The National Association of Benefits and Insurance Professionals filed a lawsuit against CMS and HHS on Oct. 15 concerning a temporary freeze on new agent and broker registrations with federally facilitated exchanges for 2027.
CMS instituted the freeze under an interim final rule in September, which immediately went into effect and could run until Feb. 1. That rule also baked in an HHS authority to implement temporary freezes on agent and broker registrations when “certain agents’ or brokers’ conduct poses an unacceptable risk.” There was no notice-and-comment period before the moratorium kicked off as HHS found “good cause under the Administrative Procedure Act,” writing that “providing advance notice would be contrary to the public interest and impracticable.” HHS still invited public comments as it considers the future of this authority.
The complaint, filed in Maryland’s federal court, claimed violations of the Administrative Procedure Act, alleging that the good-cause exception to the notice-and-comment period was insufficient, HHS exceeded its statutory authority, CMS froze registrations without substantial evidence, and CMS unlawfully withheld and unreasonably delayed training for new agents.
In the rulemaking documents, CMS estimated that roughly 19,000 new agents and brokers would have registered during the moratorium period had it not taken place. The complaint said agents or brokers assisted with more than 75% of plans purchased through HealthCare.gov last year.
“CMS should be going after bad actors, not shutting out thousands of licensed agents and brokers because of a handful of bad agents and brokers,” NABIP President Mychal Walker said in an Oct. 15 news release, adding that the trade organization supports federal marketplace safeguards.
The association is seeking to vacate the regulation and moratorium, and it is also seeking injunctive relief, allowing agents to pursue training ahead of the Nov. 1 start to the open enrollment period.
The crackdown builds on the federal government’s broader integrity efforts with the ACA, including the removal of 760,000 people determined as having “unauthorized” enrollments. However, some enrollees have since been reinstated, according to a KFF Health News report. CMS has also taken steps to tackle broker noncompliance in prior rulemaking.
CMS told Becker’s it does not comment on pending litigation.
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