Hunton Employment & Labor Law Perspectives : Employment Lawyers & Attorneys : Hunton & Williams Law Firm : Labor Law Legislative Updates

The Act’s Minimum Essential Coverage Provision (Section 1501 of the PPACA) requires that every United States citizen, other than those specifically excepted, maintain a minimum level of health insurance coverage beginning in 2014.  According to Section 1501, the failure to comply will result in a penalty on a taxpayer’s annual tax return.

Judge Hudson opined—in connection with partially granting summary judgment to the Commonwealth of Virginia—that the requirement in Section 1501 of the PPACA that individual citizens purchase private health insurance is unconstitutional and exceeds Congress’s commerce-clause power.  According to Judge Hudson, Section 1501 of the PPACA constituted a “unchecked expansion of congressional power” that would “invite unbridled exercise of federal police powers.”  Judge Hudson also found unavailing the federal government’s argument that the purchase mandate is a valid exercise of Congress’s taxation power.  The Judge observed that the generation of revenue as a legislative objective was merely a “transparent afterthought.”  Judge Hudson severed Section 1501’s purchase mandate from the Act but declined to grant Virginia’s request for injunctive relief pending appellate review.  According to the Judge, the likelihood of irreparable harm—a necessary element for issuance of an injunction—was minimal considering that the purchase mandate at issue does not take effect until 2013. 

The Virginia Attorney General’s Office is seeking to “fast track” the case to the United States Supreme Court.  This would require the Department of Justice to join with the Virginia Attorney General’s office in waiving a hearing in the Fourth Circuit Court of Appeals, allowing the case to move immediately to the Supreme Court for resolution.

This case represents the first case involving a successful constitutional challenge to the PPACA.

Employer’s Take Away

This decision will not have an immediate impact on employers.  However, the decision adds to the growing uncertainty facing employers regarding the effect of PPACA on health insurance-related planning and budgeting.  We will continue to monitor PPACA-related developments in order to effectively guide employers through this field of uncertainty.

Employers should be aware that the following rules for group health plans, both insured and self-insured, and including grandfathered plans, will go into effect for plan years beginning on or after September 23, 2010. 
 

1. Preexisting condition exclusions - The Health Care Reform Act generally prevents group health plans from imposing preexisting condition exclusions for participants who are under age 19.  The prohibition will go into effect for all other participants in the 2014 plan year.
2. Annual/Lifetime Benefit Limits - The Health Care Reform Act prohibits group health plans from using dollar amount lifetime limits for health benefits.  In addition, the regulations gradually phase out the use of annual dollar limits for health insurance coverage (such limits will be prohibited for plan years beginning on or after January 1, 2014). 
3. Rescission - The Health Care Reform Act prohibits group health plans from rescinding coverage, except in cases involving fraud or an intentional misrepresentation of material facts (caused by either the individual involved or the person seeking coverage on his or her behalf).  Plans seeking to rescind coverage must provide the affected individual with 30 days advance, written notice of the rescission.

The regulations also provide guidance on required plan participant protections for non-grandfathered plans.  Specifically, group health plans must provide to plan participants, without any co-pays or other cost-sharing measures for in-network providers, preventative care options such as well-child care and certain immunizations/screenings.  In addition, plan participants will be allowed to choose their own primary care provider (“PCP”) or pediatrician from the plan’s provider network, and will be able to see an OB-GYN without needing a referral or authorization from a PCP.  Moreover, group health plans will be prohibited from requiring prior authorization for emergency care at a hospital outside the plan’s network.  These protections also go into effect for plan years beginning on or after September 23, 2010.

Employers will have to review their existing group health plans to ensure that they incorporate the coverage mandated by the Health Care Reform Act.  Most of the protections must be in place for plan years beginning on September 23, 2010, which means that time is of the essence in making any modifications to existing health plans. 

More detailed information on the new regulations can be found in our client alert.

According to Fact Sheet #73, “Break Time for Nursing Mothers under the FLSA,” employers must provide reasonable amounts of unpaid break time and a private place for breast-feeding employees to express milk. “The frequency of breaks needed to express milk as well as the duration of each break will likely vary,” said the agency. The agency clarified that employers also must provide “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public,” where the employee may express breast milk. If a space is temporarily converted into a lactation area, it must be available whenever the nursing mother needs it.

The FLSA nursing break provisions cover only those employees who are not exempt from the FLSA’s overtime pay requirements, according to the fact sheet.  However, state laws may obligate employers to provide breaks to nursing mothers who are exempt from overtime pay under federal law.

Federal law does not require employers to compensate nursing mothers for the breaks they take to express milk, the agency said, but if an employer nevertheless compensates employees for breaks, an employee who uses the break time to express milk must be compensated in the same way that other employees are compensated for break time.  In addition, the FLSA’s general requirement that the employee must be completely relieved from duty or else the time must be compensated as work time applies. 

An employer with fewer than 50 employees at all of its work sites is not subject to the break-time requirement if compliance would cause an undue hardship.  The agency explained that the existence of an undue hardship is measured by comparing the difficulty or expense of compliance with the size, financial resources, nature, and structure of the employer's business.  The FLSA requirements do not preempt state laws that provide employees with greater protections, such as paid break time or coverage for more than one year.

Now that the Department of Labor has issued its regulations regarding the amendment and has clarified some misunderstandings from the Act, employers should aim to avoid potential claims.  To the extent employers have not already done so, they should consider what private locations they can make available to nursing mothers and communicate that information to their employees.  If compensating employees for breaks already, make sure to compensate the employee who uses the break time to express milk.  If you are an employer with less than 50 employees and compliance with the law would cause an undue hardship, make sure you can measure the hardship by the factors expressed by the agency.