Federal court temporarily blocks ACA insurance broker ban after industry challenge
A lawsuit challenging the U.S. Department of Health and Human Services (HHS) decision to bar new brokers and agents from operating on the Affordable Care Act (ACA) marketplace next year has gained traction, with a federal judge issuing a preliminary injunction against the rule.
The plaintiff in the case is the National Association of Benefits and Insurance Professionals (NABIP), a major lobby representing brokerages that connect patients and employers with health plans. In its lawsuit, filed on Oct. 15, the group argued that HHS' decision violated the Administrative Procedure Act by enacting the sweeping ban on all new broker and agent registrations for the ACA marketplace—something the agency did shortly after expelling fraudulent brokers and canceling 315,000 illegitimate health plan enrollments.
HHS was reacting to an ongoing issue where agents and firms were signing patients up for medical coverage without their full consent, oftentimes failing to even include legally necessary details, such as the Social Security number of the enrollee.
NABIP did not deny that fraud is occurring on ACA marketplaces or that unscrupulous actors are taking advantage of the system—the lobby took specific issue with the solution to issue a blanket moratorium on broker signups.
In issuing a preliminary injunction, the U.S. District Court for the District of Maryland agreed for the time being, writing that NABIP was able to demonstrate that “they are likely to succeed on the merits of their claims under the Administrative Procedure Act.”
Further, the court said claims made by the lobby that its members would suffer significant harm as a result of the policy, despite no wrongdoing on their part, was compelling enough to block HHS' enrollment moratorium until a court can weigh in more definitively or the agency can adjust the policy.
As open enrollment for 2027 medical coverage has already begun, NABIP said the decision means it will begin training new brokers immediately, so they can get to work selling health plans through the ACA.
“Today’s ruling is a significant victory for licensed agents and brokers and the consumers who rely on their expertise,” NABIP President Mychal Walker said in a statement. "With Open Enrollment already underway, every day matters."
"Lifting the moratorium immediately and beginning training tomorrow will help affected professionals get to work assisting individuals and families in finding coverage that fits their needs and budgets," he added.
Targeted solutions
In a statement released on Oct. 15 announcing the filing of its complaint, NABIP said that the “existence of fraud” on ACA markets is “not in dispute,” offering advice for HHS on how to combat it.
At that time, Walker claimed NABIP has been working with the Centers for Medicare & Medicaid Services “for years,” advising leadership that the ACA marketplace needs “stronger safeguards” to bar low-quality plans and scammy brokers from operating on the federal government exchange.
“CMS should be going after bad actors, not shutting out thousands of licensed agents and brokers because of a handful of bad agents and brokers,” Walker said, adding that there is a “better approach: target fraud where it occurs, strengthen the system’s security, and hold bad actors accountable while preserving consumers’ access to trusted professionals.”
It remains to be seen if HHS will appeal the district court’s decision.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.