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Texas District Court Rules Individual Mandate is Unconstitutional; White House States the Affordable Care Act Remains the Law of the Land

"[T]he District Court ruled that the Individual Mandate was inseverable from the rest of the ACA so the District Court struck down the entire ACA. Subsequently, and most importantly for purposes of employer actions moving forward, the White House has stated that the ACA will remain the law of the land while the District Court decision is reviewed by the United States Court of Appeals for the Fifth Circuit and, then most likely, the Supreme Court of the United States.... [T]he District Court in Texas decided not to grant injunctive relief ... [which] could have invalidated the entire ACA in all 50 States immediately[.]" [Texas v. U.S., No. 18-167 (N.D. Tex. Dec. 14, 2018)]

Northern District of Texas Expands Fiduciary Exposure by Permitting ESG Proxy Voting Theory to Go to Trial

"The court's summary judgment decision ... may result in an expansion of fiduciary liability for plan sponsors and their duty to monitor hired investment managers.... [At] a minimum, plan sponsors may need to dedicate additional resources to evaluating the proxy votes of the managers of the investment funds in their plans. Depending on the outcome at trial, plan sponsors also may be vulnerable to future challenges by plaintiffs for not seeking to prevent even short-term dips in stock prices, which plaintiffs may claim are traceable in some way to shareholder vote outcomes." [Spence v. American Airlines, Inc., No. 23-0552 (N.D. Tex. February 21, 2024; order setting trial date filed Jun. 5, 2024)]

DOL's Fiduciary Rule Faces Threat from Trump Administration But Is Upheld by Texas District Court

"On February 8, 2017 ... Chief Judge Barbara Lynn of the United States District Court for the Northern District of Texas delivered the DOL a sweeping victory in the third decided challenge to the final conflict of interest regulation and related exemptions ... The win adds to the DOL's scorecard, but the Fiduciary Rule's toughest test yet may be the Presidential Memorandum, issued on February 3, 2017."

Texas District Court: Repeal of Penalty Renders Individual Mandate Unconstitutional -- Entire ACA Ruled Invalid (PDF)

55 pages. "Plaintiffs allege that, following passage of the Tax Cuts and Jobs Act of 2017 (TCJA), the Individual Mandate in the [ACA] is unconstitutional. They say it is no longer fairly readable as an exercise of Congress's Tax Power.... The Supreme Court's reasoning in [NFIB v. Sebelius] ... compels the conclusion that the Individual Mandate may no longer be upheld under the Tax Power. And because the Individual Mandate continues to mandate the purchase of health insurance, it remains unsustainable under the Interstate Commerce Clause -- as the Supreme Court already held...."Congress stated many times unequivocally -- through enacted text signed by the President -- that the Individual Mandate is 'essential' to the ACA.... All nine Justices to review the ACA acknowledged this text and Congress's manifest intent to establish the Individual Mandate as the ACA's 'essential' provision.... Because rewriting the ACA without its 'essential' feature is beyond the power of an Article III court, the Court thus adheres to Congress's textually expressed intent and binding Supreme Court precedent to find the Individual Mandate is inseverable from the ACA's remaining provisions...."Under the law as it now stands, the Individual Mandate no longer 'triggers a tax' beginning in 2019. So long as the shared-responsibility payment is zero, the saving construction articulated in NFIB is inapplicable and the Individual Mandate cannot be upheld under Congress's Tax Power...."The Court today finds the Individual Mandate is no longer fairly readable as an exercise of Congress's Tax Power and continues to be unsustainable under Congress's Interstate Commerce Power. The Court therefore finds the Individual Mandate, unmoored from a tax, is unconstitutional and GRANTS Plaintiffs' claim for declaratory relief ..."All told, Congress stated three separate times that the Individual Mandate is essential to the ACA. That is once, twice, three times and plainly. It also stated the absence of the Individual Mandate would 'undercut' its 'regulation of the health insurance market.' Thirteen different times, Congress explained how the Individual Mandate stood as the keystone of the ACA. And six times, Congress explained it was not just the Individual Mandate, but the Individual Mandate 'together with the other provisions' that allowed the ACA to function as Congress intended....On the unambiguous enacted text alone, the Court finds the Individual Mandate is inseverable from the Act to which it is essential.... "For the reasons stated above, the Court grants Plaintiffs partial summary judgment and declares the Individual Mandate, 26 U.S.C. Section 5000A(a), UNCONSTITUTIONAL. Further, the Court declares the remaining provisions of the ACA, Pub. L. 111-148, are INSEVERABLE and therefore INVALID. The Court GRANTS Plaintiffs' claim for declaratory relief[.]"[Texas v. U.S., No. 18-167 (N.D. Tex. Dec. 14, 2018)]

Text of Federal District Court Opinion: ERISA Does Not Pre-empt Texas Prompt Payment Statute (PDF)

"ALIC claims that the Providers may not seek prompt payment penalties under the TPPA because the TPPA 'relates to' ERISA plans, and thus is expressly preempted by Section 514(a).... The only impact on ERISA plans asserted by ALIC is the increased cost it will incur for administering ERISA plans as a result of the imposition of prompt payment penalties, which the Court finds speculative at best.... [T]he parties in this case are not all traditional ERISA entities, nor do the Providers 'stand in the shoes' of ERISA plan beneficiaries.... Furthermore, the Providers are not making demands for payment of benefits under ERISA plans. No coverage determination is implicated.... ERISA does not go so far as to eliminate the ability of parties on the periphery of ERISA plans to contract with one another, nor the right of state legislatures to pass laws that impact those contracts." [Aetna Life Ins. Co. v. Methodist Hospitals of Dallas, No.3:14-cv-347-M (N.D. Tex. Mar. 4, 2015)]

Texas District Court Recommends Significant ERISA Fee Award, Approves Out-of-District Rates and Rejects Proportionality Arguments

"Plaintiff's counsel -- primarily based in California -- sought rates ranging from $500 to $900 per hour. United argued that Texas rates should apply and that the requested rates were excessive. The court rejected those arguments, finding that the plaintiff had demonstrated the necessity of retaining out-of-district counsel with specialized experience in ERISA mental health and eating-disorder claims." [Dwyer v. UnitedHealthcare Insurance Co., No. 17-0439 (W.D. Tex. Jan. 21, 2026)]

Texas District Court Sacks NFL Retirement Plan Procedures for Disability Claims (PDF)

"The curtain has been pulled back as to the inner workings of Defendant The Bert Bell/Pete Rozelle NFL Player Retirement Plan. And what lies behind it is far from pretty with respect to how it handles disability benefit claims sought by former players ... What has become clear over the course of this litigation is that Plaintiffs claim for disability benefits was wrongfully and arbitrarily denied in a process that lacked the procedural safeguards both promised by the benefits plan and required by law." [Cloud v. The Bert Bell/Pete Rozelle NFL Player Retirement Plan, No. 20-1277 (N.D. Tex. Jun. 21, 2022)]

United States District Court Ruling Puts Risk Adjustment on Hold

"On February 28, 2018, the United States District Court for the District of New Mexico issued a decision invalidating use of the statewide average premium by [CMS] in the risk adjustment transfer formula established under section 1343 of the [ACA] for the 2014-2018 benefit years ... In light of a contrary decision by the United States District Court for the District of Massachusetts, the government moved the New Mexico district court to reconsider its decision, and CMS is currently awaiting the court's ruling.... The New Mexico district court's ruling currently bars CMS from collecting or making payments under the current methodology[.]"

Update to Texas v. United States: DOJ Files a Brief in Support of Eliminating the ACA

"The Brief explains that after further review of the district court's opinion, the United States now takes the position that the provisions of the ACA are 'highly interdependent' and that they 'would not 'function in a coherent way and as Congress would have intended' in the absence of the individual mandate and the guaranteed-issue and community-rating provisions.' As such, the individual mandate is inseverable from the rest of the ACA and the entire ACA should be struck down."

Texas District Court Upholds Denial of LTD Benefits Because Claimant Did Not Prove Functional Limitations Within Benefit Waiting Period

"The case ... highlights the need to focus on whether a claimant has a disabling condition and not merely a diagnosis within the benefit waiting period under the Policy.... Further, the reasoning of this case provides a strong basis for a Plan to argue to the reviewing court that it can only look to a claimant's condition during the benefit waiting period, and not the claimant's condition beyond, even though it may have worsened into a disabling condition during the administrative review, but after the elimination period." [Calkin v. United States Life Ins. Co., No. 20-0035 (S.D. TX., Apr. 29, 2021)]

DOJ, Plaintiffs File Briefs in Texas v. United States

"The brief is the first time that the DOJ has explained the dramatic shift in its position on the validity of the ACA.... [T]he DOJ largely embraced the plaintiffs' arguments and the district court's rationale."

Federal District Court in California Asked to Determine Retroactive Applicability of United States v. Windsor

"The IRS has stated its position. In Notice 2014-19, the IRS stated that retirement plans are not required to recognize same-sex spouses prior to June 26, 2013, the date of the Windsor decision. However, the IRS permits employers to amend their plans to reflect the outcome of Windsor prior to June 26. In other words, employers can provide retroactive benefits, but they are not required to do so. It seems unlikely that the California district court, and perhaps ultimately the Supreme Court, would take a position different from the IRS. Nonetheless, employers should keep a close eye on the outcome of the decision. If the court finds that Windsor should be applied retroactively to employee benefits, it is possible that many other suits may be filed, and those suits may not be limited to surviving spouse benefits."

Text of Federal District Court Opinion of Summary Judgment for Directed Trustee of United's ESOP (PDF)

16 pages; Oct. 12, 2005. Excerpt: We agree with the court's reasoning in In Re WorldCom, Inc. that 'a directed trustee's knowledge that a company's stock price and profits were declining and that the company was undergoing a restructuring' is not sufficient to find a breach of a fiduciary duty where the trustee continued to invest plan funds in the company's stock as directed.

Some Political and Practical Aspects of Texas v. United States If ACA Is Overturned

"Moving forward, we are likely to see states intervene. In fact, California Attorney General Xavier Becerra has already stated his intention to file a petition for certiorari with the Supreme Court. Other states are likely to respond in suit, joining either side in appeal or support. As a result, we are likely to see passionate amicus briefs on either side.... If the ACA is held unconstitutional as a whole, the decision will mean much more than simply removing the already inconsequential individual mandate." [Texas v. U.S., No. 19-10011 (5th Cir. Dec. 18, 2019)]

Texas District Court Nullifies Portions of Preventive Care Mandate

"In a closely watched case challenging the constitutionality of the ACA's requirement for health plans to cover certain preventive care on a first dollar basis, a Texas district court held that the requirement violates the Constitution.... The judge found the members of the [Preventive Services Task Force (PSTF)] were unlawfully appointed, which voided any of their recommendations. This determination is effective immediately and retroactive to March 23, 2010. Further, the court stated that the PrEP mandate (which covers treatment for the prevention of HIV) violates individual plaintiffs' 'rights under the Religious Freedom Restoration Act and is therefore DECLARED unlawful.' " [Braidwood Management, Inc. v. Becerra, No. 20-0283 (N.D. Tex. Mar. 30, 2023)]

Texas District Court Preliminarily Enjoins HHS from Enforcing HIPAA Reproductive Health Care Rules Against Provider

"Citing Loper, the court analyzed whether the 2024 regulations ran afoul of a statutory requirement that HIPAA would not be construed to invalidate or limit procedures under other laws for reporting child abuse, public health investigations, or certain other activities. The provider argued that the 2024 regulations limited disclosures regarding child abuse in states such as Texas. Again agreeing with the provider, the court concluded that the 2024 regulations limited providers from reporting child abuse in many ways." [Purl v. HHS, No. 24-0228 (N.D. Tex. Dec. 22, 2024)]

DOJ's Proposed Remedy in Texas v. United States Is an Unrealistic Solution

"DOJ argues that the court should invalidate the ACA only in the states that brought suit.... This proposed remedy is illogical on many levels ... [T]his approach completely upends the intent of ERISA, as employers would need to have different health benefit plans depending on where their employees, retirees, and dependents live."

Texas Federal District Court Finds for Defendants in Post-Jander Stock Drop Case

"The court found that this proposed alternative action did not pass the 'more harm than good test': 'The Court cannot say that attempting to prevent Exxon's alleged misrepresentations would have been so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it.' ... The court also rejected plaintiffs' (Jander-based) 'disclosure was inevitable' argument, finding that 'investigations into [as distinguished from the filing of charges against] Exxon by state attorneys general and the SEC' did not make it inevitable that the non-public information 'would come to light.' " [Fentress v. Exxon Mobil Corp., No. 16-3484 (S.D. Tex. Feb. 4, 2019)]

Texas v. United States: What Did The DOJ Do? (PDF)

"The error in the DOJ's position is that it views Congress's decision to repeal the individual mandate through the lens of the 2010 decision to pass the ACA and the Supreme Court's decision in NFIB. In 2010, Congress made explicit findings that the individual mandate was essential to the guaranteed issue and community rating provisions, implying that the other two would not function if the individual mandate was struck down."

Texas District Court Vacates HHS Guidance on Mandatory Coverage of Gender Dysphoria Treatments Under ACA Section 1557

"In litigation under Section 1557 of the [ACA], a Texas district court vacated [HHS] guidance addressing gender affirming care for minors on the grounds that the guidance was arbitrary and capricious and violated the Administrative Procedure Act.... For employer-sponsored health plans, the Texas district court's ruling is but the latest development in an increasingly challenging legal landscape involving coverage of gender dysphoria treatments." [Texas v. EEOC, No. 21-0194 (N.D. Tex. Oct. 1, 2022)]