12.21.09

Legal Issues in the Senate Manager’s Amendment

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I reported over the weekend on one legal issue raised by the Senate manager’s amendment–an important clarification of the public disclosure and original source provisions of the civil false claims act.

This post will address the constitutionality of the abortion provisions in the amendment and mention four other legal issues raised by the additions the amendment makes to the bill.

It has long been clear that the Constitution does not require the government to finance abortion. The provisions of the bill, therefore, prohibiting the use of public subsidies to pay for abortion, and the elaborate accounting mechanisms that plans that cover abortion must have in place to assure that public subsidies are kept completely separate from the private premiums that individuals and employers pay for abortion, are probably not constitutionally problematic.

There are two provisions of the bill, however, that are more questionable. First, the bill provides that “A State may elect to prohibit abortion coverage in qualified health plans offered through an Exchange if such State enacts a law to provide for such prohibition.” This provision goes further than the Stupak amendment in the House, which requires abortion coverage to be sold as a supplemental policy but does not prohibit the sale of such coverage through the exchange. Indeed, the Senate amendment seems to be crossing the line between the government refusing to subsidize abortion on the one hand, and placing a barrier in the way of private financing of abortion, on the other..

According to the Guttmacher institute, four states currently prohibit private insurance coverage for abortion except when the life of the pregnant woman is endangered, while one additional state prohibits coverage except for rape, incest, and life endangerment. In National Education Ass’n of Rhode Island v. Garrahy, 598 F.Supp. 1374 (D.R.I. 1984), the district court enjoined the enforcement of a Rhode Island law prohibiting the sale of private health insurance including abortion coverage except in cases of rape, incest, or life endangerment, holding that, while the state had no obligation to fund abortions, it could not under Roe burden a woman’s engaging in a private transaction to fund an abortion. Similarly, the Third Circuit struck down a Pennsylvania law requiring insurers to charge more for policies covering abortion than for policies that did not. American College of Obstetricians and Gynecologists v. Thornburgh, 737 F.2d 283 (3rd Cir. 1984). On the other hand, the Eighth Circuit in 1992, applying the “undue burden” test that was later that year adopted in Casey, held that a Missouri statute that required the purchase of a separate abortion rider paid for with a separate premium was constitutional. Coe v. Melahn, 958 F.2d 223 (8th Cir. 1992). No reported decision has addressed this question since Casey adopted the undue burden test, to my knowledge.

A state law prohibiting the sale of a policy covering abortion through the exchange would not totally eliminate abortion coverage, as both nongroup and group policies can be sold outside of the exchange under the Senate bill. Further, it is difficult to imagine the current Supreme Court striking down a state prohibition on private insurance coverage of abortion. Nonetheless, the prohibition is not beyond constitutional challenge, and is, I believe, more questionable than the Stupak amendment provisions in the House bill.

A second provision of the legislation also raises constitutional questions. This provision states:

‘‘(3) RULES RELATING TO NOTICE.—
‘‘(A) NOTICE.—A qualified health plan that provides for coverage of the services described in paragraph (1)(B)(I) [abortions] shall provide a notice to enrollees, only as part of the summary of benefits and coverage explanation, at the time of enrollment, of such coverage.
‘‘(B) RULES RELATING TO PAYMENTS.—
The notice described in subparagraph (A), any advertising used by the issuer with respect to.
the plan, any information provided by the Exchange, and any other information specified by
the Secretary shall provide information only with respect to the total amount of the combined payments for services described in paragraph (1)(B)(I) and other services covered by the plan. [that is, not advertise the price of abortion coverage separately]

As I read this provision, it seems to prohibit plans that cover abortion from giving notice to enrollees of this fact other than at the time of enrollment and from advertising the price that they charge for abortion coverage. I am not an expert on commercial speech First Amendment law, but this provision, if I am reading it right, would seem to clearly fail the Central Hudson test. What is the substantial government interest that it directly advances, and if there is such an interest, why would a more limited restriction not be sufficient? Indeed, in one of its earliest commercial speech cases, antedating Central Hudson, the Supreme Court explicitly struck down a law prohibiting the advertising of abortion services. Bigelow v. Virginia, 421 U.S. 809 (1975).

At least four other legal issues are affected by the amendment. First, the amendment expands on the underlying bill’s new section 2719 of the Public Health Services Act, dealing with internal and external review of insurance claims denials. The amendment requires ERISA plans to comply with the ERISA internal review regulations and nongroup plans to provide internal review procedures that comply with existing law. The amendment also requires insured health plans to comply with state external review procedures and for HHS to develop minimum standards for external review that must be followed by self-insured plans and by insured plans in states that do not have external review laws.

Second, the law imposes new requirements that must be met for the approval of 1115 “demonstration project” waivers in the Medicaid or CHIP programs that would impact eligibility, enrollment, benefits, cost-sharing, or financing. The legislation would require public notice and comment at both the state and federal level (and a public hearing at the state level), periodic reporting by the states and periodic evaluation by HHS, and an annual report to Congress for such waivers. The section 1115 waiver program has long been abused by HHS and the states to permit radical changes in the Medicaid and CHIP programs with little transparency or accountability either to the public or to Congress. It is hoped this statute will change this.

Third, a curious provision of the amendment requires the Comptroller General to “conduct a study of whether the development, recognition, or implementation of an guideline or other standards under” fourteen listed provisions of the new bill “would result in the establishment of a new cause of action or claim,” and to report its findings to Congress within two years. Presumably it is up to Congress to determine whether a new law provides a private cause of action or not and it is up to the courts to determine whether Congress has done so. It seems to me, therefore, rather odd to ask the GAO to figure out what Congress has done.

Finally, the program integrity provisions of the amendment increase the sanctions under the federal sentencing guidelines and revise 18 U.S.C. section 1347, the health care false claims prohibition, to add the following: “With respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.” This should put at rest the Hanlester problem (if it were not already at rest) and reinforce the principle that ignorance of the law is no excuse.

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The views reflected in this blog are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.

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