan under ERISA. Our previous blog recaps the AHP Final Rule here.

Below is a timeline of the recent litigation surrounding the Final Rule. More information can be found on the DOL’s website.

July 25, 2018:

11 states (New York, Massachusetts, California, Delaware, Kentucky, Maryland, New Jersey, Oregon, Pennsylvania, Virginia, and Washington) and the District of Columbia filed a complaint in the U.S. Federal District Court for the District of Columbia arguing, among other things, that the Final Rule’s expansion of “employer” was unlawful.

March 28, 2019:

In State of New York v. United States Department of Labor, the United States District Court for the District of Columbia vacated essential portions of the “employer” definition under the AHP Final Rule.

March 28, 2019:

The DOL responded to the ruling with an Initial Response.

April 26, 2019:

In response to the ruling, the DOL, with the Department of Justice (“DOJ”), filed a Notice of Appeal to the district court’s ruling.

April 29, 2019:

The Department of Labor’s Employee Benefit Security Administration (“EBSA”) released a policy statement regarding the status of AHPs formed in reliance prior to the district court’s ruling—below are three important takeaways from the statement:

  1. Good faith reliance will not be punished
    • Violations from good faith reliance upon the AHP Final Rule will not be punished by the DOL or the Department of Health and Human Services (“HHS”), as long as responsibilities to participants and beneficiaries are met.
  2. Coverage will generally remain in force under AHPs formed pursuant to the Final Rule
    • AHPs formed pursuant to the Final Rule, prior to the district court’s ruling, may continue to provide benefits through the remainder of the plan year or contract term.
  3. Questions are welcomed
    • The DOL, HHS, and the States will work with affected parties to address their compliance issues resulting from the district court’s ruling.

The information and content contained in this blog are for general informational purposes only, and does not, and is not intended to, constitute legal advice.

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