Obama Administration Unlawfully Reimbursed Health Insurers, Judge Rules

The Obama administration unlawfully paid billions of dollars to insurance providers under the Affordable Care Act without a funding appropriation from Congress, a federal district judge in Washington ruled on Thursday.

The insurance subsidies were designed to offset discounts that insurers were required to give eligible lower-income Americans under the health care reform law. U.S. District Judge Rosemary Collyer said federal agencies could not fund the subsidies through another section of the health care law that allocated money for tax credits.

“Paying out Section 1402 reimbursements without an appropriation thus violates the Constitution,” Collyer wrote. “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.”

Collyer last year found that the U.S. House of Representatives had standing to challenge the legality of how the administration funded the insurance subsidies. The judge at the time denied the House standing to lodge a separate challenge to the delay of the Affordable Care Act’s mandate that employers provide insurance to employees.

Thursday’s ruling won’t take effect right away. Collyer stayed an injunction that would block further payments to insurance companies in order to give the executive branch the opportunity to appeal.

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In the U.S. Court of Appeals for the D.C. Circuit, the case will face a bench with a majority of Republican appointees, including senior judges. If the case ends up before an en banc court—which generally includes only active judges—there would be a majority of Democrat appointees, even without Chief Judge Merrick Garland. The U.S. Supreme Court nominee is not participating in cases while his nomination is pending.

Jonathan Turley, the George Washington University Law School professor who represented the House plaintiffs, called Collyer’s ruling “a resounding victory not just for Congress but for our constitutional system as a whole.”

Turley said in a statement: “We remain a system based on the principle of the separation of powers and the guarantee that no branch or person can govern alone. It is the very touchstone of the American constitutional system and today that principle was reaffirmed in this historic decision.”

Former House Speaker John Boehner, who filed the suit, on Thursday said the implementation of the health care law marked “historic overreach” that exceeded the president’s authority.

“The president of the United States is not a king or a monarch, with the ability to singlehandedly create or change the laws of our country,” Boehner said in a statement.