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Judge Bates said that the final rule issued by Mr. Trump and Labor Secretary Alexander Acosta “creates absurd results under the Affordable Care Act.” For example, he said, two business owners who have no employees would be treated as both employers and employees.

Likewise, he said, a group of 51 individuals, none of whom employ anyone, would be treated as 52 employers (counting the association as an employer) and 51 employees and would be free from many requirements of the Affordable Care Act that apply to health insurance in the individual and small-group markets.

The Trump administration’s attempt to squeeze self-employed individuals into the definition of employer is “a magic trick,” and the rationale offered by the Labor Department is a sleight of hand, Judge Bates said.

Moreover, he said, in issuing its rule for small business health plans, the Trump administration ignored the language and purpose of both the Affordable Care Act and the Employee Retirement Income Security Act, known as Erisa.

The final rule, he said, illegally “expands the definition of ‘employers’ to include groups without any real commonality of interest and to bring working owners without employees within Erisa’s scope.”

“Because the final rule stretches the definitions of ‘employer’ beyond what the statute can bear, the final rule is unlawful” under the Administrative Procedure Act, which sets the standards for federal rule-making, the judge said.

Republicans in Congress have been trying for two decades to promote association health plans through legislation. Using his regulatory authority, Mr. Trump tried to do what Congress could not accomplish.