Federal Court in Missouri suspends state laws to regulate federally approved counsellors helping consumers enroll in the federal Marketplace

An important ruling was announced in a federal court last Thursday, temporarily striking down a Missouri state law and regulations that sought to impose additional requirements upon Navigators, certified application counselors (CACs), and counselor-designated organizations working to help consumers understand and access health care coverage under the Affordable Care Act (ACA).

A strong victory for both the advocates on the ground and the Department of Health and Human Services, this ruling says that state laws or rules that seek to regulate Navigators and CACs who are already regulated under the ACA are unconstitutional, if those state law requirements impose “additional burdens” that would frustrate the purpose of the ACA—increasing access and affordability of health care.

“Missouri’s Certified Application Counselors, Navigators and other service providers who work with uninsured and underinsured people are helped by the this ruling,” said Nancy Kelley, Director of Engagement & Advocacy at Saint Louis Effort for AIDS, one of the plaintiffs in the case. “Our goal is to assist individuals as they learn about their options and gain the health benefits of being insured. With 800,000 Missourians still needing coverage, we do not need additional barriers to this work.”

The Court noted that when Missouri declined the opportunity to create an Exchange, or operate one jointly with HHS, the state had in effect “opted not to be in the health insurance exchange business” leaving “the operation of the exchange to the federal government….” After doing so, the state “cannot choose to impose additional requirements or limitations on the exchange. Doing so frustrates Congress’ purpose of having HHS operate [federal Exchange]s in states where no exchange exists.”

As a result, the Court voiced the “view that any attempt by Missouri to regulate the conduct of those working on behalf of the FFE is preempted.”

The Court first struck down the state’s licensing requirements, and then struck other state rules that tried to impose “limitations on what State Navigators may do.”

For instance, one state regulation sought to prevent any Navigator from providing “advice concerning the benefits, terms and features of a particular health plan or offer advice about which exchange health plan is better or worse for a particular individual or employer” unless that person was also licensed as an insurance agent under state law.

The Court found this new state regulation was in direct conflict with the federal law requirement that federally certified Navigators and CAC’s provide “information about various plans – which necessarily requires providing information about the differing strengths, weaknesses, and other contrasting features…” The Court saw providing this valuable information health plan options, and their strengths and weaknesses as “indistinguishable from ‘advice.’” The Court said that Navigators could not comply with both Federal and State law, so the state law was preempted.

The Court’s ruling temporarily banned the state from enforcing those requirements, pending the full completion of the litigation. Part of the decision rested on the Court’s view that advocates who challenged the law – St. Louis Effort for Aids and Planned Parenthood of the St. Louis Region and Southwest Missouri, among others – had a greater likelihood of winning in the end. So the Court granted them a preliminary injunction, to stop the state law’s requirements from being enforced while the litigation proceeds. While preliminary injunctions such as this are uncommon, the Court concluded that “the public interest is damaged if the state is permitted to thwart federally approved Navigators, CACs and Counselor Designated Organizations from performing their functions…” (See page 15 of the Decision.)

The injunction prevents the state from enforcing the law’s requirements or penalties on the “federally-approved Navigators, CACs and Counselor Designated Organizations [that] have satisfied the requirements of federal law…” The Court elaborated that suspending these penalties and other hurdles that CACs and others currently face removed “the state-created specter of punishment and regulation that likely violates the Constitution…” (See page 16 of the Decision.)

What this means to other states.

This initial ruling sets an important precedent. By clarifying that the ACA, as federal law, has the power to preempt conflicting state law, this ruling paves the way for other federal courts to nullify similar state laws or regulations that create barriers, or impose burdens upon, any person or organization that receives federal funding or certification to help consumers use the Marketplace and enroll in health insurance coverage.

If this precedent stands, the strongest impacts of federal preemption would likely be on Federally-facilitated Marketplace (FFM) states – i.e. those that chose not to establish a Marketplace. If these states then try to regulate Navigators or CACs, federal law would preempt, or nullify, those state laws or issued agency rules. If this ruling is followed by other federal courts, it would allow Navigators and CAC’s to focus all their energies on the important task of helping millions of uninsured consumers find and enroll in accessible, affordable health insurance, without hindrance from unfair or restrictive state laws.

Ultimately, this preliminary ruling by the federal Court in Missouri may be the first pebble causing ripples across the nation – a legal victory to set aside restrictive state laws that try to block Navigators and CAC’s from doing critical work to help consumers find their best options for health care coverage.