Commentary & Opinion

FSI Responds to District Court Ruling on Association Health Plans

WASHINGTON, D.C. – 1 APRIL 2019 — On Friday, the U.S. District Court in the District of Columbia issued its decision to block the U.S. Department of Labor’s efforts to allow the development of Association Healthcare Plans (AHP). The Financial Services Institute has issued the following statement regarding the decision:


“While we are disappointed in the ruling, we intend to continue our work to ensure our members one day have access to the quality, affordable healthcare they need and deserve. We urge the Trump Administration to appeal this ruling. What’s at stake is access to quality, affordable healthcare plans for millions of Americans, and thousands of our members. We have made access to better healthcare for financial advisors a priority for the last two years, making it a top issue during last year’s Capitol Hill Day, writing a comment letter to the Department of Labor supporting the rule and participating in a coalition that wrote an amicus brief to the court. We will continue to champion this issue. While we wait for an appeal to the ruling, we will continue our work behind the scenes to make better healthcare for our members a reality.”

Excerpts from the Ruling

AHPs are group health plans offered through an association of employers, such as an industry group. DOL has always permitted some AHPs meeting stringent criteria to qualify as a single ERISA employee benefit plan, as if the plan was sponsored by a single employer for its employees.

Under DOL’s longstanding sub-regulatory guidance, only so-called “bona fide associations” could sponsor an AHP under ERISA. Bona fide associations had to display certain employer-like characteristics, because “the Department’s regulation of employee benefit plans [was] focused on employment-based arrangements, as contemplated by ERISA, rather than merely commercial insurance-type arrangements that lack the requisite connection to the employment relationship.” Final Rule, 83 Fed. Reg. at 28,914. The “overall structure” of ERISA “contemplates employment-based benefit arrangements,” and since these AHPs qualify as ERISA plans, they had to fit within an employment context, notwithstanding the fact that they were sponsored by employer associations rather than directly by single employers. Id. at 28,913.

We urge the Trump Administration to appeal this ruling. What’s at stake is access to quality, affordable healthcare plans for millions of Americans, and thousands of our members...

Eleven States and the District of Columbia sued DOL over the Final Rule, raising claims under section 706 of the APA. Compl. [ECF No. 1]. The States allege that the Final Rule’s bona fide association test and working owner provision are “not in accordance with law” under ERISA and the ACA, that the Final Rule does not “carry out” Congress’s intent in enacting ERISA, and that the Final Rule is arbitrary and capricious. Id. ¶¶ 108–45. The States moved for summary judgment.
for the Court’s consideration.


The Court first considers the issue of standing raised in DOL’s motion to dismiss. Finding that the States have standing to challenge the Final Rule, this opinion then considers the merits of the States’ challenges to the Final Rule.

The States challenge multiple dimensions of the Final Rule under section 706 of the APA, arguing that the Final Rule’s bona fide association and working owner provisions conflict with the text and purpose of both the ACA and ERISA and exceed DOL’s statutory authority. The States also maintain that the Final Rule is arbitrary and capricious under the APA. DOL disagrees with the contention that this case has anything to do with the ACA and urges the Court to consider the Final Rule narrowly as an interpretation of ERISA.



About the Financial Services Institute (FSI): The Financial Services Institute (FSI) is the only organization advocating solely on behalf of independent financial advisors and independent financial services firms. Since 2004, through advocacy, education and public awareness, FSI has successfully promoted a more responsible regulatory environment for more than 100 independent financial services firm members and their 160,000+ affiliated financial advisors – which comprise over 60% of all producing registered representatives. We effect change through involvement in FINRA governance as well as constructive engagement in the regulatory and legislative processes, working to create a healthier regulatory environment for our members so they can provide affordable, objective advice to hard-working Main Street Americans. For more information, please visit