386 Holding Health Insurance Marketplaces Accountable 2015
quirements. But broad structural reform litigation, like that in Rosie D., 363
which seeks to reform an agency’s overall functioning, may be unavailable
against the FFMs.
Partnership Marketplaces are a variant on the FFMs. 364 They are creatures of regulation not originally contemplated by the federal statute. 365
HHS chose to structure these Marketplaces as FFMs, which are authorized
by statute, but is permitting states to take on some responsibilities. 366 In the
partnership Marketplaces, HHS runs the core Marketplace functions, including eligibility, enrollment, and financial management. 367 Nevertheless,
states can opt to take on additional responsibilities, such as plan management, consumer assistance, or both. 368 In terms of eligibility denials and appeals procedures, the partnership Marketplaces will likely be treated the
same as FFMs because HHS will retain authority over the core functions.
Additionally, the federal government retains ultimate authority over the
operation of the marketplace. 369 Even if state employees staff the partnership Marketplaces and process applications, courts are unlikely to consider
them to be “acting under color of state law.” For example, state agencies
tasked with making disability determinations for Social Security disability
benefits were “acting under color of federal law” because Social Security
“funds are entirely of federal origin and the state agencies function solely as
agents of the Secretary . . . applying federal law and federal regulations in
accordance with procedures prescribed by her.” 370 Even if the state’s employees had established a practice of violating state law, the Second Circuit
determined that just because state officials are the ones implementing a federal statute, their actions are still pursuant to federal law rather than “under
color of state law.” 371 So long as the federal government provides funding
363. See supra Section II. A (describing the broad reforms secured through Rosie D. v.
Romney, 474 F. Supp. 2d 238, 239-40 ( D. Mass. 2007)).
364. DASH ET AL., supra note 189, at 3.
365. See DEBORAH BACHARACH & PATRICIA BOOZANG, NAT’L ACAD. OF SOC. INS. Report from the Study Panel on Health Insurance Exchanges Created Under the Patient Protection and Affordable Care Act: Federally-Facilitated Exchanges and the Continuum of
State Options 8 (Dec. 2011), available at Grusin Final Edits.docxhttp://www.
367. Id. at 2.
368. Id. at 5-6.
369. DASH ET AL., supra note 189, at 19 n.15.
370. Ellis v. Blum, 643 F.2d 68, 83 n.17 (2d Cir. 1981).
371. Id. (“the authority under which this is done is nonetheless federal. The mere fact
that the federal agents happen to be state officials does not, without more, convert every intentional deviation from the federal path into an action taken under color of state law”); see
also Rosas v. Brock, 826 F.2d 1004, 1007 (11th Cir. 1987) (denying of Disaster Unemployment Assistance by the Florida Department of Labor and Employment Security was not state
action because the denial was based solely on a United States Department of Labor handbook, which was based on a Department of Labor regulation); cf. R.J. Williams Co. v. Fort