- Associated Press - Tuesday, September 30, 2014

TULSA, Okla. (AP) - Some of the health-insurance subsidies being offered under the Affordable Care Act represent an “abuse of discretion” by the federal government, a federal judge in Oklahoma ruled Tuesday, marking another volley in a years-long legal fight that could eventually reach the U.S. Supreme Court.

The ruling is the latest in a string of federal court decisions on regulations that allow health insurance tax credits in all 50 states. One of those cases has already been appealed to the high court.

In Oklahoma, U.S. District Judge Ronald White immediately put his ruling on hold pending an appeal. But he sided with Oklahoma Attorney General Scott Pruitt, who argues that the law doesn’t explicitly allow subsidies for people who buy insurance in Oklahoma and other states that didn’t set up their own insurance exchanges. The exchanges are online marketplaces where people can compare and buy health insurance.

Pruitt, who filed the lawsuit in 2012, said the IRS created a rule that allows it to levy millions of dollars in tax penalties on “large employers,” which include state and local governments, in states using the federal exchange. That power, he argued, was never given to the IRS and allows the government to punish states that didn’t create their own exchanges.

White agreed, ruling that the IRS rule was “an abuse of discretion” and represented “an invalid implementation” of the federal law.

The White House had no immediate comment on the ruling, while Pruitt called it “a consequential victory for the rule of law.” The case is expected to be appealed to the 10th U.S. Circuit Court of Appeals.

Similar challenges are making their way through courts elsewhere in the U.S. The Virginia-based 4th U.S. Circuit Court of Appeals has upheld the subsidies, and that case was appealed to the Supreme Court. In Washington, a three-judge appeals court panel ruled against the Obama administration, but the full court threw out that ruling and said it would decide the case.

If the full appeals court in Washington or the 10th Circuit strikes down the subsidies, the U.S. Supreme Court may be more inclined to jump in because of conflicting federal appeals court rulings.

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Associated Press writers Mark Sherman in Washington, D.C. and Jill Bleed in Little Rock, Arkansas, contributed to this report.


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