Court strikes down Trump administration’s rule on association health plans

April 10, 2019
| United States
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By Anu Gogna and Ben Lupin

On March 28, 2019, a District of Columbia federal district court struck down the Department of Labor’s (DOL’s) final association health plan (AHP) rule. The district court concluded that the rule exceeded the statutory authority delegated by Congress in ERISA, and therefore is unlawful and should be set aside.

As background, on July 26, 2018, 12 state attorneys general filed a complaint against the DOL challenging the final AHP regulations, which were intended to expand AHPs.1 The complaint contended that the final AHP rule “increases the risk of fraud and harm to consumers, requires States to redirect significant enforcement resources to curb those risks, and jeopardizes state efforts to protect their residents through stronger regulation.” The complaint also claimed that the final AHP regulations were part of a broad effort to undermine the Affordable Care Act (ACA) and so should be vacated.

The district court judge agreed with the complaint, finding that the final AHP regulations were “clearly an end-run around the ACA.” The court also concluded that both the “bona fide association” and “working owner” provisions in the final AHP rule were unreasonable interpretations of ERISA, in that the DOL redefined “employers” to include groups with no real commonality of interest and to bring working owners without employees within ERISA’s scope, despite Congress’s clear intent that ERISA cover benefits arising out of employment relationships.

The DOL’s final AHP rule included a severability provision providing that, even if parts of the rule were found to be invalid, the other provisions would remain in effect. In its decision, the court tasked the DOL with determining how the severability provision affects the parts of the rule not addressed by the court.

While the Trump administration is expected to appeal the decision, employers contemplating joining or forming an AHP might want to wait for a resolution. Employers that already formed or joined an AHP should evaluate the district court’s decision with their legal counsel to determine how to proceed.


  1. See “DOL issues final association health plan regulations,” Willis Towers Watson Insider, July 2018.