On February 13, Judge George Finkle (Ret.), presiding officer in the Business Health Trust administrative action against the Insurance Commissioner ruled:

BHT is not entitled to a hearing or to an automatic stay under RCW 48.04.020(1). I do not grant a discretionary stay under RCW 48.04.020(2). This Order is without prejudice to BHT’s renewed Demand and presentation of all pertinent arguments, following action by the Commissioner. I do not rule on BHT’s standing.” [Order page 6]

The Judge essentially said that Premera was the party who should demand a hearing on the disapproval of its health plans for the associations. But we know from the federal court litigation, Premera is not going to challenge the disapproval. The Judge said that BHT has no right to prevent the Commissioner from doing his job reviewing a health plan.

I do not find that BHT is a person aggrieved by an act, threatened act, or failure to act of the Commissioner under RCW 48.01.010(1)(b). The Commissioner’s intent to act on the filing, even assuming he will determine that the plans are not sponsored by ERISA Section 3(5) employers and that Premera’s rate filing methodology is not in compliance with Washington State law, does not constitute a threatened specific adverse action, but instead the Commissioner’s stated intent to exercise his statutory duties.

The automatic stay provided under RCW 48.04.020(1) is therefore inapplicable. I do not believe that a discretionary stay under RCW 48.04.020(2) is appropriate.

Even assuming that BHT is aggrieved by threatened acts of the Commissioner, RCW 48.44.020(2) provides that the Commissioner may on examination, “subject to the right of the health care service contractor to demand and receive a hearing under chapters 48.04 and 34.05 RCW, disapprove any individual or group contract form.”   (Emphasis added.)

RCW 48.44.020(2) is a specific statute setting forth an aggrieved party’s right to a hearing following the Commissioner’s disapproval, not in anticipation of such disapproval. The specific statute that is applicable under the present plan review circumstances controls aggrieved parties’ hearing rights, rather than the general hearing provisions of RCW 48.04.020(1).

Further, a statutory interpretation that imposed a stay would block the Commissioner from exercising his statutory duty to review group plan filings and interfere with the Commissioner’s efficient and effective regulation of the insurance industry. Such interpretation would result in unlikely, absurd, or strained consequences, which must be avoided. An interpretation consistent with the spirit or purpose of the statutory scheme – for the commissioner to engage in the review of group plan filings and to efficiently and effectively regulate the insurance industry – rather than a literal reading that would render this statutory scheme ineffective, is favored. [Order, citations omitted]

Today, BHT and OIC lawyers filed their amended “Joint Status Report” in federal court. A joint status report is essentially a report to the federal judge summarizing where the case stands and next steps in the litigation. Recall that BHT is also suing the OIC in federal court.

The Commissioner contends that Premera is a necessary party to the federal litigation and BHT argues that the case is only about whether BHT is a bona fide association under ERISA. Not surprisingly, a conference between the lawyers did not resolve their differences.

You can get a sense for how long employers will be dangling at the end of a rope wondering whether they are providing federally compliant health plans by the following statements in the Report:

“Plaintiffs anticipate that this case, or substantial portions thereof, will be decided by the Court on summary judgment.

Plaintiffs moved for a temporary restraining order, which was denied, and for declaratory and injunctive relief, which is pending before this Court.

The stay that was in place at the administrative level, that prevented the Commissioner from entering his disapproval of Premera’s health plan filings, has been dissolved, and the Commissioner has entered his disapproval.

Therefore Plaintiffs’ motion for preliminary injunction with respect to the 2014 filings now appears to be moot. Plaintiffs have also requested an injunction with respect to the 2015 Premera health plan filings and a declaration that this action is subject to the exclusive jurisdiction of federal court.

Plaintiffs intend to file for summary judgment once this Court issues an Order on Plaintiffs’ Motion for Declaratory and Injunctive Relief, dkt. #17. Defendant intends to file a motion to dismiss.” [Report at 5]

So now the small employers know their 2014 health plans were non-compliant leaving them to unknown tax consequences. What about the 2015 plans Premera filed last week for all of its associations?

“No trial date has been set for this case. However, due to the timeframe of the 2015 insurance policy at issue in this case, the parties request that trial date be set for October or November of 2015.” [Emphasis added, Report at 7]

The Premera health plan filing logs for the BHT trusts and for the Association of Washington Business (AWB) plans can be found here, here, here, here, here, and here. The administrative hearing for AWB has not been held yet; but, you can find the pre-hearing conference order issued on February 11th here.

While many great arguments can be made back and forth over state insurance regulatory authority and the meaning of federal law, employers face serious consequences for health plan non-compliance. These matters should have been settled a long time ago.

Since I am just a lowly lawyer from Tacoma, don’t just take my word for the risk to small employers. Ask Mr. Internet. He’ll tell you this – “MEWAs that don’t comply” and this – “Consequences of noncompliance for group health plans.”