Health Agents for America, representing more than 1,000 independent agents, filed a lawsuit Wednesday in a Maryland district court against the Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS).
The suit challenges a decision to lock out new agents and brokers from participating in open enrollment for 2027 Affordable Care Act plans.
Broker freeze tied to September interim rule
In September, the HHS and CMS released an interim final rule preventing agents and brokers without a previous registration in the exchanges from signing up to help consumers in this year’s open enrollment period. The moratorium is set to run until February, which follows the November 1 open enrollment start date in most states.
By preventing new participants from assisting consumers during the enrollment window, the rule creates a gap in the marketplace.
Regulators said the measure aims to curb fraud. Data cited by the agencies indicate that most improper enrollments, such as enrolling consumers without consent or switching plans without approval, are linked to newly registered agents and brokers. The pause is intended to give CMS time to implement stronger safeguards, including enhanced identity verification and monitoring.
Legal challenge asserts procedural violations
The administration argued that rapid implementation was necessary to stop a rush of registrations before the rule took effect. The complaint, however, alleges that the freeze violates the Administrative Procedure Act because it took effect immediately without an opportunity for public comment.
According to the filing, the freeze may cause significant financial harm to broker firms that have invested heavily in recruiting and training new workers for the 2027 enrollment cycle. If those workers cannot participate, firms may be forced to lay them off and absorb the associated costs.
The suit also contends that limiting agent and broker capacity will make it harder for consumers to understand their options and manage enrollment, potentially reducing the quality of assistance available during the important open enrollment period.
Industry groups push back
The National Association of Insurance Commissioners, representing state regulators, sent a letter to the director of CMS’s Center for Consumer Information and Insurance Oversight. The letter warned that staffing shortages caused by the freeze could make it difficult for consumers to secure coverage.
The complaint asks the court to stop the freeze from going into effect before open enrollment begins, which is Nov. 1 in most states.
