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Benefits

Court Dismisses Facility’s Claim Against Grandfathered Health Plan Due to Lack of Private Right of Action Under ACA

EBIA  

EBIA  

Kindred Hosps. East, L.L.C. v. Local 464A United Food and Commercial Workers Union Welfare Serv. Benefit Fund, 2021 WL 4452495 (D. N.J. 2021)

Available at https://www.govinfo.gov/content/pkg/USCOURTS-njd-2_21-cv-10659/pdf/USCOURTS-njd-2_21-cv-10659-0.pdf

A long-term acute care facility sued a welfare benefits fund after the fund denied coverage for a participant’s care and treatment at the facility because it was “non-covered.” Among other things, the facility requested a judicial declaration that the fund had to comply with the Affordable Care Act (ACA) essential health benefits requirement, which mandates hospitalization coverage along with a list of other essential coverages. The fund responded that there was no controversy regarding whether hospitalization was an essential health benefit, but it requested that the claim be dismissed because its status as a grandfathered plan exempted it from the ACA’s essential health benefit requirements and the facility did not have a private right of action to challenge that status.

The court dismissed the claim, holding that the ACA’s essential health benefits provision did not provide for a private right of action, either on its face or by implication. The court noted that the facility did not point out any portion of the ACA’s legislative history evidencing congressional intent to create such a right of action, nor did the facility cite any cases in which a party obtained a declaratory judgment that an ERISA plan violated the ACA’s essential health benefits mandate.

EBIA Comment: When the agencies issued final grandfathered plan regulations in 2020, they observed that some employers, insurers, and participants continue to find value in these plans (see our Checkpoint article). This welfare benefit fund would be an example. And there are many others—the economic impact analysis included with the regulations estimated that 400,000 firms sponsored ERISA-covered plans that were grandfathered or included a grandfathered benefit package option. For more information, see EBIA’s Health Care Reform manual at Sections VI.B (“What Is the Significance of Grandfathered Plan Status”) and XIV.F (“Comprehensive Health Coverage Requirement (Essential Health Benefits Package)—Applicable Only in the Individual and Small Group Markets”).

Contributing Editors: EBIA Staff.

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