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DOCKET NO. 2759
RULEMAKING TO ESTABLISH SUBCHAPTER W. REGULATION OF NAVIGATORS FOR HEALTH BENEFIT EXCHANGES § § § § TEXAS DEPARTMENT OF INSURANCE

SUPPLEMENTAL FORMAL COMMENTS OF TEXAS IMPACT TO PROPOSED NEW 28 TAC §§19.4001-19.4018

Texas Impact is a statewide nonprofit corporation that promotes public policy in the State of Texas consistent with the social principles of our member denominations. Our membership includes individuals and congregations of the Christian, Jewish, and Muslim faiths. It has long been the position of Texas Impact that people need access to affordable health care. To that end, it is important that consumers have confidence in the enrollment assistance they receive, which requires adequate consumer protections. Texas Impact supports many of the important consumer protections in the proposed rule, and wishes to see them remain effective by avoiding rancorous litigation that unnecessarily costs the taxpayer money and reduces consumer confidence. Texas Impact would like to begin by thanking the staff of the Texas Department of Insurance (TDI) for the diligent attention they are according this rule. TDI has been extremely thorough and has proceeded with an abundance of caution. TDI’s professionalism is second to none. Texas Impact is concerned, however, that the proposed rule as currently written could lead to both substantive and constitutional challenges that might lead not only to the invalidation of individual provisions of the rule, but also the rule as a whole. Texas Impact offers these comments in hopes of assisting the agency to prepare a final order and adopt a rule that protects the consumer while helping Texans to obtain health care coverage that has eluded many Texans for so long. 1. §§ 19.4002-4004 The most problematic section of the proposed rule is the current framework of Sections 19.4002-19.4004. The current definition, applicability, and registration requirement sections risk invalidation of not just those sections, but of the entire rule under substantive and constitutional challenge.1

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Tex. Gov’t Code §2001.038 (2013).

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1.1 Construction of §§19.4002-4004 Whether an agency’s rules are “in harmony with the general objectives of the legislation involved” is a question of law determined through statutory construction.2 It is the duty of the courts to give full recognition to the legislative intent.3 Courts are restricted to the act itself for the purpose of determining the intention of the legislature.4 Rules for interpreting statutes aid the courts in ascertaining the legislative intent.5 One basic rule is that “when the legislature provides definitions for words that it uses in statute, then the court uses those definitions in its task.6 When the definition is clear and unambiguous,7 it is binding as an expression of the legislative intent.8 The 83rd Legislature passed SB 1795 creating Chapter 4154, Insurance Code. In this law, “Navigator”9 is clearly and unambiguously defined at §4154.002(3) as “an individual or entity performing the activities and duties of a navigator as described by 42 U.S.C. Section 18031.” A “Navigator” as described by 42 U.S.C. §18031(i)(1) is an entity awarded a grant that carries out certain statutorily prescribed duties.10 Those duties are subsequently described at 42 U.S.C. §18031(i)(3). TDI’s proposed rule, however, redefines “Navigator” so as to no longer be in harmony with, but rather contradictory of, the plain language of the state and federal statutes. The proposed rule creates definitions for “enrollment assistance”11 and “navigator services”12 which expands applicability beyond the federal grant recipients described in 42 U.S.C. §18031(i) and then states that whoever provides “navigator services” and “enrollment assistance” is required to register as a navigator.13 The effect of the framework of this proposed rule contradicts the statutory framework of Chapter 4154.002(3) and 42 U.S.C. §18031 by redefining “Navigator” as one performing an activity rather than one who possesses a federal designation. Such a
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Gulf Coast Coalition of Cities v. Public Utility Com’n, 161 S.W.3d 706 (Tex. App. Austin 2005); Lambright v. Texas Parks and Wildlife Dept., 157 S.W.3d 499 (Tex. App. Austin 2005). 3 Kutzner v. State, 75 S.W.3d 427 (Tex. Crim. App. 2002); Texas Workers’ Comp. Comm’n v. Patient Advocates of Tex., 136 S.W.3d 643, 652 (Tex. 2004). 4 Ex parte Hayden, 152 Tex. Crim. 517, 215 S.W.2d 620 (1948). 5 Ezell v. Knapp & Elliott, 120 Tex. 503, 39 S.W.2d 829 (Comm’n App. 1931). 6 City of Waco v. Kelley, 309 S.W.3d 536 (Tex. 2010); Quaterman v. Hampton, 321 S.W. 3d 864 (Tex. App. Houston 1st Dist. 2010), rule 53.7(f) motion granted, (Oct. 11, 2010). 7 State v. San Patricio Canning Co., 17 S.W.2d 160 (Tex. Civ. App. San Antonio 1929); State v. Frost, 16 S.W.2d 331 (Tex. Civ. App. San Antonio 1929). 8 Transport Ins. Co. v. Faircloth, 898 S.W.2d 269 (Tex. 1995). 9 The term “navigator” will be in lower case when used as a generic term. It will be capitalized when referring to those specifically designed under 42 U.S.C. §18031. Due to the term’s preexisting generic use, it may be helpful to think of “navigators” under the ACA as “capital N- Navigators.” 10 Patient Protection and Affordable Care Act, 42 U.S.C. §18031(i)(1) (2010). 11 38 Tex. Reg. 8780 (2013)(to be codified at 28 Tex. Admin. Code §19.4002(1))(proposed Dec. 6, 2013)(Tex. Dept. of Ins.). 12 38 Tex. Reg. 8780-1 (2013)(to be codified at 28 Tex. Admin. Code §19.4002(4))(proposed Dec. 6, 2013)(Tex. Dept. of Ins.). 13 38 Tex. Reg. 8780-1 (2013)(to be codified at 28 Tex. Admin. Code §19.4002(4))(proposed Dec. 6, 2013)(Tex. Dept. of Ins.). !
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redefinition of “Navigator” as an activity rather than a designation is the equivalent of saying anyone who swims with scuba gear, lands on a beach, and carries a firearm is a Navy SEAL. Unfortunately, the confusion may be that Congress picked the generic term “navigator” instead of picking a unique designation like “Navy SEAL.” Nevertheless, “Navigator” for the purposes of the statutory authority granted under SB 1795 is a specific federal designation and not a generic activity. Thus TDI’s statutory authority is over only those described in 42 U.S.C. §18031(i) with the federal designation, not those performing certain activities as redefined by TDI in the proposed rule. 1.2 Current Proposed Rule Exceeds Statutory Authority Redefinition of “Navigator” beyond the express definitions in §4154.002(3), Insurance Code and 42 U.S.C. §18031(i) exceeds TDI’s statutory authority. Redefinition of “Navigator” causes the rule to no longer be in harmony with the general objectives of SB 179514 which is to register those who are officially designated as Navigators by the health benefit exchange.15 An agency’s rule is facially invalid if it 1) contravenes specific statutory language;16 2) runs counter to the general objectives of the statute;17 or 3) imposes additional burdens, conditions, or restrictions in excess of or inconsistent with the relevant statutory provisions.18 The proposed rule runs the risk of meeting not just one of these, but all three. Redefinition of “Navigator” is very much like Texas Orthopaedic Association v. Texas State Board of Podiatric Medical Examiners, a scope of practice case where the Board impermissibly expanded the definition of the word “foot.”19 In this case, the Austin Court of Appeals found that the Board had exceeded its authority by expanding the definition of the word “foot” to involve parts of what a layperson would call the ankle. The entire rule was invalidated.20

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Pruett at 452; see also Gerst v. Oak Cliff Sav. & Loan Ass’n, 432 S.W.2d 702, 706 (Tex. 1968); Citizens Bank of Bryan v. First State Bank, Hearn, Tex., 580 S.W.2d 344, 348 (Tex. 1979). 15 Tex. Ins. Code §4154.051(d)(2013). 16 Lee v. Texas Workers’ Compensation Com’n, 272 S.W.3d 806 (Tex. App. Austin 2008); TXU Generation Co., L.P. v. Public Utility Com’n of Texas, 165 S.W.3d 821 (Tex. App. Austin 2005); Office of Public Utility Counsel v. Public Utility Com’n of Texas, 104 S.W.3d 225 (Tex. App. Austin 2003). 17 Liberty Mut. Ins. Co. v. Griesing, 150 S.W.3d 640 (Tex. App. Austin 2004)(a rule of administrative agency is void if it conflicts with a statute) 18 Williams v. Texas State Bd. Of Orthotics & Prosthetics, 150 S.W.3d 563 (Tex. App. Austin 2004); Cordillera Ranch, Ltd. V. Kendall County Appraisal Dist., 136 S.W.3d 249 (Tex. App. San Antonio 2004). 19 Texas Orthopaedic Association v. Texas State Board of Podiatric Medical Examiners, 254 S.W.3d 714 (Tex. App. – Austin 2008). 20 Id at 724.!!!
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“If a rule has no supporting statutory authority, the rule is void.”21 Nowhere in the reasoned justification for the proposed rule does TDI cite statutory authority to redefine what the Legislature has already defined. TDI does cite 9 statutes applicable generally to the entire rule22 (§§19.4001-19.4018). However, none authorize the agency to redefine Navigators or to make the rule applicable to persons not covered under §4154.002(3), Insurance Code, and 42 U.S.C. §18031. The only argument in the reasoned justification for the need to redefine “Navigators” in the proposed rule does not come from statute. Rather, TDI asserts that HHS has stated it has left regulation of non-Navigators to the states. HHS’ general assertion is irrelevant to TDI’s statutory authority to redefine “Navigator” in an attempt to encompass people not covered under 42 U.S.C. §18031. A federal agency’s telling a Texas agency that it has authority does not make it so. The Texas Legislature must say so. The plain language of 4154.002(3) did not delegate authority to register those as “Navigators” that are outside its definition. 1.3 Application of Proposed Rule is Overbroad The proposed rule casts a wide net over persons not intended by the Legislature in the plain language of SB 1795. By clearly and unambiguously defining “Navigator,” the Legislature is not trying to regulate the activity of the whole world under SB 1795, but the activity of those holding a specific federal designation. Casting such a wide net imposes additional burdens, conditions, or restrictions in excess of or inconsistent with the relevant statutory provisions.23 1.3.1 Preexisting use of term “navigators.” Unlike the specific term Navy SEAL, the non-specific term “navigator” is already in use to describe other non-ACA related activity in unrelated statutes.24 Additionally, the generic term exists informally in many healthcare settings such as the examples described by Sister J.T. Dwyer of Seton Hospital in oral testimony at the December 20th public hearing at TDI.25

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Office of Pub. Util. Counsel. v. Public Util. Comm’n, 104 S.W.3d 225, 232 (Tex. App. – Austin 2003, no pet.). 22 38 Tex. Reg. 8780 (2013)(proposed Dec. 6, 2013)(Tex. Dept. of Ins.). (On page 46 of the proposed rule, TDI cites “Insurance Code §§82.002 (general enforcement authority); 541.401 and 541.452 (pertaining to deceptive practices); 4001.005 & 4052.051 (pertaining to licensing for agents and health insurance counselors); 36.001 (general rulemaking powers of TDI superseded by specific grants of authority under Chapter 4154); and 4154.001, 4154.005, and 4154.051 (respectively, a purpose clause, general rulemaking authority limited to Navigators as defined by 42 U.S.C. 18031, and specific rulemaking authority for standards and qualifications of Navigators contingent upon certain conditions being met). 23 Williams v. Texas State Bd. Of Orthotics & Prosthetics, 150 S.W.3d 563 (Tex. App. Austin 2004); Cordillera Ranch, Ltd. V. Kendall County Appraisal Dist., 136 S.W.3d 249 (Tex. App. San Antonio 2004). 24 Tex. Gov’t. Code §531.751(2) 25 See oral testimony of Sister J.T. Dwyer at the December 20, 2013 public hearing at the Texas Department of Insurance.
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An agency may not enact regulations that are inconsistent with statutes other than those under which the regulations are issued.26 Texas Impact was closely involved with the passage of SB 1795 throughout the legislative process. It is for this reason that the Legislature carefully crafted the definition of “Navigator.” Due to the fact that the proposed rule has penalties for violation of the statute, the statutory definition of or should be strictly construed or risk invalidation.27 1.3.2 Rule’s construction over inclusive. Under 42 U.S.C. §18031, a Navigator shall perform all the duties prescribed by law. In other words, a Navigator is federally designated and receives a grant, then shall perform a list of 5 duties.29 Those 5 duties are connected using the conjunction “and.” Put another way, performing all those duties makes one a “Navigator,” as opposed to performing any one of those five as TDI’s proposed rule defines “navigator services.”
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Section 19.4002(4) of the proposed rule defines “navigator services” as “[s]ervices performed under Insurance Code Chapter 4154, this subchapter, 42 USC §18031, or30 any regulation enacted under 42 USC §18031, including; (A) assisting consumers in completing the application for health coverage affordability programs available through a health benefit exchange; (B) explaining how health coverage affordability programs work and interact, including Medicaid, the Children’s Health Insurance Program, or advance premium tax credits and cost-sharing assistance; (C) explaining health insurance concepts related to qualified health plans, including premiums, cost sharing, networks, or essential health benefits; (D) providing culturally and linguistically appropriate information; (E) avoiding conflicts of interest; or31 (F) establishing standards and processes relating to privacy and data security.” Using the conjunction “or” is problematic and makes the rule extremely broad. Performing any one of those “services” above in conjunction with “enrollment assistance” implicates medical professionals, private citizens helping family, clergy advising parishioners and private companies with HR departments. [See examples in 1.4 below as the proposed rule is simultaneously overbroad and vague] 1.3.3 – U.S. Constitutional Challenge for Overbreadth Under the First Amendment of the U.S. Constitution, a law is overbroad if it regulates more speech than the Constitution allows to be regulated.32 Like in Houston v.
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State v. Jackson, 376 S.W.2d 341 (Tex. 1964); Railroad Com’n of Texas v. ARCO Oil and Gas Co., a Div. of Atlantic Richfield Co., 876 S.W.2d 473 (Tex. App. Austin 1994), writ denied, (Oct. 5, 1995). 27 Railroad Commission v. Fort Worth & D.C. Ry. Co., 161 S.W.2d 560 (Tex. App. Austin 1942)(rehearing denied). 28 42 U.S.C. §18031(i)(3). 29 See 42 U.S.C. §18031(i)(3) for the list of required duties. 30 Emphasis added. 31 Italics added.
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Hill, the current construction of the proposed rule applies to substantially more speech that is otherwise protected and is susceptible of regular application to that protected speech.33 This should be of particular concern because the federal Overbreadth Doctrine grants standing to individuals whose speech may be unprotected and could be constitutionally regulated under a more narrow construction. The federal doctrine allows that party to argue the law is unconstitutional because of how it might be applied to 3rd parties not before the Court.34 Additionally, the federal doctrine grants standing to 3rd parties to raise the claims of others.35 It has been the position of Texas Impact since before SB 1795 was filed that Texas needs adequate consumer protections. Therefore, the definition of “Navigator” needs to be limited to the statutorily defined federal definition found in 42 U.S.C. §18031. Any expansion or redefinition of the term “Navigator” puts valuable consumer protections found in the proposed rule at risk by vastly expanding the scope of potential plaintiffs. Outside groups may bring suit over the scope of the definition in federal court. 1.4 Proposed Rule is Vague In addition to being overly inclusive, the rule’s construction does not provide fair notice to a person subject to the regulation. A rule may be struck down for vagueness if it 1) does not give fair notice of what conduct may be punished; and 2) invites arbitrary and discriminatory enforcement by its lack of guidance for those charged with its enforcement.36 A rule is invalid as discriminatory where it allows those administering it to select, arbitrarily and without assigning a reason, those who must obey it and those who are not required to do so.37 The proposed rule is potentially vague in two different ways. First, it is vague as to what actions bring one under the rule. Second, the rule is vague as to applicability and who is and is not exempt. 1.4.1 Vague as to actions (§19.4002) The way the definition of “navigator service” is constructed, it is unclear at what point certain elements have been met that would require registration. Using “or” as a conjunction, one need only to perform “culturally and linguistically appropriate information” in order to have performed “navigator services.” To be required to register, one need only provide “navigator services” and “enrollment assistance.”38

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Houston v. Hill, 482 U.S. 451 (1987). Id. 34 Schad v. Borough of Mt. Emphraim, 452 U.S. 61 (1981). 35 Secretary of State v. J.H. Munson Co., 467 U.S. 947 (1984). 36 TXU Generation Co., L.P. Public Utility Com’n of Texas, 165 S.W.3d 821 (Tex. App. Austin 2005). 37 Ex parte Leslie, 87 Tex. Crim. 476, 223 S.W. 227 (1920). 38 38 Tex. Reg. 8781 (2013)(to be codified at 28 Tex. Admin. Code §19.4002(4))(proposed Dec. 6, 2013)(Tex. Dept. of Ins.).
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In rural South Texas, the Wesley Nurses are a health care outreach mission of Methodist Healthcare Ministries.39 If a Wesley Nurse helps a person enroll for health insurance in Spanish, must that person now register as a Navigator with TDI? Use of Spanish alone surely cannot be enough to have performed a “navigator service” without raising an Equal Protection Clause issue. However, under the proposed rule, that is far from clear as the nurse has provided one of the six things that constitute “navigator services” and then provided “enrollment services” under §19.4002. In another example, the retail store, Target, recently had a security breech of over 40 million consumers’ credit card information. Assume Target hires an expert in data security to remedy the situation. Also assume Target has a Human Resource department. If Target’s HR department assists its employees enroll for health insurance, must Target register as a Navigator? Under Section 19.002(F), Target would have provided both “navigator services” by establishing standards for data security and “enrollment assistance” through their HR department. 1.4.2 – Vague as to applicability (§19.4003) The applicability section at §19.4003(C) reads “[t]his subchapter does not apply to an individual or entity that provides assistance to consumers under and in compliance with state or federal authority40 other than 42 USC §18031, to the extent that the individual or entity is providing assistance consistent with that state or federal authority.” There are two issues with the drafting of this exception paragraph that lead to great ambiguity. The first ambiguity pertains to the use of the word “authority.” What does “authority” mean for the purposes of this section? Does being regulated under a state or federal law constitute authority? If so, how much regulation is required? If the ambiguity around the issue of “authority” can be settled, the second issue that arises is with the level of compliance and noncompliance with that authority. What does compliance mean? How will noncompliance be determined? What brings an entity under TDI’s jurisdiction in a way that it would not be if it were in compliance with that authority? All for-profits and nonprofits in the State of Texas are governed under Tex. Bus. Orgs. Code Chapters 21 & 22, respectively. Both interact with any number of state agencies including the Secretary of State, the Comptroller and the Office of the Attorney General. Both have designations under the Internal Revenue Code and are regulated by the Internal Revenue Service. Does this section exempt Target or Methodist Healthcare Ministries? [See examples in 1.4.1 above] For Target’s HR department providing assistance, is an employee not simultaneously a consumer? Is §19.4004(C) meant to serve as a “notwithstanding clause?” Does TDI intend to have a floating jurisdiction based on compliance or noncompliance concurrent with other state agencies? How is a person to know when this subchapter exempts them?
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http://www.mhm.org/clients/healthcare-services/wesley-nurse-health-ministries Italics added.

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1.4.3 – Void-on-vagueness – U.S. Constitution In addition to a state challenge for unconstitutional vagueness under the APA, the proposed rule may be unconstitutionally vague under the First Amendment of the United States Constitution. Under the federal test, a law is unconstitutionally vague if a reasonable person cannot tell what speech is prohibited and what is permitted or “when people of common intelligence must guess at its meaning.”41 Unduly vague laws may also violate due process whether or not speech is regulated.42 The proposed rule fails to put an average person on notice as to what conduct is prohibited. What exactly constitutes explaining health insurance concepts? While defined, what exact level of “assistance” is required in helping a person to enroll? It is unclear what a private individual may or may not say in order to avoid enforcement. This regulatory scheme leaves an individual at risk of selective prosecution. While it is doubtful TDI would (or desires to) enforce the rule against an individual explaining and assisting a grandparent behind the walls of a private domicile, the ambiguity leaves many 501(c)(3) and 501(c)(4) nonprofits that are not federal Navigators confused as to what constitutes permissible and impermissible activities. Outreach and enrollment are a very common activity for nonprofit entities and are often funded by private foundations and governmental entities. There is a substantial risk of a chilling effect on this otherwise constitutionally protected speech.43 “Standards of permissible statutory vagueness are strict in the area of free expression…Because First Amendment freedoms need breathing space to survive, government may regulate in the area only within narrow specificity.”44 1.5 Free Speech – Prior Restraint The current scope of the proposed rule is so broad as to amount to an unconstitutional prior restraint upon speech. If the Free Speech Clause of the First Amendment means nothing else, at a very minimum, it was mean to abolish prior restraints on speech.45 For example, the scope of the proposed rule under its current construction would require a media outlet with a presence in Texas to register with the department if they 1) “explain how health coverage affordability programs work”46 or “explain health

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Connally v. General Construction Co., 269 U.S. 385, 391 (1926). Papachristou v. Jacksonville, 405 U.S. 156 (1972). 43 NAACP v. Button, 371 U.S. 415, 433 (1963). 44 NAACP v. Button, 371 U.S. 415, 432-433 (1963). 45 Patterson v. Colorado, 205 U.S. 454, 462 (1907). 46 38 Tex. Reg. 8781 (2013)(to be codified at 28 Tex. Admin. Code §19.4002(4)(B))(proposed Dec. 6, 2013)(Tex. Dept. of Ins.).
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insurance concepts related to [QHP’s],”47 to the public and then 2) provide enrollment assistance to employees.48 1.6 Free Exercise under Texas law While Employment Division v. Smith49 controls in a federal challenge to rules of general applicability burdening religion, Texas has what is known as a “mini-RFRA” or a state law restoring the old strict scrutiny test.50 The government will have the burden to show that it has a compelling state interest and has used the least restrictive means.51 The proposed rule is so broad that it may restrict a religious organization’s Free Exercise rights under the First Amendment. For example, in the United Methodist Church, “health care is a basic human right. Providing the care needed…is a responsibility each person owes others and government owes to all.”52 That responsibility includes helping parishioners understand and obtain health care coverage which includes “explaining health insurance concepts” and “enrollment assistance.” In another example, litigation regarding the contraception mandate is currently working it way up to the U.S. Supreme Court. Regardless of the outcome of that litigation, should the Catholic Church, or others, wish to advise and assist parishioners enroll in a federal qualified health plan that is either compliant with or the “lesser of two evils” according to Canonical Law, then the proposed rule could force such an entity to register with the TDI as a “Navigator.” 1.7 Conflict Preemption Conflict Preemption will be discussed more below. However, the redefinition of “Navigator” could also arise in a preemption challenge. It is unclear how a court would view a Texas Navigator holding themselves out to the world under that designation that the Federal Government did not recognize as a Navigator under their designation. [See below]. 1.8 Uniform Declaratory Judgment Act (UDJA).53 The inclusion of non-Federal Navigators as Texas Navigators may expose TDI to an independent, and parallel to the APA, cause of action under the Uniform Declaratory Judgment Act.54 A person who is not a federal Navigator under §18031 might challenge
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38 Tex. Reg. 8780-1 (2013)(to be codified at 28 Tex. Admin. Code §19.4002(4)(C))(proposed Dec. 6, 2013)(Tex. Dept. of Ins.). 48 38 Tex. Reg. 8780-1 (2013)(to be codified at 28 Tex. Admin. Code §19.4002(1)& 19.4004)(proposed Dec. 6, 2013)(Tex. Dept. of Ins.). 49 Employment Division v. Smith, 494 U.S. 872 (1990). 50 Tex. Civ. Prac. & Rem. Code Ch.110. (2013). 51 Civ. Prac. & Remedies Code §110.003. 52 United Methodist Church, Book of Discipline Paragraph 162V (2012). 53 Tex. Civ. Prac. and Rem. Code Ch. 37 (2013). 54 Texas Municipal Power Agency v. Public Utility Commission, 100 S.W.3d 510, 519-520 (Tex. 2003).
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not just the specific final order of the rule under the APA, but also TDI’s general authority under the UDJA. Such a challenge would be following the path of Texas Municipal Power Agency v. Public Utility Commission where the Texas Supreme Court upheld TMPA’s action under the UDJA for a determination of the PUC’s statutory authority.55 §§19.4002-4004 Solution The best solution to enact SB 1795 consumer protections that survive a legal challenge is to use the definition of “Navigator” as so defined by the Texas Legislature. So narrowing the rule should present no legal procedural problems under the APA. Making a rule less applicable, as opposed to expanding application of a rule, does not require republication because it has not failed to give notice to any affected parties.56 If TDI limits the rule only to Navigators as defined in 42 U.S.C. §18031, not only is the world of potential plaintiffs immensely reduced, but so are most of the possible causes of action against the rule. 2. Preemption “Under the Supremacy Clause, from which our preemption doctrine is derived, ‘any state law…which interferes with or is contrary to federal law, must yield.’”57 The proposed rule potentially has three types of preemption claims that could be levied against it: conflict preemption due to physical impossibility, conflict preemption due to impeding a federal objective, and an impermissible state tax of a federal activity. 2.1 Physical Impossibility When it is a physical impossibility for a person to comply with both a federal and a state law, the state law is deemed preempted.58 Examples include when a maple syrup company could not comply with the labeling requirements of both federal law and Wisconsin law,59 and when a federal law prohibited attachment of railroad retirement income which conflicted with state community properly law that would have divided the income in a divorce case.60 TDI’s proposed rule at §19.4014(5) prohibits “provid[ing] advice regarding substantive benefits or comparative benefits of different health benefit plans.” However, 45 CFR 155.210(e)(3) requires Navigators to “[f]acilitate selection of a QHP.”

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Id. Patient Advocates of Tex. V. Tex. Workers Comp. Comm’n, 80 S.W.3d 66 (Tex. App. – Austin 2002, pet. granted); Board of Ins. V. Deffebach, 631 S.W.2d 794 (Tex. App. – Austin 1982). 57 Gade v. National Solid Waste Management Association, 505 U.S> 88, 108 (1992) quoting Gibbons v. Ogden, 22 U.S. (9 Wheat) 1.211 (1824). 58 Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143 (1963). 59 McDermott v. Wisconsin, 228 U.S. 115 (1913). 60 Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979).
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Where a regulation contains no statutory or regulatory definition of a term, courts will look to the term’s common usage and its plain and ordinary meaning unless the statute or regulation clearly indicates the drafter’s intent to use the language in some other sense.61 Merriam Webster’s defines “advice” as an opinion or suggestion about what someone should do. Facilitate is defined as “to make something easier; to help cause something.” The proposed rule puts Navigators in the difficult position of needing to make selection of a health plan easier for the consumer by explaining the benefits of a health plan without crossing the murky line TDI has imposed. In many conflict preemption cases, it is often difficult to determine whether there is a conflict between state and federal law. The case often turns on the “mutually exclusive” element. The question of “mutual exclusivity is whether the federal regulation is seen as an “exclusive standard” or whether the federal regulation is viewed as setting a “minimum standard.” This is a question of Congressional intent.62 Should TDI adopt the proposed rule, it should explain in its reasoned justification in the final order why this extra regulation beyond the federal regulations is necessary, how it does not conflict with federal law, and how a Navigator can comply with both. Such an explanation will not only help those regulated to know how TDI plans to separate the two concepts during enforcement, but help a court decide the question of “mutual exclusivity.” 2.2 Impedes achievement of a federal objective A state law will be deemed preempted if it “stands as an obstacle to the accomplishment and execution of the full purposes or objectives of Congress.”63 Like preemption for a physical impossibility, there is no bright line for impeding the achievement of a federal objective. Often preemption determinations are based on the record and context of the particular case.64 Nevertheless, the effective date of March 1, 2013, is particularly an undue burden for Navigators. March 31st is the deadline by which people must comply with the individual mandate. Given the human proclivity to wait until the last minute, Navigators will be sidelined with strenuous requirements for compliance, including 40 hours or one work week of additional training, at exactly the same time they will need to be assisting consumers enroll for insurance. Should TDI adopt the proposed rule, it should explain in its reasoned justification in the final order why the effective date cannot be postponed until after the deadline to avoid the tax penalty under the individual mandate has passed.
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State v. Kost, 785 S.W.2d 936 (Tex. App. San Antonio 1990), petition for discretionary review refused, (May 23, 1990). 62 Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963). 63 Hines v. Davidowitz, 312 U.S. 52, 67 (1941). 64 Chimerinsky, Erwin, Constitutional Law: Principles and Policies at 414 (3rd ed. 2006)(discussing Pacific Gas & Electric v. State Energy Resources Conservation & Development Commission, 461 U.S. 190 (1983)).
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2.3 Impermissible state tax on federal activities Imposition of a fee may impose an impermissible state tax on federal activities. In McCulloch v. Maryland,65 the state of Maryland imposed a state tax on the Bank of the United States. Explaining that “the power to tax involves the power to destroy,66 the Supreme Court held that a state may not tax the Bank because such exactions could greatly impede the operation of a federal program and potentially even tax it out of existence. Additionally, a state tax on a federal initiative taxes those in other states who are not represented in the state imposing the tax.67 Not all state taxes on federal activities are impermissible. The cases often turn on the degree of independence from the federal government or whether the entity is sufficiently part of it so as to be protected from state and local taxation.68 Courts apply the “legal incidence” test. “If the tax will be directly borne by the federal government, it is unconstitutional as violating the Supremacy Clause of Article VI unless Congress expressly allows the tax.”69 However, a tax may be permissible if it is borne by a private actor, even if the ultimate effect increases costs for the federal government. Navigators, as defined under 42 U.S.C. §18031, are federal grant recipients. Their operation money represents federal tax dollars. TDI’s proposed rule imposes a large registration fee. Center for Public Policy Priorities projects that the actual cost of compliance for a Navigator entity in the first year to range between $963-$1,457 with additional costs per individual employed which range between $323-$976 per person. In other words, a federal grant recipient with 30 Navigators on staff would incur costs of up to $31,000 a year, enough that the recipient entity may not be able to hire as many employees as they stated in their initial grant application. It is unclear whether TDI’s fee in the proposed rule is constitutional. This particular case can be distinguished from the private contractor cases in at least three ways. First, TDI’s proposed rule is not a tax generally applicable to all, but a specific fee aimed at only Navigator entities. Second, federal grant recipients vary wildly. Recipients include private nonprofits; Councils of Government (COGs); trade, industry and professional associations; commercial fishing, ranching and farming organizations; chambers of commerce; unions; small business; licensed agents and brokers; and other public or private entities or individuals, including Indian tribes and State or local human service agencies that meet certain standards thus complicating each entity’s degree of separation from the Federal Government.
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McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819). Id at 431. 67 See also The Dormant Commerce Clause Doctrine. 68 United States v. New Mexico, 455 U.S. 720 (1982)(court allowed state tax on federal contractors even though they had authority to draw funds directly from federal government); Washington v. United States, 460 U.S. 536 (1983)(court upheld state tax on construction materials ultimately borne by the federal government when it purposed construction work from a contractor.) 69 United States v. State Tax Commission of Mississippi, 421 U.S. 599, 608 (1975).
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Lastly, Navigators receive grants rather than performance contracts. Though subtle, this is particularly important because grants were applied for with assurances that a certain number of employees could be employed for a specific amount. The total cost of compliance with the proposed rule could very well affect the overall number of employees the entity can employ, which could jeopardize the entity’s ability to carry out the duties it has agreed to and put the entity in default of the grant. Such a scenario raises a Due Process issue between the Department and the recipient entity. One potential remedy to such a scenario is for TDI to see affirmation from HHS that HHS will not rescind a grant to a recipient due to the costs of compliance with the proposed rule. Pragmatically, if TDI limits the fee and the cost to the entity of compliance, then the chance anyone will be interested enough to challenge the proposed rule’s provision is greatly reduced. Regardless, the reasoned justification for the rule should fully account for all costs and provide an explanation. Lastly, the proposed rule should not waste the taxpayer dollars of this state and citizens of other states by reinventing the wheel. TDI should use existing state resources for training and examination that are already in existence at the Health and Human Service Commission instead of contracting with a private outside entity. 2.4 Dormant Commerce Clause Doctrine In cases where no preemption is found, a state or local law may still be challenged if it excessively burdens commerce among the states. Under modern Dormant Commerce Clause jurisprudence, the Court has articulated a balancing test where the burden on interstate commerce is compared to the interest the state is trying to achieve.70 In other words, do the benefits of the state law outweigh its burdens on interstate commerce. Under such a test, courts have enormous discretion. The health insurance industry is a substantial part of the U.S. economy. Representing over 17% of the GDP,71 and with that percentage continuing to rise,72 the provision of health care has an enormous impact on interstate commerce. In weighing the burdens on interstate commerce against the benefits of a law, a court may consider whether the state could achieve the benefits in a manner that places a lesser burden on interstate commerce.73 The lower the fee, the tighter the definition and application, and the less restrictive the impediments that exist in the rule, then the less likely there is to be a Dormant Commerce Clause problem.

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See South Carolina State Highway Department v. Barnwell Bros., 303 U.S. 177 (1938); Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945). 71 http://www.commonwealthfund.org/Newsletters/Washington-Health-Policy-inReview/2010/Feb/February-8-2010/National-Health-Expenditures-Now-Grab-173-Percent-of-GDP-StudyProjects.aspx 72 http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/99xx/doc9925/12-18-healthoptions.pdf 73 Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970); Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 473 (1981).
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Conclusion Texas Impact appreciates the opportunity to submit formal comments. Since before SB 1795 became law, Texas Impact has supported and been working to enact consumer protections for those seeking enrollment assistance from Navigators. Consumer protections are important for consumer confidence, which is important for the success of the ACA. To that end, Texas Impact submits these comments with the hope that a consumer protection rule becomes, and remains, effective. Respectfully submitted:

___________________________________ Joshua Houston, General Counsel Texas Impact Bar No. 24064716 200 East 30th Street Austin, Texas 78705 (512) 472-3903 josh@texasimpact.org

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