ACA survives another close call in the Supreme Court
2015 will be remembered as the year the U.S. Supreme Court narrowly saved the Affordable Care Act for the second time. But there were other court rulings that also will have a lingering impact on healthcare.
In their June opinion in Kingv. Burwell, Chief Justice John Roberts and five other justices upheld the legality of the law’s insurance premium subsidies in all states, averting an insurance market meltdown.
But healthcare providers were far less pleased with the Supreme Court’s 5-4 ruling in Armstrong v. Exceptional Child Center Inc., in which the court held that providers cannot sue state Medicaid agencies over low payment rates. Now it’s up to the federal government to make sure the states are paying providers enough to ensure adequate patient access to care, said Nicholas Bagley, a University of Michigan law professor.
In a third significant healthcare ruling, the Supreme Court ruled in February in North Carolina Board of Dental Examiners v. Federal Trade Commission that state licensing boards composed of active members of the professions they regulate, such as practicing doctors and dentists, are not immune from antitrust law unless they are actively supervised by their states. That may prompt state boards to shake up their memberships, or spur states to tighten their oversight of licensing boards.
In a major antitrust ruling, the 9th U.S. Circuit Court of Appeals upheld a lower court ruling ordering St. Luke’s Health System in Idaho to unwind its acquisition of a large physician practice. That sent a warning shot to providers about the antitrust risks of mergers in the name of improving care and efficiency. The appeals panel said that promising better patient outcomes wasn’t enough to sidestep antitrust concerns.
“It seemed to set a pretty high barrier for merging parties to defend a merger on efficiencies,” said Robert Leibenluft, a partner at Hogan Lovells and former head of the healthcare division in the FTC’s Bureau of Competition.
In July, a different federal appellate court upheld a $237 million False Claims Act verdict against Tuomey Healthcare System in Sumter, S.C., based on allegations that Tuomey paid doctors above fair market value and rewarded them for referring patients to the hospital, in violation of the Stark law.
Tuomey ended up settling for $72.4 million. It was one of a string of large hospital settlements this year in Stark/False Claims Act cases involving physician compensation arrangements. The Tuomey case “has had a chilling effect throughout the industry, causing compliance officers and the lawyers who advise them to demand much more verification of fair-market value,” said Peter Pavarini, co-leader of Squire Patton Boggs’ healthcare practice group.
At year-end, legal observers were closely watching another ACA challenge that could reach the Supreme Court. In September, a federal district judge in Washington granted legal standing to House Republicans in a case seeking to block federal funding to reduce cost-sharing for low-income exchange-plan members. The judge is now considering that case, House of Representatives v. Burwell, on the merits. Experts say it could be a close case with a significant impact on the ACA.