In Ohio v. U.S., No.16-3093 (6th Cir. 2017), the Sixth Circuit Court of Appeals (the “Court”) was faced with the question of whether one of the Affordable Care Act’s tax provisions applies to state government employers with the same force that it applies to private employers. The plaintiffs are the State of Ohio, and several of its political subdivisions and public universities (the “State”). The plaintiffs filed suit against, inter alia, the United States Department of Health and Human Services (“HHS”), alleging that the Federal Government illegally collected certain monies from the State in order to supplement the Affordable Care Act’s Transitional Reinsurance Program (the “Program”).
Arguing that the Program’s mandatory payment scheme applies only to private employers and not to state and local government employers, the State sought a refund of all payments made on its behalf and a declaration that the Program would not apply to the State in the future. The State also argued that application of the Program against the State violated the Tenth Amendment to the United States Constitution and principles of intergovernmental tax immunity. The district court, in a thorough and reasoned opinion, granted a motion to dismiss filed by the United States, and denied a motion for summary judgment filed by the State. The district court ruled that the Program applies to state and local government employers just as it applies to private employers, and that the Program as applied to the State does not violate the Tenth Amendment. The Court affirmed the district court’s rulings.