MANHATTAN (CN) - The Patient Protection and Affordable Care Act's voiding of limits on prescription drug payments is unconstitutional and threatens to bankrupt union health care funds, an employee benefits fund claims in Federal Court.
Norman Seabrook, president of New York's Corrections Officers' Benevolent Association sued President Barack Obama, Treasury Secretary Jacob Lew, Labor Secretary Thomas Perez, and Health and Human Services Secretary Sylvia Mathews Burwell, claiming the union's expressed concerns about the Act's annual cap on prescription drug benefits have largely been ignored.
The Correction Officers' Benevolent Association Security Benefits Fund is a single employer supplemental benefit fund sponsored by the labor union and managed by a board of trustees selected from the association's executive board.
The fund provides prescription drug coverage, optical and dental benefits for New York City corrections officers and their dependents. It is "supplemental" in the sense that it is not the main health plan for covered individuals, but provides alternative coverage to that which is available through the employer.
The fund is also supplemental in the sense that prescription drug coverage is available through the City of New York, but with high cost employee contributions. By comparison, the fund requires no employee contributions, other than co-payments.
The provision of the act at issue, Section 2711, prohibits the fund from placing annual dollar limits on the amounts the fund will pay to cover a participant's or dependent's prescription drugs.
Seabrook claims the requirement became applicable to the fund on Jan. 1, 2014 and threatens "no less than the continued survival of the Fund."
"This is because whereas in prior years the Fund had applied a $10,000 annual limit per family on its reimbursement for prescription drugs purchase though the Fund, the elimination of the limit has resulting in skyrocketing costs," the complaint states.
Seabrook says his fund joined with others covering New York City's unionized employees in seeking an exemption to the provision, and that while the U.S. Department of Health and Human Services did offer to delay implementation of the provision, the Obama Administration refused to exempt the funds from the requirements.
"It is the Fund's contention that it is exempt as a matter of law under the ACA from the requirements to eliminate annual dollar limits," Seabrook says, calling the administration's refusal to grant it an exemption from Section 2711, "arbitrary and capricious."
Seabrook believes in ignoring the union's pleas, the administration and its agencies, "failed to take into account the serious consequences of applying limit elimination to collectively bargained single title, supplemental benefit funds such as the Fund."
"It is the Fund's further contention that Section 2711 and the regulators' decision making with regard to the Fund was marked by an irrational hostility targeting such funds because they are sponsored by public section unions or, in the alternative, that the regulators turned a blind eye to the disparate adverse impact on funds such as the Fund. Whether purposeful or not, the regulators refusal to grant the requested exemption violates the equal protection and free association rights of union members and their dependents as the only reason they are threatened with the loss of their prescription drug coverage is their association with a labor union and with one another.
"Finally, it is the Fund's contention that the application of Section 2711 to a Fund that is, of itself, wholly regulated by state law and which is the product of a collective bargaining process governed wholly by state law and wholly regulated by state entities encroaches on the reserved rights of the State of New York and the people of that state under the Tenth Amendment.
The union seeks declarative and injunctive relief blocking the implementation of the prescription drug payment limit.
The union is represented by Howard Wien, of Koehler & Isaacs LLP in New York.