Sidley secured a significant litigation victory for ManhattanLife Insurance & Annuity Company and one of its insurance agents in an administrative law case challenging the legality of a new regulation requiring fixed indemnity insurance providers to include a notice on their marketing and application materials stating that the policy is “NOT health insurance.” On December 3, 2024, the United States District Court for the Eastern District of Texas held the regulation unlawful and vacated the rule.
Fixed indemnity insurance, a type of health insurance under federal law, is exempt from numerous regulatory requirements that are imposed on comprehensive health insurance products sold in the United States, as long as the fixed indemnity policy satisfies three statutory criteria. In April 2024, the federal agencies that enforce the health insurance laws promulgated a regulation that added a fourth criterion – provision of a 14-point notice stating, falsely, that fixed indemnity insurance is “NOT health insurance.” As a result, beginning January 1, 2025, any fixed indemnity policy that failed to provide this notice would be subject to the same burdensome requirements as comprehensive health insurance.
ManhattanLife challenged the notice rule under the Administrative Procedure Act, with Sidley arguing that the rule exceeded the agencies’ statutory authority and was issued without adequate notice and comment. In its final judgment, the court agreed on both counts and vacated the rule. The decision marks Sidley’s fifth straight victory in administrative law cases brought in the Eastern District of Texas.
The Sidley team representing ManhattanLife was led by Eric McArthur, who argued the case, and included Brenna Jenny and Cody Akins (all in Washington, D.C.), and Hundley Poulson (Sidley alumnus).
