Data Marketing Partnership Health Plan Case: Why a Key Employee Status Dispute Could Affect ACA Coverage
A legal dispute between Data Marketing Partnership (DMP) and the U.S. Department of Labor is drawing attention to a basic question with potentially broad consequences for the health insurance market: when can a person legally be considered an employee or bona fide partner and become eligible for an employer-sponsored health plan?
DMP filed the lawsuit in 2019, during Donald Trump’s first administration. Court filings now indicate that the parties may be discussing a settlement, although the terms of any potential agreement have not been made public.
The case centers on a health insurance model in which people join a limited partnership and receive access to an employer-style health plan. A court decision or settlement could influence how widely similar arrangements are used and how much authority states have over them.
The issue is particularly significant as policymakers and health insurance analysts continue to watch changes in ACA marketplace premiums and enrollment.
How Data Marketing Partnership’s Health Insurance Model Works
DMP wants to be officially recognized as an employer so that its limited partners can continue participating in company employee health insurance plans.
The coverage is sometimes described as limited-partnership health coverage.
Consumers who want to obtain insurance offered through DMP and handled by LP Management Services must join the partnership.
One requirement involves downloading an app.
The app tracks a consumer’s internet searches and browsing activity, allowing the company to collect data that it can potentially sell.
That arrangement creates a trade-off for consumers. Some may have concerns about having their internet activity tracked, while others may consider access to health insurance coverage an attractive benefit in exchange for participating.
The central legal question is whether people who join these partnerships can legitimately be treated as employees or bona fide partners rather than simply consumers receiving access to insurance.
Why Employer Health Plans Receive Different Treatment
The dispute involves the Employee Retirement Income Security Act, or ERISA, a federal law enacted in 1974.
ERISA established a framework that allows qualifying employers to provide benefits, including health and retirement plans, without having those self-insured plans subject to the full range of individual state insurance regulations.
Self-insured employer plans can therefore be exempt from many state insurance rules.
The distinction also matters under the Affordable Care Act.
Employer-sponsored self-insured plans are not required to follow every ACA requirement that applies to individual-market insurance. For example, they generally do not have to cover all 10 categories of essential health benefits required in the ACA individual and small-group markets.
That makes the employee-versus-partner question central to DMP’s case.
If limited partners qualify as employees or bona fide partners participating in an employer plan, the coverage can receive treatment that differs significantly from individual-market insurance.
What Happened in Court?
The Department of Labor defended its position during both the Trump and Biden administrations.
In early 2020, the Labor Department issued an advisory opinion addressing DMP’s arrangement.
The department said that simply downloading software capable of capturing data about a person’s internet browsing did not, by itself, make that person an “employee or bona fide partner.”
A federal district court in Texas later described the Labor Department’s advisory opinion as “arbitrary and capricious” and ruled in favor of the data marketer.
The judge had previously issued a ruling declaring the ACA unconstitutional, although the U.S. Supreme Court later rejected that challenge.
The case subsequently went before the U.S. Court of Appeals for the Fifth Circuit.
The appeals court largely upheld the lower court’s decision but instructed the district court to further consider whether people downloading the software qualified as “working owners” or “bona fide partners.”
That question remains at the heart of the dispute.
Why States Are Concerned
State insurance regulators have raised concerns about what could happen if limited-partnership arrangements are treated as employer health plans.
States generally have authority to regulate insurance products sold within their jurisdictions and enforce consumer-protection requirements.
If arrangements receive treatment as exempt employer plans, state regulators could have less authority over them.
Maryland Insurance Commissioner Marie Grant has said the case could affect consumers as well as the ability of states to exercise their regulatory authority.
Other state insurance commissioners have also filed legal arguments in the DOL case, warning about the potential impact on their ability to enforce consumer protections.
Ali Khawar, who previously served as principal deputy assistant secretary of the Labor Department’s Employee Benefits Security Administration during the Biden administration, has argued that the dispute is less about the traditional Republican-Democratic divide and more about state regulatory authority.
States Have Already Taken Action Against Similar Arrangements
Several states have previously taken enforcement action or issued warnings involving limited-partnership health coverage.
In 2024, Maryland fined The Vitamin Patch after an investigation determined that the company was not licensed to sell coverage in the state.
In 2021, Washington ordered another company to stop offering its plans in the state and imposed a $25,000 fine.
Maine and Connecticut also issued consumer warnings in 2024 about similar coverage arrangements.
Connecticut warned that such plans may not provide comprehensive medical coverage and that consumers could potentially face large unpaid medical bills.
Maine’s announcement identified several entities associated with these arrangements, including The Vitamin Patch, Affiliated Workers Alliance, Consumer Data Partners, Employers Business Alliance, Socios Buenos and Strategic Limited Partners.
The state actions illustrate why the DMP case matters beyond the companies directly involved in the lawsuit.
Could the Case Affect ACA Marketplace Premiums?
The legal dispute comes as the ACA individual insurance market faces its own affordability pressures.
According to KFF Health News, premium increases have contributed to millions of people leaving coverage, while insurers have sought double-digit increases for ACA marketplace premiums in the following year.
Health-policy analysts have raised another potential concern: what happens if healthier consumers move from ACA marketplace plans into alternative limited-partnership coverage?
Insurance markets depend in part on the mix of people enrolled in a risk pool.
If relatively healthy consumers leave an ACA marketplace while people with greater health needs remain, the resulting pool could become older or sicker on average.
That could place additional upward pressure on future premiums.
Katie Keith has said the outcome of the DMP case could contribute to further expansion of alternative coverage arrangements. She has also raised concerns that a favorable outcome could encourage what she described as “junk plans” that do not have to meet ACA requirements.
Critics Raise Consumer-Protection Concerns
Some health-policy and insurance-market experts say a favorable legal outcome for DMP could encourage more companies to develop similar arrangements.
Khawar has warned that a broader expansion of the model could produce many entities that functionally resemble unregulated insurance companies.
If those plans remain outside state insurance oversight, consumers could have fewer regulatory options when disputes arise.
Ellen Montz, who worked on ACA implementation during the Biden administration, has said products of this type exist in part because they are not subject to the same ACA consumer-protection rules.
She has also argued that such arrangements can have an economic incentive to attract healthier people.
Grant, Maryland’s insurance commissioner, has similarly warned that broader use of these plans could affect ACA marketplace premiums if healthier consumers leave the marketplace.
Patient Groups Urge the Labor Department to Continue Its Defense
The debate intensified in August 2026 when 19 patient advocacy groups sent a letter to the Department of Labor.
The groups urged the department to continue defending its position in the DMP litigation.
They warned that a settlement recognizing the arrangements as employer-employee relationships could weaken state regulatory authority and potentially affect the stability of health insurance markets.
Some of the organizations had previously filed a legal brief supporting the Labor Department in 2021.
Rep. Bobby Scott (D-Va.), the ranking member of the House Education and Workforce Committee, also warned the Labor Department about the issue days after the groups sent their letter.
Scott raised concerns about what he called “questionable employment relationships” and the potential expansion of insurance associated with them.
He cited reports involving call centers that allegedly provided misleading information to consumers.
According to those allegations, some people may enroll believing they are purchasing comprehensive health insurance when the coverage is actually more limited and depends on establishing an employment relationship.
Supporters Say the Plans Provide Another Choice
Supporters of limited-partnership plans view them differently.
Proponents argue that the arrangements provide consumers with an additional health coverage option, potentially at a lower cost than some ACA marketplace plans.
When the case began, attorneys general from seven right-leaning states urged the Labor Department to support DMP’s request to recognize limited partners as employees.
They argued that the arrangement could provide another option for people whose income is too high to qualify for ACA subsidies.
The state officials also presented the model as a possible interim option while broader changes to the ACA remained unresolved.
They argued that states could retain some regulatory authority and that the Labor Department could establish requirements for self-insured employer plans to encourage financially stable companies to enter the market.
They also argued that concerns about younger and healthier consumers moving away from ACA coverage were already present.
DMP Says Nearly 50,000 Policyholders Could Be Affected
Court filings indicate that DMP has warned it could be forced to end the insurance coverage if it does not receive employer status.
The company says approximately 50,000 policyholders could be affected.
DMP has also argued that offering insurance is an important source of revenue for its partnership model.
According to the company’s attorneys, insurance coverage is a “significant attractor” that encourages people to join the partnership and provide their electronic data.
DMP’s attorneys told KFF Health News that they could not comment on the matter because the litigation remains active.
The White House and the Centers for Medicare & Medicaid Services also did not respond to KFF’s questions about whether the Labor Department had changed its position or how the administration views limited-partnership plans.
What Happens Next?
The potential settlement is now one of the key developments to watch in the case.
Court papers indicate that settlement discussions may be underway, but the terms of any potential deal have not been publicly disclosed.
It is also not yet clear whether the Department of Labor has changed its longstanding position on the employee and bona fide partner question.
Any final settlement or court outcome could affect more than DMP.
It could influence how limited-partnership health plans are structured, how states regulate similar arrangements and whether alternative coverage becomes more widely available outside the ACA marketplace.
The case also highlights a broader question for the U.S. health insurance system: where the line should be drawn between an employer-sponsored benefit and an insurance product sold through an alternative business structure.
