Full Breakdown
Department of Labor Case on Limited-Partnership Health Plans Faces Possible Settlement
By Drooid · · How we work
The Lawsuit and Potential Settlement
Data Marketing Partnership sued the U.S. Department of Labor in 2019, seeking official recognition as an employer so its limited-partner members could purchase a type of job-based health insurance that is exempt from many state rules and ACA benefit requirements. Court filings indicate that the parties are negotiating a settlement, though the terms remain undisclosed. A settlement could expand the availability of these “limited-partnership” plans, which are marketed to consumers who download an app that tracks their internet searches in exchange for the ability to join the partnership and obtain health coverage.
Legal Background and Recent Developments
The dispute centers on the 1974 Employee Retirement Income Security Act (ERISA), which allows large self-insured employers to offer benefits without complying with state insurance regulations. In early 2020 the Department of Labor issued an advisory opinion that individuals who merely download data-capture software are not “employees or bona-fide partners.” A Texas district court rejected that view, calling the opinion “arbitrary and capricious.” The Fifth Circuit largely upheld the lower-court ruling but sent the case back to consider whether a downloader could be a “working owner” or “bona-fide partner.”
State regulators have acted against similar plans: Maryland fined The Vitamin Patch in 2024; Washington ordered a stop to such offerings in 2021 and levied a $25,000 fine; Maine and Connecticut issued consumer warnings in 2024. Attorneys general from seven right-leaning states originally urged the Labor Department to recognize limited partners as employees, arguing the models could serve high-income consumers who lack ACA subsidies.
Official Positions and Responses
Katie Keith, director of the Center for Health Policy and the Law at Georgetown University Law Center, warned that a settlement could “be an even bigger expansion” of plans that bypass ACA consumer protections. Ellen Montz, a former ACA implementation official, argued the products exist because they are not bound by ACA rules and can attract healthy risk pools. Representative Bobby Scott (D-Va.), ranking member of the House Education and Workforce Committee, warned the department against expanding “questionable employment relationships” that lead to “junk coverage.”
Criticism and Opposition
State insurance commissioners and patient-advocacy groups contend that limited-partnership plans lack comprehensive coverage and could leave enrollees with large unpaid medical bills. Nineteen advocacy groups wrote to the Labor Department on Aug. Critics also argue that these plans may draw younger, healthier individuals away from ACA markets, potentially driving up premiums for remaining, higher-risk enrollees.