govinfo:USCOURTS-mdd-1_25-cv-02114-1

IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF MARYLAND 
CITY OF COLUMBUS ET AL., 
Plaintiffs, 
V. 
* 
* 
* 
* Civil No. 25-2114-BAH 
ROBERT F. KENNEDY, JR. ET AL., 
* 
Defendants. 
* 
* * * * * * * * * * 
MEMORANDUM OPINION 
* 
Plaintiffs filed suit under the Administrative Procedure Act ("AP A") seeking to prevent 
Defendants from implementing changes to federal regulations enfordng the Patient Protection and 
Affordable Care Act (the "A-CA," or the "Act"). ECF 1' ( complaint). These changes, embodied in . 
. the Marketplace Integrity and Affordability Rule (the "Rule"), were set to take effect on August 
. . 
25, 2025. See Patient Protection and Affordable <:;are Act; Marketplac~ Integrity and 
Affordability, 90 Fed. Reg. 27,074 (June 25, 2025). Plaintiffs-three cities, a coalition of doctors, 
and an interest group representing small business owners-allege they will shoulder increased 
costs or see their members lose health insurance coverage if these changes are implemented. See 
ECF 1; ECF 65 (motion for summary judgment). Defendants, the Secretary of the Department of 
Health and Human Services ("HHS") and mariy in his employ charged with crafting and 
implementing $e Rule, 1 counter that changes to ACA-related regulations are needed to prevent 
1 Throughout this opinion, the Court o~casionally refers to the taker of the administrative actions 
on review as "the agency," following the example of the parties. See, e.g., ECF 65-1, at 30; ECF 
68-1, at 18. •• 

fraud and .to readjust the cost of health insurance. • See ECF 68 ( cross-motion· for summary 
judgment). 
The Court previously granted in part and denied in part Plaintiffs' motion to stay the Rule;: 
pursuant to 5 U.S.C. § 705 pending a final ruling on the merits of the instant matter. See ECF 11 
(motion to stay); ECF 35 (memorandum opinion); ECF 36 (order); ECF 38 (amended order). The 
Court found that Plaintiffs had shown a likelihood of success on the merits of their challenge to 
seven provisions of the Rule. See ECF 38. I)efendanis have appealed the Court's decision to the 
United States .Court of Appeals for the Fourth Circuit, arguing that Plaintiffs lack standing and that 
the Court erred in ;finding that Plaintiffs demonstrated a likelihood of success on their challenges 
to two provisions of the Rule.2 See ECF 39. That appeal remains pending, and Defendants have 
.been denied a stay pending appeal by both this Court and the Fourth. Circuit. See ECF 49; ECF 
52. 
In the interim, the parties jointly moved to pro~eed on the merits in this C~urt "to account 
for the rate filing season for 2027." See ECF 57, at 2. Both parties seek a decision on the merits 
through cross-motions for ~mary judgment based on the administrative record. Id The Court· 
entered the partie~' proposed briefing schedule, and the cr~ss-motioi;is for summary judgment are 
' 
now ripe for resolution. See ECF 65 (Plaintiffs' motion for summary judgment); ECF 68 
(Defendants' cross-motioh for summary judgment); ECF 70 (Plaintiffs' reply); ECF 71 · 
(Defendants' reply). All filings includ~ memoranda of law, and Plfil1:1tiffs' motion includes an 
addendum of administrative record materials.3 Accordingly, for the reasons stated below, 
2 That appeal has been docketed as Case No. 25-2012. 
3 Defendants also produced the complete administrative record to Plaintiffs via a digital vile 
sharing service and to the Court by mailing a flash drive. ECF 62, afl. From this complete record, 
Plaintiffs compiled their addendum of record materials in support of their motion. See ECF 65-2. 
-2 

_Plaintiffs' motion for summary judgment is GRANTED in part and DENIED in part and 
Defendants' cross-motion for summary judgment is GRANTED in part and DENIED in part.4 
I. BACKGROUND 
A. The· Affordable Care Act 
' 
In 2010; Congress enacted the ACA "to increase the number of Americans covered by 
health insurance and decrease the cost ofhealth care.!' NFIB v. Sebelius, 567 U.S. 519,538 (2012). 
"Prior to the en~ctment of the ACA, individual health insurance :r_narkets were dysfunctional." City 
0
of Columbus v. Trump, 453 F. Supp. 3d 770, 778 (D. Md. 2020) ("City of Columbus f'). 5 The 
ACA "adopts a series of interlocking reforms designed to expand coverage in the individual health 
insurance market."6 King v. Bu'rwell, 576 U.S. 473, 478-79 (2015). Individual market health 
·plans are referred to as qualified health plans ("QHPs"). Individuals primarily enroll in QHPs for 
(Volume 1); ECF 65-3 (Volume 2). The Court references all filings by their respective ECF 
_numbers and page numbers by the ECF-generated page numbers at the top of the page . 
. 4 Given the Court's earlier decision on the motion to stay under 5 U.S.C. § 705, see City of . 
Columbus v. Kennedy, 796 F: Supp. 3d 123 (D. Md. 2025) ("City of Columbus Ill'), the parties 
"essentially ask ihis Court to decide the same issues·, on the same record, for a second time," Am. 
Fed'n ofTchrs. v, Dep 't of Educ., 796 F. Supp. 3d 66, 81 (D. Md. 2025). In the interests of judicial 
economy, where the Court reaches the same conclusion as it did in City of Columbus III, it repeats 
'its prior analysis, often verbatim. However, the Court stresses that it reaches its conclusions anew 
after review of the full record and with the benefit of fulsome briefing. Moreover, since the facts 
are undisputed and the Court previously held a lengthy hearing on the prior motion at ECF _ 11 
addressing the same rule change, no additional hearing is necessary. See Loe. R. 105.6 (D. Md. 
2025). , 
•5 The Cc;mrt frequently cites two prior opinions by Judge Chasanow, which included the same City 
Plaintiffs involved in this case. , One opinion is from 2020 and addresses a motion to dismiss. See 
City of Columbus, 453 F. Supp. 3d at 770 ("City of Columbus I"). The other opinion, from the 
same case, addresses the parties' cross-motions for summary judgment. See City of Columbus v. 
Cochran, 523 F. Supp. 3d 731 (D. Md. 2021) ("City ofColumbus If') . 
. 6 "Individual health insurance is insurance that individuals purchase themselves, in contrast to, for 
example, joining employer-sponsored group health plans." City of Columbus I, 453 F. Supp. 3d 
at 778 (citation omitted). 
3 

a given benefit year during an annual open enrollment period, or under specified special enrollment 
periods. 42 U.S.C. § 1803 l(c)(6). Ultimately, the ACA "aims to achieve systemic improvements 
in the individual health insurance market by means of certain key reforms[.]" City of Columbus I, 
453 F. Supp. 3d at 778. 
First, the ACA's "guaranteed issue" requirement specifies that every "health insurance 
issuer that offers health insurance coverage in the individual or group market in a State must accept 
every employer and individual in the State that applies for such coverage," 42 U.S.C. § 300gg­
l(a), subject to exceptions specified in the statute, such as limiting sign-ups to the aforementioned 
enrollment periods, id. § 300gg-l(b); see Me. Cmty. Health Options v. United States, 590 U.S. 
296, 301 (2020). "In other words, the Act 'erisure[s] that anyone can buy insurance."' Me. Cmty. 
Health Options, 590 U.S. at 301 (quoting King, 576 U.S. at 493). 
Second, the ACA's "guaranteed renewability" provision mandates that "the issuer must 
renew or continue in force such coverage at the option of the plan sponsor or the individual." 42 
U.S.C. § 300gg-2(a). This provision, too, is subject to statutory exceptions, including an exception 
for persons who have failed to pay premiums owed on their policy. Id.§ 300gg-2(b)(l); see also· 
id §§ 300gg-12, 300gg-42. 
Third, the ACA requires all QHPs to cover "essential health benefits" and limits cost­
sharing (in the form of deductibles and co-pays) by enrollees for these essential health benefits.· 
42 U.S.C. § 300gg-6(a); id. § 18022(a)(2). The limitation on cost-sharing is adjµsted each year by 
a "premium adjustment percentage," which is "the percentage (if any) by which the average per 
capita premium (or health insurance coverage in the United States for the preceding calendar­
year ... exceeds such average pe; capita premium for 2013," the year before the ACA's reforms 
to the individual health insurance market went into effect Id. § 1.8022(c)(l), (4). • 
4 

Fourth, the ACA "requires the ·creation of an 'J;:xchange' in each State where people can 
·shop for insurance, usually online." Ki~g, 576.U.S. at479 (quothlg 42 U.S.C. § 1803l(b)(l)); see 
also Me. Cmty. Health Options, 590 U.S. at 301. The Act "gives each State the opportunity to 
' ' 
establish its own Exchange, but provides that the Federal Government will establish the Exchange 
·if the State does not." King, 576 U.S. at479; see also 42·U.S.C. §§ 18031, 18041. The purpose 
of the Exchange is to serve as a ''marketplace that allows people to compare.and purchase" ACA­
c.ompliant pians. 7 Id 
• Fifth, exchange plans are categorized in_to different "metal tiers"-bronze, silver, gold, and 
platinum-based on the.ir "level of coverage." 42 U.S.C. § 18022(d) (setting the "level of 
coverage" for each of the plan types). For example, "silver plans," must have an actuarial value 
. of 70%, meaning the plan is designed such that the issuer will pay around 70% of covered medical 
expenses, and the enrollee will pay the remaining 30% of expenses through out-of-pocket 
spending. 8 Id Because actuarial predictions may be· imprecise, the A.CA specifies that the Centers 
_for Medicare & Medicaid Services ("CMS"), an agency within HHS, may "provide for a de 
minimis variation ... to account for differences in actuarial estimates." Id. ·§ 18022( d)(3). 
Sixth, the ACA "seeks to make insurance m~re affordable by giving refundable tax credits 
to individuals[.]" King, 516 U.S. at 482 (citing 26 U.S.C. § 36B). These ''premium tax credits" 
7 As Plaintiffs describe, "[s]ome states have elected to create Exchanges themselves (state-based . . ' Exchanges or SBEs), as is the case in Maryland, while others have created Exchanges that operate 
on the federal Healthcare.gov platform (state-based Exchanges on the federal platform, or SBE­
. FPs ), such as the Exchange that Illinois used in 2025 while it transitioned to an SBE. The Exchange 
in other states, including' Ohio, is operated by the Centers for Medicare & Medicaid Services 
(CMS) (federally facilitated Exchange, or the FFE)." ECF 65-1, at 11 (citing CMS, Consumer 
Info. & Ins: Oversight, State-Based Exchanges, https://perma.cc/JFT3-6EAK). • 
8 Bronze, gold, and platinum plans are designed to provide benefits that are actuarially equivalent 
.to 60%, 80%, and 90%, respectively, of the full value of benefits under the plan. 42 U.S.C. 
§ 18022( d)(l ). 
5 

("PTCs") vary depending on an individual's income- individuals who earn more must pay more 
toward the cost of their monthly premium-but arecgenerally pegged to the cost of the so-called 
"benchmark silver plan," or the second-lowest-cost silver plan offered within a market. See, e.g.', . . 
26 U.S.C. § 36B(b)(3)(B)-(C). The ACA initially made these tax credits availabl~ to individuals 
with incomes between 100% and 400% of the federal poverty level ("FPL"). 26 U.S.C.' 
§ 36B(c)(l)(A). However, during the COVID-19 pandemic, Congress-via the American Rescue 
Plan Act of 2021, Pub. L. No. 117-2, 135 Stat. 4 ("ARPA")-temporarily increased the generosity 
of the ACA's premium subsidies and expanded subsidy eligibility to enrollees with household· 
incomes above 400% of the FPL. The 2022 Inflation.Reduction Act, Pub. L. No. 117-169, 136 
~tat. 1818 ("IRA"), extended these enhanced. subsides through 2025. 
PTCs are claimed on an individual's tax return after.the end of the year, and ar~ paid by._ 
the Internal Revenue Service ("IRS"). 26 U.S.C. § 36B(h). _Rather than an enrollee paying the 
entire insurance premium up front and then later . claiming a credit toward that amount on the 
taxpayer's tax return, HHS-the federal agency that largely administers the ACA-may also make. 
an advance payment of the premium tax credit amount directly to the enrollee's insurance provider. 
42 U.S.C. §§ 18081, 18082. Such credits are.known as advance premium tax credits ("APTCs"). 
"APTCs act as a subsi.dy for_low-income individuals who. could not afford to purchase insurance 
outright.': City of Columbus II, 523 F. Supp. 3d at 741 . CMS is responsible for determining 
whether individual~ meet the statutory eligibility requirements for APTCs, as well as for 
"redetermin[ing] eligibility on a periodic basis in appropriate circumstances." 42 U.S.C. 
§ 18081 (f)(l )(B). The amount of the APTC owed ultimately depends on the individual's income 
·at the end of the year. Thus, individuals must file a federal tax return each year to "reconcile" the 
.q ., 
•i 
·I 6 
II 

APTCs they received with the PTC amount they qualify for based on their actual income during 
the applicable tax year. See 26 U.S.C. § 36B(f)(l). . 
"Each ye_ar, HHS -promulgates rules pursuant to its rulemaking authority under the ACA 
and the Public Health Service Act ('PHS Act'). Such rules are the mechanisms by which HHS 
makes ongoing adjustments to the regulations and processes surrounding ACA insurance 
markets." City o/Columbus II, 523 F. Supp. 3d at 741. 
B. The Marketplace Integrity and Affordability Rule 
On March 19, 2025, CMS issued a Notice of Proposed Rulemaking for a proposed rule that 
would implement "several regulatory actions aimed at strengthening the integrity of the [ACA] 
eligibility and enrollment systems to reduce waste, fraud, and abuse." 90 Fed. Reg. 12,942 (Mar. 
19, 2025). CMS explained that it "expect[ed] these actions would prov1de premium relief to 
·families who do not qualify for [ACA] subsidies and reduce the burden of.;. [ACA] subsidy 
expenditures on the Federal taxpayer." Id. CMS received more than 26,000 comments on the 
proposed rule. After reviewing those comments and revising certain provisions of the proposed 
'rule, HHS issued (and publicly released) the Rule on June 20, 2025, and it was published in the 
Federal Register on June 25. 90 Fed. Reg. 27,074. 
As relevant here, the Rule implements policies concerning the effectuation of new 
)::xchange coverage when a customer owes past;.due premiums to an issuer; id at 27,084-91; the 
requirement that recipients of APTCs file a federal tax return and reconcile those APTCs with the 
recipient's PTC amount, id. at 27,113-17; and the procedures HHS uses to annually redetermine 
.Exchange enrollees' eligibility tq receive APTCs, id. at 27,102-10. The Rule additionally makes 
changes to the procedures that HHS uses to verify enrollees' eligibility for APTCs, id at 27,118-
32; pauses an income-based special enrollment period ("SEP"), id. at 27,140-48; and amends 
7 

certain verification procedures that apply to SEPs, id. at 27,148-52. The Rule also updates the_ 
methodology used to calculate the "premium adjustment percentage," id. at 27,166-74, and makes 
adjustments to the allowable ranges of actuarial values applicable to the different plan types sold 
on Exchanges, id. at 27,174-78. 
HHS explained in the Rule's preamble that, "[b]ased on [its] review of enrollment data and 
[its] experience fielding consumer complaints," it believes that the "temporary expansion of ACA 
premium subsidies" via the ARP A and the IRA "resulted in conditi_ons that were exploited to 
improperly gain access to fully-subsidized coverage" on Exchanges. Id. at 27,074. More 
specifically, "the widespread availability" of fully subsidized plans-i. e., plans with post-subsidy 
net premiums of $0-"created the incentive, and opportunity for fraudulent and improper 
enrollments at scale," either by individual enrollees wanting no-cost Exchange coverage or by 
third-party brokers that collected commissio~s on improper enrollments made without customers' 
knowledge .. Id. The Rule·purports to "take □ a carefully curated set of temporary actions to 
immediately reduce the crisis-levels of improper enrollments·over the short-term as the market 
readjusts to the new subsidy environment in _which enhanced subsidies are no longer available." 
Id. The Rule also implements a number of "permanent reforms to help the markets reset to the 
changing subsidy environment to improve affordability and stability over the long-term." Id. 
Plaintiffs contend that the Rule "contains a number of provisions that, in their individua! 
and collective effect, would raise consumers' premiums for plans on the Exchanges, limit coverage 
under those plans, and deter millions of individuals from enrolling in coverage, leading to higher· 
uncompensated care costs for providers of last resort." ECF 65-1, at 13-14. According to 
Plaintiffs, the Rule "will lead to at least 1.8 million fewer people enrolling on the Exchanges." Id. 
at 14 (citing Yol!pg Deel., 4). Plaintiffs argue that the Rule "accomplishes this result through· 
' 
8 
Ii 

measures that erode the value of coverage obtained through the· Exchanges, impose barriers 
designed to depress enrollment in the Exchanges, and impose further barriers limiting the 
• availability of subsidized insurance even· for those enrollees that do successfully enroll." Id. 
The Rule was originally set to take effect on August 25, 2025, 90 Fed. Reg. 27,074, but 
many of its provisions would have applied to Exchange plans that would first become available in 
·2026, see id. at 27,178-79. 
C. Procedural History 
Plaintiffs are three city governrnents-the City of Columbus, Ohio; the Mayor and City 
.Council of Baltimore, Maryland; and the City of Chicago, Illinois (collectively the "City 
Plaintiffs")-and two nonprofit organizations, Main Street Alliance ("MSA"), a, "national network 
of small businesses," and Doctors for America ("DFA"), an advocacy organization consisting of 
"member physicians and medical trainees ... in all 50 states." ECF 1, at 5-6 ,r,r 8-12. Plaintiffs 
' . . 
seek review of agency action under the APA, claiming that several of the Rule's provi_sions are 
contrary to law (Count I), and that those same provisions plus several others are arbitrary and 
• capricious (Count II). Id. at 26 ,r,r 74-82. 
On July 2, 2025, Plaintiffs filed a motion for preliminary relief, in Which they sought a stay 
of the August 25, 2025 effective date of the challenged Rule provisions under 5 U.S.C. § 705 or, 
in the alternative, a preliminary injunction. See ECF 11. The Court held a hearing on the Motion 
on August 14, 2025. &e ECF 34 (Tr. of Hearing). On August 22, 2025, the Court issued a 
memorandum opinion and order granting in part and denying in part Plaintiffs' motion, construed 
as a motion_for a stay under5 U.S.C. § 705. See ECF 35 (memorandum opinion); ECF 36 (order). 
The Court's order st~yed the effecfr".,e dates of certain provisions of the Rule pursuant to 5 U.S.C. 
§ 705 while this litigation remains pending. See ECF 38. Now the parties seek to resolve the 
litigation through cross-motions for summary judgment. 
9 

II. JURISDICTION 
As an initial matter, the Court assures itself of jurisdiction: The proposition that an 
"interlocutory appeal does not divest the district court of jurisdiction to resolve the merits of a suit" 
has been described as an "unremarkable" one. CASA, Inc. v. Trump, 791 F. Supp. 3d 606, 612 (D. • 
' ' 
Md. 2025) ( emphasis in original). Taking such a course is widely understood to comport with the 
Griggs principle, or the principle that "[a]n appeal, including an interlocutory appeal, 'divests the 
district court of its control over those aspects of the case involved in the appeal."' Coinbase, Inc.· 
v. Bielski, 599 U.S. 736, 740 (2023) (quoting Griggs v. Provident Consumer Discount Co., 459 
U.S. 56, 58 (1982)). Ordinarily, the Court would have no pause in concluding that its resolution 
of the pending motions accords with Griggs, especially considering that Defendants only challenge. 
two of the Court's holdings as to Plaintiffs' likelihood of success on the merits in the interlocutory 
appeal. See USCA.4 Case No. 25-2012, at ECF 28. 
However, the issue of Plaintiffs' standing is also on appeal, which may present some. 
question about this Court's jurisdiction to proceed with the merits given the concerns expressed 
by dissenters in the Supreme Court's relatively recent opinion in Coinbase, Inc. v. Bielski. In that 
case, which conceµi.ed the denial of a motion to compel arbitration, the dissent expressed concern 
that the majority's reasoning concluding that Griggs required an automatic stay of proceedings 
when such a motion is appealed could be extended to "any interlocutory appeal on a dispositive 
issue." Coinbase, Inc., 599 U.S. at 760-61 (Jackson, J., dissenting,joined by Sotomayor & Kagan, 
JJ., in full & Tho1;11as, J., in part). "How far Coinbase extends is an active subject in the federal 
appellate courts." City of Martinsville v. Express Scripts, Inc., 128 F.4th 265,269 (4th Cir. 2025) . 
. And the Fourth Circuit recently concluded that Coinbasfs logic encompasses appeals taken 
pursuant to the federal officer removal statute. See id. at 271. 
10 

Nevertheless, in City of Martinsville, the Fourth Circuit cautioned in a ~ootnote that its 
decision should not be read to "imply that the Griggs principle will sweep broadly in other 
_interlocutory appeals." Id at 270 n.3. "Interlocutory· appeals taken fro.m collateral orders," the 
Fourth Circuit explained, "will ordinarily come with narrow automatic stays because a collateral 
order must, by definition, be 'completely separate from the merits· of the action."' Id ( quoting 
Flanagan v. United States, 465 U.S. 259,265 (1984)). The Court concludes that it has jurisdiction 
to proceed with the merits here, in accordanc~ with ~he well-recognized proposition that an 
interlocutory appeal of preliminary injunctive relief analogous to a § 705 stay does not deprive a 
Court of jurisdiction to proceed on,the merits. _Moreover, the parties filed a joint motion at the 
Fourth.Circuit to enter a briefing schedule that ripens after this Court's resolution of the pending 
motions for summary judgment, which the Four.th-Circuit granted, perhaps sugge~ting that the 
Fourth Circuit agrees (or at least is not alarmed by) a resolution on the merits in this Court while 
the appeal is pending. See USCA4 Case No. 25-2012, at ECF 36 (motion for extension), at ECF 
37 (order granting motion to extend filing time and noting no further extensions will be granted). 
But consistent with the Griggs principle, the Court will not address Def~ndants' renewed 
contention in their cross-motion for summary judgiµent that "Plaintiff Doctors for America [ ] does 
. . 
not have standing." ECF 68-1, at 13. That issue is _an aspect of the case involved in the pending 
appeal. Should the Fourth· Circuit have reason to conclude that this Court does not have 
'jurisdiction to resolve the pending motions for summary judgment, the Court notes that it would 
have issued this opinion as an indicative rulingpursu_antto Fed. R. Civ. P. 62.~ in order to fa~ilitate 
the expeditious resolution of this case as the parties have requested: Cf. CASA, Inc., 791 F. Supp. 
·3d at 614 (using an indicative ruling to indicate how the Court would decide a pending motion it 
_could not rule on in light of a pending interlocutory appeal). 
11 

• III. LEGAL STANDARD 
A. Sm;nmary Judgment 
Plaintiffs have brought their claims as an APA challenge. See ECF I. "Because claims 
brought under the APA are adjudicated without a trial or discovery, on the basis of an existing 
I • 
administrative record, such. claims are properly decided on summary judgment." Audubon 
Naturalist Soc. of the Cent. At!. Sta~es, Inc. v. Dep 't of '{ransp., 524 ·F. Supp. 2d 642, 660 (D: Md. 
2007) (citing Citizens for the Scenic Severn River Bridge, Inc. v. Skinner, 802 F. Supp. 1325, 1332 
(D. Md. 1991), ajf'd, 972 F.2d 338 (4th Cir. 1.992)). "From this review, the Court must determine .. 
whether the plaintiff has demonstrated that the agency action should be set aside as arbitrary, 
capricious, contrary to law, or unsupported by sµbstantial evidence." Williams v. Roth, Civ. No. 
21-2135-PX, 2oi2 WL 4134316, at *6 (D. Md. Sept. 12, 2022) (citing 5 U.S.C. § 706(2)(A)). 
"[T]he ordinary summary· judgment standard set forth in Rule 56 'does not apply because of the 
limited role of a court in reviewing the administrative-record."' Am. Fed'n o/Tchrs., 796 F. Supp. 
3d at 89 (quoting Deese v. Esper, 483 F. Supp. 3d 290,304 (D. Md. 2020)). . . . 
B. Reyiew Under the AP A 
The AP A requires courts to "hold unlawful and set aside agency action, findings, and· 
conclusions" that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance 
with law." 5 U.S.C. § 706(2)(A). Previously, "[w]hen a challenger assert[ed] that an agency action 
conflicts with the language of a statute, [the reviewing court] generally appl[ied] the two-step· 
analytical framework set forth in Chevron, US.A., Inc. v. Nat. Res. Def Council, Inc., 467 U.S. 
837, 842--43 (1984)." City of Columbus II, 523 F. Supp. 3d at 744. However, Loper Bright 
overturned Chevron and changed this Court's role in reviewing an administrative agency's. 
interpretation of a statute. See Loper Bright Enters. v. Raimondo, 603 _U.S. 369, 412 (2024). 
Section 706 ofth~ AP A requires courts to dec'ide '"all relevant questions oflaw' arising o_n review 
12 

of agency action." Id at 392 (quoting 5 U.S.C. § 706). "A court may give weight to an agency's 
authoritative interpretation but ultimately must rul~ on matters of law." Molina-Diaz v. Bondi, 
128 F.4th 568, 574--75 (4th Cir. 2025) (first citing Loper Bright, 603 U.S. at 2262; and then citing 
'Skidmore v. Swift & Co,, 323 U.S. 134, 140 (1944)); see also Loper Bright, 603 U.S. at 400-01 
("[A]gencies have no special competence in resolving statutory ambiguities. Courts do."). 
. \ . 
"The scope oJreview-under the 'arbitrary and capricious' standard is narrow and a court i~ _ 
·not to substitute its ju~gment for that of the agency." Motor Vehicle Mfrs. Ass'n of [!S., Inc. v. 
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). However, the agency must "articulate a 
satisfactory explanation for its.action including a 'rational connection betw~en the facts found and 
.the choice made .. "' Id (quoting Burlington Trucli Lines v. United States, 371 U.S. 15_6, 168 
(1962)). Agency action is generally considered arbitrary or capricious if the agency "has relied on 
factors which Congress has not intended it to ·consider, entirely failed to consider an important 
_aspect of the problem, offered an explanation for its decision that runs counter to the evidence 
before the agency, or is so implausible that it could not be ascrib.ed to a difference in view or the 
product of agency expertise." Id. 
IV. ANALYSIS 
As noted above, Plaintiffs challenge several provisions of the Rule as either contrary to 
law, arbitrary and capricious, or both.9 See ECF 1, ·at 26-29. Plaintiffs. separate their challenges 
into three categories: challenges to provisions that erode the value of coverage, challenges_ to 
9 ·with respect to the motion to stay, "Plaintiffs initially challenged the revocation of the low­
income SEP in their opening brief but aban~oned that claim on Reply." City of Columbus III, 796 
F. Supp. at 1'48. Plaintiffs do not advance or defend that challenge at summary judgment either, 
.and thus the Court considers Plaintiffs to have abandoned the claim. See, e.g., Tartaro-mcGowan 
v. !nova Home Health, LLC, Civ. No. 121-298RDATCB, 2022 WL 2232190, at *3 (E.D. Va. June 
21, 2022) ("Generally, a party abandons claims when she fails to defend them in opposition to a 
motion for summary judgment.") (collecting cases),.af/'d, 91 F.4th 158 (4th Cir. 2024). 
13 

provisions that impose barriers on enrollment, and challenges· to provisions that limit the 
availability of subsidized coverage. See ECF 65-1, at 14. 
Plaintiffs' initial challenges raised in the "erosion of the value coverage" section of their 
' 
brief seek relief from a provision imposing a monthly surcharge of $5 on enrollees to reconfirm­
eligibility, a provision revising the premium adjustment methodology, and a provision revising the 
actuarial value policy. See id. at 14-15. Plaintiffs' next three challenges are raised in the "barriers· 
to enrollment" section and seek relief from a provision requiring enrollees to pay past-due 
premiums before receiving new coverage, a provision shortening the·open enrollment period, and 
a provision adding verification requirements for SEP enrollments. See id. at 16-17. Plaintiffs'· 
final challenges are included in the "limiting the availability of subsidized coverage" section and . 
seek relief from a provision re-instituting a policy regarding failure-to-reconcile tax data and two 
provisions requiring heightened income verification when a person's projected annual income does. 
not match IRS data or when tax data is unavailable. See id. at 17-18. The Court will address each 
challenge in turn. 
A. Eligibility .Redetermination / Imposition of a "Junk Fee" 
As noted, a taxpayer is eligible for tax credits to cover the cost of premiums if he or she 
enrolls in coverage through the Exchange, falls within the specified income thresholds, and lacks 
an offer for other affordable health insurance. 26 U.S.C. § 36B(c)(l), (2). As Plaintiffs describe, 
"[t]he amount of the tax credit is determined by the taxpayer's income and the cost of a benchmark 
plan offered through the Exchange." ECF 65-1, at 28. Additionally, "[e]ligibility for, and the 
amount of, APTCs turn on the same statutory criteria." Id. (first citing 42 U.S.C. § 18081(a)(2); 
and then citing id.§ 18082(a)(l)). The Rule provides that (1)-ifan enrollee does not submit an 
appli_cation for an updated APTC eligibility. determination for plan year 2026 on or before the 
deadline to select Exchange coverage and (2) that enrollee's post-APTC premium will be zero 
·I 
ii I; 
14 
,, 
Ii 

. dollars (i.e., the enrollee's coverage will be fully subsidized), then (3) the Exchange "must decrease 
the amount of' the APTC "applied to the [enrollee's] policy such that the remaining monthly 
premium owed for. the policy equals $5." 90 Fed. Reg. at 13,031. Plaintiffs colorfully describe . 
this requirement to reduce the value of the APTC by at least $5.00 a month as a 'junk fee." ECF 
65-1, at 28. 
In response, Defendants argue that the fee is merely "a tool to facilitate HHS's ability to 
redetermine enrollees' eligibility to remain enrolled in fully subsidized Exchange plans." ECF 68-
1, at 17. "The unusually high level of imp~oper enrollment in fully subsidized Exchange coverage 
. stemming from a soon-to-expire enhanced subsidy regime," Defendants argue, "presented the 
'appropriate circumstances' for implementing this temporary nominal-premium procedure." Id. 
(first citing 90 Fed. Reg. at 27,103; and then quoting 42 U.S.C. § 18081(±)(1)(B)). 
As the basis for the agency's authority, Defendants argue that the "ACA grants the HHS 
Secretary the authority to 'establish a program' for making these eligibility determinations and to 
'establish procedures' for 'redetermin[ing] eligibility on a periodic basis in appropriate 
circumstances."' Id. (alterations in original) (first_ quoting 42 U.S.C. § 18081(a)(l); and then 
quoting id § 18081(t)(l)(B)). Plaintiffs acknowledge the agency's obligation to redetermine 
'eligibility on a periodic 1;,asis in appropriate circumstances. See ECF 65-1, at 12, at 28-29. 
However, they argue that "CMS' s authority under the statute is to determine whether the statutory 
criteria for APTC eligibility are met, not to alter those criteria." Id. at 29 (emphasis added) (citing 
·Neumann v. Prudential Ins. Co. of Am., 367 F. Supp. 2d 969, 975 (E.D. Va. 2005)). Plaintiffs 
contend that "[n]othing in section 18081 or the remainder of the Act grants CMS the 'authority to 
tinker with the premium cost structure outlined in 26 U.S.C. § 36B"' by reducing APTCs by $5 
15 

per month for applicants who automatically re-enroll in a plan tha~ "':'ould othe~ise be1 fully 
subsidized. Id. 
Relying on 42 U.S.C. § 18081(~)(2), Defendants counter that "the ACA tasks HHS with 
'determining' whether individuals enrolled in Exchange plans 'meet □ the•inco~e and coverage 
requirements' for claiming PTCs, as well a~ with determining 'the amount' of those tax credits." 
ECF 68-1, at 17 (quoting 42 U.S.C. § 18081(a)(2)). Defendants further argue that it is "likewise 
HHS's responsibility to determine an Exchange enrollee's eligibility for APTCs (which mirrors ' . 
the applicable requirements for PTC eligibilify) and to calculate the amount of those APTCs." Id 
(first citing 42 U.S.C. § 18082(a)(l), (3); ,and then citing 45 C.F.R. § 155.305(±)(5)). 
Importantly, however, 26 U.S.C. -§ 36B provides a formul~ for calculation of tax credits, 
which is determined by income and the cost of a benchmark plan offered through the Exchange. 
That statutory provision states: 
The premium assistance amount d~termined under' this subsection. with. resp_ect to 
any coverage month is the am01.µ1t equal to the lesser of:-
(A) the monthly premiums for such month for 1 or more quali:(ied health 
plans offered in the individual market within a State which cover the taxpayer, the 
taxpayer's spouse, or any dependent (as defined in section 152) of the taxpayer and 
which were enrolled in through an Exchange established by the State under 1311 of 
the'Patient Protection and Affordable Care Act, or 
'\ 
(B) the excess (if any) of-
• I 
(i) the adjusted monthly premium for such month for the applicable second lowest 
cost silver plan with respect to the taxpayer, over 
(ii) an amount .equal to 1/12 of the product of the applicable percentage and the 
taxpayer's househqld income for the taxable year. 
26 U.S.C. § 36B(b)(2). The agency cannot utilize its general nilemaking authority to override· 
explicit statutory provisic~ms. See,Air All. Hous. v. EPA, 906 F.3d 1049, 1061 (D.C. Cir. 201'8) 
("[I]t is well established that an agency may not circumvent specific statutory limits on-its actions 
16 

by relying on separate, general rulemaki~g authority."). As such, CMS lacks authority to tinker 
·with the premium cost structure outlined in 26 U.S.C. § 36B. 
Relatedly, CMS does not have the authorio/ t~ change the statutory formula for APTCs 
under 42 U.S:C. § 18081 (f)(l )(B). That section provides that the Secretary of HHS "shall establish 
·procedures by which the Secretary or one of such other Federal officers ... redetermines eligibility 
on a periodic basis in appropriate circumstances." 42 U.S.C. § 18081(f)(l)(B); The Court finds 
that the relatively limited grant of authority to "redetermine[] eligibility" for APTCs under 
•"appropriate circumstances" does not encompass broad power to adjust the amount of APTCs, 
which are set according to a statutory formul_a. Id. 
According to Defendants, the purpose of that provision corresponds with the purpose of 
.the $5 fee-to "facilitate HHS's ability to redetern_iine enrollees' eligibility to remain enrolled in 
fully subsidized Exchange plans." ECF 68-1, at 17 ( emphasis in original). Defendants thus argue 
"the 'procedure[]' HHS opted for in the Rule is the application of a nominal premium that is 
' 
_designed to prompt certain enrollees to affirmatively reconfirm their eligibility." Id. (quoting 42 
U.S.C. § 18081 (f)(l)(B)). But "an agency may not rewrite clear statutory terms to suit its own 
sense of how the statute should.operate." Util. Air Regul. Grp. v. EPA, 573 U.S. 3q2, 328 (2014). 
Merely suggesting that the· purpose of the provision comports with the agency's general 
' rulemaking authority to ''redetermine eligibility" does nothing to address Plaintiffs' argument that 
Defendants were not free to choose a procedure that changed the statutory formula. See ECF 65-
1, at 28-29: Defendants' interpretation of its authority stretches the "redetermine eligibility" 
language beyond its plausible meaning and scope. See Util. Air Regul. Grp., 573 U.S. at 328 
("Agencies are not free to 'adopt .. • . unreasonable interpretations of statutory provisions and then . 
edit other statutory provisions to mitigate the unreasonableness."' ( citation omitted)). In short, the 
17 

authority to verify eligibility does not infuse the agency with authority to re-write Congress's 
unambiguous statutory formulas. 
The Court finds that HHS lacks the authority to impose a fee on plans that would otherwise 
be fully subsidized through APTCs via the formula prescribed by Congress. There are explicit 
formulas in the statutes for calculating APTCs, and Defendants do not have authority to re-write· 
tho~e. formulas by readip.g broad authority into the limited statutory directive allowing HHS to 
"redetermine[] eligibility" for enrollment under "appropriate circumstances." 42 U.S.C. 
§ 1808l{f)(l)(B). Additionally, the Court agrees that the "Treasury's obligation is to pay the· 
' 
amount that would be owed under the section 36B formula, not a different amount arbitrarily 
selected by CMS." ECF 65-1, at 29. In short, the Court concludes that the Rule's "junk fee" 
provision is contrary to law because applicants cannot be compelled to pay a fee that is untethered. 
to the statutory formula.10 Accordingly, Pla,intiffs are entitled to summary judgment on their 
challenge against this provision. 
B. Revised Premium Adjustment Percentage Methodology 
The ACA directs the HHS Secre_tary to determine an annual "premium· adj~tment 
percentage" based on "the average-per capita premium for health insurance coverage in the United 
. States for the preceding calendar year." 42 U.S.C. § 18022(c)(4). This measure of pre~ium 
. . 
growth is then used to set the rate of increase for a m1nj.ber of parameters defined in the ACA, such 
as the maximum annual limitation on cost sharing under Exchange plans. See 45 C.F.R. 
§ 156.130(a). . Because the IRS traditionally adopts the same premium growth indexing 
methodology as HHS, the methodology used to calculate the premium adjustment percentage also 
10 Because the C?urt finds that this provision of the Rule is contrary to law, the ColJ,rt does not, 
reach Plaintiffs' alternative argument that adopting the provision was arbitrary and capricious. 
18 

affects how PTC and APTC amounts are calculat~d and, by extension, the cost of health care 
coverage on Exchanges. See 90 Fed. Reg. at 27,171. . 
HHS presently only considers premiums for employer-sponsored coverage_ in the premium 
adjustment percentage calculation, not insurance purchased by individuals on the marketplace. 
The Rule, however, incorporates individuai insurance market data into this measure. Id at 27,169. 
Section 1302(c)(4) of the ACA and§ 156.130(e) provide that the premium adjustment percentage 
is the percentage (if any) by which the average per capita premium for health insurance coverage 
for the preceding calendar year exceeds such average per.capita premium for health insurance for 
2013. Id. at 27,166. In response to the proposed rule, commenters expressed concern that 
"individual market premiums should not be used to measure premium growth since 2013 because 
premiums in the early years of ACA were volatile[.]" Id. at 27,173. 
Plaintiffs contend that "[a]s a result" of the Rule's incorporation of individual plan prices 
into the premium growth indexing methodology, "the maximum out-of-pocket limit in 2026 will 
be about $450 higher for an individual and $900 higher for a family than it otherwise would have 
·been." ECF 65-1, at 33 (citing 90 Fed. Reg. at 27,206). According to Plaintiffs, "[t]his will lead 
to about a 4.5% increase in premiums across the. board and 80,000 fewer enrollments in the • 
Exchanges under CMS's own·estimates, running the risk of a spiral of a worsening risk pool and 
'increased premiums, as well as higher volumes of uninsured patients being seen by health centers." 
Id (internal quotation marks and citations omitted). 
1. Contrary to Law 
Plaintiffs now argue that the revised premium adjustment percentage methodology is 
contrary to law and emphasize that "[t]he statute requires the agency to compare the most recent 
'average per capita_premium for health insurance coverage' with 'such average per capita premium 
.for 2013,' the year before the Act's reforms to the individual health insurance market went into 
19 

effect." Id. at 33 (quoting 42 U.S.C. § 18022(c)(4)). "By using the term 'such,"' Plaintiffs argue_ 
that "Congress directed the agency to compare average premiums in the two years for the 'same,' 
or 'equivalent,' coverage." Id. at 33-34 (citing King, 576 U.S. at 487). "But premiums on the 
individual market in 2013 were not premiums for policies that met the Act's ~tandards for 'health 
insurance co:verage,'_" say Plaintiffs. Id. at 34 (first citing 42 U.S.C. §§ 300gg-91 (b), 18021 (b )(2); 
and then citing 42: U.S.C. § 300gg et seq.) .. "So any measurements of premiums for individual 
policies in 2013 wouldn't capture the cost of 'health insurance coverage,' as the Affordable Care 
Act uses that phrase." Id. 
Defendants respond that Plaintiffs' "argument places far more weight on the word 'such' 
than it can bear." ECF 68-1, at 21. According to Defendants, "[h]ad Congress wished to constrain 
the agency in the highly specific manner that Plaintiffs suggest"-i.e., "to include the group .market 
only"-"it could easily have been more specific." Id. at 21-22. In addition to arguing that the 
plain text of the statute does not naturally accommodate Plaintiffs' reading, Defendants contend 
that "Plaintiffs' argument relies on an incorrect premise that demands an impossibly pristine 
market comparison from 2013" when both "individual and small group markets" were "restricted 
to calculate premipm costs based only on certain factors." Id. at 22 (citing 45 C.F.R. § 147.102). 
The Court begins and ends with the text of the ACA. The provision at issue, 42 U.S.c.· 
§ 18022(c)(4), provides: 
For purposes of paragraph (l)(B)(i), the premium adjustment percentage for any 
calendar year is the percentage (if any) by which the average per capita premium 
for health insurance coverage in the United States for the preceding calendar year 
(as estimated by the Secretary no later tlian October 1 of such preceding calendar 
year) exceeds such average per capita premium for 2013 (as determined by 
the Secretary). 
42 U.S.C. § 18022(c)(4). The A.CA defines "health insurance coverage" to. mean "benefits 
consisting of medical care (provided directly, through insurance or reimbursement, or otherwise 
20 

and including items and services paid for as medical care) under any l)ospital-or medical service 
policy .or certificate, hospital or medical service plan contract, or health maintenance organization 
'contract offered by a health insurance issuer." 42 U.S.C. § 300gg-91(b)(l); see also id. 
§ 18021 (b )(2). Plaintiffs read this definition together with the other provisions of the ACA "setting 
standards, as of 2014, for health insurance coverage in the individual market" to give meaning to 
·the phrase "health insurance coverage" as it is used in§ 18022(c)(4). ECF 65-1, at 34 (citing 42 . . 
U.S.C. § 300gg et seq.). 
The Court observes that the term "health insurance· coverage" only appears in the first half 
,of (c)(4), relating to the "average per capita premium ... for the preceding calenpar year"; it is not 
used to describe the "average per capita premium for 2013." 42 U.S.C. § 18022(c)(4). Moreover, 
the provision expressly grants the Secretary the authority to "determine □" the "average per capita 
_premium for 2013." Id. ("as determined by the Secretary"). By way of contrast, the first half of 
the provision permits the Secretary to "estimate[]" the "average per capita· premium· for health 
insurance coverage in the United States for the preceding calendar year." Id. Defendants argue 
that there is a meaningful difference between estimation and determination, in that "[a]n estimate 
of a value is implicitly constrained by metrics and formulas, whereas determination of a value is 
not." ECF 68-1, at 23. Where a statute "has used orie term in one place, and a materially different 
term in another, the presumption is that the different term denotes a different idea." Sw. Airlines 
• Co. v. Saxon, 596 U.S. 450, 457-58 (2022) (quoting A. Scalia & B. Gamer, Reading Law 170 
(2012)). However, it i's not clear to the Court whether "estimated" and "determined" in this context 
are materially different, and Defendants do not cite a source for defining either term in support of 
their reading. 
21 

More useful to the Court is the use of the word "such" in the provision. Within (c)(4), 
Congress used "such" twice-once to refer back to the preceding calendar year ("such preceding 
calendar year") and one~ to refer back to the-average per capita premium ("such average per capita 
premium"). 42 U.S.C. § 18022(c)( 4). Plaintiffs suggest that "such" means the same kind or degree 
. already described. See ECF 70, at 8; Culbertson v. Berryhill, 586 U.S. 53, 59 (2019) ("Both at the 
time of enactment and today, the adjective 'such' means ' [ o ]f the kind or degree already described 
or implied.''' (alteration in original) (first quoting H. Fowler & F. Fowler, Concise Oxford· 
Dictionary of Current E11.glish 1289 (5th ed. 1964); and theri citing Black's Law Dictionary 1661 
(10th ed. 2014))). In the first usage in this subsection, the Court observes that Congress has used 
"such" to effectively mean_ "the same as stated prior." In other words, the Secretary must estimate• 
"the average per capita premium for .health insurance coverage in the United States for the 
preceding calendar year [] as estimated by .the Secretary no later than October 1 of [the same] 
preceding year." 42 U.S.C. § 18022(c)(4)(alteration added). 
The second clause, however, resists that precise meaning for "such," because the "average 
per capita premium for 2013" wili ( of course) not necessarily be "the same" as that of the average 
for the year of comparison. But the kind of average taken can be made identical to the calculation 
described prior. In other words, the Secretary must determine the average per capita premium of 
the kind described-i.e., "for health insurance coverage"-but "for 2013." Id. (alteration added). 
The question the Court must answer, then, is whether the meaning of"health insurance coverage" 
is coverage that comports with the "standards, as of 2014, for health insurance coverage in the 
individual market" set by the ACA, see ECF 65-1, at 34, or whether such coverage must simply 
meet the definition provided for in § 300gg-91(b). The text of the statute compels the latter 
reading, even if the former may be of sounder policy. 
I . 22 

As discussed, the ACA defines "health insurance coverage" to mean "benefits consisting 
. . 
of medical care (provided directly, through insurance or reimbursement, or otherwise .arid 
including items and services paid for as medical care) under any hospital or medical service policy 
or certificate, hospital or medic~! service plan contract, or health ipaintenance organization 
contract offered by a health insurance issuer." 42 U:S'.C. § 300gg-9l(b)(l). That definition alone 
does not include· a requirement that the benefits provided comply with the other standards 
established by the ACA. Plaintiffs urge the Court to read the definition of "health insurance 
coverage" in connection with the other provi~ions of. the ACA that set standards for such coverage, 
see ECF 65-1, at 34, so that§ 18022(c)(4) must be read to involve an average per capita premi~ 
of "health insurance coverage" that comports with the ACA "for 2013," see 42 U.S.C. 
§ 1_8022(c)(4). ,But to do so would require the Courtjo .effectively add word~ to§§ 300gg-91(b)(l) 
or 18022( c )( 4 ), which ordinary principles of statutory interpretation counsel against. See Stockley 
• ·v. United States, 260 U.S. 532, 540 (1923) ("We are not at liberty to add to or take from the 
language of the statute."). 
Plaintiffs are likely correct that ''the coverage available on- the individual market in 2013 
·'differ[ed] in [a] meaningful way,' from the coverage available on that market no~." ECF 70, at 
6-7 (alterations in original) (quoting King, 576 U.S. at 487). But the Court finds no statutory 
authority to compel the agency to use a particular formulation in its determination of the "average 
•per capita premium for 2013" under§ 18022(c)(4). 
2. Arbitrary and Capricious 
Plaintiffs also argue that the revised premium adjustment percentage methodology was 
.arbitrary. See ECF 65-1, at 34. "CMS ackno,;yledged that its choice ran contrary to the Act's 
goals, but it brushed this concern aside, reasoning that it didn't need to take these issues into 
account when it exercised its discretion .u~der section 18022( c )( 4) to adopt an 'appropriate' 
23 

methodology." Id .. at 34 (first citing 90 Fed. Reg. at 27,172; and then citing 90 Fed. Reg. 12,942,. . . 
12,990 (Mar. 19, 2025)). I I • 
Defendants do not dispute that the new Rule will affect the cost of Exchange plans. See 
ECF 68-1, at 23 (''HHS acknowledges that the new methodology will increase the maximum 
annual limitation on cost sharing apd ·net premiums for enrollees with incomes under 400 percent 
of the FPL, which could in turn negatively impact the cost of Exchange coverage and enrollment." 
(citing 90 Fed. R~g. at 27,171, at 27,206--07)). However, Defendants maintain that "any such 
impact would be a consequence of Congress's decision to tie the value of certajn forms of financial 
assistance under the ACA to the premium adjustment percentag~." id. at 24 ( emphasis in original). 
D,efendants argue that "HHS therefor~ concluded-· and reasonably so-that a premium adjustment 
percentage methodology th~t considers 'all private health insurance premiums' is 'more consistent 
with' that congressional intent and the ACA's text." Id. (quoting 90 Fed. Reg. at 27,172). In the 
Rule, CMS explained. that "[b ]ecause the role of the premium adjustment percentage is to 
appropriately index various parameters defin~d in the ACA, the primary consideration for setting 
the value of the premiuµi . -adjustment percentage should be whether it accurately and 
comprehensively captw;es the rate of premium growth ih the United States rather than the impact 
of the indexing methodology on net premiums, enrollment, access to health care, health outcomes, 
or out-of-pocket posts for those who receive non-covered or out-of-network care." 90 Fed. Reg. 
at 27,172. According to the agency, "[c]onsidering these other impacts when setting the premium· 
adjustment percentage may result ~n a measure of premium growth th()t does not accurately reflect 
actual premium growth in the United States, artificially inflating the generosity of provisions of 
the ACA beyond the intent of Congress:" Id. 
24 

That the agency changed its view on how to set the premium adjustment percentage does 
not mean its position was not substantially justified. "Agencies are free to change their existing 
policies as·long as they provide a reasoned explanation for the change." Encino Motorcars, LLC 
·v. Navarro, 579 U.S. 211,221 (2016). "In such cases it is notthat further justification is demanded 
by the mere fact of policy change; but that a reasoned explanation is needed for disregarding facts 
and circumstances that underlay or were engendered by the prior policy." FCC v. Fox Television 
.Stations, Inc., 556 U.S. 502, 515-16 (2009). "We defer to the agency's new position no less than 
the old, so long as we are satisfied that the agency's change in position was intentional and 
considered." Philip Morris USA, Inc. v. Vi/sack, 736 F.3d 284,290 (4th Cir. 2013). 
• Here, the agency's change in position was not arbitrary and capricious because it provided 
the necessary reasoned explanation for the change. In the Rule, HHS clarified that premiums from 
the individual market were previously excluded because they were "most affected by the 
significant changes in benefit design and market composition in the early years of implementation 
of the ACA market rules and were most likely to be subject to risk premium pricing," and later, in 
2022, the agency "anticipated that these premiums would be more volatile in response to the 
<;:OVID-19 PHE than employer-sponsored premiums." 90 Fed. Reg: at 27,173. However, the 
agency re.asoned that "the ACA is now past the initial years of implementation and issuers have 
had the opportunity to collect data on the risk composition of the individual market and adjust 
pricing accordingly ... [a]dditionally ... premiums in the employer-sponsored market increased 
more rapi~ly than premiums in the individual market during the COVID-19 PHE, the impact of 
which has led to a decreasing gap in premium growth between the individual market and employer­
sponsored market." Id. . In light of those findings, the agency determined that "a comprehensive 
25 

measure incorporating both individual market and employer-sponsored premiums will more 
accurately reflect true premium growth going forward." Id. 
While Plaintiffs argue that the agency "disregarded commenters who noted that the new 
measure_ would be less ac:curate if it included the volatility of the individual insurance market in 
the early years of the ACA's implementation," ECF 65-1, at 34, the Rule reflects th~t the agency 
explicitly responded to this concern by commenters: 
We acknowledge that the premium adjustment percentage is a cumulative 
measure and, as such, the market fluctuations in the early years of ACA 
implementation are included in the calculation when using private health 
insurance premiums ( excluding Medigap and property and casualty 
insurance) as the data source for indexing. However, becaus·e it is a 
cumulative measure, the impact of these early years decreases as more time 
elapses between the applicable plan year and the benchmark year (2013) .. 
For example, for PY 2018, PY 2014 was 1 of 4 years of growth included in 
the premium adjustment percentage measure and therefore the weight of PY 
2014 premium growth was approximately one quarter of the overall 
measure. For PY 2026, PY 2014 is 1 of 12 years of growth included in the • 
measure. Therefore, for PY 2026, the weight of PY 2014 is only one twelfth 
of the overall measure. As such, the greater time between the benclunark 
year and the applicable plan year reduces the impacts of any individual year, 
even if the premium growth in that year is unusual. 
90 Fed. Reg. at 27,173. HHS both explained the reasoning behind the policy change and addressed. 
commenters' concerns that the.new methodology would lead to less accurate measures of premium 
growth. While this policy change will undoubtedly have effects on the broader insurance market, 
including, as HHS concedes, an increase in premiums and a worsening risk pool, the Court is . ' 
constrained to conclude that HHS did not act without explanation or rationale in making this 
' 
decision. In fact, the agency took these negative effects into account when responding to 
comments in the final Rule, but ultimately concluded that the new methodology was more closely 
aligned with Congressional intent and the text of the ACA, and therefore should nonetheless be 
adopted despite its likely impact on premiums and enrollment. See id. at 27,172 ( acknowledging 
, I 26 

commenters' concern that healthy enrollees "may be less likely.to enroll due to the higher net 
premiums that result from the change in the premium adjustment methodology" but ultimately 
finding "consideration of the impact of this proposaf on the risk pool to be outside the scope of the 
indexing provisions of the· ACA because the purpose of the premium adjustment percentage is to 
' 
accurately index program parameters against the growth in premiums, not to control the growth of 
those premiums"). 
"The role of courts is not to assess whether executive decisions are wise." Am. Fed'n of 
Tchrs., 796-F. Supp. 3d at 81 (citing Dep't of Homeland Sec. v. Regents of the Univ. of Calif., 591 
U.S. 1, 35 (2020)). As such, the Court is satisfied that "such a change in course was made as a 
genuine exercise of the agency's judgment." Philip Morris, 736 F.3d at 290; see also .City of 
Columbus II, 523 F. Supp. 3d at 758 ("The court may not supplant the agency's v·iew that the new 
. ' ' 
policy is better than the old one simply because Plaintiffs prefer the old policy."). 11 Consequently, 
the Court concludes that the provision was not arbitrary and capricious, and that Defendants are 
·entitled to summary judgment as to this provision. 
C. Actuarial Value Policy 
Under the ACA, health insurance plans offered on Exchanges must cov~r certain "essential 
·health benefits" and adhere to certain "level[s] of coyerage" specified in the statute. 42 U.S.C. 
§ 18022(a). A plan's "level of coverage," or actuarial value, reflects the estimate~ average 
percentage of covered.health care expenses that will be paid by the in~urance plan. For example, 
-under a plan with an actuarial value of 80%, the insurer will pay, on average, 80% of covered 
• 11 In light of the Court's finding on -this point, the Court is unconvinced that Plaintiffs' argument 
that the agency had an "unalterably closed mind" during nilemaking could provide an independent 
. basis for relief on this claim. ECF 65-1, at 35. The examples put forth by Plaintiffs, see id at 35-
.36, are insufficient to show that.Defendants were "unwilling or unable to rationally consider 
arguments." Mississippi Comm'n on Env't Quality v. EPA, 790 F.3d 138, 183 (P.C. Cir. 2015) 
(quotation marks and citations.omitted). 
27 

medical expenses, and the enrollee will pay the remaining 20% of expenses through a combination 
of deductibles, coi~surance, co-payments, and maximum out-of-pocket limits. Consequently, the. 
I , 
higher a plan's actuarial value, the lower an enrollee's out-of-pocket costs, on average. Plans that 
have a higher actuarial value also have higher premiums. 
The statut~ instructs the Secretary to· "develop guidelines to provide for a de mininiis 
variation in the actuarial valuations used in determining the level of coverage of a plan to account· 
for differences in actuarial estimates." 42 • U.S.C. § 18022(d)(3). As relevant here, current 
regulations provide that the "allowable variatiop.'; in the actuarial_ value of silver, gold, and 
platinum plans is two percentage points above ~nd below their respective benchmark actuarial 
values (i.e., +21-2 percentage points). 45 C.F ;R. § 156.140(c)(2). The Rule will change this range 
to +2/-4 percentage points. See 90 Fed. Reg. at 27,174. And for bronze plans, current regulations 
allow for a +5/-2 percentage point range, which the Rule will change to +5/-4 percentage points. 
Id 
-- Plaintiffs explain that "[tJhe formula for PTCs turns on the cost of the second-lowest-cost 
silver plans available on the Exchange." ECF 65-1, at 36 ( citing 26 U.S.C. § 36B(b )(2)(B)(i)-(ii))_. 
Thus, "[b]y permittingdns~rs to sell cheaper, but less comprehensive, silver plans, CMS will 
therefore decrease the value of the tax credits for all enrollees, leading to a reduction in PTCs by 
$1.22.billion overall for 2026 alone, by CMS's own calculation." Id (citing 90 Fed. Reg. at 
27,208). Plaintiffs argue that "[t]he rule does not even attempt to justify the ·nl?W policy as an effort 
to account for di~ferences in actuarial estimates." Id. at 37-38 (citation .omitted). Defendants 
counter that "CMS [] made the reasoned judgment that such 'short-term' concerns about how· 
wider ranges would affect subsidized enrollees should not necessarily take priority over the longer­
term prospect of plans with lower premitims and competitive cost-sharing structures drawing 
28 

unsubsidized consumers to Exchanges, 'potentially improv[ing] the risk pool as coverage be.comes 
'more affordable for generally healthy people who currently may opt to forgo coverage 
altogether."' ECF 68-1, at 28 (quoting 90 Fed. Reg .. at 27,175). 
Generally, "an agency decision is arbitrary and capricious if 'the agency has relied on 
'factors which Congress has not intended it to consider, entirely failed to consider an important 
aspect of the problem, offered an explanation for its decision that runs counter to the evidence 
before the agency, or is so implausible that it could not be ascribed to a difference in view or the 
·product of agency expertise."' Sierra Club, 899 F.3d at 293 ( quoting Motor Vehicle Mfrs. Ass 'n, 
463 U.S. at 43). So too, here, as the agency was constrained to rely only "on factors which 
Congress has [] intended it to consider" when exercising its authority under the statute. Sierra 
.Ciub, 899 F.3d at 293. Here, as Plaintiffs point out, "[t]he purpose of the standard is set forth in 
section 18022(d)(3) itself and the only permissible 'de minimis' variations are those that account 
for u~certaihtie~ in 'differences in actuarial es~imates,' not variations to reflect a new 
.Administration's policy preference for less generous subsidies." ECF 65-1, at 37 (citation 
omitted). 
Moreover, the agency was obligated to establish a "rational connection between the facts 
found and the choice made." Motor Vehicle Mfrs. Ass 'n, 463 ·u.s. at 43. The Rule reflects that 
HHS believed ".lower AV s would lead to lower premiums, and in turn potentially improve the risk 
pool as coverage becomes more affordable for generally healthy people who currently may opt to 
forgo coverage altogether." 90 Fed. Reg. at 27,175. HHS acknowledged that "although this may 
mean that those eligible for APTCs receive less money in tax credits, [the agency] believe[s] that 
in the long term there would be a sufficient choice of affordable plans." Id. Similarly, in response 
to commenters' concerns that the provision would "lead to increased out-of-pocket consumer costs 
29 

as pl~ cost-sharing generosity decreases and higher overall pr~miums for some consumers given 
a potential impact on- the generosity of the SL CSP, the benchmark plan used to determine l:lll 
I 
individual's PTC," id at 27,176, the agency merely stated that the "change is essential to restoring 
greater balance between; access and affordability in the long term," and "the overall benefits to the 
risk pool as a result of this change will better incentivize unsubsidized enrollees to enroll in· 
coverage, which we expect to lower overall costs and further drive down premiums as the risk pool 
improves," id. at 27,176--77. 
This reasoning is conclusory and unsupported by evidence. Defendants cannot merely· 
label something a "short-term" trade-off to avoid engaging with data and justifying the change 
during the rulemaking process . .See ECF 68-1, at 28. There is no data to back up the claim and 
reasoning that coverage would become "more affordable" over time, which is understandable• 
considering that even CMS }ts elf est~ates that the. policy change widening the de minims range 
will reduce aggregate PTCs by $1.2 billion in 2026. See 90 Fed. Reg. at 27,208. And, as Plaintiffs 
note, data shows that "[a] typical family of four would see their subsidies decrease, and their cost. 
of coverage rise, by up to $714 for the year." ECF 65-1, at 36 (citing Ctr. for Budget & Policy 
Priorities comme11t at 34-35 (Apr .. 11, 2025), https://perma.cc_lKP9W-J63N, also avai~able at ECF 
65-2, at I 85-86). Plcµntiffs argue, and the Court agrees, that the relationship between subsidies. 
and the strength of the risk pool is well established by empirical research, but C:l-4S simply stated 
that it 'expect[ed]' its rule to have the opposite effect, without citing any evidence to support this 
subjective belief or engaging with the record." Id at 37 (quoting 90 Fed. Reg. at 27,107). Such 
"nodding to concerns raised by commenters only to dismiss them in a conclusory manner is not a 
hallmark of reasoned 4ecisionmaking." Gresham v. Azar, 950 F.3d 93, 103 (D.C. Cir. 2020). 
Thus, the Court finds that Defendants provided an insufficient and conclusory rationale for altering 
• 30 
I • I 

the de minims variation, and that the agency acted in an arbitrary and capricious manner. 12 
.Plaintiffs are thus entitled to summary judgment on their challenge of this provision .. 
D. Revocation of Guaranteed-Issue/ Past Due Premium 
The next challenged provision will allow issuers to require a customer to pay (1) any past­
due premiums the customer owes.the issuer ( or related issuers) for prior coverage and (2) the initial 
premium amount (also known as a "binder payment") required for new coverage before tl'ie latter 
coverage is effectuated. See 90 Fed. Reg. at 27,084, at 27,220. If the customer fails to pay that 
combined amount in full, the issuer can decline to effectuate the new coverage. Id.· at 27,084. 
Defendants argue that "an issuer's provision of coverage is of course contingent on the . . . 
enrollee's payment of premiums." ECF 68-1, at 31-(citirig 42 U.S.C. § 300gg-2(b)(l) (providipg 
• that an issuer may "nonrenew or discontinue health insurance coverage" if an enrollee "has failed 
to pay premiums")). Defendants also cite. 45 C.F.R. § 155.400(e) in support of their argument, 
which provides that federally facilitated Exchanges and State·-based Exchanges on the federal 
platform "will[] require payment of a binder payment" equivalent to "the first _month's premium" 
'to "effectuate an enrollment" in an Exchange plan. Id. According to Defendants, "[t]he Rule 
simply allows an issuer who is owed past-due prem~ums from a particular customer to credit any 
payments made by that customer for new coverage to the past-due balance before crediting any 
'payments to :the initial premium amount for the new coverage."· Id at 31-32. In doing so, "if, 
because of such an allocation policy, the consumer still has an outstanding balance on the initial 
premium amount, then the issuer can decline to effectuate the new -policy for failure to pay the 
-requisite initial premium." Id. at 32 (citations omitted). Plaintiffs maintain that the agency "was 
12 However, the Court is likewise unconvinced by· Plaintiffs' argument that the agency had an 
"unalterably closed mind" during rulemaking with respect to this provisio_n. ECF 65-1, at 38; see 
supra note 11. 
31 

not free to rewrite the text of Section 300gg-l(a) to carve out a new exception to the statute's. 
categorical [guaranteed-issue] rule." ECF 65-1, at 39. 
The ACA's guaranteed-issue requirement provides that "each health insurance issuer that 
offers health insurance coverage in the individual or group market in a State must accept every 
employer and individual in the State that applies for such coverage," subject only to specified 
exceptions. 42 U.S.C. § 300gg-l(a) (emphasis added). Defendants invoke separate statutory 
provisions that relate to renewability and termination of coverage, rather than issuance, to justify 
the new past-due premium policy. See 42 U.S.C. § 300gg-2(b)(l). 
The Court finds no authority in the text of the statute for the.agency's decision to "credit 
any payments made by that customer for new coverage_ to the past-due balance before crediting 
any payments to the initial premium amount for the new coverage." ECF 68-1, at 37. As CMS 
itself has long understood, an exception for p~st-due premiums is not one of the Act's enumerated 
exceptions to the guaranteed-issue requirement. See 77 Fed. Reg. 70,5.84, 70,599 (Nov. 26, 2012); 
see also ECF 65-1, at 38-39. Plaintiffs clarify that "[t]here is such an exception for past-due . 
· premiums in the Act's parallel provision that_guarantees t)le renewability of policies." ECF 65-1, 
at 39 (emphasis added) (citing 42 U.S.C. § 300gg-2(b)(l)). This demonstrates "Congress's 
understanding that an outstanding debt could prevent an enrollee from maintaining the policy he· 
or she currently has, but that the debt wouldn't lock the enrollee out of the market altogether." Id. 
( citations omitted). Had Congress wanted to condition issuance of a new policy on payment of 
past premiums, it clearly knew how to do so expressly. See 42 U.S.C. § 300gg-2(b )(1) (providing· 
that an issuer may "nonrenew or discontinue health insurance coverage" if an enrollee "has failed 
to pay premiums"). In the. absence of an enumerated exception to the guaranteed-issue 
. requirement, the agency "has no power to tailor legisiation to bureaucratic policy goals by· 
32 

rewriting unambigu~us statutory terms." Util. Air Regul. Grp., 573 U.S. at 325 (internal quotation 
marks omitted); see also TRW, inc. v. Andrews, 534 U.S. 19, 28 (20_01) ("Where Congress 
·explicitly enumerates certain exceptions to a general prohibition, additional exceptions are not to 
be implied, in the absence of evidence of a contrary legislative intent" (cleaned up)); Polselli v. 
IRS, 598 U.S. 432, 439 (2023) ("We assume that Congress acts intentionally and purposely when 
'it includes particular language in one section of a statute but omits it in another section of the same 
Act." (internal quotation marks and citations omitted)). 
According to Defendants, the Rule's past-due premium policy will "help to promote 
·continuous coverage_, reduce gaming· and adverse selection,[131 ensure that ACA subsidies are· 
targeted to those who are eligible, and allow issuers to more accurately predict costs and pri9es." 
ECF 68-1, at 30 (quoting 90 Fed. Reg. at 27,084). Regardless of the merits of those arguments, 
.they are best-directed to Congress, as it is only Congress who can add enumerated ex_ceptions to 
the guaranteed-issue requirement. See Brown & Williamson Tobacco Corp. v. Food & Drug 
Admin., 153 F.3d 155, 161 (4th Cir. 1998), q/J'd, 529 U.S. 120 (2000) ("[N]either federal agencies 
.nor the courts can substitute their policy judgments for those of Congress."}. The Court is bound 
by the plain text of the statute in its current forni, which contains a guaranteed-issue requirement, 
subject only to specific, enumerated exceptions. The exceptions do not include a provision 
permitting insurers to deny issuance of coverage based on failure to pay a past-due premium. 
13 The risk of "adverse selection" that Defendants refer to. ih the insurance context is "a situation 
where individuals with higher risk are more likely to select coverage than healthy individuals[.]" 
90 Fed. Reg. at 27,075. 
33 

Accordingly, the Court concludes that the provision is contrary to law and will award summary 
judgment to Plaintiffs as to that provision. 14 
E. SEf Eligibility Verification Requirements 
The ACA requires Exchanges to provide for SEPs during which qualifying individuals may· 
enroll for coverage in between the annual open enrollment periods. 42 U.S.C. §_ 18031(c)(6)(C). 
Under current regulations, federally facilitated Exchanges are required to conduct pre-enrollment 
eligibility verification only for applicants seeking to enroll in an Exchange plan under the loss-of-· 
minimum-essential-coverage SEP; they are not permitted to conduct such pre-enrollment 
eligibility verification in cor:tjunction with any other category of SEP. See 45 C.F .R. § 155 .420(g). 
Under the Rule, federally facilitated Ex~hanges will instead be required to conduct pre-emollment. 
eligibility verification for other categories ofSEPs as well (permanent move, marriage, etc.), which 
is consistent with the eligibility verification 'policy that was in place between 2017 and 2022. $ee 
90 Fed; Reg. at ·27,148-49. The Rule further requires. those federal Exchanges to conduct pre-. 
enrollment eligibility verification "for at least 7~ percent of new enrollments through SEPs." Id. 
at 27,148, at 27,223. The Rule is time-limited and will sunset at the end-0f2026, and the eligibility 
verification requi~ements do not apply to State.Exchanges. 15 Id at 27,151. 
. Plaintiffs maintain that "[t]his rule will generate 293,000 verification issues to resolve in 
the coming year, resulting in a further barrier to coverage, through additional paperwork and 
administrative burdens, and costing consumers more than $7 million in 2026." ECF 65-1, at.43 
14 Because the Court finds that this provision of the Rule is contrary to law, the Court does not 
reach Plaintiffs' alternative argument that adopting the provision was arbitrary and capricious. 
15 States are given the "option" to conduct pre-enrollment eligibility verification for SEP. 
enrollment, but they are not required to do so, a policy unchanged by the Rule. See 90 Fed. Reg. 
at 27,151 ("[T]he program integrity issues are largely concentrated in Exchanges utilizing the 
Federal platform."). 
,34 

(citing 90 Fed. Reg. at 27,186). According to Plaintiffs, "[y]ounger and healthier people are more 
likely to drop coverage as a result, leading to a worsening of the risk pool, as CMS itself realized 
_the last time it considered (and rejected) a similar policy." Id (citations omitted). Plaintiffs argue 
that Defendants failed to .provide "an adequate explanation fo~ why the agency acted at all," and 
that there was a "fundamental mismatch between this rule and the problem that CMS claims it is 
trying to solve." Id at 44, 47. Specifically, "CMS attempted to justify this policy as a.response 
to the problem of improper enrollments by brokers," but according to Plaintiffs, "the agency 
fundamentally misconceived the scope of that problem and ignored the success of recent efforts to 
address broker misconduct." Id. at 44. 
_ Defendants respond that "because of their limited scope, the !egulations 'do not p_rovide 
enough protection against misuse and abuse' of SEPs, which enables otherwise ineligible 
individuals to enroll in Exchange plans 'only after thl'?Y become sick-or ... need expensive health 
care services,' which in turn 'negatively impacts both the risk pool and program integrity around 
determining eligibility for' APTCs and other subsidies." ECF 68-1, at 35-36 (quoting 90 Fed. 
Reg. at 27,148). According to ·the Rule, requirjng pre-enrollment eligibility verification for all 
SEP categories "improves the risk pool by restricting people from gaming SEPs to wait to enroll 
~til they need health care services."16 90 Fed. Reg. at 27,150. Additionally, CMS reasons that 
"pre-enrollment verification for_ SEPs _strengthens program integrity by denying ineligible 
• • enrollments and discouraging ineligible enrollees who know they cannot meet verification 
16 CMS suggested that pre-enrollment verification requirements that previously applied to SEPs 
did not create substantial barriers to Exchange enrollment, and that such requirements had the 
effect of "encourag[ing] continuous enrollment by making it more difficult to engage in strategic· 
enrollment and disenrollment" based on customers' changing health status. 90 Fed. Reg. at 27,149. 
35 

standards from attempting to enroll which, in turn, reduces Federal subsidies to ineligible 
consumers who would otherwise enroll and receive APTC and CSR subsidies." Id. 
While an agency "is not required to choose the best solution, only a reasonable one," Petal 
' . 
Gas Storage, LLC v. FERC, 496 F.3d 695, 703 (D.C. Cir. 2007), it is required to "provide[] an 
explanation of its decision that includes a rational connection between the facts found and the 
choice made," Nat'! Audubon Soc'y v. U.S. Army Corps of Eng'rs, 991 F.3d 577, 583 (4th Cir. 
2021). Importantly, courts are not free to "ignore the disconnect between the decision made and 
the explanation given." Dep't of Com. v. New York, 588 U.S. 752, 785 (2019). "The reasoned 
explanation requirement of administrative law, after all, is meant to ensure that agencies offer 
genuine justifications for important decisions, reasons that can be scrutinized by courts and the 
interested public." Id. 
Here, the Court finds that the agency's chosen solution is unmoored from the problem it 
seeks to address. The provision purports to address "urgent program integrity. concerns," 90 Fed. 
Reg. at 27,151, and alleged "gaming" of SEPs through enrollees waiting until they are sick to 
enroll in coverage, id. at 27,150, in an effort to "discourag[e] ineligible enrollees who know they 
carmot meet verification standards,from attempting to enroll," id. But Defendants have offered no 
current data, reports, or evidence establishing that any "misuse and abuse" of SEPs, 90 Fed Reg. 
at 27,148, stems from SEP enrollment in particular. In the Rule, the agency. cites to a "GAO 
undercover testing study of SEPs" from 2016, which found that "9 of 12 of GAO's fictitious· 
applicants were approved for cov~rage on the Federal and selected State Exchanges." Id. But as 
noted, that study was from 20 I 6, and the parties have not identified, nor can the Court locate, any 
evidence in the Rule to corroborate .Defendants' conclusory assertion that abuse of SEPs is• 
currently contributing to the "program integrity concerns" the agency seeks to address through this ' . 
' 
36 

provision. Accordingly, it remains merely a theory that the "temporary policy will help stabilize 
the marketplace in [Plan Year] 2026 as the subsidy ~nvironment normalizes and the high levels of 
improper enrollments are reduced before reverting back in PY 2027." 90 Fed. Reg. at 27,152. 
'Further, the agency's conclusi,on that "the additional burden [on enrollees] is not significant 
enough to outweigh the merits of SEP verification and the increases. in program integrity that it 
. provides," id. at 27,151, is insufficient to address the very real concern raised by numerous 
·commenters that the Rule change will improperly hinder the e~ollment of eligibl~ individuals.17 
Defendants similarly fail to articulate how an audit of75% of new enrollments will curb the alleged 
problem. And they offer no new evidence or reasons at this stage of litigation. See ECF 68-1, at 
-36--37. 
After reviewing the record, the Court finds that Plaintiffs' disagreement with CMS is more 
than a mere policy debate on the merits of the provision. Plaintiffs have established that 
.Defendants' rationale was not indicative of reasoned decision-making .. In short, the hypothesis 
that such "gaming" and "abuse" of subsidized coverage stems from enrollees and brokers 
fabricating events triggering SEPs is without support. See Dep 't of Com., 588 U.S. at 783 
(remanding rule to agency where the record "reveal[ed] a significant mismatch between the 
decision the Secretary made and the rationale he provided'} The Court agrees with Plaintiffs'. 
principal argument that "CMS acted arbitrarily in imposing these new burdens for 2026." ECF 
17 Indeed, one commenter noted that "a study published by the American Economic Assodation 
found that adding one single additional step to the enrollment process prompted a 33 percent 
decline in enrollment, predominantly among _young, healthy, and economically disadvantaged 
•people." See Ctr. for Budget & Policy Priorities comment at 29 (Apr. 11, 2025), 
https://perma.cc/KP9W-J63N (citing Mark Shepard & Myles Wagner, Do Ordeals Work for 
Selection Markets? Evidence from Health Insurance Auto-Enrollment, 115 Am. Econ. Rev. 772 
(2025), doi: 10.1257 /aer.20231133), also available at ECF 65-2, at 180. • 
37 

65-1, at 44. • As such, the .Court finds that instituting SEP pre-enrollment verification procedures 
' . 
was arbitrary and capricio_us, and will enter judgment in favor of Plaintiffs as to that provision. 
F. Shortened Op~n Enrollment Period 
Under the ACA, the Secretary must require Exchanges to p·rovide for "an initial open 
enrollment, as determined by the Secretary," "annual open enrollment periods: as determined by 
the Secretary for calenda:r years after the initial enrollment period," and "special' enrollment­
periods specified in section 9801 of title 26 and ot4er special enrollment periods" under certain • 
circumstances. 42 U.S.C. § 18031(c)(6). Under the current policy, the open enrollment period for 
the Exchanges begins on November 1 and ends (at the earliest) on January 15. See 45 C.F.R.. 
§ 155.410(e); ECF 65-1, at 16. Starting in 2027, however, the Rule will require Exchanges to hold 
an open enrollment period that begins no later than November 1, and ends no later than December 
31, a 60~day period in total. See 90 Fed. Reg. at 27,135-40. The Rule would thus rescind the. 
extended open enrollment period which was in effect over the last four years in favor of a shorter . 
one. 
Plaintiff$ argue that in attempting to en.act such a Rule, "CMS ignored a wealth of evidence 
showing that Jan~ary eru:ollments have been beneficial both for enrollees and for the financial 
health of the Exchanges." ECF 65-1, at 41. According to Plaintiffs, ~'CMS opined that it needed 
to balance the need to allow suffici~nt time for consumers to enroll in the Exchanges against the 
possibility that a longer open enrollment pe_riod would create a risk of adverse selection," but "such 
a trade-off is entirely illusory." Id. Plaintiffs assert that "[a]ll ... available evidence from the 
state-based Exchanges shows that January enrollees are younger and healthier, and that their 
I . 
I 
enrollments accordingly lower premiums overall." Id (citations omitted). Although "[d]ata from 
the federally facilitated_ Exchange is solely {n the possession of CMS," Plaintiffs maintain that 
"there is no reason to believe (and the agency offered none) that the result would be different in 
38. 

.states on that Exchange," so "by shortening the open enrollment period, the agency exacerbated 
the problem of adverse selection that it claimed it was trying to solve." Id (citations omitted). 
As discussed, "[a]gencies are free to change their existing policiys as long as they provide 
_a reasoned explanation for the ~hange."_ Encino Motorcars, LLC, 579 U.S. at 221. Here, the 
agency explained that in setting the open enrollment period, it generally "attempt[s] to balance the 
risk of adverse.selection-a situation where individuals with higher risk are more likely to select 
coverage than health individuals-with the need to ensure that consumers have adequate 
opportunity to enroll in QHPs through an Exchange."· 90 Fed. Reg. at 27,136. Accordingly, in 
different years, the open enrollment period has varied, opening in 2014, for example, as early ·as 
October 1, 2013, and closing in March 31, 2014. See id (chart providing summary of open 
~nrollment periods starting in 2014). At other times·, such as in 2018, the open enrollment period­
has been shorter, starting on November 1 arid ending on December 15, 45 days total. ·see id. 
(noting that period existed in 2018, 2019, 2020, and 2021). 
However, the Rule reflects that HHS failed to explain why the adverse selection problem 
would be remedied by the open enrollment period it chose. It is possible that a reasoned 
explanation for shortening the period to 60 days exists, or could exist, as ev'idenced by the fact that 
'the open enrollment period has chariged over time, and indeed has been shorter than the Rule 
would now require. See id. But HHS did not provi~e such an explanation. Instead, it stated that 
although HHS formerly concluded that the "risk of adverse selection was outweighed by the 
• ' 
'benefits of increased consumer enrollments and opportunities to switch plans for consumers with 
unexpected plan costs," the agency's "new analysis of this experience extending the· OEP to end . . . 
January 15 suggests that these benefits did not materialize," and thus the "risk of adverse selection 
·was outweighed" by those benefits. Id at 27,137. However, HHS provides no specifics as.to its 
39 

"new analysis," and it offers no current data, reports, or ·evidence establishing its conclusion. The 
closest HHS comes is reflected in the mention of HHS' s "experience implementing" the prior open 
enrollment period, in which HHS observed that "fewer than 3 percent of enrollees (470,000 
individuals) ended" coverage "between December 15, 2024, and January 15, 2025 [. ]" Id But that 
observation fails to map, without more, onto the risk of adverse selection supposedly motivati1:1g 
the adoption of a shorter period, nor does it explain wh~ the risk of adverse selection drives the 
particular length of open enrollme?-t ultimately selected. See id.; see qlso 90 Fed. Reg. at 12,979. 
The absence of reasoned decision-making is particularly troubling given that this provision of the 
Rule will take the described timeframe for enrollment "away from the 470,000 individuals who 
r_elied on the opportunity;, in the past. ECF 70, at 22. Because the Court is unable to discern a 
"rational connection between the facts found and the choice made," Nat'/ Audubon Soc'y, 99.1 
F.3d at 583, it concludes that the agency's decis~on to shorten the open enrollment period was 
arbitrary and capricious, and will award summary judgment to Plaintiffs as to this provision.18 
G. Failure-to-Reconcile Provision 
This provision reinstates a prior Failure to File and Reconcile ("FTR") policy that requires· 
an Exchange to determi1;1e that a "tax filer" is ineligible for AP.TCs un~er the ACA if the applicant 
· (1) received APT Cs the. prior year and (2) failed to comply with the statutory requirement to file a .. 
tax return and "reconcile APTC" for that year. See 90 Fed. Reg. at 27,113, at 27,221. This· 
provision, which will apply only through the end of 2026 should it go into effect, see id. at 27,115, 
18 Plaintiffs also argue that the ag~ncy failed to respond to several categories of comments. See 
- ECF 65-1, at 41-43. The Court does not rest its holding on these arguments, however, and notes. 
that with respect to this provision; the agency was responsive to some commenters' concerns. See, 
e.g., 90 Fed. Reg. at 27,138 (delaying the implementation date of this provision to 2027 in light of 
commenters' concerns about Navigators' aqility to ·assist individual~ due to recent cuts to the 
Navigators program). In short, this ~se appears to present the likely rare scenario where an agency 
was • responsive to comments related to a· rule change, but never provided a fundamental 
justification for the change in the first place. 
40 

amends the current requirement that such a determination be made only after a tax filer fails to 
reconcile for two consecutive tax years. See 45 C.F.R. § 155.305(£)(4). 
The IRS requires taxpayers who receive APTCs-which are typically scaled to the 
recipient's projected annual household income-to reconcile those ·advanced payments with the 
'PTC amount they otherwise qualify for in the applicable tax year, as determined by their actual 
annual household income in that year. See 26 U.S.C. § 36B(f). If the APTCs the taxpayer received 
exceed that allowable PTC amount, then the taxpayer may incur a tax liability, subject to certain 
·income-based caps. Id. § 36B(f)(2). Since 2012, HHS has prohibited an Exchange from 
"determin[ing] a tax filer eligible for" AP:rcs if the filer (1) received APTCs the prior year and 
• (2) failed to comply with the requirement to file a federal income tax return and reconcile those 
.APTCs for that year. 45 C.F.R. § 155.305(£)(4). Taxpayers who are detennined ineligible for 
APTCs due to their failure to reconcile can still claim on their tax returns the full amount of the 
PTC they are otherwise eligible for; such taxpayers just would not be able to receive that PTC 
.amount in advance. Id. 
In 2023, CMS amended the failure-to-recqncile regulations such that a taxpayer becomes. 
ineligible for APTCs only after failing to file a federal income tax-return and reconcile their APTCs 
_for two consecutive tax years. See 90 Fed. Reg. at 27,113. The current Rule provision reverts 
back to the requirement that a taxpayer be deemed ineligible for APTCs after one year of failing 
to reconcile, and that change applies only through pian year 2026. Id. 
In thei_r contrary to law claim, Plaintiffs challenge the agency's authority to "condition 
eligibility for a tax credit on ·the reconciliation of old debt~-" ECF 65-1, at 46. Plaintiffs posit that 
although "CMS has authority to detennine if th~ statutory standards f?r APTC eligibility are met, 
[] it does not have authority to alter those standards." Id. at 45 (citing 42 U.S.C. § 1808l(a), (f)). 
41 

Accord~g t9 Plaintiffs, "[t]he statute does not contemplate that a prior tax debt affects an 
applicant's eligibility for ~TCs in any way." Id. at 46. 
As an initial matter, the Court observes that the parties do not relitigate their statute of 
limitations coi:cem as to this claim at.summary judgment. See ECF 65-1, at 45--47;1 ECF 68-1, at 
37--41. The Court reiterates its prior conclusion here that Plaintiffs' challenge is not barred on· 
account of the "r~pening doctri~e," which "allows an otherwise stale challenge to proceed 
because the agency opened the issue up· anew, and then reexamined and reaffmned its prior 
decision." Wash. All. of Tech. Workers v. U.S. Dep't of Homeland Sec., 892 F.3d 332,346 (D.C.· - -
Cir. 2018) (internal quotation marks and citation omitted). Specifically, the "doctrine arises where 
an agency conducts a rulemaking or adopts a policy on ~ issue at one time, and then in a later 
rulemaking restates the policy or otherwise addresses the issue again without altering the original. ' . . 
decision." CTIA-Wireless Ass'n v. FCC, 466 F.3d 105, 110 (D.C. Cir. 2006) (internal quotation 
and alterations omitted). "The. doctrine only applies, however, where the entire context 
demonstrates that the agency has undertaken a serious, substantive reconsideration of the existing 
rule." 411. for Safe, Efficient & Competitive Truck Transp. v. Fed Motor Carrier Safety Admin., 
755 F.3d 946, 954 (D.C. Cir. 2014) (internal quotatioJ.?, marks and citation omitted). 
In 2017, another trial court in this Circuit noted that it "[could not] find [any] Supreme 
Court or Fourth 9rcuit precedent recognizing the reopening doctrine." Indep. Cmty. Br:nkers of 
. Am. v. Nat'/ Credit UnionAdmin., No. 16-cv-1141, 2017 WL 346136, at *4 (E.D. Va Jan. 24, 
2017). This Court has similarly not been able to find any in-circuit case law addressing this 
doctrine. See Outdoor {lmusement Bus. Ass 'n, Inc. v. Dep 't of Homeland Sec., 983 F.3d 671, 682 
n.5 (4th Cir._ 2020) (not reaching the issue of ~hether to adopt the reopening doctrine, but 
recognizing its application in the D.C. Circuit); s.ee also Biden v. • Texas, 597 U.S. 785,. 809 n.8 
'I • 42 

(2022) (noting that the Supreme Court has never adopted the reopening doctrine). However, the 
.reopening doctrine remains well-established in the D.C. Circuit, which regularly hears APA 
claims. See, e.g., GrowthEnergyv. EPA, 5 F.4th 1, 21 (D.C. Cir. 20~1) ("Whenalaterproceeding 
explicitly or implicitly shows that the agency actually reconsidered the rule, the matter has been 
reopened and the time period for s~ekingjudicial review begins anew." (internal quotation marks 
and citations omitted)). As su~h, despite the lack of in-circuit precedent, the Court cannot identify 
a ·reas~n the reopening doctrine would not apply and thus applies it here, for the reasons stated in 
its prior opinion.19 See City of Columbus III, 796 F. Supp. 3d at 161-62 ("By explicitly re­
evaluating and subsequently affirming its statutory authority to issue the failure-to-reconcile 
provision during the notice and comment rulemaking process, CMS reopened the issue of 
Congressional authorization for the provision."). 
Turning back to the merits of Plaintiffs' contrary to law challenge, the Court agrees with 
Plaintiffs that "[t]he statute does not contemplate- that a prior tax debt affects an ~pplicant's 
eligibility for APTCs in any way," and that "if Congress intended to condition eligibility-for a tax 
credit on the reconciliation of old debts, it knew how to do so." ECF 65-1, at 46 (first citing 26 
U.S.C. §§ 24(/), 32(k); and then citing Nat'! Elec. Mfrs. Ass'n v. Dep't of Energy, 654 F.3d 496, 
507 (4th Cir. 2011)). Once _again, Defendants' invocation ofits general rulemaking authority under 
·42 U.S.C. § 18041(a)(l) does not authorize it to flout separate, express provisions of the statute. 
See ECF 68-1, at 37-39; see NRDC v. Reilly, 976 F:2d 36, 40 (D.C. Cir. 1992) (explaining that a 
"general grant of rulemaking power ... [cannot] trump the specific provisions of the act"); see 
'also Air All. Hou/, 906 F.3d at 1061 ("[I]t is well established that an agency may not circumvent 
19 Since the issuance of the Court's prior opinion in this matter, Judge Maddox has also applied 
the reopening doctrine. See Von Gronefeldv. Kendall, Civ. No. MJM-23-1407, 2026 WL 691641, 
·at *8 (D. Md. Mar. 11, 2026). 
43 

specific statutory. pmits on it~ act!ons by relying on .separate,.general rulemaking authority.")~ 
CMS is not free to:re-write the s'tatutory formula to accomplish its policy goals, irrespective of the 
! 
efficacy of such a policy. As the Court previously described in evaluating the provision addressing 
-, I ' ~ • . 
I . 
the $5 fee, PTCs (and thus, by extension, APTCs) are prescribed by statutory forinula. See 26 
U.S.C. § 36B(b)(2)-(3); supra Section Ill.A. Thus, the agency's decision to condition APTC . ' • . 
I 
eligibility on reco;nciling tax infopnation reads an exception into the statutory formula that is 
., ; 
simply not there. Because the plain text of the statute contradicts the agency's provision, the Court 
I . 
concludes that the failure-to-reconcile provision is contrary to law.20 Plaintiffs will be awarded • 
- I . • 
summary judgmerit as to that provision. • • 
H. Data-Matching Policies/ Income Eligibility Verification 
I 
1. . Recission of Automatic 60:-Day Extension 
I 
When an I?xchange attemP,ts to verify-an applicant's income for purposes of determining 
' ' 
an applicant's eligipility f~r APTCs, and it finds an inconsistency in that appl_icant's data, it notifies 
I 
the applicant and provides the applicant with an opportunity to respond. 42 U.S.C. § 18081(e)(4). • 
The statute provid~s a default period of90 days for that response. Id. §§ 1808l(c)(4), (e)(l), (e)(4). 
The current regulations provide for an .additional 60 days where necessary. 45 C.F.R. 
I . 
§ 155.315(£)(7). The final Rule revokes that 60-day extension. 90 Fed. Reg, at 27,120. Plaintiffs· 
I 
[ 
argue that "CMS Vvrongly reasone1 that it was compelled by the statute to impose a 90-day policy." 
ECF 65-1, at 48. :Defendants res~ond that "[i]t is Plaintiffs' flawed.reading of the ACA's plain 
t~xt that is arbitrary, not the Rule." ECF 68-1, at 44. 
I ' 
. The Supreme Court recently held that "[c]ourts must ex~rcise their independent'judgment 
in deciding_whether an agency has acted w1thin its statutory authority, as the APA requires." 
I 
20 Because the C6urt finds that this provision of the Rule is contrary to law, the Court does not •. 
I . . 
reach Plaintiffs' alternative argument that adopting the provision was arbitrary and capricious. 
I 
44 
.. , , ; 

Loper Bright, 603 U_.S. at 412. The Court explained that "[c]areful attention to the judgment of 
the Executive Branch may help inform that inquiry," however, "courts need not and under the 
APA may not defer to an agency interpretation of the law simply because a statute is ambiguous." 
Id. at 412-13. ''If a statute is ambiguous, courts exercise their independent judgment to determine 
the single, best meaning, but do so with _the agency's body of experience and informed 
judgment ... at [their] disposal." Valladares v. Ray, 130 F.4th 74, 83-84 (4th Cir. 
2025) (alterations in original) Onternal quotation marks and citations omitted). 
According to Plaintiffs, 42 U.S.C. § 1808l(e)(4)(A)(ii) and § 18081(c)(4)(B) grant the 
·agency power to modify the timeline described in paragraph (e)(4)(A). See ECF 65-1, at 48. 
However, according to Defe~dants, "one of those provisions expressly states that the HHS 
Secretary 'may extend the 90-day period' for resolving income-related inconsistencies 'for 
-enrollments occurring during 2014,' and makes no mention of extensions being available during 
any ·other year." ECF 68-1, at 43 (emphasis in origin~l) (citing 42 U.S.C. § ·18081(e)(4)(A)(ii)). 
Defendants contend that while § 18081 "provides that the HHS Secretary 'may modify' the 
. 'methods' for verifying inforr.nation prescribed by the ACA, that provision plainly limits such 
modifications to the methods by which HHS verifies information with trusted data sources and 
other federal agencies, not_ the methods by which Exchanges must try to resolve income-related 
_inconsistencies with applicants." Id (emphasis in original) (citing 42 U.S.C. § 18081(c)(4)(B)). 
Defendants further point out that "§ 18081 ( c) falls under a subsection titled 'Verification of· 
information contained in records of specific Federai officials,' and the example of a permissible 
modification that the provision provides concerns the transfer of tax return information from a 
federal of~cial (i.e., the Treasury Secretary) directly to another trusted data source." Id 
45 

The Court begins, as it must, with the statutory text. 42 U.S.C. § 18081(c)(4)(B) provides· 
that ·"[t]he Secretary may modify the methods used under the program established by this section 
for the Exchange and verification of information if the Secretary determines such modifications 
would reduce the administrative costs and burdens on the applicant." 42 U.S.C. • 
§ 18081(e)(4)(A)(ii) provides that the Exchange, in the case of an inconsistency or inability to 
verify, shall "provide the applicant an opportunity to either present satisfactory documentary 
evidence or resolv~ the inconsistency with the person verifying the information under subsection· 
(c) or.(d) during the 90-day period beginning the date on which the notice required under subclause 
(I) is sent to the applicant." The section also states that "[t]he Secretary may extend the 90-day 
period under subclause (II) for enrollments occurrmg _during 2014." 
§ 18081(e)(4)(A)(Ii) (emphasis added). 
42 u.s.c .. 
In decidi_ng Plaintiffs' motion for preliminary relief, it was p,ot clear to the Court that 
Plaintiffs were. "likely succ~ed on their argument that 'the agency misunderstood t!ie scope of its. 
authority on this score."' City of Columbus Ill, 796 F. Supp. 3d at 164 (quoting ECF 30, at 23). 
As an initial matter, the Court agree~, and sfill does agree, that "~he mere title of the subsection 
cannot alter the otherwise unambiguous meaning of the language in its text" and that "CMS' s 
reading of 42 U .. S.C. § 18081(q)(4)(B) is unreasonable given that the Section 'authorizes 
modification of methods in order to reduce· administrative burdens on the applicant, and this I , 
I 
I 
language would make little sense if the statute permitted the agency only to modify the procedures 
it used with other federal agencies without the applicant's involvement."' Id at 164-65 ( quoting 
' . 
ECF 30, at 23). 
Howe~er, the2014 limiting provision in42 U.S.C. § 18081(e)(4)(A)(ii) expressly indicates 
that. an agency could ex~end the 90-day deadline for enrollments occurring during 2014. Given 
46 

the statute's explicit reference to a specific year, the Court cannot interpret the statute to allow 
blanket modifications for enrollments at any time. "When Congress provides exceptions in a 
_statute, it does not follow that courts have authority to create others. The proper inference ... is • 
that Congress considered the issue of exceptions and, in the end, limited the statute to the ones set 
forth." United States v. Johnson, 529 U.S. 53, 58 (2000). However, the matter is further 
complicated by the agency's internal" inconsistency in applying .its own modification authority. 
Curiously, the agency claims that its modification power is limited, but simultaneously uses that 
modification authority to allow extensions on a case~by-case basis to individual applicants in years 
other than 2014. 
In an attempt to reconcile this (nconsistency, Defendants argue that "any authority the HHS 
Secretary might have to 'modify' a statutorily prescribed timeline in order to 'reduce the 
administrative costs and burdens' faced by a particular 'applicant,' 42 U.S.C. § 18081(c)(4)(B) 
( emphasis added), cannot be reasonably understood to include the authority to promulgate a 
regulation that categorically replaces a statutorily prescribed time line (90 days) with a different 
one (90 days plus an automatic 60-day extension) for all applicants." ECF 68-1, at 44 (emphasis 
in original) (first quoting 42 U.S.C. § 18081(c)(4)(B); then citing 45 C.F.R. § 155.315(±)(7); and 
then citing Util. Air Regul. Grp., 573 U.S. at 328). The Court invited further briefing on this issue 
of statutory interpretation at the preliminary relief stage, see City of Columbus III, 796 F. Supp. 3d 
"at 164, and the parties have offered additional arguments in their cross-motions fo~ summary 
judgment, see ECF 65-1, at 48-49; ECF 68-1, at 4~5. 
Plaintiffs now argue that the Court should not apply the expressio unius est .exclusio 
·alterius canon of statutory interpretation-a phrase which "means 'expressing one item of [an] 
associated group or series excludes another left unmentioned,"' Children's Hosp. Ass'n of Texas 
47 

v. Azar, 933 F.3d ?64, 770 (D.C. Cir. 2019) (quoti~g Chevron U.S.A. Inc. v. Echazabal, 536 U.S. 
73, 80 (2002))-to this close question. In support of its contention, Plaintiffs assert that "[t]his 
canon is_ a 'feeble helper in an administrative setting,' when a statute, such as this one, contains 
multiple overlapping grants of authprity to an agency." ECF 65-1, at-49 (quoting Children's Hosp. 
. . 
Ass'n ofTexas, 933 F.3d at 770-71). Plaintiffs fui.ther point out that "[e]ven outside of this setting, 
• (i]f there are other reasonable explanations for an omission in a statute, expressio unius may not 
be a useful tool."' Id (first quoting Children's Hosp. Ass'n ofTexas, 9_33 F.3d at 771; then.citing 
- NLRB v. SW Gen., Inc., 580 U.S. 288, 302 (2017); and then citing United States v. Hawley, 919 
F.3d 252, 256 (4th Cir. 2019)). According to Plaintiffs, "[t]he most logicai'explanation for the . . 
phrasing of_paragraph (e)(4)(A) is that Congress wish~d to remove any doubt as to the scope of 
CMS' s authority in the first year of implem~ntation for the ACA, when time was short and the 
agency faced numerous interpretive issues to resolve." Id Plaintiffs continue that "[t]here was no 
... . . . -
reason for Congre~s to proceed further to reiterate the 'methods' authority it had already granted 
the agency under paragraph (c)(4)(B) for later years." Id 
Dc;fendants acknowledge t,hat the expressio uni~s "canon can be overcome by 'contrary 
indications that adopting a particular rule or statute was probably not meant to signal any· 
~ r 
exclusion."'. -ECF 68-1} at 44 (quoting Marx v. Gen. Revenue Corp., 568 U.S. 371,381 (2013)). 
But Defendants contend that "th.ere is no warrant for that here," because despite Plaintiffs 
contention that expressio unius is a "feeble helper in an administrative setting," "that is not true· ' . 
where Congress has 'directly resolved' the scope of an agency's authority." Id. (quoting Cheney 
R.R. Co. v. Interstate Com. Comm 'n, 902 F.2d 66, 69 (D.C. Cir. 1990)). According to Defendants, 
"[t]here is simply no ambiguity. in the plain text of the statute: automatic 60-day extensions-
' •I 
48 

countermand the ACA's limited grant of extension authority in 42 U.S.C. § 1808l(e)(4)(A)(ii)." 
Id 
Although the Court still believes this issue is a close call, it concludes that Plaintiffs have 
'the better interpretation of 42 U.S.C. § l 8081(e)(4)(A)(ii) and§ 1808l(c)(4)(B). In reaching that 
conclusion, the Court examines the structure of the ~ection. Peltier v. Charter Day Sch., Inc., 37 
F.4th 104, 128 (4th Cir. 2022) ("Our inquiry begins with the text and.the structure of the statute." 
·c emphasis added)). Section 18081 begins by laying out the scope of the program, see id. 
§ 18081(a), before laying out the requisite ipformation applicants must provide, see id. § 18081(b). 
In the next section related to the verification of such information, the statute states that "[t]he 
·Secretary ... shall provide that verifications and determinations under this subsection shall-be 
done .· .. through use of an on-line system" or otherwise through "electronic submission" or 
"through such other method as is approved by the Secretary." Id. § 1808l(c)(4)(A). It is in the 
.context of methods for verification ofinformation that ( c)( 4)(B) then provides that "[t]he Secretary 
may modify the methods used under the program .established by this section for the Exchange and 
verification of information if the Secretary determines such modifications would reduce the 
_administrative costs and burdens on the applicant[.]" Id § 18081(c)(4)(B) (emphasis added). In 
addition to limiting such authority to modify to "methods" of verification, the other limiting 
principle applicable to the Secretary's flexibility to engage in modification under the section is the 
purpose provided for by the subsection itself: to "reduce the administrative costs and burdens on _ 
the applicant." Id 
The ordinary meaning of "methods" of verification ofinformation might alone struggle to 
encompass the timeline for verification at issue here. However, the Court reads that word and the 
phrase it modifies in context, as it must.· See Johnson v. Zimmer, 686 F.3d 224 (4th Cir. 2012) 
49 

("[l]t is a 'cardinal rule' of statutory interpretation that 'statutory language must be read in context 
_ [because] a phrase gathers meaning from the ·words around it.' ( quoting Gen. Dynamics Land Sys., 
Inc. v. Cline, 540 U.S. 581, 596 (2004))). After subsection (c) provides the Secretary with such· 
power to modify, subsection (e) discusses "[a]ctions relating to verification," including "[n]otice 
and opportunity to correct" information. 42 U.S.C. § 18081(e)(4)(A)(ii). • There, the statute 
provides that the Exchange "shall . .. provide the apl?licant an opportunity to either present· 
satisfactory documentary evidence or resolve the inconsistency ... during the 90-day period 
' • ! ' 
beginning the date on which the notice required . .. is sent to the applicant," and it further provides 
·that "[t]he Secretary may extend the 90-day period" for doing so "during 2014." Id. 
That structure, along with the te~t of the subsection headings,21 suggests to this Court that 
Congress intended to p~ovide for the opportunity to correct information-including the time in 
which to correct it-as one such "meth~d" which the Secretary has the :flexibility to modify with_ 
respect to the verification of information. In providing that "[t]he Secretary may extend the 90-
day period under subclause (II) for enrollments occurring during 2014," id. § 1808l(e)(4)(A)(ii) 
( emphasis added), the Court further concludes that Congress intended to permit t~e agency to 
extend that period: automatically for the first year of the program, without engaging in the process 
. otherwise necessary to exercise its authority to modify wider§ 18081(c)(4)(B). At the same time, 
Congress wanted. to establish an ordinary period (i.e., 90 days) for correction going forward, which 
21 Title 42 has not-been enacted as positive law. See Revock v. Cowpet Bay W. Condo. Ass 'n, 853 
F.3d 96, 105 n.11. (3d Cir. 2017) ("Section 1988(a) is published at 42 U.S.C. § 1988(a), which is 
only "prima facii' evidence of the law, as Title 42 has not l;>een enacted into positive law. 1 U.S.C. 
§ 204(a)."); U.S. Nat 'I Bank of Oregon v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439,448 (1993). 
("Though the appearance of a provision in the current edition of the United States Code is 'prima 
facie' evidence that the provision has-the force oflaw, 1 U.S.C. § 204(a), it is the Statutes at Large 
that provides the 'legal evidence of-laws,' § 112 . . .. "). However, the subsection headings in this 
section are included in the Statutes at Large that correspond with the section,· so the Court may 
utilize them to aid in its interpretation. See Pub. L. No. 111-148, § 1411, 124 Stat. 119 (2010). 
50 

.the Secretary could but qid not necessarily have to modify pursuant to § 18081(c)(4)(B) where 
doing so "would reduce the administrative costs and burdens on the applicant." Thus, to enact 
both ~e standard period for opportunity to correct and to ensure extensions throughout 20l4, 
Congress enacted the following text: "The Secretary may extend the 90-day period under subclause . . 
(II) for enrollments occurring during 2014." Id§ 18081(e)(4).(A)(ii). If Defendants' interpretation 
was correct, the Court would expect.that provision to read as follows: "[t]h~ Secretary may extend 
the 90-day period ... only during 2014." But C~ngress did not so say. Instead, it only affirmatively 
authorized the Secretary to grant extensions during 2014. In the context of this statute, the Court 
will not infer from the affirmative grant of authority an implicit limitation on the otherwise express 
authorization to the Secretary to modify such methods of information verification. 
However, that Plaintiffs have the better reading of the statute means that it was not contrary 
to law for Defendants to modify or eliminate an extension to the ordinary period-for correction, so 
long as (1) Defendants made the modification to "reduce the administrative costs and burdens on 
the applicant" and (2) their decision to do so was not otherwise arbitrary and capricious. Plaintiffs 
argue that CMS did not "engage □ with the evidence showing the need for a 150-day verification 
period" because it "~onglr believed that it was ·required by the statute to adopt this rule." ECF 
0
65-1, at 49. Plaintiffs contend that "[i]f CMS had correctly understood its statutory authority, it 
could have engaged with the evidence showing the_ need for a 150-day verification period." Id. 
According to Plaintiffs, "[b]y the agency's own telling, this provision wi11 cause 226,000 enrollees 
'to lose eligibility for tax credits on the ~xchanges." Id. (citing 90 Fed. Reg. at 27,199). "Apart 
from incorrectly asserting that its hands were tied," Plaintiffs contend that "CMS only briefly 
averted to 'program integrity' needs, without explaining how those needs would be advanced in 
·any way." Id. at 50. 
51 

Defendants counter that "CMS very much engaged with relevant evidence suggesting that 
. an automatic 150-day verification period provided no 'meaningful benefit to consumers' compared 
to a process in which extensions can be granted on a case-by-case basis as appropriate." ECF 68-
1, at 45 (citing 90 ~ed. Reg. at 27,119-20). Defendants further assert that "CMS also 'address[ed]' 
other 'relevant factors,' including the potential effects that. rescinding the automatic 60-day 
extension might have on enrollment and the risk pool within Exchanges, as well as on federal 
expenditures for APTCs given to ineligible enrollees." Id. (citing 90 Fed. Reg. at 27,119). 
A significant portion of Defendants' explanation for this provision of the Rule centers on 
a misreading of§ 18081, as discussed above. See 90 Fed. Reg. at 27,119 ("However, as discussed 
prevlously, section 1411 ( c)( 4)(B) of the ACA_specifically limits modifications on how information 
is exchanged and verified between HHS and trusted data sources and does not extend to other 
aspects of the verification process. Therefore, section 141 l(c)(4)(B) of the ACA does not provide 
a statutory basis to modify the length of the 90-day response period."). However, the agency also 
explained that "even if the statute allowed an automatic 60-day extension, our review of how 
applicants used the 60-day extension shows that the benefits we previously anticipated have not' 
materialized." Id. Yet in attempting to explain that conclusion, in light of the 2024 automatic 
extension rule and its findings, the agency merely stated that it "must weigh" the "potential positive 
impact on the risk poo)" identified by the prior rule "against the substantial increase in APTC­
expenditures that we identified from ineligible people who stay enrolled and receive APTC for an 
additional 60 days." Id. According to the agency, "the cost to taxpayers and decline in program 
integrity outweigh any possible benefit to the risk pool." Id. 
But the statute permits the exercise of authority to modify methods for information 
verification "if the Secretary determines such modifications would reduce the administrative costs 
52 

. and burdens on the applicant." 42 U.S.C. § 18081(c)(4)(B) (eniphasis added). CMS's exercise of 
its authority centers on "program integrity" and "costs to taxpayers"--consideration of "the 
administrative costs and burdens on the applicant" are nowhere to be found, nor is any data which 
undermines the conclusions ofthe prior policy regarding the reduction in administrative costs and 
'burdens to the applicant imposed by a 90-day timeline without extension. See 90 Fed. Reg. at 
27,119 ("As we stated in the proposed rule (90 FR 12963), we previously determined that 90 days 
is often an insufficient amount of time for many applicants to provide income documentation, since 
•it can require multiple documents from various household members along with an explanation of 
seasonal employment or self-employment, including multiple jobs."). 
In sum, the Court concludes that this .provision of the Rule is contrary to law because it did • 
-not modify a "method[] used under the program established by" § 18081(a) based. on a 
determination that the modification "would reduce the administrative costs and burdens on the 
applicant." 42 U.S.C. § 18081(c)(4)(B). • ;\Ila to the extent that the agency purported to do so;it 
.did not provide "a reasoned explanation'' necessary "for disregarding facts and circumstances that 
underlay or were engendered by the prior policy." Fox Television Stations, Inc., 556 U.S: at 515-
16. Accordingly, Plaintiffs are awarded summary judgment on their challenge to the provision of 
_the Rule rescinding the automatic 60-day extension. 
2. Income Verification When Data Shows Income Below 100 Percent of FPL 
Under current regulations, if an applicant's attestation regarding their projected annual • 
household income reflects a higher household income than that reflected in income data provided 
by • the IRS or certain other sources, an Exchange generally "must accept the applicant's 
attestation ... without further verification." 45 C.F:R. § 155.320(c)(3)(iii)(A). The Rule ~ends_ 
this provision by requiring an Exchange to instead further verify an applicant's household income 
if (1) an applicant attests to income that is between 100% and 400% of the FPL, (2) income data 
53 

ii 
from the IRS indicates household income below I 00% of the FPL, and (3) the former income ' 
amount exceeds the latter amount by a "reasonable threshold." 90 Fed .. Reg. at 27,123. Toe· 
applicant would then-be given an opportunity to resolve the inconsistency by providing 00:ditional 
documentation and taking other steps to verify their household mcome. See 45 C.F.R. 
§ 155.315(f)(l)-{4). 
Plaintiffs argue that "the mandatory audit policy is arbitrary for precisely the same reasons 
that this Court vac~ted tp.e same policy five ye~s ago." ECF 65-1, at 50 (citing City of Columbus 
JI, 523 F. Supp. 3d at 731). According to Plaintiffs, "CMS improperly assumed that these enrollees. 
must have been attempting to defraud the Exchanges," even though "[t]here are many reasons. why 
an individual could, in good faith, project that he or she will have income next year higher than 
the federal poverty level eve~ if current-year IRS data sh9ws a lower income." Id. Plaintiffs. 
further argue that the additional verification will cause significant obstacl_es to enrollment, as 
"[ m ]any such people are self-employed, or may have difficulty obtaining doc~mentation to support ,­
their projections." Id. 
Defend~ts acknowledge that the provision "parallels a provision from a 2018 rule that was 
vacated in City of Columbus v. Cochran, 523- F. Supp. 3d 731 (D. Md.-2021)." ECF 68-1, at 46. 
However, Defend~ts maintain that the verification measures are necessary because an applicant 
may be "overestimating his or her projected -household income to obtain APTCs for which the 
applicant is not otherwise eligible." Id. As noted, a similar challenge to a similar proposed change 
in the Rule was raised in 2018. See City of Columbus II, 523 F. Supp. 3d at 762 ("Plaintiffs contend 
that HHS' s decision to impose income verification requirements is arbitrary and capricious 
because it failed to support its decision with ~ything more than unsubstantiated conclusions and 
failed to acknowledge the impracticability of low-inc?me appl_icants being able to meet this 
11 
54 
+i 
1: 

requirement."). There, Judge Chasanow held that "Defendant's stated rationale for imposing 
. income verification requirements-to prevent fraud in states that did not expand Medicaid-[ was l 
unfo_unded," because "Defendants failed to point to any actual or anecdotal evidence indicating 
. fraud in the record." Id Judge Chasanow reasoned that '~HHS improperly elevated the objective 
of fraud prevention, for which it had no evidence, above the ACA's primary purpose of providing 
health insurance. Id (citing King, 759 F.3d at 373-74). 
This time around, Defendants posit that their justification "does not suffer from the same 
flaws that were fatal to the 2018 provision." ECF 68-1, at 46. Specifically, Defendants argue that 
"HHS now points to data that 'provide substantial evidence that applicants with household incomes 
below the APTC income eligibility threshold'-that"is, 100 percent of the FPL-'are strategically 
inflating their household income~,• or are 'getting assistance from' agents and brokers that have a 
'financial incentive' to maximize Exchange enrollments, in Qrder to obtain subsidized coverage .in 
an Exchange despite the4' actual household incomes.rendering them ineligible for such coverage." 
Id. at 46--47 (quoting 90 Fed. Reg. at 27,122). In its current effort to change the regulation, HHS 
cited to a study that "compared estimated potential enrollment.in Exchanges based on income data 
r~ported in census surveys to actual enrollment by ~nrollees who reported household income above 
the FPL-based eligibility threshold and found that actual enrollment was 136 percent higher than 
'the total population of potential enrollments." Id at 4 7 ( citing 90 Fed. Reg. at 27,122). Defendants 
also point out that the "same study also found th~t a far higher number of enrollees reported 
household income that was just above the Exchange-eligibility threshold in non-Medicaid 
·expansion States compared to those in States that did expand Medicaid." Id. (citing 90 Fed. Reg. 
at 27,122). However, Plaintiffs respond that "one of the authors of that study submitted a <;:omment 
to CMS (which the agency ignored) cautioning that the report did not support this conclusion, 
55 

-, 
I 
given the difficulties that low-income people face in estimating their future incomes." ECF 65-1, 
·at 51 (citing Urban Institute comment at 2 (Apr. 11, 2025), https://perma.cc/FSPH-WVN2;also 
available at ECF 65-2, at 150). 
It appears that the agency did not.directly address the comment by one of the study's 
authors in the final'Rule. In their reply, Defendants note that "the other two authors of the [study] 
did not join their coauthor's comments," and point o~t that the "commenter admitted that her own 
research 'provides evidence of some improper enrollment in the marketplace by people with 
incomes below the eligibility threshold of 100 percent of the federal poverty line (FPL) from 2015 
to 2017."' ECF 71, at 23. Defendants further ~rgue that "[t]hese 'flaws' are simply data limitations 
common to any study, which HHS identified." Id. (citiµg 90 Fed. Reg. at 27,210). 
The Rule also cites to a report from the Paragon Health Institute (the "Paragon report") that 
purports to find a high rate of fraudulent enr~llments, specifically citing it.to show that "[a] more 
recent analysis of 2024 open enrollment data shows plan selections on HealthCare.go~ among 
people ages 19-64 who reported household income between 100 percent and 150 percent of the 
FPL in non-Medicaid expansion States were 70 percent higher than potential enrollments 
estimated from Census data at that same income level." 90 Fed. Reg. at 27,122. The agency thus 
reasoned that "[b ]~sed on this mis~atch between enrollment and the eligible population,. this study· 
estimates four to five million people improperly enrolled in QHP coverage with APTC in 2024 at 
a cost of $15 to $20 billion." Id. Plaintiffs point ou~ that "the Paragon report compared apples to 
oranges by including children in its estimated number of applicants but not in its count of eligible· 
persons; by mismatching 2023 data to estimate improper enrollments for 2024, when many more 
people gained eligibility for the Exchanges in light of changes in Medicaid enrollment standards; 
and by using fundamentally different measures of income for its two data sets." ECF 65-1, at 19-. 
56 
j, 

20 (first citing Urban Institute comment at 2-3 (Apr:. 11, 2025), https://perma.cc/7457-27KN, also 
available at ECF 65-2, at 150-51; then citing Jason Levitis et al. comment at 2g.:_-31 (Apr. 11, . . . 
'2025), https://perma.cc/X3KY-KZLW, also available at ECF 65-2, at 220-23; then citing Ctr. for­
Budget & Policy Priorities comment at 4-5 (Apr. 1_ 1, 202?), https://perma.cc/KP9W-J63N, also 
available at ECF 65-2, at 155-56; and then citing Matthew Fiedler comment at 4-5 (Apr. 11, 
'2025), available .at ECF 65-2, at 190-91)). Plaintiffs contend that "[t]hese flaws in the Paragon 
analysis were pointed out to CMS by commenters, but CMS _did not explain why it chose to ignore 
them." Id. at 20. 
Against this backdrop, the· Court concludes that HHS failed to meaningfully address the 
comments pointing out potential flaws in the data contained in the Paragon repo~, despite 
continuing to rely on such data to justify the provision in the Rule. See 90 .Fed. Reg. at 27,215 
.( explaining in response to commenters expressing concerns· over unsoun4 data in the Paragon 
Report that the agency "noted these.limitations in the proposed rule and continue to reference them 
in this final rule. The Paragon report analysis "informed our analysis, but we also incorporated 
_Exchang_e data_ for a more fulsome analysis."). D~fendants have essentially ignored the Paragon 
Report (and its flaws) during this litigation, except in their reply, see EC:f 71, at ~3. Defendants 
are not free to support a rule change with data of questionable vali~ity and limited relevance, and 
then refuse to engage with _commenters' reasonable concerns that the data fails to support the 
conclusion the agency drew from that C:Iata. This is particularly problematic where, as here, an· 
author of one of the studies relied upon timely noted that the study she contributed to "did not 
support this conclusion, given the difficulties that low-income people face in estimating their 
fu~re incomes," ECF 65-1, at 51 (citations omitted), which is the issue ~at purportedly motivated 
the rule change in the first place. The agency was thus required to meaningfully contend with this 
57 

I 
comment because it affected a "fundamental premise" of the Rule, namely the very justification 
for the Rule itself., See MCI Wo,:ldCom, Inc. v. FCC, 209 F.3d 760, 765 (D.C. Cir. 2000) ("An 
agency is not obliged to respond to every comment, only those that can be thought to challenge a 
fundamental premise."). That the other two authors of that study did not join in their co-author'.s • 
comment does not alter the Court's conclusion. The silence of those co-authors does nothing to 
rebut the legitimate reservations which the commenting author and other commenters brought ·to 
the agenc)'.'. s attention, and which the agency failed to adequately address. 
In short, the agency refused to meaningfully engage with challenges to the data and reports 
used to justify the Rule, which began at the time of pro!Ilulgating the final Rule and continues 
through this litigation. As Judge Chasanow previously (and eloquently) explained, the agency's. 
"decision to prioritize a hypothetical risk of fraud over the substantiated risk that its decision result 
in immense administrative burdens at best, and a lo~s of coverage for eligible individuals at worst, 
defies logic." City of Columbus 11, 523 F. Supp. 3d at 763. Accordingly, this Court again_ 
concludes that CMS acted arbitrarily by instituting additional verification requirements without 
sufficient data justifying the need to do so. Summary judgment will be awarded to Plaintiffs with 
respect to this provision. 
3. Income Verification When Tax Data is Unavailable 
This provision of ·the Rule rescinds a regulation that requires an Exchange to accept an 
applicant's self-attestation of projected annual household income "without further verification" 
whenever (1) the Exchange requests tax return data from the IRS to verify the applicant's.attested 
income, but (2) the IRS confirms that there is no such data available, 45 C.F.R. § 155.320(c)(5). 
See 90 Fed. Reg. at 27,130. The current regulation, which was adopted in 2023, creates an 
exception to the general requirement that an Exchange must verify an applicant's annual household 
income with certain trusted data sources, 45 _C.F.R. § 155.320(c)(l)(ii), and otherwise follow an 
58 

alternative verification process }f tax return data for an applicant is unavailable, id 
§ 155.320(c)(3)(vi). The Rule removes this exception and requires Exchanges to·follow standard 
_verification and data-matching procedures "when tax return data is unavailable to immediately 
verify a consumer's attestation of annual household income." 90 Fed. Reg. at 27,132. 
Plaintiffs explain that "[i]t is a relatively common occurrence for tax data to be missing for 
' 
_an applicant, for entirely legitimate reasons," for example, "[a]n individual might have changed 
his -or her name, had a change in family composition, had a change in filing status, or might not 
have been subject to a filing requirement for the year in question." ECF 65-1, at 52. According 
to Plaintiffs, "[f]or many of' the people with data discrepancies, "other documentation might not 
be readily available to substitute for tax data, which means that if these people are not permitted 
to attest to their income, they will be deprived of subsidized coverage." Id 
The question for. the Court is not simply whether Defendants have presented sufficient 
evidence or fraudulent enrollment, but also whether there is sufficient evidence of a nexus between 
fraudulent enrollment and self-attestation to tax data such that it justifies requiring heightened 
income verification. Put differently, if the agency cannot point to- data showing that self-attestation 
meaningfully contributes to increased fraud, then the agency.adopted an incongruent solution to 
the problem. See City of Columbus II, 523 F. Supp. 3d at 762 ("HHS improperly elevated the 
objective of fraud prevention, for which it had no evidence, above the ACA's primary purpose of 
providing health insurance." (citing King, 759 F.3d at 373-374)); 
After reviewing the agency's reasoning in t~e Rule, the Court finds that CMS concluded 
in a conclusory fashion that program integrity benefits would outweigh the administrative burden 
·on applicants. The Co~rt agrees with Plaintiffs that CMS "attempted to justify these b~dens· and 
these coverage losses simply by reciting that self-attestation 'may have played a role in weakening 
59 

the Exchange eligtbility system,' ~ut it provided no support for this assertion." ECF 65-1, at 52 
;· • 
( quoting 90 Fed. Reg. at 27,130). While Defendants argue that "[t]he agency made the reasonable 
! 
observation that applicants without tax return data will likely have docwnentation verify~g their 
household income (e.g., pay stubs) 'readily available' to them and that the burden ofsubmitting 
! . 
that documentatioµ,,by extension, would be relatively minimal," ECF 68-1, at 48 (quoting 90 Fed. 
'I I -
Reg. at 27, 131-32~, the· agency provides no basis for this conclusory statement. 
., I ~ •. • 
In fact, thi~ assertion is not!evert internally consistent, as CMS separately acknowledges in 
• I ! . .-
the Rule that "income verification pan be more chaµenging for lower-income.tax filers due to less 
consistent employJnent." 90 Fed. R~g. at 27,200. To address this concern, CMS merely stated 
"our experience 'Yith income vetjfications suggests the process does not impose a substantial 
burden." Id The agency never explains wl,lat this history is or how it led to ·the c~ndusion it 
purportedly supports. The circular reasoning and conclusory statements offered to justify the 
I . 
-' policy change ar~ not indicative .of reasoned decision-making. This is particularly troubling • 
because CMS, by ~ts own estimation, acknowledges that 407,000 people will lose so_me, or all, of . ' . -· 
their APTCs as a :result of this c~ange. See id. Given the lack of sufficient data to justify this 
' ' 
provision of the RµIe, and the agen:cy' s lack of meaningful explanation for the provision, the Court· 
I • • • 
finds that this pro,vision was not "reasonable and reasonably explained."22 FCC v. Prometheus 
• ·1 C ~ 
Radio Project, 5~2 U$. 414, 423 (2021). Ac.e:~rdingly, Plaintiffs are entitled to summary 
' 
judgment as to thi~ provision as well. 
22 This hoiding is; bolstered by th~ fact that the Rule relied on the Paragon rep.ort, which, as the 
Court described above, has serious flaws the_ agency did not address and which Defendants have 
sparsely· and W1petsuasively defended in their reply. 
l 
6,0 
J 

V. CONCLUSION 
For the foregoing reasons, Plaintiffs' motion. for summary judgment is granted in part and 
denied in part, and Defen~ants' cross-motion for summary judgment is granted in part and denied 
·m part. A separate implementing order will issue. 
Dated: June 12, 2026 , Isl 
Brendan A. Hurson 
·united States District Judge 
,, 
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