Vol. 24 Annals of Health Law 387
for state partnership Marketplaces and maintains authority over the core
functions of the Marketplaces, including eligibility and enrollment responsibilities, it is unlikely that state involvement would transform actions taken
by partnership Marketplaces into actions taken “under color of state law.”
Even in the state-based Marketplaces, potential plaintiffs may face difficulty characterizing the actions of the Marketplaces as clearly “state” or
“federal.” This is because even within the state-based Marketplaces federal
agencies play a significant role. First, in order to verify an individual’s immigration status, social security number, and residency, Marketplaces must
seek verification from various federal agencies, including HHS, the Social
Security Administration, and the Department of Homeland Security. 372 If an
individual seeks to challenge the verification procedures or the information
provided by the federal agency, this may be considered federal action, rather than action “under color of state law,” even if a state-official requests
Second, states have the option to utilize the HHS federal appeals entity in
several instances. Appeals to the HHS appeals entity are available after exhaustion of a state-based appeals system. 373 Alternatively, if a state has not
established an appeals system, the appeal may proceed directly to the HHS
appeals entity. 374 State-based Marketplaces also have the option to delegate
a subset of appeals—those seeking exemptions from the penalty for not
having insurance—to the HHS appeals entity. 375 This is a novel structure
where the federal government has delegated authority to the states, only to
allow the states to re-delegate back to the federal agency. But this structure
will make it difficult to assess who is accountable when individuals do not
receive notice or a response to an appeal. Imagine an individual who requests an appeal in a state where either the state has failed to establish an
appeals process or the appeal has been delegated to HHS. If the individual
never receives acknowledgement of the appeal request, the individual will
not know whether the state failed to send the information to HHS, or
whether HHS received the information but failed to process it. Individuals
would need to use different causes of action, likely § 1983 and an APA
claim, to review HHS’ inaction in order to name both defendants and bring
both parties into the suit.
Belknap Hous. Auth., 719 F.2d 979, 982 (9th Cir. 1983) (holding that housing authority created by Indian tribal law pursuant to federal statute did not act under color of state law); but
see Tongol v. Usery, 601 F.2d 1091, 1097 (9th Cir. 1979) (“[T]he actions of state agencies
administering federally-funded programs have been held to be actions undertaken under color of state law for the purposes of section 1983.”) (citing Green v. Dumke, 480 F.2d 624,
372. See 45 C.F.R. § 155.315(c) (2014).
373. See 45 C.F.R. § 155.505(c)(2)(i) (2014).
374. See 45 C.F.R. § 155.505(c)(2)(ii) (2014).
375. See 45 C.F.R. § 155.625(b); 45 C.F.R. § 155.505(c)(2)(iii) (2014).