H-1B Uncertainty, AI & FISA Gaps, and AI Medical Inflation

From immigration to AI policy, the federal government is asserting executive power in areas where legal authority is contested and political risk is present -- and large enterprises are caught in the middle.

In this edition:

Workforce: H-1B $100,000 Fee Found Unconstitutional But Decision Temporarily Paused
AI & Tech: Anthropic Shutdown, Congressional AI Fragmentation, and FISA Lapse
AI & Health: AI Is Driving a 9% Employer Medical Cost Increase — And the 2027 Budget Window Is Already Closing

Workforce: H-1B $100,000 Fee in Legal Limbo as Courts Battle Over Executive Tax Authority

WHAT HAPPENED

On June 8, U.S. District Judge Leo Sorokin in Boston ruled the Trump administration's $100,000 supplemental fee on new H-1B hires unconstitutional in a ruling brought by 20 Democratic state attorneys general. Sorokin's decision turned on a single constitutional question: whether the fee was a regulatory charge — permissible under executive authority — or a tax, which the Constitution reserves exclusively to Congress. He found it was a tax. The ruling applied to all new H-1B hires requiring consular processing outside the U.S., covering the full universe of foreign national new hires who must obtain visa stamps abroad before entering. The administration appealed immediately and on June 12 asked Sorokin to stay his own ruling pending First Circuit review. He agreed, which means the $100,000 fee is back in effect while the appellate process plays out. DOJ attorneys argued the administration is likely to prevail on the merits, framing the fee as a justified exercise of foreign commerce and immigration powers, not a tax. Parallel legal challenges remain active in the Northern District of California and the D.C. Circuit, where plaintiffs have already notified judges of Sorokin's underlying ruling, citing it as strengthening their cases.

BUSINESS RISK

The $100,000 H-1B fee is still in effect and hiring decisions must continue to reflect that reality, including petitions filed during the June 8 window expecting a waiver. Any new hire requiring consular processing must also assume the fee applies until the First Circuit issues a dispositive ruling, which is months away. That uncertainty has already reshaped talent strategy with H-1B utilization dropping sharply after imposition of the fee. Relatedly, companies that pivoted to Optional Practical Training (OPT) extensions, accelerated green card sponsorships, or domestic talent pipeline expansions cannot easily reverse course mid-litigation — nor should they, as those diversification moves reduce long-term visa dependency risk regardless of how the courts rule. Large employers with the resources to absorb the fee and accelerate green card sponsorship may actually gain a competitive advantage in foreign national talent markets where smaller competitors cannot keep pace. At the same time, companies with significant foreign national populations should monitor the ICE voter file development, as naturalized citizens and permanent residents may face heightened anxiety irrespective of their compliance status, making proactive internal communication a business continuity issue, not just an HR nicety.

DO THIS WEEK

For Government Affairs Teams

→ Consider a congressional response. Hill allies of the technology and higher education sectors may move to legislatively repeal or cap the fee if courts ultimately uphold it — companies with active GR presences should be tracking markup activity on any immigration or appropriations vehicles where this could attach

→ Flag administration signaling on fee scope expansion. The DOJ's foreign commerce framing in the stay briefing is broader than H-1B alone and could presage similar fee structures on other visa categories; GR teams should flag this in their agency monitoring.

For Legal & Risk Teams

→ Review all recent petitions. Audit all H-1B petitions filed or in process since June 8 for fee payment status; do not assume the Sorokin ruling provides relief since the stay reinstates the $100,000 requirement pending appeal.

→ Communicate updates with HR. Brief talent acquisition leadership on the First Circuit timeline and instruct hiring managers to plan for the fee remaining in effect through at least Q4 2026.

→ Assess administrative compliance. Ensure I-9 compliance documentation is audit-ready across all facilities; the ICE voter file development signals that enforcement cross-referencing is expanding beyond traditional channels.

→ Consult with legal counsel. Engage immigration counsel to model alternative visa pathways — L-1, O-1, TN, and green card sponsorship acceleration — for critical foreign national hires who would otherwise require H-1B consular processing.

WHAT TO WATCH NEXT

First Circuit scheduling of the emergency stay motion — oral argument could occur within weeks; outcome determines whether the $100,000 fee survives near-term
Northern District of California and D.C. Circuit are hearing cases challenging the $100k fee policy, so be on the look out for decisions from these courts. Plaintiffs notified judges in both cases of Sorokin’s order, saying it strengthened their challenges to the fee.

AI & Tech: Anthropic Shutdown, Congressional Fragmentation, and FISA Lapse Create Compounded AI Security Risk

WHAT HAPPENED

On June 12, Commerce Secretary Lutnick notified Anthropic that its Fable 5 and Mythos 5 models were subject to export controls barring access by any foreign national, which was triggered by a third-party report that Mythos 5 had been successfully jailbroken. In response, Anthropic shut both models down entirely, citing the impossibility of blocking foreign nationals without cutting off a substantial portion of its own workforce and customer base. At the same time as the administration invoked national security to justify the Anthropic shutdown, Congress allowed the primary legal authority the intelligence community uses to detect foreign exploitation of U.S. technology to lapse. Section 702 of FISA expired for the first time after Trump demanded Congress attach his SAVE America voting overhaul to any renewal bill, fracturing Republican support.

BUSINESS RISK & MORE

The export control directive's application to foreign national employees — including Anthropic's own staff — establishes a precedent that enterprises with significant foreign national populations in AI development or integration roles face novel workforce exposure with no notice or appeal mechanism. The FISA 702 lapse compounds operational and security risk: companies relying on government threat intelligence sharing for their cybersecurity posture may see degraded warning signals at precisely the moment AI governance uncertainty is highest, and enterprises with federal contracts tied to intelligence community coordination face immediate uncertainty about data-sharing protocols. On reputation, companies that publicly positioned Anthropic as a safety-first vendor now face awkward optics since the shutdown was triggered by a perceived safety issue, not a policy disagreement. This may make board-level AI governance disclosures and vendor due diligence documentation both more urgent and more scrutinized.

Companies holding federal contracts with intelligence community coordination requirements should engage their contracting officers immediately to document how the 702 gap affects existing data-sharing obligations and whether any interim protocols apply, while simultaneously assessing foreign national exposure across AI development and integration functions — existing export control compliance programs almost certainly did not contemplate this application and legal and HR teams need to be briefed on the new precedent now. On the watch side, GR teams should track FISA 702 reauthorization closely, as any legislative vehicle moving before recess is a potential attachment point and floor scheduling and whip counts will signal whether a standalone or attached renewal is viable this summer. Commerce Department signals on a licensing framework for foreign national AI access are equally critical. Anthropic's characterization of the shutdown as a misunderstanding suggests a negotiated resolution is possible, and whatever framework emerges will likely set the template for future actions across the frontier model landscape.

AI & Health: AI Is Driving a 9% Employer Medical Cost Increase — And the 2027 Budget Window Is Already Closing

WHAT HAPPENED

PwC's Health Research Institute is projecting a 9% increase in medical costs in the employer market for 2027 — the highest projected increase in over a decade — with AI-enabled clinical documentation identified as a significant and underappreciated driver. Providers are deploying AI scribes and diagnostic tools that produce substantially more thorough clinical records than traditional documentation workflows. The more complete records enable providers to code for higher-acuity care, resulting in larger reimbursement claims. The practical effect is that AI implementation in healthcare is accelerating cost growth rather than generating the efficiency savings that health system executives and payers have publicly projected. The individual market is projected to increase 8.5%. For large self-insured employers, a 9% cost increase translates directly to the P&L. Unlike fully insured employers who absorb cost increases through premium adjustments at renewal, self-insured employers carry the claims risk in real time. Q4 2026 is when plan year negotiations and open enrollment communications begin for 2027 — that window is approximately 90 days away.

BUSINESS RISK & MORE

On the workforce side, a 9% increase that translates to higher employee premium contributions, deductible increases, or narrower networks carries real retention and engagement risk in competitive talent markets, making early open enrollment communication planning a business priority, not an HR afterthought. Healthcare AI vendors, including clinical documentation tools, diagnostic platforms, health IT systems, face the sharpest reputational exposure. If CMS or state regulators move to scrutinize AI-enabled upcoding, enforcement risk will flow downstream to enterprise customers through contract liability and procurement scrutiny. GR and legal teams should monitor CMS and state insurance regulator activity on this issue closely, track 2027 renewal proposals beginning in Q3 for early negotiating leverage. Also watch for Congressional hearings on healthcare cost drivers — a 9% projection in a midterm election year is precisely the kind of number that generates Capitol Hill attention given that policymakers are prioritizing affordability as a key electoral issue.

The Trendline

The federal government is asserting executive power in legally contested territory, and large enterprises are absorbing the uncertainty in real time. It's showing up in disrupted hiring pipelines, vendor relationships that can be terminated overnight, and benefit costs that are climbing faster than planning cycles can accommodate. The strategic posture that matters most right now is not reactive compliance but forward positioning. Companies that model scenarios, diversify dependencies, and get ahead of employee communications before each policy shift. litigation milestone or regulatory action hits will be better placed than those waiting for resolution that, in most of these cases, is months away at minimum.

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