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DOL takes on data-miner over novel health insurance plan - Reuters

The United States Department of Labor headquarters in Washington, D.C. REUTERS/Andrew Kelly

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  • DOL said agreeing to be tracked online does not create any employment relationship
  • Lower court disagreed, said plan purchasers were "working owners"
  • DOL and amici say this opens floodgates to junk plans

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(Reuters) - A data-mining company and federal regulators will square off Wednesday before a U.S. appeals court over a 2020 ruling that critics say erases the need for employee-benefit health insurance to only be offered in a genuine employment context and encourages risky “junk” plans.

The U.S. Labor Department wants the 5th U.S. Circuit Court of Appeals to overturn a Fort Worth, Texas federal judge’s ruling that health insurance policies offered by Data Marketing Partnership LP are employee-benefit plans, not state-regulated private health insurance.

According to DMP’s appellate briefs, the Texas-based company was created in 2018 to give internet users a financial stake in the booming data-aggregation market.

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Users join DMP’s limited partnership by downloading tracking software, with the chance of sharing in the profits from the future sale of aggregated data. The only immediate benefit, however, is the opportunity to buy low-cost health insurance through the company, at the users’ own expense.

DMP sued the Labor Department in October 2019, a year after it sought an advisory opinion that would allow it to market the plans as compliant with the federal Employee Retirement Income Security Act, which governs employer-provided benefits. ERISA plans are not subject to most state regulation, and large plans like DMP’s are also exempt from many of the Affordable Care Act’s coverage requirements.

The department’s opinion, filed in January 2020, called DMP’s partnership arrangement a sham designed solely to market private insurance. It said agreeing to be tracked online did not create any employment relationship recognized by ERISA.

U.S. District Judge Reed O’Connor disagreed, saying DMP’s thousands of health-plan purchasers are clearly ERISA-eligible “working owners” who have a stake in DMP and actively provide services to it.

In an email, DMP lawyer Jonathan Crumly of Taylor English Duma said they are “simply asking that the government abide by the rules and guidelines it created.”

The government’s attorneys declined to comment. Their appellate brief to the 5th Circuit says O’Connor lacked jurisdiction to review the advisory opinion, erred in analyzing ERISA, and overstepped his authority by blocking future investigations of DMP’s ERISA compliance.

The department has drawn amicus support from 21 states and the District of Columbia, 12 insurance regulators and the National Association of Insurance Commissioners, who argue the ruling will undercut states’ power to enforce coverage minimums, solvency standards and other regulations.

Other supporters include Blue Cross Blue Shield, Public Citizen and several patient-advocacy groups that say O’Connor’s order “licenses ‘junk’ insurance” and jeopardizes “the benefits of the insurance bargain to patients who need it most.”

The case is Data Marketing Partnership LP v. U.S. Department of Labor, 5th U.S. Circuit Court of Appeals No. 20-11179

For DMP: Jonathan Crumly of Taylor English Duma; and Warren Harris of Bracewell

For the Labor Department: Michael Shih and Mark Stern of the U.S. Department of Justice, Civil Division

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