Indiana’s attorney general and 15 of its school districts are suing the federal government over the 2010 health-care law, saying the measure is forcing schools to choose between absorbing major costs and reducing employees’ hours.
The, filed by individual school systems and state Attorney General , contends that regulations approved by the Internal Revenue Service that clarify how the will be administered will unfairly penalize the state and districts for not offering health insurance to various employees, including support-staff members working in schools.
The state and the districts argue that the IRS policy would force Indiana and its districts to extend health-care coverage beyond what Congress had authorized through the law, which was championed by President Barack Obama and has been one of the most divisive issues in today’s hyper-partisan political landscape.
[The lawsuit] is about the fundamental relationships between the state and federal government."
Indiana was one of many states that did not create a state health-insurance exchange through the law. But the plaintiffs say that the IRS regulation would improperly apply financial penalties to employers, including school districts, in states that don’t have their own exchanges and don’t provide health coverage to employees working at least 30 hours a week.
Districts are cutting hours of employees to avoid the penalties that would come with the law and the IRS regulation, the plaintiffs say.
The IRS regulation “thwarts Indiana’s ability to execute state policy sparing employers from employer mandate penalties,” the lawsuit argues, and it “induces plaintiffs to reduce the hours of certain employees, including part-time and intermittent employees, to avoid having to provide all such employees with minimum essential coverage.”
Cutting Classroom Support
Mr. Zoeller, an elected Republican, said in a statement that the lawsuit “is about the fundamental relationships between the state and federal government.”
The lawsuit, filed in the U.S. District Court for the Southern District of Indiana, in Indianapolis, names the U.S. Treasury Department, of which the IRS is a part, and the U.S. Department of Health and Human Services as defendants.
The suit cites several instances in which the plaintiff districts cut the hours of staff members, including instructional aides and cafeteria workers, to below 30 a week so that the districts would not face the employer mandate.
One such district that has made cuts, according to the plaintiffs, is the Eastern Hancock County school corporation. The district, which has just under 200 employees, has reduced the hours of support workers, including instructional sides, to fewer than 30 a week so that those workers are considered part-timers who would not have to receive health benefits under the law, the lawsuit states.
Jim Hamilton, an Indianapolis lawyer representing the districts, said the support workers affected by the law will vary by district, but they may include employees offering assistance in classrooms, bus drivers, and others. Indiana schools typically do not offer those employees health-insurance coverage because the districts don’t have the money to do so, Mr. Hamilton said in an interview.
The legal action does not focus on teachers, who in Indiana are covered by collective bargaining agreements that obligate districts to provide health coverage, he said.
For Indiana districts, offering support-staff members coverage “has a cost, and that means cuts in other places,” said Mr. Hamilton. Many of the state’s school systems have been squeezed for years, he said.
Encouraging districts to reduce staff members’ hours ultimately hurts “good people who don’t make a lot of money,” the lawyer added.
But state Rep. Ed DeLaney, an Indianapolis Democrat, questioned the motives behind the lawsuit, and said state Republicans’ efforts to derail the law are denying school employees and others vital services.
“This lawsuit confirms the desire of our state’s Republican leadership to deny affordable health-care coverage to hundreds of thousands of Hoosiers and takes that to dangerous new levels,” Mr. DeLaney said.
“This lawsuit deserves to be tossed out of court as quickly as humanly possible,” he added. “Some day, there will need to be an accounting for the willful neglect demonstrated by the leaders of this state’s government toward the basic human need for health care.”
A version of this article appeared in the October 16, 2013 edition of Education Week as Ind. Districts, AG File Suit Over Federal Health-Care Law