Observations on Oral Arguments for the Appeal Case on Association Health Plans

On Thursday, November 14, oral arguments were heard in the Department of Labor’s appeal of the Judge Bates’ decision against the new regulation for association health plans (often referred to as “Pathway 2”). Of the three judges empaneled for the appeal, Clinton appointee Judge Tatel asked the most questions, challenging both sides with equal vigor. Interestingly, Judge Tatel asked the attorney defending the Bates decision in the 11-state lawsuit why the appeals court should even go beyond deciding whether the Department of Labor had satisfied the two-step framework of the Chevron doctrine that determines whether a government agency acted appropriately with respect to the interpretation of statutory law in the context of regulation.

Trump-appointed Judge Katsas also directed questions at both sides of the case but appeared to be more suspect of the arguments made by attorney defending the 11-state lawsuit than he was of the lawyer representing the DOL in their appeal of the Judge Bates’ decision. The senior jurist, Judge Henderson appointed by Bush, did not direct any questions to either attorney during the proceedings.

A matter of prolonged discussion among both judges and attorneys was the matter of the definition of “employee” as that concept operates within the legal framework of ERISA and the Affordable Care Act. ERISA’s definition of “employee” has been historically criticized as circular with respect to its interrelationship with ERISA’s definition of “employer.”

One of the other interesting aspects of the case was the relative absence of discussion of “working owners” by both the judges as well as the attorney arguing the case for the 11 states. Working owners are individuals who exhibit dual status as both employer and employee. Working owners were briefly mentioned during the oral arguments and very little time was spent discussing their dual status as employers and employees.

From the perspective of stakeholders in the new Trump-era association health plan regulation, the questions asked by the appeals judges were a cause for considerable optimism inasmuch as they earnestly explored many of the core issues justifying the legality of the new regulation.