Administrative Procedure Act

ALJs in Limbo

A number of cases have been filed recently against the Securities and Exchange Commission (SEC), challenging its use of in-house administrative law judges (ALJs).  As I discussed in my earlier post on this topic, the SEC’s use of ALJs has come under close scrutiny lately because of concerns that, in the wake of a provision in Dodd-Frank expanding ALJs’ power, the SEC has elected to use its in-house procedures more frequently and that this use may have increased the SEC’s ability to prevail in enforcement actions.  Of particular concern is the fact that administrative proceedings lack many of the protections for defendants that litigation in federal courts provide, including: the option of having the case decided by a jury; access to the government’s evidence; and the ability to exclude certain evidence traditionally believed to be unreliable (such as hearsay).    

While a number of these cases have been dismissed, Monday finally garnered a win: Charles Hill succeeded in getting a federal court to issue an injunction that prohibits the SEC from continuing its case against him using its in-house ALJ.  Having been charged with insider trading and brought before an SEC ALJ, Hill filed suit against the SEC in federal court claiming the administrative proceeding was unconstitutional on three different grounds.  Although the court disagreed with two of his arguments, it found in his favor on the third – that the ALJs’ appointment violates the appointments clause because ALJs are “inferior officers.”

ObamaCare’s ‘Essential Health Benefits’: Few States Implement, HHS ‘Is in Clear Violation of the Law’

ObamaCare directs the Secretary of Health and Human Services to define the “essential health benefits” that all consumers in the individual and small-group health insurance markets must purchase. HHS Secretary Kathleen Sebelius kicked that decision to the states, giving them a deadline of this past Friday, September 30. Kaiser Health News reports that all of 16 states submitted an Essential Health Benefits (EHB) benchmark to HHS by the deadline.

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