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A Washington, D.C. federal district court ruled that the government unlawfully paid billions of dollars to insurance providers under the Affordable Care Act (“ACA”) without a funding appropriation from Congress.  U.S. House of Representatives v. Burwell, 2016 WL 2750934 (D.D.C. May 12, 2016).

The House of Representatives filed suit alleging that the Secretary of the Department of Health and Human Services and other federal agencies spent unappropriated funds in order to reimburse health insurers for discounts given to low-income consumers pursuant to the ACA.  More specifically, the suit alleged that insurers were improperly reimbursed for discounts they provided pursuant to Section 1402 of the ACA (in the form of “cost sharing reductions,” such as reduced deductibles, coinsurance and copayments) because funds for such reimbursements were never appropriated by Congress.  The court explained:

Paying out Section 1402 reimbursements without an appropriation thus violates the Constitution.  Congress authorized reduced cost sharing but did not appropriate monies for it, in the FY 2014 budget or since. Congress is the only source for such an appropriation, and no public money can be spent without one.

The court rejected the argument that the funds were available through a related ACA provision that provides funds for subsidies that reduce the cost of health insurance premiums (Section 1401), noting that “[s]uch an appropriation cannot be inferred, no matter how programmatically aligned the Secretaries may view Sections 1401 and 1402.”   

Although the court issued an injunction enjoining the use of unappropriated monies to fund reimbursements to health insurers under Section 1402, the ruling will not take immediate effect because the court issued a stay of the injunction pending any appeal.