District Court in Missouri Enjoins State Navigator Rules Citing ACA Preemption

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By Mary Anne Pazanowski  

Jan. 23 --In a case attorneys called the first of its kind, a federal court in Missouri Jan. 23 said federal law likely preempts Missouri's Health Insurance Marketplace Innovation Act (HIMIA), to the extent that the state law applies to entities and individuals certified to counsel people seeking to purchase insurance on the state's federally facilitated exchange (FFE) (St. Louis Effort for Aids v. Huff , W.D. Mo., No. 13-4246, 1/23/14).

According to a statement released by the National Health Law Program (NHeLP), more than 12 states, including Missouri, enacted laws in 2013 that impose additional licensing standards and limitations on individuals and entities certified by the federal government to help consumers enroll in FFEs.

Jane Perkins, co-counsel for plaintiffs and NHeLP's legal director, said in the press release that the court's decision “is clear: federally funded navigators must be able to exercise the duties they are funded to do under federal law. Missouri cannot interfere with that.”

Jay Angoff, counsel for plaintiffs and former director of Affordable Care Act implementation at the Health and Human Services Department, added: “This opinion calls into question the Constitutionality of laws in many states obstructing the implementation of the ACA. This decision is great news for consumers.” Angoff is with Mehri & Skalet PLLC in Washington.

In a follow-up telephone conference call Jan. 23, Angoff said there have been many lawsuits designed to obstruct implementation of the ACA, but this was the first designed “to promote implementation.” Several states have similar laws, he said, although Missouri's may go the furthest toward obstructing the ACA. Although it is “too early to say” whether there will be more lawsuits challenging those other state laws, at the least, state legislatures considering new laws designed to obstruct implementation of the ACA may want to “think twice,” he said.

If other lawsuits do arise, Angoff said, the well-reasoned decision of Judge Ortrie D. Smith in this case certainly strengthens the arguments against them.

NHeLP is a nonprofit organization that advocates to protect and advance the health rights of low-income and underserved individuals and families.

Nanci Gonder, press secretary for the Missouri Attorney General's Office in Jefferson City, told Bloomberg BNA Jan. 23 the office was “reviewing the ruling.”

Injunction Issued

The U.S. District Court for the Western District of Missouri entered a preliminary injunction that precludes the Missouri Department of Insurance, Financial Institutions and Professional Registration from imposing requirements on certified application counselors (CACs) and navigators that exceed the requirements imposed by the Affordable Care Act and its attendant regulations. The court said HIMIA frustrates the ACA's purposes of increasing Americans' access to health insurance and decreasing the cost of health care by placing additional burdens on designated federal counselors.



“This opinion calls into question the Constitutionality of laws in many states obstructing the implementation of the ACA. This decision is great news for consumers.”  


--Jay Angoff, Mehri & Skalet PLLC

The court said that Missouri, having elected not to create its own exchange, and to instead rely on the federal government to operate the exchange in the state, may not “choose to impose additional requirements or limitations on the exchange.” Allowing the state to do so would frustrate “Congress's purpose of having” the HHS “operate FFEs in states where no exchange exists,” it said.

Missouri is one of 34 states that have opted not to operate insurance exchanges, also called marketplaces. Sixteen states and the District of Columbia have their own exchanges.

ACA's Exchange Rules

Under the ACA, individuals who are unable to obtain qualified health plans (QHPs) may purchase plans through exchanges and, potentially, qualify for government subsidies to help them afford the full cost of the insurance. The ACA envisions that the states will establish these exchanges, 42 U.S.C. § 18031(b), but sets up a program under which the HHS will establish and operate an exchange in a state that opts not to do so, 42 U.S.C. § 18041(c)(1). The HHS must contract with appropriate nonprofit entities in the state to operate its FFE.

All exchanges--whether state or federally operated--must have a certified application assistance program in which CACs and navigators are available to help buyers. The ACA and its implementing regulations spell out the duties of CACs and navigators and regulate their conduct. Certification standards and counselors' obligations also are specified in the regulations. The exchange is responsible for overseeing CACs and navigators and must have procedures for withdrawing certifications. All certified and approved CACs and navigators on FFEs are subject to HHS oversight.

Two of the plaintiffs in this lawsuit, St. Louis Effort for AIDS and Planned Parenthood of the St. Louis Region and Southwest Missouri (the CAC plaintiffs) are CACs and navigators under the ACA. They also employ individuals who are certified by the HHS as CACs and navigators. The HHS operates the FFE in Missouri.

State Regulations

In 2013, Missouri enacted the HIMIA, which regulates the conduct of entities and individuals who perform duties on behalf of the FFE. The statute uses the term “navigator” to describe these individuals and entities but defines the term differently than the federal law. In Missouri, a “state navigator” is an individual or entity that “for compensation, provides information or services in connection with eligibility, enrollment, or program specifications of any health benefit exchange operating in the state.”

The HIMIA requires CACs and navigators to be licensed by the state, Mo. Rev. Stat. § 376.2002.1, and imposes certain licensing requirements. It also sets out continuing education requirements for state navigators.

“Far more significant,” the court said, the HIMIA places limitations on what state navigators may do. For example, state navigators may not perform certain functions unless they are also licensed as “insurance producers.” Essentially, this means the state navigator also must be an insurance agent or insurance company. Thus, under state law, a navigator that isn't a licensed insurance agent may not give “advice concerning the benefits, terms and features of a particular health plan or offer advice about which exchange health plan is better or worse for a particular individual or employer,” Mo. Rev. Stat. § 376.2002.3(3).

Conflict Preemption

The CAC plaintiffs argued that these HIMIA provisions are preempted by federal law, and they sought a preliminary injunction to preclude the state from enforcing its law pending a decision on the merits.

The Constitution's supremacy clause states that federal law is the supreme law of the land. Congress may expressly preempt state laws, but preemption also may occur by implication, such as where compliance with both federal and state law is impossible or when a state law “stands as an obstacle” to the objectives of a federal law, the court said.

The plaintiffs alleged that the HIMIA provisions make the operation of the Missouri FFE more difficult and, therefore, stand as an obstacle to the purposes of the ACA. Because the court considered the issue on a motion for a preliminary injunction, its analysis at this stage turned, to a large extent, on whether the plaintiffs had shown they were likely to succeed on the merits of this claim. The court found they had satisfied this requirement.

Application to Plaintiffs

The state argued that the CAC plaintiffs weren't likely to succeed because the HIMIA didn't apply to them. The state law applied only to individuals or entities that were compensated for their services, the state said. The court found several flaws in this argument, including the fact that the CAC plaintiffs were compensated, through HHS grants, for performing their duties as federal counselors.

Also, the court said, the CAC plaintiffs came under the HIMIA second definition of a “state navigator,” which included federal navigators. The law's third clause made it even clearer that the HIMIA applied to the CAC plaintiffs, as it defines a state navigator as anyone “who receives funds” from the HHS, the court said.

In short, the court said, the CAC plaintiffs were subject to the HIMIA because they receive compensation in connection with a health benefit exchange; they were selected to perform the duties of a federal navigator; they receive HHS grants to perform these duties; HHS certified them to perform duties related to the FFE; and their function isn't limited to disseminating public health information to a general audience.

Licensing Requirements and Limitations

The court went on to say that “it seems obvious” that the HIMIA's licensing requirements imposed additional requirements that obstructed the HHS's operation of the FFE in Missouri, “and for that reason alone HIMIA is preempted insofar as it applies to the CAC plaintiffs.”

The court concluded that the state rule mandating that federal navigators obtain state licenses “constitutes an impermissible obstacle.”  


The court said it was “theoretically possible” for the CAC plaintiffs to obtain a state license. But the question wasn't “whether it is possible” for federal navigators to meet state licensing requirements, but whether the requirement that they do so “imposes additional burdens that frustrate the federal purpose,” it said. The court concluded that the state rule mandating that federal navigators obtain state licenses “constitutes an impermissible obstacle.”

The HIMIA's “more significant” limitations on what state navigators may do present even greater obstacles, the court said. It noted, for example, that federal counselors are required to perform certain functions that are prohibited by the HIMIA unless the counselor is a licensed insurance agent. Provisions in the Missouri law that prohibit counselors from providing advice about benefits, terms and features of individual plans “obviously conflict” with federal provisions that require counselors to provide information about various plans, the court said.

The court concluded that “any attempt by Missouri to regulate the conduct of those working on behalf of the FFE is preempted.” The ACA gave the state the opportunity to create an exchange and also provided a mechanism by which the state might join the federal government in operating an exchange. Having completely opted out of the “exchange business,” the court said, Missouri may not impose additional requirements or limitations on the FFE.

The court also said that the CAC plaintiffs demonstrated that they faced irreparable harm if the state wasn't enjoined from enforcing the HIMIA's requirements. It also said that it could discern no hardship to the state as the result of the injunction and that the public interest favored “removing the state-created specter of punishment and regulation that likely violates the Constitution, and permitting the FFE to operate as intended by the ACA.”

Abigail Coursolle, Los Angeles; Ingrid Babri, Steven A. Skalet and Jay B. Angoff, of Mehri & Skalet, Washington; Martha Jane Perkins, Carrboro, N.C.; and Jane Perkins, of the National Health Law Program Inc., Chapel Hill, N.C., represented the plaintiffs. Jeremiah J. Morgan, of the Missouri Attorney General's Office, Jefferson City, Mo., represented the state.


To contact the reporter on this story: Mary Anne Pazanowski in Washington at mpazanowski@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com

Full text of the decision is at http://www.bloomberglaw.com/public/document/St_Louis_Effort_for_AIDS_et_al_v_Huff_Docket_No_213cv04246_WD_Mo_.

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