What health execs should watch: 2017 Supreme Court cases

Decisions of the U.S. Supreme Court can have a huge impact on the healthcare industry.  This year is no different.  Here are several healthcare cases the High Court will hear this term, and two notable additional cases to watch in the near future.

2017 Supreme Court Cases

FordThe Supreme Court will hear three cases that may determine the fate of pension plans of religiously affiliated hospitals that traditionally have been treated as a “church plan” exempt from the Employee Retirement Income Security Act of 1974 (ERISA).

The hospitals are appealing separate Circuit Courts of Appeals rulings holding the plans are not exempt from the Employee Retirement Income Security Act of 1974 (ERISA). The Supreme Court must determine whether pension plans maintained by entities associated with or controlled by a church qualify as a “church plan,” or whether the pension plans must be initially established by the church to qualify as such.

The Supreme Court’s decision could have wide-reaching implications, affecting a number of non-profit, church-affiliated entities treating their pension plans as exempt from ERISA. If the Supreme Court finds that the plans are subject to ERISA, hospitals may have to overhaul their existing pension plans, which may cause severe financial repercussions for not only the hospitals, but potentially also their employees.

The cases:

• Advocate Healthcare Network v. Stapleton (Docket No. 16-74)

• St. Peter’s Healthcare v. Kaplan (Docket No. 16-86)

• Dignity Health v. Rollins (Docket No. 16-258).

Cases to Watch: Antitrust - Insurance Mergers

LudwigThe U.S. Department of Justice (DOJ) is challenging the merger of Anthem, Inc. and Cigna Corp.  The two-phase bench trial before the U.S. District Court for the District of Columbia recently concluded.  According to the DOJ, the two insurers cover about 17%of the U.S. population, fueling concerns that the merger would leave only three insurers capable of providing nationwide employer-provided health insurance coverage for larger employers.

Anthem argues that the acquisition would give it the ability to lower reimbursement rates to health providers and that those savings would be passed onto employers.  Approval of this deal would authorize the creation of the nation’s largest health insurance company, which could significantly impact the employer-provided health insurance market. If the deal is not approved, Anthem will be required to pay Cigna a $1.85 billion break-up fee.

The DOJ also challenged Aetna, Inc.’s acquisition of Humana, Inc. The DOJ alleges that combining the second and fourth largest Medicare Advantage insurers would result in anti-competitive effects in many local markets where Aetna and Humana currently offer Medicare Advantage products, and in certain states with respect to insurance exchange products.

Aetna contends that the deal would be pro-competitive, would benefit many consumers, and the proposed divesture of certain assets to Molina Healthcare would cure any potential harm to competition.  The bench trial on this merger in the U.S. District Court for the District of Columbia also recently concluded.

Decisions on both insurance antitrust cases are expected by the end of January.

The cases:

• U.S. v. Anthem Inc., 16-cv-1493, U.S. District Court, District of Columbia

• U.S. v. Aetna, Inc., 16-cv-1494, U.S. District Court, District of Columbia

Chacey R. Ford is a member at Jackson Kelly PLLC.  She concentrates her practice on healthcare and commercial law. She can be reached at crford@jacksonkelly.com.

Rachel D. Ludwig is an associate at Jackson Kelly PLLC.  She concentrates her practice on healthcare law. She can be reached at rdludwig@jacksonkelly.com.