By Terry Baynes
Feb 8 (Reuters) - 2013 is shaping up as an important year in
health law, with several high-profile cases that could affect
the contraceptive mandate of the Obama administration's
healthcare law, how the government calculates Medicare payments
and the fate of the healthcare exchanges. Here is a look at the
top six lawsuits, based on interviews with eight lawyers in the
healthcare field, and a status report on where the cases stand.
NON-PROFIT RELIGIOUS GROUPS TACKLE THE BIRTH CONTROL MANDATE
Summary: When the Obama administration announced in August
2011 that the Affordable Care Act would require employers to
provide free contraceptive coverage, many non-profit religious
institutions objected and began bringing legal challenges.
Because the administration in February 2012 said it
eventually would create an exemption for non-profit religious
institutions, courts began dismissing many of the lawsuits as
premature. One exception, however, was an action brought by
Wheaton College, a Christian liberal arts school near Chicago.
In that case, the U.S. Court of Appeals for the District of
Columbia Circuit chose to put proceedings on hold and ordered
the government to report back every 60 days on its progress in
finalizing the exemption for religious organizations.
Status: Last week, Health and Human Services finally issued
the proposed rule, which adopts the definition of "religious
employer" from the Internal Revenue Code. Wheaton's lawyer, Kyle
Duncan of the Becket Fund for Religious Liberty, said the
compromise failed to resolve the school's objections. The
federal government is required to file its first status report
with the D.C. Circuit in mid-February.
Case: Wheaton College v. Sebelius, U.S. Court of Appeals for
the D.C. Circuit, No. 12-5273.
RELIGIOUS OBJECTIONS FROM BUSINESS OWNERS
Summary: There are also a number of for-profit companies
with religious owners who are seeking an exemption from the
requirement that employers provide free birth control coverage
to employees. The most high profile of these challenges has been
brought by the arts and crafts chain Hobby Lobby, which contends
that the morning-after and week-after birth control pills are
tantamount to abortion. It also objects to providing coverage
for certain kinds of intrauterine devices.
In December, the 10th U.S. Circuit Court of Appeals rejected
Hobby Lobby's request for temporary relief. The court's ruling
was a blow for opponents of the birth control coverage mandate,
but it is not the final word. That same month the 7th Circuit
granted a similar request from the Catholic owners of a
"You've already got the makings of a split among the
circuits," said the Becket Fund's Kyle Duncan, who also
represents Hobby Lobby. He said the issue could eventually land
before the U.S. Supreme Court. The government's proposed rule
does not exempt family businesses like Hobby Lobby, he said.
Status: Hobby Lobby on Jan. 10 asked the full 10th Circuit
to rehear the case. The court has not yet ruled on that request.
Case: Hobby Lobby Stores Inc v. Sebelius, 10th U.S. Circuit
Court of Appeals, No. 12-6294.
TARGETING HEALTH INSURANCE EXCHANGES
Summary: In this lawsuit filed in Oklahoma federal court,
Oklahoma Attorney General Scott Pruitt argues that an Internal
Revenue Service rule to facilitate federal health insurance
exchanges conflicts with the Affordable Care Act. The U.S.
government has challenged the state's right to file the lawsuit.
If the lawsuit succeeds, it would pose a serious problem for
the implementation of the healthcare law, as numerous states
have already opted out of creating their own exchanges.
Oklahoma's argument has gained some traction since it was
first introduced by the Cato Institute's Michael Cannon and
Jonathan Adler, a law professor at Case Western Reserve
University. But its chances of success remain slim, said Stephen
Weiner, the chair of Mintz Levin's health law practice.
Status: In a Jan. 25 court filing, Oklahoma defended its
standing to bring the lawsuit, saying that the IRS rule will
punish large employers in the state with millions of dollars in
tax penalties. A hearing on the federal government's motion to
dismiss is not yet scheduled.
Case: Pruitt v. Sebelius, U.S. District Court for the
Eastern District of Oklahoma, No. 11-30.
HOW TO COUNT MEDICARE PATIENTS
Summary: Twenty-seven hospitals are suing the secretary of
the U.S. Department of Health and Human Services for changing
how the government counts patients covered by Medicare
Advantage, which allows Medicare beneficiaries to enroll in a
managed care program. The change lowered the payments many
hospitals received for treating low-income patients, and the
hospitals sued on grounds that the government's rule-making
process was flawed.
Status: In a sharply worded rebuke, the Washington, D.C.
district court in November agreed, criticizing the government
for arbitrarily changing the Medicare payment formula. The
secretary of Health and Human Services appealed to the U.S.
Court of Appeals for the District of Columbia Circuit on Jan.
14. The case is not yet scheduled for oral argument.
Case: Allina Health Services v. Sebelius, U.S. Court of
Appeals for the D.C. Circuit, No. 13-5011.
WHAT IF A PATIENT QUALIFIES FOR MEDICARE AND MEDICAID?
Summary: This lawsuit instead challenges the way the
government formula accounts for patients who qualify for both
Medicare and Medicaid. The case stems from another change to
reimbursement policies made by Health and Human Services, which
the agency sought to apply retroactively. Catholic Health
objected, claiming that the government could not apply a new
methodology to lower the hospital's payments for past years. If
the hospitals win, it could mean increased reimbursements for
Status: The district court in early 2012 agreed with the
hospital. Sebelius appealed to the D.C. Circuit, and oral
arguments are scheduled for April.
Case: Catholic Health Initiatives v. Sebelius, U.S. Court of
Appeals for the D.C. Circuit, No. 12-5092
AUDITING HOSPITAL RECORDS
Summary: This lawsuit challenges a government program that
was launched in 2005 to curtail improper Medicare payments. The
program dispatches private auditors to scour hospital records
for evidence that patients were treated on an inpatient basis
when they could have been treated as outpatients. When auditors
find Medicare patients who should not have been admitted, the
government reclaims what it paid. The American Hospital
Association contends that even if a patient should have been
treated as an outpatient instead of an inpatient, the government
still has to reimburse the provider for medically necessary
Status: The lawsuit is pending in federal district court in
Washington. The hospital group has filed a motion for summary
judgment, and the federal government is seeking to have the case
dismissed. The parties will file briefs on those motions through
Case: American Hospital Association v. Sebelius, U.S.
District Court for the District of Columbia, No. 12-1770.
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