Texas Attorney General Ken Paxton is leading a five-state coalition that on Thursday won an $839 million judgment against the federal government in an Obamacare lawsuit, a massive blow to the Obama administration’s namesake legislation.
The Affordable Care Act (ACA, better known as Obamacare) requires medical providers to pay a Health Insurance Provider Fee (HIPF). Even though the ACA exempts states from paying that fee when providing health care, the U.S. Department of Health and Human Services (HHS) during the Obama era created a regulation requiring states to pay the fee anyway, a fee that is styled as a tax on the states.
Paxton sued in federal court, joined by Indiana, Nebraska, Kansas, and Louisiana. The five states’ lawsuit argues that this tax/fee is illegal under the Administrative Procedure Act (APA) because the ACA clearly exempts states from this payment and also that even if the statute did allow it, such taxes would violate the Tenth Amendment of the Constitution when imposed on sovereign states.
Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas agreed on the statutory issue (the APA claim), striking down the Obama HHS rule because it violates the plain language of the ACA law. O’Connor ordered the federal government to pay Texas the $305 million that the Lone Star State had paid in HIPF fees, as well as the fees of the other states, for a total of $839 million.
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