United States District Court, D. Wyoming
NORTHERN ARAPAHO TRIBE, on its own behalf and on behalf of its members, Plaintiff,
SYLVIA BURWELL, Secretary of the United States Department of Health & Human Services, and JACOB J. LEW, Secretary of the United States Department of Treasury, Defendants
For Northern Arapaho Tribe, on its own behalf and on behalf of its members, Plaintiff: Andrew W Baldwin, Berthenia S Crocker, Kelly A Rudd, Janet E Millard, Mandi Anne Vuinovich, LEAD ATTORNEYS, BALDWIN CROCKER & RUDD, Lander, WY.
For United States Department of Health and Human Services Secretary, in her official capacity, also known as Sylvia Burwell, United States Department of Treasury Secretary, in his official capacity, also known as Jacob J Lew, Defendants: Alice S LaCour, Jacek Pruski, PRO HAC VICE, LEAD ATTORNEYS, UNITED STATES DEPARTMENT OF JUSTICE, CIVIL DIVISION, FEDERAL PROGRAMS BRANCH, Washington, DC; Nicholas Vassallo, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, Cheyenne, WY.
ORDER DENYING PRELIMINARY INJUNCTION
Scott W. Skavdahl, United States District Judge.
This matter comes before the Court on the Northern Arapaho Tribe's Motion for Preliminary Injunction. (Doc. 8.) Defendants filed an opposition to the motion. (Doc. 26.) The Court held an evidentiary hearing on the matter on February 12, 2015. Having considered the evidence and affidavit testimony presented at the hearing, the parties' briefs, the arguments of counsel, the record herein, and being otherwise fully advised, the Court finds and concludes a preliminary injunction should be denied.
This case asks whether the Northern Arapaho Tribe (the " Tribe" ), a federally-recognized Indian tribe, should be exempted from the " large employer mandate" of the Patient Protection and Affordable Care Act of 2010 (the " ACA" ). The large employer mandate is found at 26 U.S.C. § 4980H and, in short, requires a large employer to sponsor a health insurance plan meeting certain minimum requirements
for its full-time employees or face an " assessable payment" if it fails to do so. As relevant to this case, § 4980H(c)(2) defines a " large employer" as employing an average of at least 50 full-time employees on business days.
The Tribe operates several different economic enterprises on the Wind River Indian Reservation in Wyoming, including a casino, a convenience store, a gas station, a grocery store, and other businesses. The Tribe employs over 900 people in its economic enterprises and governmental agencies. (Conrad Decl. ¶ ¶ 2, 4.) Nonetheless, the Tribe argues it should not be subject to the large employer mandate.
After the ACA was passed, the Tribe discovered its employees could buy health insurance plans on the federal health insurance exchange that offered superior coverage at a lower price than any other plan previously available in the insurance market. The Tribe encouraged and assisted its members in purchasing individual health insurance plans through the federal exchange, including paying up to 80% of the premiums for its tribal members.
As of January 1, 2015, the ACA's large employer mandate became effective. The Tribe alleges the health insurance plan it would offer as a large employer would be more expensive for its employees and offer less coverage than the individual plans available on the federal exchange. The Tribe believes the individual health insurance plans purchased through the federal exchange are superior to any employer-sponsored insurance plan it could provide under the large employer mandate, primarily because most of the Tribe's members qualify for income-based tax credits and cost-sharing exemptions under the individual plans that are unavailable within an employer-sponsored plan.
The Tribe has filed this lawsuit against the Secretary of the United States Department of Health and Human Services and the Secretary of the United States Department of Treasury (collectively, " Defendants" ). The Tribe seeks to be exempted from the large employer mandate and asserts its members should be permitted to continue to obtain individual health insurance plans on the federal exchange. In the instant motion, the Tribe requests a preliminary injunction that would exempt it from the large employer mandate during the pendency of the case. Defendants oppose a preliminary injunction arguing this lawsuit is barred by threshold matters and, if examined on the merits, the Tribe cannot establish its right to injunctive relief.
The ACA " aims to increase the number of Americans covered by health insurance and decrease the cost of health care." Nat'l Fed'n of Indep. Bus. v. Sebelius, 132 S.Ct. 2566, 2580, 183 L.Ed.2d 450 (2012). The ACA was codified in scattered sections of Title 26 and Title 42 of the United States Code. Title 26 is the Internal Revenue Code.
1. The Individual Mandate
The so-called " individual mandate" became enforceable in 2014 and it requires most individuals to maintain a minimum level of health insurance coverage or be subject to a monetary tax " penalty." 26 U.S.C. § 5000A. Members of Indian tribes, including the members of the Plaintiff Tribe here, are subject to the mandate but nonetheless exempt from any tax penalty. Id. § § 5000A(d)(1), (e)(3); Nat'l Fed'n, 132 S.Ct. at 2580.
To assist with meeting the individual mandate, the ACA provided for the creation of health insurance exchanges whereby individuals can obtain health insurance coverage. 42 U.S.C. § § 18031-18044. Each plan offered through an exchange must provide a minimum level of coverage, as defined by Congress. Id. § 18021.
Wyoming opted not to set up its own state exchange. Consequently, qualifying Wyoming citizens may obtain an individual health insurance plan through the federally-facilitated exchange. See 42 U.S.C. § 18041(c)(1) (requiring the Department of Health and Human Services to " establish and operate" an exchange within a state that opts out of setting up its own).
The ACA also enacted new tax credits and cost-sharing reductions in an attempt to make health insurance coverage on the exchanges more affordable for low- and middle-income individuals. For taxpayers whose household income is between 100% and 400% of the poverty line, the ACA establishes premium tax credits. 26 U.S.C. § 36B. These premium tax credits are intended to reduce a qualifying tax payer's net cost of insurance, and they are advanceable and refundable so that individuals with little or no income tax liability can still benefit from them. See 42 U.S.C. § 18082.
In addition to the premium tax credits, the ACA also provides for federal payments to insurers to help cover certain individuals' cost-sharing expenses for insurance obtained through an exchange. 42 U.S.C. § 18071. These cost-sharing subsidies are intended to reduce a qualifying individual's out-of-pocket expenses when they use health care services, such as deductibles, copayments, and coinsurance. Normally, to qualify for these cost-sharing subsidies, the individual's household income must fall between 100% and 400% of the poverty line. Id. § 18071(b)(2), (c)(1)(A). Specific to this case, though, members of an Indian tribe qualify for these cost-sharing subsidies if the member's household income is 300% or less of the poverty line, and under subsection (d)(1)(B), the plan issuer " shall eliminate any cost-sharing under the plan" for the qualifying Indian, which effectively reduces that insured's out-of-pocket expense to zero. " The ACA eliminates all cost-sharing for Indians under 300 percent of the federal poverty level...." Alex Dyste, Note, It's Hard Out Here for an American Indian: Implications of the Patient Protection and Affordable Care Act for the American Indian Population, 32 Law & Ineq. 95, 119 (2014).
These two incentives (premium tax credits and reduced or eliminated cost-sharing) are only available as part of an individual health insurance plan obtained through an exchange. See 26 U.S.C. § 36B(c)(2)(B) (premium tax credit is unavailable during months when the individual is eligible for sufficient coverage outside of the exchange market); 42 U.S.C. § 18071(f)(2) (cost-sharing reduction is not allowed during months when the individual does not qualify for a premium tax credit). In short, these two incentives are only available to those obtaining individual health insurance plans through an exchange, and individual plans are only available through an exchange when alternative coverage (e.g., insurance through an employer) is unavailable, thus the rub in this case.
2. The Large Employer Mandate
On January 1,2015, the large employer mandate went into effect. It requires
employers with at least 50 full-time employees to offer to their employees a health insurance plan meeting a certain minimum level of coverage. See 26 U.S.C. § 4980H. Failure to do so results in the large employer owing " an assessable payment." Id. § 4980H(a), (b). The ACA requires applicable large employers to report to the federal government on the health insurance coverage they offer to their full-time employees to determine whether any assessable payment is owed. See id. § 6056. State and local governments are likewise subject to the large employer mandate. See id. § § 6055(d), 6056(e) (addressing the reporting requirements for governmental units or agencies).
3. The Treasury Regulations at Issue
In implementing the ACA, the Department of Treasury and the Internal Revenue Service (IRS) issued various federal regulations after a notice-and-comment period. See 26 U.S.C. § 7805 (providing the Secretary of the Department of Treasury the authority to create necessary rules and regulations for enforcing the Internal Revenue Code). The Tribe takes exception to three final regulations (a/k/a federal tax regulations) promulgated and finalized by the Treasury in this case:
(1) 26 C.F.R. § 54.4980H-1, finalized on February 12, 2014, defined " government entity" to include Indian tribal governments;
(2) 26 C.F.R. § 301.6056-1, finalized on March 10, 2014, concerns reporting requirements for large employers and defines " governmental unit," similar to " government entity," to include Indian tribal governments; and
(3) 26 C.F.R. § 1.6055-1, also finalized on March 10, 2014, defines " governmental unit" to include Indian tribal governments.
These final regulations expressly subject Indian tribes that employ 50 or more full-time employees to the ACA's large employer mandate and its reporting requirements. Federal tax regulations provide the official interpretation of the Internal Revenue Code.
THE PARTIES' ARGUMENTS
In the years preceding the ACA, the Tribe worked to provide cost-effective health insurance to its employees and tribal members, including through a commercial insurance carrier and a self-insurance system. (Conrad Decl. ¶ 7.) These efforts proved unsuccessful. ( Id.)
Once the ACA was passed, the Tribe discovered its members could obtain individual health insurance plans through the federal exchange that were superior to the plans the Tribe had been able to offer its members in the preceding years. ( Id. ¶ 9.) And the Tribe pays about 80% of the cost of the insurance premium for individual plans obtained through the exchange. ( Id. ¶ 8.) The Tribe asserts that without the reduced cost-sharing and premium tax credits, its Native American employees could not afford to keep health insurance coverage. ( Id. ¶ 9.)
The Tribe's basic argument is that Congress never intended to subject Indian tribes to the large employer mandate, and
the Treasury has erred by including Indian tribes within its definitions. And if the Tribe is subject to the large employer mandate, its Indian employees cannot qualify for the premium tax credits and reduced cost-sharing incentives. According to the Tribe, this will result in its Indian employees paying more for their insurance or, since tribal members are exempt from the individual mandate's tax penalty, the Indian employees will simply forego health insurance altogether.
Defendants argue Congress's intent to include Indian tribes as large employers is clear and unambiguous in the ACA. Accordingly, argue Defendants, the Treasury was within its authority to include Indian tribes within the large employer mandate.
As set forth below, this Court finds there are multiple threshold procedural impediments to the Tribe's motion for preliminary injunction, and to the extent those hurdles could be cleared, the Tribe's substantive arguments nonetheless fail on their merits.
With this backdrop in place, the Court turns to the issues that must be considered in determining whether a preliminary injunction in the Tribe's favor is warranted. The Court begins by addressing the two threshold issues raised by Defendants.
1. The Anti-Injunction Act (AIA)
In their first argument, Defendants contend the Anti-Injunction Act (AIA) prohibits this lawsuit. (Doc. 13 at pp. 9-11.) The AIA provides in relevant part that " no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." 26 U.S.C. § 7421(a). Here, the Tribe is preemptively challenging the legality of the Treasury regulations in order to restrain the IRS from assessing the ...