Health insurance companies are filing suit against the Department of Labor in the same federal court that is hearing challenges to the DOL fiduciary rule, Think Advisor reports. Both actions are accusing federal officials of violating administrative procedures in imposing new regulations.
The latest suit was filed by ManhattanLife Insurance and Annuity Co., a supplemental health insurance issuer, in the U.S. District Court for the Eastern District of Texas. The complaint is joined by Paschall and Associates, a health insurance agency, and the agency’s owner, William Paschall.
They brought the action for declaratory and injunctive relief against the DOL and other defendants, the United States Department of Health and Human Services and Department of the Treasury.
The complaint stems from new notice rules imposed on fixed indemnity health insurance issuers. The sellers are now required to include a notice declaring that the product is “NOT health insurance” if they want the product to be exempted from the Affordable Care Act major medical insurance requirements. The plaintiffs allege that the DOL, Treasury Department, and HHS used an arbitrary process in adopting the regulations, and violated the federal Administrative Procedures Act.
“Even if the Departments had statutory authority to impose a federal notice requirement and the record supported the need for one, the notice imposed by the Notice Rule is arbitrary, capricious, and contrary to law because it contradicts the statute and requires insurers to make false statements,” the complaint states.
The lawsuit was filed in the Eastern District of Texas federal court, where a coalition of groups that includes the Federation of Americans for Consumer Choice (FACC) filed their action against the newly adopted DOL fiduciary rule. It updates the definition of an investment advice fiduciary to apply when financial services providers give investment advice for a fee to retirement plan participants, individual retirement account owners and plan officials responsible for administering plans and managing their assets. .
The ThinkAdvisor report notes that the manner in which judges on the Texas federal court apply requirements of the Administrative Procedures Act in the health insurance issuers case could have an influence on how those requirements are applied in the DOL fiduciary lawsuit.
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