Americans For 

Limited Government

9900 Main Street Suite 303 · Fairfax, VA 22031 · Phone: 703.383.0880 · Fax: 703.383.5288 · WWW.GETLIBERTY.ORG 

July 9, 2010 

Office of Health Plan Standards and Compliance Assistance 

Employee Benefits Security Administration 

Room N-5653 

U.S. Department of Labor 

200 Constitution Ave, N.W. 

Washington, DC 20210 

Via email to: E-OHPSCA.EBSA@dol.gov 

RE: Comments of Americans for Limited Government on RIN 1210-AB41 

Interim Final Rules for Group Health Plans and Health Insurance 

Issuers Relating to Dependent Coverage of Children to Age 26 Under 

Patient Protection and Affordable Care Act

To Whom It May Concern: 

These comments are submitted pursuant to the Interim Final Rule that was published 

by the Internal Revenue Service, the Department of Labor, and the Department of 

Health and Human Services (herein after “Secretary” or “Secretaries”) on May 13, 2010 

at 75 Fed. Reg. 27122. That Interim Final Rule purports to define “dependents to which 

coverage shall be made available” as that phrase is found in Section 2714 of Public Law 

111-148, the Patient Protection and Affordable Care Act (hereinafter “Act”). 

As will be discussed in further detail below, we have significant concerns with the 

scope of the Interim Final Rule because it goes beyond the statutory language. 

Additionally, the Interim Final Rule cites no legal authority, other than the Rule itself, 

which allows for mandating an additional paperwork requirement on the regulated 

community. Further, the burden analysis found in the Paperwork Reduction Act 
RIN 1210-AB41 Comment Page 2 July 9, 2010 

section fails to accurately reflect the true cost of legal advice which members of the 

regulated community will need to engage in order to comply with the Rule. 

Relevant Authority

The Interim Final Rule was promulgated pursuant to Section 2714 of the Act. That 

section states as follows: 

 "Sec. 2714. EXTENSION OF DEPENDENT COVERAGE. 

"(a) In General.--A group health plan and a health insurance issuer offering 

group or individual health insurance coverage that provides dependent coverage 

of children shall continue to make such coverage available for an adult child 

(who is not married) until the child turns 26 years of age. Nothing in this section 

shall require a health plan or a health insurance issuer described in the preceding 

sentence to make coverage available for a child of a child receiving dependent 

coverage. 

"(b) Regulations.--The Secretary shall promulgate regulations to define the 

dependents to which coverage shall be made available under subsection (a). 

"(c) Rule of Construction.--Nothing in this section shall be construed to modify 

the definition of 'dependent' as used in the Internal Revenue Code of 1986 with 

respect to the tax treatment of the cost of coverage. 

This section was amended by Section 2301(b) of the Health Care and Education 

Reconciliation Act of 2010, 111 P.L. 152 as follows: 

(b) Clarification Regarding Dependent Coverage.--Section 2714(a) of the Public 

Health Service Act, as added by section 1001(5) of the Patient Protection and 

Affordable Care Act, is amended by striking "(who is not married)". 

Under the Act as amended by the Reconciliation Act if the insurance plan offers 

coverage to dependents then the option of coverage must be extended to dependent 

children of the participant until those children reach age 26. The Act gives the Secretary 

the discretion to define “dependents to which coverage shall be made available.” 

The language used to define dependent in the Interim Final Rule states as follows: 

(b) Restrictions on plan definition of dependent. With respect to a child who has not 

attained age 26, a plan or issuer may not define dependent for purposes of 

eligibility for dependent coverage of children other than in terms of a 

relationship between a child and the participant. Thus, for example, a plan or 
RIN 1210-AB41 Comment Page 3 July 9, 2010 

issuer may not deny or restrict coverage for a child who has not attained age 26 

based on the presence or absence of the child’s financial dependency (upon the 

participant or any other person), residency with the participant or with any other 

person, student status, employment, or any combination of those factors. 75 Fed. 

Reg. 27122, 27136 (May 13, 2010). 

Analysis of the Substance of the Rule

Congress passed the Act to enlarge the universe of dependent children to which 

dependent coverage must be made available. Congress delegated to the Secretary the 

authority to “define the dependents.” The Secretary’s Interim Final Rule essentially 

deletes the word “dependents” from the definition of covered children and replaces it 

with “children.” If Congress had intended for the coverage requirement to apply to all 

children it would have used the word “children” instead of using terms such as 

“dependent coverage” and “define the dependents.” Even if Congress intended to 

expand coverage to all “children” the use of the word “dependent” modifies “children” 

in a way to limit its scope. 

The universe of potentially covered “children” is larger than the universe of 

“dependent children.” Instead of defining “dependent” as a subset of “child” the 

Secretary is using the definition of “child” as the definition of “dependent.” The 

Interim Final Rule’s language expressly disallows an insurance provider from taking 

into consideration whether a child is actually a “dependent” as that term is generally 

understood in society. Thus, for example, the insurance provider is prohibited from 

taking into consideration the financial condition of the child when making a 

determination on coverage eligibility. As such the child could have an income that is 

many multiples of their parent (participant) but the child would still be eligible for 

coverage. 

Is This “Interpretation” Permissible?

The effective interpretation that has been made by the Secretaries is that “dependent” 

means “child.” Is this interpretation permissible under the laws of the United States? 

Based on the definition chosen for use in the Interim Final Rule it is readily apparent 

that the Secretary ignored the word “dependent” and essentially chose “children” 

instead. The definition of “dependent” does not allow for any dependency factors to be 

used. As such rather than defining what factors go into a determination as to whether a 

child is a dependent what the Interim Final Rule does says is that it is irrelevant 
RIN 1210-AB41 Comment Page 4 July 9, 2010 

whether the child is a dependent for the purposes of determining whether they are a 

dependent. 

If Congress wished to force coverage to be extended to all “children” it would have 

used the word “children” and told the Secretary to define that word. Congress did not 

do this but instead used the word “dependents” which is as discussed above, a subset 

of the universe of possible “children.” 

In so doing the Interim Final Rule fails to give effect to the word “dependents,” 

violating a basic principle of statutory construction that in the interpretation of a statute 

we “must give effect to every word of a statute wherever possible.” Leocal v. Ashcroft, 

542 U.S. 1 (2004). “It is our duty to ‘give effect, if possible, to every clause and word of a 

statute’.” United States v. Menasche, 348 U.S. 528, (1955). “Congress is not to be 

presumed to have used words for no purpose.” Platt v. Union P.R. Co., 99 U.S. 48, 59 

(1878). See also, Duncan v. Walker, 533 U.S. 167, 175 (2001): “We believe that our duty to 

‘give each word some operative effect’ where possible, Walters v. Metropolitan Ed. 

Enterprises, Inc., 519 U.S. 202, 209, 136 L. Ed. 2d 644, 117 S. Ct. 660 (1997), requires more 

in this context.” 

 In Sec. 2714(b) of the Act Congress gives the Secretary the responsibility to define a 

subset of children under age 26. Instead of defining a subset of children under age 26 

the Secretary defined that subset “dependents” to include the entire universe of 

children under age 26. This definition is contrary to the Act and should be modified to 

reflect certain factors that are indicia of dependency. 

Factors That Should be Used in Defining Dependents

In other places in the law where the term dependent is defined, such as the Internal 

Revenue Code, a series of elements or factors are considered to determine whether there 

is actually a dependency of the child upon the parent. For instance in Section 152 of the 

Internal Revenue Code (IRC) elements such residency and whether the parent actually 

supports a child are used to determine whether that child is a dependent. 

The Secretary would be well advised to adopt the IRC Section 152 definition of 

dependent because the elements used in that section tend to prove dependency. The 

following are a few of the elements found in IRC § 152(c) to determine whether a child 

qualifies as a dependent: 

(c) Qualifying child. For purposes of this section-- 
RIN 1210-AB41 Comment Page 5 July 9, 2010 

(1) In general. The term "qualifying child" means, with respect to any taxpayer 

for any taxable year, an individual-- 

 (A) who bears a relationship to the taxpayer described in paragraph (2), 

(B) who has the same principal place of abode as the taxpayer for more than onehalf of such taxable year, 

 (C) who meets the age requirements of paragraph (3), 

 (D) who has not provided over one-half of such individual's own support for the 

calendar year in which the taxable year of the taxpayer begins, and 

(E) who has not filed a joint return (other than only for a claim of refund) with 

the individual's spouse under section 6013 [IRC Sec. 6013] for the taxable year 

beginning in the calendar year in which the taxable year of the taxpayer begins. 

(2) Relationship. For purposes of paragraph (1)(A), an individual bears a 

relationship to the taxpayer described in this paragraph if such individual is— 

(A) a child of the taxpayer or a descendant of such a child, or 

(B) a brother, sister, stepbrother, or stepsister of the taxpayer or a descendant of 

any such relative. 

The Secretary should use the elements in these categories in “defining the dependents 

to which coverage shall be made available” because those children falling into these 

categories are actually dependent to a degree upon the parent. By defining dependent 

as any child the Secretary has gone beyond the language and intent of the Act. Because 

of the many issues involved in defining dependents the Secretary should hold public 

stakeholder meetings and issue a Notice of Proposed Rulemaking and allow for public 

comment before issuing a Final Rule on this point. 

Paperwork Reduction Act Analysis

The Paperwork Reduction Act Analysis found in the Interim Final Rule estimates that 

the notice required under the rule to be sent to participants will take approximately 30 

minutes of time for an attorney to draft. In addition the Paperwork Reduction Act 

Analysis estimates that this attorney has a labor rate of $119 per house. For the reasons 
RIN 1210-AB41 Comment Page 6 July 9, 2010 

set discussed below both of these estimates severely underestimate the costs associated 

with this paperwork requirement. 

No Legal Authority Cited to Require Additional Paperwork Burden

The Interim Final Rule cites itself as the requirement for issuers to provide notice of the 

new eligibility requirements to participants. But what is the statutory authority for this 

paperwork requirement? The Interim Final Rule contains no discussion on any 

statutory authority that would permit such a requirement to be mandated by 

regulation. Further, the authority that is given to the Secretary in Section 2714 of the 

Act extends only to “define the dependents” and not to the creation of additional 

mandatory paperwork burdens. In the absence of express statutory authority this 

paperwork requirement should be immediately rescinded. 

Estimate of Preparation Time Missing from Estimate of Time Necessary to Draft 

Notice to Participants

Even if the paperwork requirement can legally be mandated by regulation the burden 

analysis used in the Interim Final Rule is ludicrous on its face because it severely 

underestimates the costs associated with this new paperwork requirement. 

The Interim Final Rule as published in the Federal Register on May 13, 2010 contains 

over 20,600 words. 

Persons reading text in English do so at an average of 250 to 300 words per minute. 

However, when reading text with an eye for detail, such as proofreading or reading 

legal documents, the average rate falls to approximately 200 words per minute.1 

Using this understanding as a baseline the average attorney could be expected to 

expend between 103 minutes and 68 minutes to read the Interim Final Rule one time. 

(20,600/200 or 20,600/300.) In order to be able to provide competent and zealous 

representation to his or her client as required under the ethical standards applicable to 

attorneys it is likely necessary for each attorney to read the Interim Final Rule at least 

two or three times, making notes each time as to particular subject matter areas which 

might require further research. Thus an attorney who reads the Interim Final Rule three 

 

1 Ziefle, M. (1998), Effects of display resolution on visual performance, Human Factors, 40(4), 555-568. 
RIN 1210-AB41 Comment Page 7 July 9, 2010 

times at 200 words per minute will expend approximately 309 minutes just for this one 

task. (20,600/200*3.) 

 

Number of 

Words 

Words Per 

Minute Total Minutes

Minutes if Read 

2x Minutes if Read 3x

20,600 300 69 137 206 

20,600 200 103 206 309 

Assuming that the attorney read only the Interim Final Rule, and no other material, and 

then immediately began drafting the required notice and that drafting took the 30 

minutes that the Secretary estimates this still amounts to 339 minutes of attorney time. 

The Secretary estimates that the attorney who drafts the required notice has an hourly 

labor rate of $119 per hour. Given the real world costs of obtaining legal advice it is 

very unlikely that this estimate is even remotely close to the actual cost per hour that 

will be incurred. First, no insurance provider would use inexperienced counsel for 

dealing with issues surrounding the Act. An attorney tasked with reviewing the 

Interim Final Rule and drafting the required notice would likely have a minimum of 

five years experience and would likely have over ten years experience. Attorneys with 

this level of experience do not bill at $119 an hour in metropolitan areas where most 

insurance providers are headquartered. 

The so-called “Laffey Matrix” has been relied upon time and time again by the courts in 

determining the level of market rates for reasonable attorney’s fees when those fees are 

owed to a prevailing party for litigation in the Washington, DC area. See for instance, 

Salazar v. District of Columbia, 123 F. Supp. 2d 8 (D.D.C. 2000). In Salazar the court 

explained how the plaintiff calculated its fees and how those fees were in line with the 

market rate for the area: 

Plaintiffs have arrived at these hourly rates in the following fashion. They have 

relied on the so-called Laffey matrix which was first approved in Laffey v. 

Northwest Airlines, Inc., 572 F. Supp. 354, 371-375 (D.D.C. 1983), aff'd, 241 U.S. 

App. D.C. 11, 746 F.2d 4 (D.C. Cir. 1094), overruled in part on other grounds by 

SOCM, 857 F.2d at 1525. The original Laffey matrix presented a grid which 

established hourly rates for law-yers of differing levels of experience during the 

period from June 1, 1981, through May 31, 1982. The Court of Appeals accepted 

the 1981-1982 matrix in SOCM, 857 F.2d at 1525, and the parties to that case 
RIN 1210-AB41 Comment Page 8 July 9, 2010 

updated it through May 31, 1989, as part of a settlement. Covington, 839 F. Supp. 

894, 898 (D.D.C. 1993); the updated Laffey matrix has often been relied upon to 

determine appropriate fee awards. See Trout v. Ball, 705 F. Supp. 705, 709, n. 10 

(D.D.C. 1989); Sexcius v. District of Columbia, 839 F. Supp. 919, 924 (D.D.C. 1993); 

Palmer v. Barry, 704 F. Supp. 296, 298 (D.D.C. 1989). 

See Salazar, supra, at 17. The court further stated: 

Consequently, the Court concludes that the updated Laffey matrix more 

accurately reflects the prevailing rates for legal services in the D.C. community. 

Salazar, supra, at 23. 

An updated version of the “Laffey Matrix” gives the following billing rates for 

attorneys in the Washington, DC area2: 

Years Out of Law School 

1-3 4-7 8-10 11-19 20+ 

Rate Per Hour $285 $349 $505 $569 $686 

Rate Per Minute $4.75 $5.82 $8.42 $9.48 $11.43 

Note further that the current billing rate in the matrix for a Paralegal/Law Clerk is $155 

per hour, far in excess of the $119 per hour of attorney time that the Secretary estimates 

in the Interim Final Rule. As stated above, the insurance provider would use 

experienced counsel to review the requirement to provide notice to its participants. 

Based on the Laffey Matrix the market rate for attorneys in the Washington, DC area 

with five to ten years of experience ranges from $349 to $505 per hour. An average of 

the ends of these ranges comes to $427 per hour. This amounts to $7.12 per minute. 

Using the figure of $7.12 per minute amounts to $2,412.55 in attorney time. This is 

significantly larger than the $59.50 cost per notice estimated by the Secretary. (30 

minutes of time at $119 per hour.) 

Because the Secretary significantly understated the costs associated with preparing the 

required notice the notice should not be mandated until a reasonable estimate of the 

costs is given and approved by the Office of Management and Budget. 

 

2 The full, updated Laffey Matrix is available online at: http://www.laffeymatrix.com/see.html. 

(Accessed July 9, 2010.) 
RIN 1210-AB41 Comment Page 9 July 9, 2010 

Conclusion

Given the many problems found both in the substance and supporting analysis of the 

Interim Final Rule, the Rule should be rescinded. The Secretaries should hold 

stakeholder meetings to solicit public comment on the proper definition of “dependents 

to which coverage shall be made available.” Then the Secretaries should issue a Notice 

of Proposed Rulemaking which actually defines “dependents” in a way accurately 

reflecting the meaning of that term. After public comment is received on that Notice of 

Proposed Rulemaking then and only then should a Final Rule be promulgated on this 

matter. 

Sincerely, 

William Wilson 

President