Opinion ID: 6334161
Heading Depth: 2
Heading Rank: 3

Heading: Copay Differential Judgment

Text: The district court (Sullivan, J.) held that Fisher is not entitled to a judgment for her copay differential because Aetna’s decision was not arbitrary or capricious. Fisher III, 2019 U.S. Dist. LEXIS 233798, at . “[W]hen the terms of a 5 See N.Y. Dep’t of Fin. Servs., Filing at a Glance: Aetna Life Ins. Co. 1, 210-11, https://myportal.dfs.ny.gov/documents/538523/1230191/Aetna+Life+ Insurance+Co.+NY_SG+EPO_AETN-128993202.pdf. “[W]e may properly take judicial notice of this document . . . because [it] is publicly available and its accuracy cannot reasonably be questioned.” Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 60 (2d Cir. 2016). 29 plan grant discretionary authority to the plan administrator, a deferential standard of review remains appropriate even in the face of a conflict.” Conkright v. Frommert, 559 U.S. 506, 512 (2010). Applying this standard, an administrator abuses its discretion where its decision was “without reason, unsupported by substantial evidence or erroneous as a matter of law.” Fay v. Oxford Health Plan, 287 F.3d 96, 104 (2d Cir. 2002) (internal citations and quotation marks omitted). Under ERISA, “a plan administrator’s decision is intended to be final—within the bounds of the highly deferential arbitrary-and-capricious standard—and not merely an input with the potential to assist the Court in making the ultimate determination.” Roganti v. Metro. Life Ins. Co., 786 F.3d 201, 217 (2d Cir. 2015) (internal citation and internal quotation marks omitted.) Here, Aetna agreed to pay Fisher the copay differential of $64.32. She did not argue below, and does not attempt to argue on appeal, that this decision was arbitrary and capricious because the parties agreed that the benefits determination correctly construed the policy. Fisher III, 2019 U.S. Dist. LEXIS 233798, at . Put simply, there is no reason to upend Aetna’s administrative decision to provide Fisher with the relief that she requested. Although Fisher 30 would like to receive a judgment granting her the exact relief that Aetna has already thrice attempted to provide, Fisher is not entitled to such a judgment. 6 IV. Out-of-Pocket Limit Under the Affordable Care Act
In Fisher III, the district court (Sullivan, J.) held that Fisher was required to satisfy the family out-of-pocket limit under the terms of the insurance plan, rejecting Fisher’s argument that she need only reach the individual limit. First, the district court held that the plain meaning of the health insurance contract indicates that the family out-of-pocket limit applied to Fisher’s claims. Fisher III, 2019 U.S. Dist. LEXIS 233798, at . Second, the district court (Sullivan, J.), on Fisher’s motion for reconsideration, held that its decision comported with the ACA’s cost-sharing provision found at 42 U.S.C. § 18022(c). Fisher, 2020 WL 5898788, at . Fisher argues that the district court erred in its statutory 6Aetna provided Fisher with two checks for $64.32. Fisher returned both, presumably because she was concerned the language accompanying the checks could have been construed as a settlement of her claims. Following the district court’s lead, Aetna sent a new check to Fisher, who declined to cash that check as well. 31 interpretation in her appeals concerning both the 2014 and 2015 health insurance plans. To determine whether the ACA requires individuals to meet the individual out-of-pocket limit even where those individuals are part of a family plan, “we start our analysis . . . with the language of the statute.” Tanvir v. Tanzin, 894 F.3d 449, 459 (2d Cir. 2018) (ellipses in original) (quoting Chai v. Comm’r of Internal Revenue, 851 F.3d 190, 217 (2d Cir. 2017)). “Where the statutory language provides a clear answer, our analysis ends there.” Id. (citation and internal punctuation omitted). “The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.” Id. (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997)). 42 U.S.C. § 18022(c)(1)(A) provides: The cost-sharing incurred under a health plan with respect to self-only coverage or coverage other than self-only coverage for a plan year beginning in 2014 shall not exceed the dollar amounts in effect under section 223(c)(2)(A)(ii) of Title 26 for self-only and family coverage, respectively, for taxable years beginning in 2014. 26 U.S.C. § 223(c)(2), concerning “High deductible health plan[s],” provides: (A) In general.—The term ‘high deductible health plan’ means a health 32 plan— (i) which has an annual deductible which is not less than— (I) $1,000 for self-only coverage, and (II) twice the dollar amount in subclause (I) for family coverage, and (ii) the sum of the annual deductible and the other annual out-ofpocket expenses required to be paid under the plan (other than for premiums) for covered benefits does not exceed— (I) $5,000 for self-only coverage, and (II) twice the dollar amount in subclause (I) for family coverage. The district court (Sullivan, J.) concluded that the ACA is silent on the question of which limit – individual or family – applies to an individual covered under a family policy. We agree. The text of the ACA does not provide any direction about whether the individual or family limit applies to an individual covered by a family policy. Therefore, we turn to the applicable regulations for guidance.
On February 27, 2015, HHS passed a final rule (the “2015 Rule”) concerning benefit and payment parameters for health insurance plans in 2016: Lastly, in the proposed rule, we proposed clarifying that the annual limitation on cost sharing for self-only coverage applies to all individuals regardless of whether the individual is covered by a self-only plan or is covered by a plan that is other than self-only. In both of these cases, an individual's cost sharing for [essential health benefits] may never exceed 33 the self-only annual limitation on cost sharing. For example, under the proposed 2016 annual limitation on cost sharing, if an other than self-only plan has an annual limitation on cost sharing of $10,000 and one individual in the family plan incurs $20,000 in expenses from a hospital stay, that particular individual would only be responsible for paying the cost sharing related to the costs of the hospital stay covered as [essential health benefits] up to the annual limit on cost sharing for self-only coverage (assuming an annual limitation of $6,850 for 2016, the maximum for that year). We sought comments on these proposed requirements and clarifications as well as whether other requirements and clarifications were needed. We are finalizing our proposal that the annual limitation on cost sharing for self-only coverage applies to all individuals regardless of whether the individual is covered by a self-only plan or is covered by a plan that is other than self-only and the technical correction we proposed to make to the text at § 156.130(c). Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2016, 80 Fed. Reg. 10750 (Feb. 27, 2015) (emphasis added). HHS determined that insurance providers could not require an individual on a family plan to spend more than the individual out-of-pocket limit established under the ACA. This reading of the ACA comports with Fisher’s argument that she needed to only meet the individual out-of-pocket limit even though she was on a family plan. However, HHS made clear in the 2015 Rule that the regulation applied only in 2016 and onward. See id. (“[U]nder the proposed 2016 annual limitation on cost sharing . . .”); see also 80 Fed. Reg. at 10825 (“We note that 2016 plans must comply with this policy.”). 34 The question, then, is whether the 2015 Rule can be applied retroactively to Fisher’s 2014 and 2015 health insurance plans. To determine that, we must answer whether the 2015 Rule is a legislative or interpretive rule. Whether a rule is legislative or interpretive implicates whether the rule can be given retroactive effect. “The distinction between legislative and interpretive rules derives from the Administrative Procedure Act.” Sweet v. Sheahan, 235 F.3d 80, 90 (2d Cir. 2000). Generally speaking, “[r]etroactivity is not favored in the law.” City of New York v. Permanent Mission of India to the United Nations, 618 F.3d 172, 192 (2d Cir. 2010) (quoting Sweet, 235 F.3d at 89). This is because retroactivity creates unfairness by upending “legitimate expectations and upset[ting] settled transactions.” Rock of Ages Corp. v. Sec’y of Lab., 170 F.3d 148, 158 (2d Cir. 1999); see also Barenboim v. Starbucks Corp., 698 F.3d 104, 113 (2d Cir. 2012) (suggesting that a regulation would “raise a retroactivity concern” where it “attach[ed] new penalties or other legal consequences to actions preceding [its] promulgation”). However, these reasons do not apply with the same force to interpretive rules, which merely explain the meaning of an ambiguous statute. Blake v. Carbone, 489 F.3d 88, 98–99 (2d Cir. 2007); see also Barenboim, 698 F.3d at 113 (suggesting that a distinction exists between legislative and interpretive rules for purposes of 35 retroactivity because an interpretive rule merely “clarif[ies] the meaning of an ambiguous statute”). A legislative rule “‘grants rights, imposes obligations, or produces other significant effects on private interests,’” while an interpretive rule is an agency’s “‘intended course of action, its tentative view of the meaning of a particular statutory term, or internal house-keeping measures organizing agency activities.’” White v. Shalala, 7 F.3d 296, 303 (2d Cir. 1993) (quoting Perales v. Sullivan, 948 F.2d 1348, 1354 (2d Cir. 1991)). “The central question is essentially whether an agency is exercising its rule-making power to clarify an existing statute or regulation, or to create new law, rights, or duties in what amounts to a legislative act.” Id. We agree with the district court that the 2015 Rule is legislative and should not apply retroactively. The 2015 Rule “change[d] the law.” Blake, 489 F.3d at 98. The Act is silent on whether the family out-of-pocket limit or individual out-ofpocket limit should apply to an individual covered by a family plan. See 42 U.S.C. § 18022(c)(1)(B). “The extent and nature of the ambiguities” in the ACA on this topic suggest “that the statute itself does not create [embedded cost-sharing requirements] and reinforce the conclusion that the [2015 Rule is] legislative.” 36 Sweet, 235 F.3d at 92; see also Chamber of Com. v. OSHA, 636 F.2d 464, 469 (D.C. Cir. 1980) (“Congress has not legislated and indicated its will on th[is] question . . . therefore the Administration must have done more than exercise its power to fill up the details.” (internal quotation marks omitted)). It follows, then, that before the 2015 Rule was issued, insurers regularly required individuals on family plans to meet the family out-of-pocket limit. See 80 Fed. Reg. at 10,824–25 (acknowledging that this “clarification” would effectively alter the types of health insurance policies that insurers are permitted to offer). Furthermore, before the 2015 Rule was promulgated, no federal agency or court read the Act’s cost-sharing provision to require embedded cost-sharing. Additionally, the actions of HHS and other agencies demonstrate that the 2015 Rule was legislative. First, the rule was enacted through the notice-andcomment process. Compare Patient Protection & Affordable Care Act; HHS Notice of Benefits & Payment Parameters for 2016, 79 Fed. Reg. 70,674, 70,723 (Nov. 26, 2014), with 80 Fed. Reg. at 10,824 (“We sought comments on these proposed requirements and clarifications as well as whether other requirements and clarifications were needed.”). The notice-and-comment process is typically reserved for legislative rules. See Gonnella v. United States Sec. & Exch. Comm’n, 37 954 F.3d 536, 546-47 (2d Cir. 2020) (“Such ‘legislative rules,’ which must go through Notice and Comment procedures, have ‘legal effect.’”) (quoting Sweet, 235 F.3d at 91)); Sweet, 235 F.3d at 93 (“Had the agencies been engaged in interpretive rulemaking, they would have been exempt from the notice-andcomment provisions.”). Second, HHS indicated that the rule should be enforced only prospectively. See 80 Fed. Reg. at 10,825 (“We note that 2016 plans must comply with this policy.”). Providing that the rule should only be enforced prospectively indicates that the 2015 Rule changes the existing legal landscape and requires a phase-in period to allow market participants time to reorient their relationships. Cf. Sweet, 235 F.3d at 92 (acknowledging that when Congress requires a delay between the time regulations are promulgated and when they become effective, it is because Congress “anticipate[s] that the agenc[y] w[ill] institute new legal obligations—that the agenc[y] w[ill] engage in legislative rulemaking”). If the agencies believed that the text of the ACA required the 2015 Rule’s interpretation, they likely would have said so. Instead, the agencies explicitly chose to defer the rule’s implementation, which suggests the agencies did not believe the ACA’s operation rested on the 2015 Rule’s interpretation. As the 38 district court (Woods, J.) determined: “The 2015 Rule says that pre-2016 plans need not comply with its interpretation. But Fisher argues that aggrieved consumers were permitted to sue based on the same interpretation. That is an odd result. If the Departments intended to open the door to private lawsuits based on their interpretation, they probably would have said something to that effect. But they did not. Indeed, Fisher has pointed to nothing in the 2015 Rule or elsewhere to support her interpretation.” Fisher II, 478 F. Supp. 3d at 498-99 (emphasis in original). Fisher argues that the 2015 Rule itself declares it was a “clarification” so it must be interpretive. We regularly defer to an agency’s views on whether its rules are legislative or interpretive. See Huberman v. Perales, 884 F.2d 62, 67 (2d Cir. 1989) (“It is of course true that courts should give weight to an agency's interpretation of the statutes it administers.”). But we are not obligated to abide by an agency’s classification of its rule. See, e.g., id. at 68 (“We need not defer to the Secretary's interpretation, therefore, as the conclusions we reach tilt us strongly in the other direction.”). For the foregoing reasons, we conclude the 2015 Rule is legislative and therefore does not apply retroactively. In this case, that means the out-of-pocket 39 limit for plans in effect before 2016 should be governed by the terms of the policy, not the 2015 Rule. Part IV.4 of the 2014 health insurance plan (the “2014 Policy”) provides: When You have met Your In-Network Out-of-Pocket Limit in payment of In-Network Deductibles, Copayments, and Coinsurance for a Plan Year in the Schedule of Benefits in section XIV of this Certificate, We will provide coverage for 100% of the Allowed Amount for Covered in-network Services for the remainder of that Plan Year. If other than Individual coverage applies, when members of the same family covered under this Certificate have collectively met the family In-Network Out-of-Pocket Limit in payment of InNetwork Deductibles, Copayments and Coinsurance for a Plan Year in the Schedule of Benefits, We will provide coverage for 100% of the Allowed Amount for the rest of that Plan Year. 7 No. 20-3148, App’x at 305. A straightforward reading of the 2014 Policy indicates that the family out-of-pocket limit applies to an individual on a family plan. 8 The third sentence of Section IV.4 of the 2014 Policy provides specifically that “[i]f other than individual coverage”—that is, family coverage—“applies,” the out-ofpocket limit is met when the family limit is “collectively” satisfied by the family’s medical expenses. There is no dispute that Fisher, the spouse of a D&S partner, 7 Similar language is present in the 2015 health insurance plan (“2015 Policy”), so our analysis applies to both plans. No. 20-3804, App’x at 47. 8 Fisher does not contest this reading of the 2014 Policy or 2015 Policy on appeal. 40 was covered as a family member by the 2014 Policy. Therefore, the family out-ofpocket limit applies to Fisher’s reimbursement requests. See Lockheed Martin Corp. v. Retail Holdings, N.V., 639 F.3d 63, 69 (2d Cir. 2011) (“When an agreement is unambiguous on its face, it must be enforced according to the plain meaning of its terms.”). Fisher’s arguments regarding the out-of-pocket limit are unpersuasive. First, Fisher argues that it was error for the district court (Sullivan, J.) to consider whether the 2015 Rule should apply retroactively because Fisher asserts rights under the ACA, not any administrative action. Putting aside the fact that Fisher raised the 2015 Rule below in the first instance, it is clearly not error for a federal court to consider the agency interpretation of a statute it administers in order to determine how to apply the statute. See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844 (1984) (“We have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer.”). Second, Fisher argues that the text, structure, and legislative history of the ACA demonstrate that the individual out-of-pocket limit applies to individuals enrolled in a family plan. On the text, she argues that Section 18022(c)(1)(A), 41 which states that “[t]he cost-sharing incurred under a health plan with respect to self-only coverage or coverage other than self-only coverage for a plan year beginning in 2014 shall not exceed the dollar amounts in effect under section 223(c)(2)(A)(ii) of title 26 for self-only and family coverage, respectively, for taxable years beginning in 2014,” implies that Congress intended that the out-ofpocket limit for an individual should not exceed either of the amounts set forth in 26 U.S.C. § 223(c). Section 223(c) sets forth the out-of-pocket limits for individuals on self-only coverage ($5,000) and family coverage (twice the selfonly coverage amount). 9 Fisher places too much emphasis on the use of “amounts” rather than “amount” in Section 18022(c). An equally, if not more likely, interpretation would be that the word “respectively” indicates that the plural “amounts” refers to the thresholds established for individuals on self-only plans versus family plans, meaning that the out-of-pocket limit for those on selfonly coverage should not exceed the limit for individuals on self-only coverage in Section 223(c) and that individuals on family plans should not exceed the 9These amounts are indexed to the rate of medical inflation. See 42 U.S.C. § 18022(c)(4). 42 limits for family coverage in Section 223(c). In any event, the ACA is ambiguous on this point as discussed above. See Majority Op. at 33. On the structure and purpose of the ACA, Fisher argues that the ACA extends greater insurance benefits to families so Section 18022(c) must do the same. But Section 18022(c) already provides greater insurance benefits to families by placing a statutory cap on family out-of-pocket limits. 42 U.S.C. § 18022(c)(1)(A) (“The cost-sharing incurred under a health plan with respect to self-only coverage or coverage other than self-only coverage for a plan year beginning in 2014 shall not exceed the dollar amounts in effect . . . .”). This section fulfills the ACA’s purpose of extending greater insurance benefits to families without clearly indicating that the individual out-of-pocket limit should apply to an individual on a family plan. For the foregoing reasons, we affirm the district court’s holding that the ACA does not provide that the annual limitation on cost sharing for self-only coverage applies to all individuals regardless of whether the individual is covered under a self-only plan or is covered by an individual or family plan for plans in effect prior to 2016. V. Cost Differential Under the Affordable Care Act 43 Fisher also argued that the Choose Generic cost differential (“Cost Differential”) should count toward her out-of-pocket limit in her claims regarding the 2014 and 2015 plans. 10 In Fisher I, the court (Woods, J.) held that Aetna’s decision that the Cost Differential did not count toward Fisher’s out-ofpocket limit was not arbitrary and capricious. Fisher I, 2020 WL 2792994, at . Fisher then argued in her motion for summary judgment that the ACA requires cost-sharing provisions, such as the Cost Differential, to count toward her out-ofpocket limit. The district court (Woods, J.) again rejected this argument in Fisher II, holding that Fisher’s EffexorXR was “not a covered service.” Fisher II, 478 F. Supp. 3d at 499. On appeal, Fisher argues that under the ACA, the Cost Differential must count toward her out-of-pocket-limit. She argues the Cost Differential is “costsharing” under the terms of the Act and that EffexorXR was a covered service. Aetna responds that the Cost Differential was not a “covered service” under the health insurance plans, and, besides, Fisher did not exhaust her out-of- 10In Fisher III, the district court (Sullivan, J.) did not reach this issue because it found that Fisher did not meet her out-of-pocket limit. Fisher III, 2019 U.S. Dist. LEXIS 233798, at . 44 pocket limit for 2014. As for the 2015 plan, Aetna argues that Fisher waived this argument because she never presented this argument to Aetna in her 2015 administrative appeal. The Choose Generic clause of the 2014 Policy and 2015 Policy states: “An additional charge may apply when a Prescription Drug on a higher tier is dispensed at Your or Your Provider’s request, when a chemically equivalent Prescription Drug is available on a lower tier unless We approve coverage at the higher tier. You will have to pay the difference between the cost of the Prescription Drug on the higher tier and the cost of the Prescription Drug on the lower tier.” No. 21-1, App’x at 116 (emphasis added). 11 The ACA states: (3) Cost-sharing. In this title— (A) In general The term ‘cost-sharing’ includes— (i) deductibles, coinsurance, copayments, or similar charges; and (ii) any other expenditure required of an insured individual which is a qualified medical expense (within the meaning of section 223(d)(2) of Title 26) with respect to essential health benefits covered under the plan. (B) Exceptions Such term does not include premiums, balance billing amounts for nonnetwork providers, or spending for non-covered services. 11 The 2015 health insurance plan has an equivalent Choose Generic clause. 45 42 U.S.C. § 18022(c)(3). The issue is whether the Cost Differential falls under the exception to Section § 18022(c)(3)(B) “as spending for non-covered services.” We hold that under the terms of the 2014 and 2015 Policy and the ACA, the Cost Differential does not count toward Fisher’s out-of-pocket limit. To qualify as a “Covered Service[]” under the 2014 or 2015 Policy, the service must be “medically necessary.” No. 20-3804, App’x at 41. A service is “medically necessary” if, among other things, (1) it is “not primarily for the convenience of You, Your family, or Your Provider,” and (2) it is “not more costly than an alternative service or sequence of services, that is at least as likely to produce equivalent therapeutic or diagnostic results.” No. 20-3804, App’x at 46. Aetna directly communicated to Dunnegan that Fisher could seek a medical-necessity waiver of the Choose Generic provision which would allow Aetna to cover the EffexorXR and only charge Fisher for the copay. No. 20-3148, App’x at 394-95, 414. However, Fisher “never sought a medical-necessity waiver.” Fisher I, 2020 WL 2792994, at . Dunnegan faxed Dr. Rosenfeld on August 19, 2014, requesting he call Aetna and discuss whether they could pay for 46 EffexorXR. But on August 21, Dunnegan changed his mind and directed Dr. Rosenfeld not to request a waiver. As the district court (Woods, J.) concluded, “[t]hat decision is explicable only by reference to Dunnegan’s interest in converting an administrative hassle into a potentially lucrative class-action lawsuit, with his [w]ife as lead plaintiff and his firm as plaintiff’s counsel.” Fisher I, 2020 WL 2792994, at . Here, Fisher repeats the same argument she made below that her EffexorXR prescription was a covered service because Dr. Rosenfeld, in a sworn statement, stated that EffexorXR was medically necessary for Fisher. However, Dr. Rosenfeld “did not certify EffexorXR was medically necessary in the relevant sense; that is, he did not certify that EffexorXR was medically necessary relative to the venlafaxine.” Fisher I, 2020 WL 2792994, at . Because Fisher failed to apply for and obtain a medical-necessity waiver, EffexorXR could not be considered medically necessary and therefore, could not qualify as a “covered service” under the policy. Accordingly, the Cost Differential falls under the exceptions to cost-sharing in Section 18022(c)(3)(B) and does not count toward Fisher’s out-of-pocket limit. 47 Fisher makes the same argument in her appeal regarding her 2015 Policy. In Fisher III, the district court (Sullivan, J.) held that Fisher did not exhaust her out-of-pocket limit for 2015 so it did not reach the issue. Fisher III, 2019 U.S. Dist. LEXIS 233798, at  (“Since there is no dispute that [Fisher’s] expenditures did not exceed the out-of-pocket limit for her family plan in 2015, the Court need not decide whether Aetna approved EffexorXR as medically necessary in 2015.”). Fisher does not dispute this on appeal. Therefore, we need not determine whether Aetna approved EffexorXR as medically necessary in 2015 and the district court’s (Sullivan, J.) judgment in favor of Aetna on this issue is affirmed.