Case: City of Columbus v. Kennedy
1:25-cv-02114 | U.S. District Court for the District of Maryland
Filed Date: July 1, 2025
Case Ongoing
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Case Summary
This case challenged a rule published by the Centers for Medicare & Medicaid Services (CMS) that allegedly endangered 24 million Americans' health coverage under the Affordable Care Act (ACA). The rule, entitled "Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability," allegedly added several roadblocks to the acquisition of ACA health insurance; these included new fees, reductions in the enrollment period, and even a revocation of the ACA's central promise that any American can purchase health insurance. CMS, a sub-agency of the U.S. Department of Health and Human Services (HHS), proposed this rule in March 2025, soon after the Trump Administration took office.
Plaintiffs, a coalition including the cities of Columbus and Chicago, filed this lawsuit on July 1, 2025, in the U.S. District Court for the District of Maryland. The lawsuit named HHS, its Secretary, CMS, and its Administrator as defendants. Plaintiffs were represented by Democracy Forward. Plaintiffs alleged that defendants' actions violated the Administrative Procedure Act (APA). Plaintiffs sought a declaration that the CMS rule was unlawful under the APA, a permanent injunction against the rule's enforcement; and attorneys' fees. The case was assigned to Judge Brendan Abell Hurson.
On July 2, 2025, plaintiffs filed a motion requesting a stay, or alternatively a preliminary injunction, of the new CMS rule. The municipal plaintiffs argued that as healthcare providers of last resort for those who lose insurance under the new rule, the rule would bestow a heavy financial burden on them. The organizational plaintiffs argued that the rule would make it harder for them to pay their employees or to receive adequate compensation for healthcare services rendered.
The court held a hearing on the requested preliminary injunction on August 14, 2025. On August 22, 2025, it issued an order granting in part and denying in part plaintiffs' motion and entering a stay enjoining certain provisions of the CMS rule that were to take effect on August 25. 2025 WL 2426382. It reasoned that the plaintiffs had shown a likelihood of success on the merits of their challenges to seven provisions of the rule, but that they failed to show likelihood of success on the merits sufficient to warrant preliminary relief as to their remaining challenges to two other provisions of the rule. As to the seven, the plaintiffs had also shown that they faced irreparable harm – economic harms that could not adequately be remedied at the conclusion of litigation – and that the balance of the equities and the public interest weighed in favor of a stay.
First, the court found that Main Street Alliance and the city plaintiffs had standing based on the increased premiums and uncompensated care costs that would be "predictable results" of the challenged provisions. Next, it addressed the plaintiffs’ likelihood of success on the merits of their claims across three categories: (1) challenges to provisions that eroded the value of coverage, including a provision imposing a $5 monthly surcharge to reconfirm eligibility, a provision revising the premium adjustment methodology, and a provision revising the actuarial value policy; (2) challenges to provisions that imposed barriers on enrollment, including a provision requiring enrollees to pay past-due premiums before receiving new coverage and a provision adding verification requirements for some enrollments; and (3) challenges to provisions that limited the availability of subsidized coverage, including a provision re-instituting a policy regarding failure-to-reconcile tax data and two provisions requiring heightened income verification under certain circumstances.
As to the first category, the court held that CMS lacked authority to impose the challenged fees, which were untethered to the statutory formula, and that plaintiffs were likely to succeed on their claim that the agency acted in an arbitrary and capricious manner by revising the actuarial value policy because it provided an insufficient and conclusory rationale for the changes. However, the court concluded that plaintiffs were unlikely to succeed on their claim that the provision revising premium adjustment methodology was arbitrary and capricious because the agency provided the necessary and reasoned explanation for the changes. As to the second category, the court held that plaintiffs were likely to succeed on their challenge to past-due payment requirements, because the agency was not authorized to create a new exception to the ACA’s categorical guaranteed-issue rule, and to the verification requirements provision because defendants’ rationale for imposing the requirements was not indicative of reasoned decision-making. As to the third category, the court first held that plain text of the ACA contradicted the agency’s failure-to-reconcile provision, and therefore that plaintiffs were likely to succeed on their claim that the provision was imposed contrary to law.
Next, considering the agency’s decision to rescind an automatic 60-day extension to reconcile income verification data, the court concluded that the plaintiffs had failed to show that the agency had misinterpreted its modification authority. The court did find, however, that the plaintiffs were likely to succeed on the merits of their claim that the agency acted arbitrarily by instituting additional verification requirements for income below the federal poverty line and by rescinding a regulation requiring acceptance of self-attestation of projected household income because those changes were made without sufficient data justifying the need to impose them and in light of the agency’s circular reasoning and conclusory statements offered in support of the changes.
Ultimately, the court held that the appropriate course of action was to temporarily stay the seven challenged provisions as to which it found likelihood of success on the merits, postponing the effective date until final resolution of the lawsuit. It reasoned that the U.S. Supreme Court’s recent decision in CASA did not preclude such relief, because that decision did not limit a court’s ability to preliminarily set aside new agency rules under the APA. On August 25, 2025, the plaintiffs filed an unopposed motion to clarify the scope of the preliminary injunction, which the court granted that same day, amending its August 22 order as clarified to order that the effective dates of the following provisions of the rule were stayed pending resolution of the merits of the case:
- The imposition of a $5 premium penalty on automatic re-enrollees, through the addition of 45 C.F.R. § 155.335(a)(3) and (n) and revisions to 45 C.F.R. § 155.330(j);
- The revocation of guaranteed insurance coverage for individuals with past-due premiums, through revisions to 45 C.F.R. § 147.104(i);
- The failure to reconcile policy in 45 C.F.R. § 155.305(f)(4), including the final rule’s amendments to that policy through the addition of 45 C.F.R. § 155.305(f)(4)(iii);
- The imposition of eligibility verification for the special enrollment period, through the revisions to 45 C.F.R. § 155.420(g);
- The imposition of a requirement that Exchanges verify household income inconsistencies when a tax filer’s attested projected annual household income differs from “trusted data sources,” through revisions to 45 C.F.R. § 155.320(c)(3)(iii) and the addition of 45 C.F.R. § 155.320(c)(3)(vi)(C)(2);
- The changes to the de minimis ranges for actuarial value calculations, through revisions to 45 C.F.R. §§ 156.140(c), 156.200(b)(3), and 156.400;
- The changes to the policy regarding self-attestation of projected income, through revisions to 45 C.F.R. § 155.320(c)(5).
And, the effective dates of the following provisions were not stayed:
- The change to the measure for calculating the premium adjustment percentage set forth in 90 Fed. Reg. 27,166 through 27,178;
- The elimination of the 60-day extension of time to resolve inconsistencies in household income data, through the removal of 45 C.F.R. § 155.315(f)(7) and revisions to 45 C.F.R. § 155.320(c)(5).
Three days after the court issued its order granting in part and denying in part plaintiffs' motion, defendants filed an appeal to this order with the United States Court of Appeals for the Fourth Circuit. Defendants then proceeded to file a motion for stay, pending their appeal, of paragraph 2(f) of the court’s ordering, granting a stay as to “changes to the de minimis ranges for actuarial value calculations, through revisions to 45 C.F.R. §§ 156.140(c), 156.200(b)(3), and 156.400.” On September 18, 2025, the appeals court denied defendants' motion for a stay pending appeal, which the district court additionally ruled on and similarly denied on September 29, 2025.
On October 14, 2025, the district court granted a motion filed by defendants seeking an extension to file their answer to the complaint due to the government shutdown. The court then granted the parties' joint motion seeking a scheduling order setting a schedule for summary judgment briefing on the matter. The schedule begins with defendants filing their administrative record by December 19, 2025, and ends with defendants' response to plaintiffs' motion for summary judgment being due by April 14, 2026. The court further ordered defendants file their answer to plaintiffs' complaint 30 days after filing their summary judgment reply.
In the United States Court of Appeals for the Fourth Circuit, parties' briefs were due by October 27, 2025, and reply briefs were due by November 24, 2025. However, upon defendants filing a motion seeking a stay of the briefing schedule due to the government shutdown, the court suspended briefing pending further order of the court. On November 24, 2025, the court issued a new briefing schedule, beginning with the joint appendix being due on January 5, 2026.
This case is ongoing.
Summary Authors
Matt Petrillo (7/21/2025)
Maddy Ligon (12/2/2025)
People
For PACER's information on parties and their attorneys, see: https://www.courtlistener.com/docket/70684987/parties/city-of-columbus-v-kennedy/
Coogl, Christine L (Maryland)
Attorney, Kelly O. (Maryland)
Baldi, Maxwell A. (Maryland)
Beer, Jocelyn S. (Maryland)
Bradley, Jill (Maryland)
Documents in the Clearinghouse
Resources
Docket
See docket on RECAP: https://www.courtlistener.com/docket/70684987/city-of-columbus-v-kennedy/
Last updated April 20, 2026, 3:46 a.m.
Case Details
State / Territory:
Case Type(s):
Healthcare Access and Reproductive Issues
Public Benefits/Government Services
Special Collection(s):
Trump Administration 2.0: Challenges to the Government
Key Dates
Filing Date: July 1, 2025
Case Ongoing: Yes
Plaintiffs
Plaintiff Description:
Several municipalities and healthcare organizations.
Attorney Organizations:
Public Interest Lawyer: Yes
Filed Pro Se: No
Class Action Sought: No
Class Action Outcome: Not sought
Defendants
Federal
Centers for Medicare and Medicaid Services
U.S. Department of Health and Human Services
Defendant Type(s):
Facility Type(s):
Case Details
Causes of Action:
Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.
Ex Parte Young (Federal) or Bivens
Ex parte Young (federal or state officials)
Other Dockets:
District of Maryland 1:25-cv-02114
U.S. Court of Appeals for the Fourth Circuit 25-02012
Available Documents:
Injunctive (or Injunctive-like) Relief
Outcome
Prevailing Party: None Yet / None
Relief Sought:
Relief Granted:
Preliminary injunction / Temp. restraining order
Source of Relief:
Content of Injunction:
Issues
General/Misc.:
Case Summary of City of Columbus v. Kennedy, Civil Rights Litig. Clearinghouse, http://www.dev.clearinghouse.net/case/46755/ (last updated 12/2/2025).