Wednesday, January 28, 2015
Ohio AG Mike DeWine this week sued the federal government for levying an assessment against the state under the ACA's Transitional Reinsurance Program. DeWine argues that the federal assessment on the state violates the text of the ACA (which, he says, doesn't authorize the government to levy this assessment on the states), the Tenth Amendment, the anti-commandeering principle, and intergovernmental tax immunity.
Under the Transitional Reinsurance Program, the federal government collects a contribution from health insurers and self-insurers (or their administrators) in order to off-set the costs of high-risk individuals in the individual health insurance market and thus to stabilize premiums in the individual market. Part of the proceeds also goes to the general fund of the Treasury. The contributions are in effect from 2014 through 2016.
AG DeWine claims that the federal government wrongfully assessed his state $5.3 million. (Ohio self-insures its employees.) He claims that the ACA didn't authorize this, and that it violates various federalism principles in the Constitution:
71. Had Congress applied this tax directly against State and local governments, which it did not, such a tax would violate the "residuary and inviolable sovereignty" that the United States Constitution leaves to the several States in our federalism system . . . .
72. Especially here, where the tax is not imposed as a "user fee" on States or local governments and where the tax is specifically designed to raise more revenue for the federal government than will be allocated to the reinsurance program (with certain amounts of the tax revenues indeed designed as monies that "may not be used for the program established under this section," 42 U.S.C. Sec 18061(b)(4)), such a direct tax against the State and its instrumentalities would breach our federal Constitution's vertical separation of powers.
73. The federal government lacks authority under the United States Constitution to levy such broad-based, revenue-generating taxes against the States and their instrumentalities.
Monday, December 2, 2013
The Supreme Court today declined to review a Fourth Circuit ruling upholding the Affordable Care Act's employer mandate. Our post on the Fourth Circuit ruling is here.
The order rejecting cert. means that the Fourth Circuit ruling stays on the books and that the Supreme Court won't take on the employer mandate (now, and likely ever). The Obama administration delayed implementation of the mandate (sparking bills in Congress and lawsuits to override the delay); it's now scheduled to go into effect in 2015 (and not January 1, 2014, as the law seems to require).
Recall that the Fourth Circuit ruled in Liberty University v. Lew that Congress had authority under both the Commerce Clause and the Taxing Clause to impose a mandate on employers to provide health insurance to employees. The case was notable, because it held that Congress had authority under the Commerce Clause to impose the employer mandate, even though five justices on the Supreme Court ruled in NFIB v. Sebelius that Congress lacked authority under the Commerce Clause to impose the individual mandate. The Fourth Circuit said that in enacting the employer mandate Congress wasn't creating commerce to regulate it (as Chief Justice Roberts wrote in NFIB about the individual mandate). Instead, the Fourth Circuit said that the employer mandate was just another federal regulation on the terms and conditions of employment between an employee and an employer, who is already in interstate commerce.
Sunday, November 17, 2013
Neil H. Buchanan (GW) argues at the Jurist.org that the President should just pay the nation's bills if Congress fails to increase the debt ceiling.
Buchanan summarizes an argument that he and Michael Dorf made over three articles last year in the Columbia Law Review--one, two, and three--that the President should do the least constitutional damage if ever faced with a trilemma involving taxing, spending, and a debt ceiling that don't add up.
Buchanan and Dorf argue that Congress would create this trilemma if it failed to increase the debt limit: Congress would have authorized a particular level of taxation; Congress would have authorized a higher level of spending; and Congress would have capped the debt limit at a level lower than authorized spending. All three are congressional acts that the President must enforce, but if the President enforces any two, he necessarily violates the third.
So: what to do?
Buchanan and Dorf argue that the constitution requires the President to take the action (1) that exercises as little legislative power as possible and (2) in a way that allows Congress to later enact legislation that can undo his actions, if it so desires.
Those two criteria mean that the President should, even must, violate the debt limit. That's because violating the debt limit (but complying with the taxing and spending measures passed by Congress) is the choice that's least legislative in nature, and the one that Congress can later undo (by enacting taxing and spending measures that add up).
Buchanan explains why this solution is novel--but also why it's right:
Bizarrely, the shared assumption among Republicans and Democrats alike has been that the president must simply default on the government's spending obligations, if he is ever faced with a trilemma. . . .
The reason that is so bizarre is that it simply presumes that duly-enacted spending laws can be ignored by the president. They cannot. We are not taking about choosing to increase or decrease future levels of spending, after all. We are, instead, contemplating having the president refuse to honor legal claims for payment from the federal government, choosing not to pay the government's legal obligations, in full, on the date that they are due.
Thursday, August 29, 2013
In a 15 page ruling today, Revenue Ruling 2013-17, the IRS clarified that it will recognize
a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages.
The Department of Treasury also issued a press release.
The Revenue Ruling applies and extends the Supreme Court's decision in United States v. Windsor in late June. Essentially, the IRS ruled that interpreting "husband" and "wife" as gender-neutral terms was consistent with Windsor and a contrary interpretation would "raise serious constitutional questions."
As for domicile, the IRS ruled that the controlling domicile was the place where the marriage occurred. While they are constitutional issues, the IRS also relied upon the practical:
Given our increasingly mobile society, it is important to have a uniform rule of recognition that can be applied with certainty by the Service and taxpayers alike for all Federal tax purposes. Those overriding tax administration policy goals generally apply with equal force in the context of same-sex marriages.
The ruling specifically excludes
individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships.
[image: United States Treasury Building via]
Friday, July 12, 2013
A three-judge panel of the Fourth Circuit upheld the employer mandate in the Affordable Care Act. The ruling in Liberty University v. Lew deals a significant blow to challengers of the Act's requirement that large employers provide affordable health care coverage to full-time employees and dependents or pay a fine. Unless and until it's appealed to the full Fourth Circuit and the Supreme Court--and unless and until one or the other reverses--the ruling upholds the employer mandate.
The ruling is notable, because it says that Congress had authority under the Commerce Clause to enact the employer mandate. (Recall that five Justices on the Supreme Court said last summer in National Federation of Independent Business v. Sebelius that Congress exceeded its authority under the Commerce Clause to enact the individual mandate.) What's the difference? See below.
The case is a hold-over from the Supreme Court's ruling last summer in National Federation of Independent Business v. Sebelius. Recall that the Court in that case held that the Anti-Injunction Act did not bar a the suit challenging the individual mandate, and that the individual mandate was a valid exercise of Congress's taxing power. The Court also remanded Liberty University to the Fourth Circuit for a ruling consistent with NFIB. (The Fourth Circuit previously held that the Anti-Injunction Act deprived it of jurisdiction to rule on the merits and dismissed the case.)
The Fourth Circuit followed NFIB's lead and ruled that the employer mandate (like the individual mandate in NFIB) was not a "tax" for purposes of the Anti-Injunction Act. (The court also ruled that Liberty University had standing to lodge its pre-enforcement challenge of the employer mandate, and that the individual named plaintiffs had standing to challenge the individual mandate.)
On the merits, the court ruled that the employer mandate is a valid exercise of Congress's Commerce Clause authority. (Recall that five members of the Supreme Court in NFIB said that the individual mandate exceeded Congress's Commerce Clause authority, even if it fell within Congress's taxation power.) What's the difference between the employer mandate and the individual mandate? In short, unlike individuals who have not purchased health insurance, employers operate in interstate commerce, and health insurance is part of their employees' compensation package, which itself is regulable under the Commerce Clause. The Fourth Circuit explained:
To begin, we note that unlike the individual mandate . . . the employer mandate does not seek to create commerce in order to regulate it. In contrast to individuals, all employers are, by their very nature, engaged in economic activity. All employers are in the market for labor. And to the extent that the employer mandate compels employers in interstate commerce to do something, it does not compel them to "become active in commerce," [NFIB, emphasis in original]; it merely "regulate[s] existing commercial activity," id., i.e., the compensation of employees . . . .
Further, contrary to Liberty's assertion, the employer mandate does not require employers to "purchase an unwanted product." . . . Although some employers may have to increase employee compensation (by offering new or modified health insurance coverage), employers are free to self-insure, and many do.
(Interestingly, the court dropped a footnote, note 7, that says, "We express no opinion as to whether the limitation on the commerce power announced by five justices in NFIB constitutes a holding of the Court." We covered that topic here.)
Following NFIB, the court also upheld the individual mandate under Congress's taxing power, and applied that ruling to uphold the employer mandate under Congress's taxing power.
The court also rejected the plaintiffs' religion claims--based on the First and Fifth Amendments (equal protection) and the Religious Freedom Restoration Act.
July 12, 2013 in Cases and Case Materials, Commerce Clause, Congressional Authority, Establishment Clause, First Amendment, Jurisdiction of Federal Courts, News, Opinion Analysis, Religion, Taxing Clause | Permalink | Comments (0) | TrackBack (0)
Monday, April 15, 2013
The Roberts Court majority is avoiding taxes: not the income taxes revealed by the returns due today, April 15, but the constitutional scrutiny that taxes deserve.
Law Prof Linda Sugin (pictured left), in her article The Great and Mighty Tax Law: How the Roberts Court Has Reduced Constitutional Scrutiny of Taxes and Tax Expenditures, draft available on ssrn, analyzes two cases that are not typically paired.
First, she considers National Federation of Independent Business v. Sebelius, in which, as she describes it, Justice Roberts' "newly muscular tax law saved Obamacare from near death at the hands of the Commerce Clause."
Second, she examines Arizona Christian Schools v. Winn, in which, as dhe describes it, the majority "adopted a novel judicial approach to targeted tax benefits" and denied standing in an Establishment Clause challenge.
Sugin argues that these two cases, taken together, "challenge the revenue-raising role of the tax law, and give it tremendous potential to overcome constitutional obstacles that legislatures face," including state legislatures. She contends that the cases "introduce confusion into the law of taxation by incentivizing the adoption of more non-revenue policy in the tax law, and blurring the conceptual structure of taxation." She claims that "these decisions undermine the important work on tax reform and fiscal responsibility that other branches of government are doing." Ultimately, she argues that these decisions portend that "policies administered through the tax law" will be deemed constitutional "even where those same policies would be unconstitutional if administered as either direct regulation or appropriated spending."
Worth a read and not only on "tax day."
Monday, November 26, 2012
The Supreme Court today reopened one of the cases challenging the federal Affordable Care Act and sent it back for further proceedings at the Fourth Circuit. The move means that the lower court, and possibly the Supreme Court, will have another crack at certain issues that the Supreme Court dodged this summer in its ruling in NFIB v. Sebelius.
Recall that the Fourth Circuit rejected a challenge to the ACA by several individuals and Liberty University in September 2011, holding that the Anti-Injunction Act barred the claim. The Supreme Court declined to review that case, Liberty University v. Geithner. But today the Court reopened the case, vacated the Fourth Circuit ruling, and sent the case back for further proceedings in light of the Court's ruling in NFIB.
The plaintiffs in the case originally challenged the universal coverage provision (the so-called "individual mandate," requiring individuals to acquire health insurance or to pay a tax penalty) and the employer mandate (requiring employers with more than 50 employees to provide health insurance coverage for their employees), arguing that they exceeded Congress's taxing and commerce powers and violated the Tenth Amendment, Article I, Section 9's prohibition against unapportioned capitation or direct taxes (the Direct Tax Clause), and the Religion Clauses and the Religious Freedom Restoration Act (among others). (As to the Religion Clauses, the plaintiffs argued that the requirements would cause them to support insurance companies that paid for abortions, a practice that they claimed ran against their religions.)
The district court ruled against the plaintiffs on all counts and dismissed the case. The Fourth Circuit dismissed the case under the AIA and didn't reach the merits.
The Supreme Court ruled in NFIB that the AIA did not bar the Court from ruling on the tax question, that Congress validly enacted the universal coverage provision under its Article I, Section 8 power "to lay and collect Taxes," and that it didn't violate the Direct Tax Clause. Thus after NFIB these issues appear to remain open on remand:
- Whether the mandates violate the Religion Clauses or the RFRA;
- Whether the employer mandate violates the taxing authority or the Direct Tax Clause;
- Whether the mandates violate equal protection;
- Whether the mandate violates free speech and associational rights.
As to the Religion Clauses, the district court ruled that the ACA's religious exemptions to universal coverage were permissible accommodations (and thus didn't violate the Establishment Clause) and that the ACA didn't require the plaintiffs to pay for abortions (and thus didn't violate the Free Exercise Clause or the RFRA).
As to the employer mandate: It's hard to see how the Supreme Court's tax analysis of the individual mandate in NFIB wouldn't apply with equal force to the employer mandate.
If the district court was right on the First Amendment and equal protection claims (as it seems), and if the Supreme Court's tax analysis applies with equal force to the employer mandate, this case doesn't seem to have much of a future.
But then again, that's what many of us said about NFIB.
November 26, 2012 in Abortion, Association, Cases and Case Materials, Commerce Clause, Congressional Authority, Equal Protection, Establishment Clause, First Amendment, Free Exercise Clause, Fundamental Rights, Jurisdiction of Federal Courts, News, Religion, Taxing Clause, Tenth Amendment | Permalink | Comments (0) | TrackBack (0)
Monday, July 2, 2012
What did Chief Justice Roberts do to the Necessary and Proper Clause in last week's ruling on the universal coverage provision of the Affordable Care Act?
Not much. Here's why.
Let's start with the opinion. Chief Justice Roberts wrote last week that universal coverage--the so-called individual mandate--exceeded Congress's authority under both the Commerce Clause and the Necessary and Proper Clause (although he wrote for a five-Justice majority that it fell within congressional taxing authority). (We wrote here about the Chief's opinion on the Commerce Clause.) In so writing, the Chief rejected the government's argument that because Congress had authority under the Commerce Clause to enact the guaranteed issue and community rating provisions, it also had authority under the Necessary and Proper Clause to enact universal coverage. After all, everybody agreed that guaranteed issue and community rating alone wouldn't work; they needed an individual mandate.
(Here's a primer. Guaranteed issue requires insurance companies to provide insurance to all comers. Community rating control premium rates within a particular community. Under these provisions, insurance companies will have to cover everyone (including those with high medical costs), within a range of premium rates. But when an insurance company covers everyone (including those with high medical costs), premiums go up. And when premiums go up, without an ability to discriminate, individuals are driven out of the market. Thus, guaranteed issue and community rating will drive up costs and drive down coverage. Unless, that is, individuals are required to buy insurance. If everybody has to buy insurance, the cost-distribution within the insurance pool will keep rates low (because the healthy, in effect, subsidize the unhealthy through the pool), and coverage (obviously) goes up.)
Chief Justice Roberts wrote that the Necessary and Proper Clause wasn't so malleable. He wrote that while universal coverage may be "necessary," it is not "proper," because universal coverage "draw[s] within its regulatory scope those who would otherwise be outside of it." Op. at 30. In other words, individuals are not the subject of the guaranteed issue and community rating regulations (insurance companies are); they are therefore not within the regulatory scope of valid congressional regulation under the Commerce Clause; and they are therefore outside of the scope of the Necessary and Proper Clause. Op. at 29-30. The Chief wrote that the Court's prior cases blessed congressional action under the Necessary and Proper Clause only when the subject of regulation under the Necessary and Proper Clause was already in the regulatory scope of congressional regulation under its principal Article I power. Here's how he described it:
The individual mandate, by contrast, vests Congress with the extraordinary ability to create the necessary predicate to the exercise of an enumerated power. This is in no way an authority that is "narrow in scope" . . . or "incidental" to the exercise of the commerce power. Rather, such a conception of the Necessary and Proper Clause would work a substantial expansion of federal authority. No longer would Congress be limited to regulating under the Commerce Clause those who by some preexisting activity bring themselves within the sphere of federal regulation. Instead, Congress could reach beyond the natural limit of its authority and draw within its regulatory scope those who otherwise would be outside of it. Even if the individual mandate is "necessary" to the Act's insurance reforms, such an expansion of federal power is not a "proper" means for making those reforms effective.
Op. at 29-30.
So, what's the effect of the Chief's opinion on the Necessary and Proper Clause? Very little.
There are two problems. The first one is exactly the same problem with the Chief's opinion on the Commerce Clause, only here it's even more pronounced. That is: the opinion may well be dicta, and, even if it's not, it doesn't have strong support as a guiding opinion under the Marks rule. Like Chief Justice Roberts's opinion on the Commerce Clause, his opinion on the Necessary and Proper Clause is not necessary to the Court's conclusion. Moreover, he's writing just for himself. The four "liberals" would have upheld universal coverage under the Necessary and Proper Clause. And the four other "conservatives" declined to join the Chief--and were in even sharper disagreement with him than they were on the Commerce Clause. (The four other conservatives would apparently read the Necessary and Proper Clause as allowing only regulation that is absolutely necessary to the named Article I powers--a reading that flies in the face of McCulloch v. Maryland and the Clause's entire history. Dissent, at 9-10.)
Moreover, the Chief's analysis is weak and apparently disavowed by all on the Court (though for different reasons), further alienating and weakening it. Chief Justice Roberts supports his new Necessary and Proper rule--that Congress can regulate only those things already within the regulatory scope--by describing the Court's prior Necessary and Proper cases. But while his description may be accurate on the facts, it is not supported by the language and analysis of those rulings. For example, the Court just two terms ago ruled in Comstock that the Necessary and Proper Clause allowed congress to authorize the detention of federal prisoners beyond their release date if they were deemed "sexually dangerous." Why? Because the Necessary and Proper Clause allows Congress to enact federal criminal law (in furtherance of its named Article I powers), and therefore to sentence offenders, and therefore to jail offenders, and therefore to keep dangerous offenders off the streets, even after their release dates--all in the name of the Necessary and Proper Clause.
Now it turns out that offenders were already within the regulatory scheme. But the Court's ruling did not turn on that, and, in fact, nowhere mentioned it. Instead, the Court said, quoting the usual language from McCulloch, that the Necessary and Proper Clause authorized Congress to take any action that was rationally related to its enumerated powers.
(The Court's opinion in Comstock was written by Justice Breyer. And Chief Justice Roberts joined it in full, even though he could have signed on with one of two more restrictive concurrences, written by Justice Kennedy and Justice Alito.)
In short, nothing in Comstock, or the Court's other Necessary and Proper decisions, sets out Chief Justice Roberts's new rule. It's just his gloss. And one, apparently, that nobody else on the Court subscribes to in his way and for his reasons.
But assuming that the courts treat the Chief's opinion as (at least) guiding, however--as they likely will--the second problem is that the Chief's opinion is quite narrow and thus only applicable to a small set of cases, if any. After all: How often does Congress seek to regulate something under the Necessary and Proper Clause that isn't within the regulatory scheme of its power-in-chief? By the Chief Justice's own reckoning: The Court has never seen this case.
And even if the Chief's opinion is guiding, courts must read it alongside Justice Breyer's majority opinion in Comstock--the Court's next-most recent foray into the Necessary and Proper Clause, and, again, an opinion that Chief Justice Roberts signed in full. Read alongside the expansive and capacious Necessary and Proper Clause described in Comstock, Chief Justice Roberts's new rule seems a narrow exception, indeed. Chief Justice Roberts did nothing last week to chip away at that expansive and capacious Clause; in fact, his opinion last week reaffirmed its long-standing principles (just as his opinion on the Commerce Clause reaffirmed the Court's broadest interpretations of that Clause).
In the end, the Chief's opinions on both the Commerce Clause and the Necessary and Proper Clause are almost certainly moot, anyway. The real story of the case is Chief Justice Roberts's majority opinion upholding universal coverage under the tax power. Any future Congress seeking to enact legislation that would push up against Chief Justice Roberts's new rules for the Commerce Clause and the Necessary and Proper Clause would do well to simply enact the policy as a tax penalty.
Thursday, June 28, 2012
A sharply divided Supreme Court today upheld key provisions in the Affordable Care Act (the "ACA," or Obamacare). The upshot is that five Justices (Chief Justice Roberts and Justices Ginsburg, Breyer, Sotomayor, and Kagan) held that universal coverage (or the individual mandate) is upheld, and that a three-Justice plurality (Chief Justice Roberts and Justices Breyer and Kagan) held Medicaid expansion is upheld in a somewhat weaker form. A different five Justices (Chief Justice Roberts and Justices Scalia, Kennedy, Thomas, and Alito) held that the commerce clause did not support universal coverage (but for different reasons).
The ruling means that universal coverage stands, and Medicaid expansion stands, although in a somewhat weaker form.
Chief Justice Roberts wrote for the majority; by issue:
Taxing Clause. A five-Justice majority held that Congress could enact the universal coverage provision (also called the individual mandate) under the taxing authority. Chief Justice Roberts, joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan, wrote that the tax penalty for failing to purchase health insurance was a valid tax.
First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the "prohibitory" financial punishment in Drexel Furniture. Second, the individual mandate contains no scienter requirement. Third, the payment is collected solely by the IRS through the normal means of taxation--except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution.
Op. at 35-36. The majority was untroubled that the tax penalty could be a "tax" for taxing authority purposes, but a non-"tax" for Anti-Injunction Act purposes: Chief Justice Roberts wrote that Congress itself enacted the AIA and could therefore itself draft around it (which it did here); but Congress's taxing authority may support congressional action whether or not Congress calls its action a "tax."
Justices Scalia, Kennedy, Thomas, and Alito dissented, arguing that universal coverage exceeded the taxing power.
Commerce Clause. A five-Justice majority concluded that the Commerce Clause did not support congressional authority to enact universal coverage, but for two different reasons. Chief Justice Roberts, writing for himself alone, wrote that universal coverage amounted to regulating before entrance into the market for health services--i.e., regulating someone who's "inactive." (And Chief Justice Roberts didn't buy the government's claim that the maarket for health insurance was integrally connected to the market for health care.) Chief Justice Roberts wrote that universal coverage was unprecedented and unsupported by the Court's cases. (Chief Justice Roberts justified reaching the issue--even though the case could be (and was) decided on the taxing power alone--because, he said, the government designed universal coverage first as a regulation and only secondly (or alternatively) as a tax.)
Justices Scalia, Kennedy, Thomas, and Alito took a harder line, arguing that Congress here went too far, because it first sought to create commerce, and then to regulate it.
Medicaid Expansion. Chief Justice Roberts wrote for himself and Justices Breyer and Kagan that Medicaid expansion as-is under the ACA--in which a state declining to participate in Medicaid expansion would stand to lose its entire pot of federal Medicaid money--was unduly coercive. But the same plurality held that Medicaid expansion could be saved by simply reading the statute to mean that a declining state could lose only the additional federal money that would have come with the expansion.
Justices Ginsburg and Sotomayor wrote separately to argue that Medicaid expansion as-is under the ACA did not violate the Constitution.
Justices Scalia, Kennedy, Thomas, and Alito dissented, writing that Medicaid expansion was flatly unconstitutional.
June 28, 2012 in Cases and Case Materials, Commerce Clause, Congressional Authority, Jurisdiction of Federal Courts, News, Opinion Analysis, Recent Cases, Separation of Powers, Spending Clause, Taxing Clause | Permalink | Comments (3) | TrackBack (0)
Tuesday, April 3, 2012
In case you missed it, here are President Obama's full comments on the ACA litigation in response to a reporter's question yesterday at a joint press conference, with President Calderon of Mexico and Prime Minister Harper of Canada:
With respect to health care, I'm actually--continue to be confident that the Supreme Court will uphold the law. And the reason is because, in accordance with precedent out there, it's constitutional. That's not just my opinion, by the way; that's the opinion of legal experts across the ideological spectrum, including two very conservative appellate court justices that said this wasn't even a close call.
I think it's important--because I watched some of the commentary last week--to remind people that this is not an abstract argument. People's lives are affected by the lack of availability of health care, the inaffordability of health care, their inability to get health care because of preexisting conditions.
The law that's already in place has already given 2.5 million young people health care that wouldn't otherwise have it. There are tends of thousands of adults with preexisting conditions who have health care right now because of this law. Parents don't have to worry about their children not being able to get health care because they can't be prevented from getting health care as a consequence of a preexisting condition. That's part of this law.
Millions of senior are paying less for prescription drugs because of this law. Americans all across the country have greater rights and protections with respect to their insurance companies and are getting preventive care because of this law.
So that's just the part that's already been implemented. That doesn't even speak to the 30 million people who stand to gain coverage once it's fully implemented in 2014.
And I think it's important, and I think the American people understand, and I think the justices should understand, that in the absence of an individual mandate, you cannot have a mechanism to ensure that people with preexisting conditions can actually get health care. So there's not only a economic element to this, and a legal element to this, but there's a human element to this. And I hope that's not forgotten in this political debate.
Ultimately, I'm confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress. And I'd just remind conservative commentators that for years what we've heard is, the biggest problem on the bench was judicial activism or a lack of judicial restraint--that an unelected group of people would somehow overturn a duly constituted and passed law. Well, this is a good example. And I'm pretty confident that this Court will recognize that and not take that step. . . .
As I said, we are confident that this will be over--that this will be upheld. I'm confident that this will be upheld because it should be upheld. And, again, that's not just my opinion; that's the opinion of a whole lot of constitutional law professors and academics and judges and lawyers who have examined this law, even if they're not particularly sympathetic to this particular piece of legislation or my presidency.
April 3, 2012 in Cases and Case Materials, Commerce Clause, Congressional Authority, Courts and Judging, Federalism, News, Spending Clause, Supreme Court (US), Taxing Clause | Permalink | Comments (0) | TrackBack (0)
Tuesday, March 27, 2012
The Supreme Court today heard oral argument in the congressional authority portion of the challenge to the Affordable Care Act--whether Congress had authority under the Commerce Clause or its taxing power to enact the minimum coverage requirement. Links to the audio files and transcript are here.
The questions at argument suggest that the case may turn on Chief Justice Roberts or Justice Kennedy (or both), both of whom, in different ways, appeared to give serious attention and thought to both sides of the argument. But if they leaned, both also seemed to lean toward opponents of the provision. For example, both (but Chief Justice Roberts perhaps more than Justice Kennedy) seemed much more skeptical of the government's argument than the opponents' argument. And Justice Kennedy at one point suggested that the government face an even higher burden, given the "unprecedented" nature of the provision. He also gave a short statement on the tradition in American law of not imposing a duty to act.
Justices Scalia and Alito seemed more set in their positions against the provision; and Justices Ginsburg, Breyer, Sotomayor, and Kagan seemed more set in their positions in favor. (Justice Thomas was silent, but his position (against) was never seriously in doubt.)
In short, this could be a squeaker one way or the other.
Several themes caught the Court's attention:
Nature of the Market. The Court spent time figuring out whether the relevant market is unique, because everyone will at some point enter it. This question turns on what the relevant market is (see below) and, at least in part, on the issue of timing (see below).
A Limiting Principle. The Court looked for a limiting principle in the government's position--one that would distinguish the parade of horribles offered by the Justices, including everything from the government requiring us all to eat broccoli to the government requiring us all to buy cell phones to use for emergencies. SG Verrilli came back with limiting principles distinguishing these examples, and Justice Kennedy seemed genuinely interested in them (or at least in hearing the states' responses to them).
The Relevant Market. The Court spent considerable time on the familiar arguments about the relevant market--is Congress regulating the market for health insurance, or the market for health care (or health care payment)? If the former, opponents argue that Congress is requiring something of people not yet in the market, and thus exceeding its authority under the Commerce Clause. Chief Justice Roberts and Justice Kennedy both seemed open at least to hearing the government's argument that the minimum coverage requirement regulates the market for health care (not health insurance).
Timing. Timing was an issue--whether Congress could regulate substantially before a person enters the market for health care, or whether Congress could only regulate at the point of entry, when, e.g., a person goes to the emergency room. Everyone seemed to agree that Congress could regulate at the point of entry; the question is how far before that Congress can regulate--and whether the Commerce Clause has anything at all to say about this.
Congressional Creation of the Market (and the Problem). Some expressed some concern that Congress created the interstate market and the very problem that it sought to address through the minimum coverage requirement by mandating that providers give free care to indigents. Even if this is so, however, it's not clear, as Justice Breyer noted, why this would be a constitutional problem: Congress creates interstate markets all the time.
Part of a Package. The Court gave some attention to the government's argument that the minimum coverage requirement was necessary to make the guaranteed issue and community rating provisions work--an argument that draws on Gonzales v. Raich. Opponents argued that Congress could have enacted these provisions without the minimum coverage provision; the government said that would have been ineffectual.
Policy. There were a couple exchanges on pure policy, in particular other ways that Congress might have achieved its goals. This shouldn't have any bearing on the constitutional question: congressional authority doesn't require something like a least-restrictive-means analysis. If these exchanges should translate into constitutional law, however--if, e.g., the Court looks to alternatives to show why the minimum coverage provision exceeds congressional authority--the result could tighten congressional authority in general along the lines of a least-restrictive-means test. This would mark an important change in the level of deference the Court usually gives to Congress in areas of congressional authority.
The Court spent more time on the Commerce Clause than on the taxing authority, but that's perhaps not a surprise. The Justices' leanings didn't seem to change whether the questioning went to the Commerce Clause or to the taxing authority.
For those hoping to get an idea of where the Court is heading with the core constitutional issues in the ACA challenge, yesterday's oral arguments on the Anti-Injunction Act must have been a disappointment. The Court yesterday drilled into the finer points of tax law--in particular, arguments whether the AIA is jurisdictional and, if so, whether it applies--but it gave few, if any, clues on the con law issues that will dominate oral argument today and tomorrow. Yesterday's argument did suggest this, though: The Court will get to the merits now, and not punt based on the AIA.
The audio file and transcript are available here.
Justice Alito got right to a main con law point with SG Verrilli, asking how the government can consider the tax penalty a non-tax for AIA purposes but a tax for Article I purposes:
Justice Alito: General Verrilli, today you are arguing that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing that the penalty is a tax [to support the universal coverage provision of the ACA].
Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act?
General Verrilli: No, Justice Alito, but the Court has held in the license tax cases that something can be a constitutional exercise of the taxing power whether or not it is called a tax. And that's because the nature of the inquiry that we will conduct tomorrow is different from the nature of the inquiry that we will conduct today.
Tomorrow the question is whether Congress has authority under the taxing power to enact it and the form of words doesn't have a dispositive effect on that analysis. Today we are construing statutory text where the precise choice of words does have a dispositive effect on the analysis.
It's not clear whether this concern about the government's position on the tax penalty will have any constitutional traction today, however. There's no requirement that a "tax" for taxing authority purposes must also be a "tax" for every other purpose. The government's position may seem at odds with itself, but it probably doesn't matter for any constitutional reason.
Other Justices asked about those subject to the universal coverage requirement, but exempt from the tax penalty, particularly the poor, suggesting that the taxing authority alone isn't enough to support the universal coverage requirement for this population. Several Justices were interested in whether the universal coverage requirement could be separated from the tax penalty, apparently setting up a line of inquiry today about whether the Commerce Clause alone could support the universal coverage provision for this population. Again, though, it's not clear how much this will matter for arguments today: The Commerce Clause has always been a potentially independent authority--maybe even the best authority--to support the universal coverage provision for every population.
The Court asked some questions about whether the tax penalty raised revenue. This line is almost certainly more important for AIA purposes than for taxing authority purposes, though. And in any event, as SG Verrilli reminded the Court, the CBO has projected that the tax penalty will raise revenue.
Finally, Justice Sotomayor asked a line of questions about state standing to challenge the universal coverage provision. This line may come back today, but it's not clear from the brief exchange (on page 72 of the transcript) that it will get much play.
In short, argument yesterday gives few clues about the con law issues on display today and tomorrow. At most, we have some likely themes for arguments today and tomorrow. And we almost certainly have this: The Court is likely to address the merits now, and not punt under the AIA.
March 27, 2012 in Cases and Case Materials, Commerce Clause, Congressional Authority, Courts and Judging, Jurisdiction of Federal Courts, News, Oral Argument Analysis, Taxing Clause | Permalink | Comments (0) | TrackBack (0)
Tuesday, February 21, 2012
The Supreme Court issued an order today alloting oral argument time in the challenges to the Affordable Care Act--six hours of argument altogether. Here's how the argument time will be shared:
March 26 and 27
- On the Minimum Coverage Provision, the Solicitor General gets 60 minutes; respondents Florida, et al. get 30 minutes; and respondents National Federation of Independent Business, et al. get 30 minutes.
- On the Anti-Injunction Act, the Court-appointed amicus gets 40 minutes; the Solicitor General gets 30 minutes; and the respondents get 20 minutes.
- On Medicaid expansion, the petitioners get 30 minutes; and the Solicitor General gets 30 minutes.
- On severability, the petitioners get 30 minutes; the Solicitor General gets 30 minutes; and the Court-appointed amicus gets 30 minutes.
February 21, 2012 in Cases and Case Materials, Commerce Clause, Congressional Authority, Courts and Judging, Federalism, News, Spending Clause, Taxing Clause | Permalink | Comments (0) | TrackBack (0)
Friday, January 6, 2012
Parties today filed opening briefs in the cases challenging the federal Affordable Care Act, now before the Court. We covered the Court's grant and argument schedule here.
The government filed its opening brief defending the minimum coverage provision, also called the individual mandate, under the Commerce Clause, the Necessary and Proper Clause, and Congress's taxing power. As we might expect, the government emphasizes the congressional findings in the act and the data supporting its argument that everyone is in the relevant market. It defends Congress's power to enact the provision principally as an essential part of a larger regulatory scheme:
The minimum coverage provision plays a critical role in that comprehensive regulatory scheme by regulating how health care consumption is financed. It creates an incentive for individuals to finance their participation in the health care market by means of insurance, the customary way of paying for health care in this country, and it works in tandem with the Act's other provisions to expand the availability and affordability of health insurance coverage. In particular, the minimum coverage provision is key to the viability of the Act's guaranteed-issue and community-rating provision.
Brief, at 17-18.
The government also defends the provision as a stand-alone regulation of commerce. In particular, it argues that the election to self-insure is an economic act that Congress can regulate and hotly disputes the opponents' claim that some self-insured are non-cost-shifters, thus not subject to regulation:
The circumstances of this case well illustrate the flaws in respondents' premises. At the outset of this litigation, respondent Mary Brown thought she had made a rational choice to forgo insurance . . . . That belief proved incorrect. Ms. Brown and her husband recently filed a petition for bankruptcy, and they list among their liabilities thousands of dollars in unpaid medical bills, including bills from out-of-state providers.
Brief, at 44. The government forcefully challenges the claimed distinction between "activity" and "inactivity," and argues that the self-insured aren't "inactive" in this market, anyway. Brief, at 47-52.
Severability is a remedial inquiry that turns on legislative intent. The ultimate question is not whether the balance of an act can function independently without an invalidated provision. That is a necessary, but not sufficient, condition for preserving the balance of the statute. The ultimate question is whether Congress would have enacted the statute without the invalidated provision. Here, the answer is clear[: No.]
Brief, at 24.
Recall that the connection between the government's principal argument--that the minimum coverage provision is an essential part of the larger ACA--and the state and private petitioners' argument--that the minimum coverage provision is not severable--was a focus of Judge Vinson's ruling (holding that the minimum coverage provision exceeded Congress's authority, and that it was not severable, because the government said that it formed an essential part of the ACA) earlier in this litigation.
The briefs today break little new ground. The fundamental arguments are familiar, even if they're sharpened, considerably.
Monday, November 14, 2011
An interesting segment on NPR's Morning Edition comparing Ayn Rand's economic thoughts to pronouncements of current politicians. Rand is the author of the novels Atlas Shrugged (1957) and The Fountainhead (1943).
The highlight is a 1959 interview with Rand by Mike Wallace, who asks about the United States' political direction of "the gradual growth of social, protective legislation, based on the principle that we are our brothers' keepers."
These programs are destroying individual liberties, Rand says, especially the freedom of producers, entrepreneurs, businessmen. The government has no right to take their property, she says.
"I imagine that you're talking now about taxes," Wallace says. "And you believe that there should be no right by the government to tax. You believe that there should be no such thing as unemployment compensation, regulation during times of stress."
"That's right," Rand replies. "I am opposed to all forms of control. I am for an absolute, laissez-faire, free, unregulated economy."
A video of the interview is available in 3 parts; here's part 1:
While the usual constitutional law link might be Lochner, Rand's interview could prompt an interesting discussion of Commerce Clause, Takings Clause, or Taxing Clause, or Campaign Finance cases - - - and of course the Affordable Care Act (last discussed here).
Wednesday, September 28, 2011
Three parties--two sets of plaintiffs and the U.S. government--filed petitions today asking the Supreme Court to review the Eleventh Circuit ruling last month in State of Florida v. HHS striking down aspects of the Affordable Care Act. In seeking Court review of the three-judge panel decision, the parties are bypassing en banc review and taking the case directly to the Court.
Recall that the Eleventh Circuit ruled the so-called individual mandate unconstitutional, but also ruled it severable from the rest of the ACA. In particular, the court ruled that the individual mandate exceeded congressional authority under both the Commerce Clause and the Taxing Clause; that the individual mandate was severable from the rest of the ACA; and that Medicaid expansion did not unduly coerce the states and thus exceed congressional authority under the Spending Clause. The ruling gave both sides plenty to appeal.
And the petitions for cert. filed today reflect it. Thus the National Association of Independent Business and two private individuals, all plaintiffs in the case, took on the Eleventh Circuit's ruling on severability. (Recall that the district court ruled the individual mandate non-severable, in part because the government argued that it was an essential part of the overall ACA. And becuase it ruled that Congress lacked authority to enact the individual mandate, the district court also struck down the entire ACA. The Eleventh Circuit reversed.) These petitioners also say that the Eleventh Circuit's case is a better vehicle with which to evaluate the ACA, because it involves all the issues, but none of the problems, of the cases out of the other circuits. Thus, they say that the Sixth Circuit ruling in Thomas More, upholding the individual mandate, includes a contested standing issue and failed to address severability of the individual mandate (because the parties didn't argue it); the Fourth Circuit in Liberty University ruled that the plaintiffs' case was barred by the Anti-Injunction Act, an erroneous and now "irrelevant" ruling, in their judgment.
The state plaintiffs in the case took on the Eleventh Circuit's ruling on the Tenth Amendment and federalism. They argue that the Eleventh Circuit erred in ruling that Medicaid expansion in the ACA isn't unduly coercive and that the Supreme Court should resolve whether the so-called employer mandate provisions are constitutional as applied to the states.
Finally, the government argued that Congress had authority to enact the individual mandate under the Commerce Clause and, alternatively, the Taxing Clause. It also asks the Court to address whether the Anti-Injunction Act bars the plaintiffs' suit.
The petitions today make it all the more likely that the Court will hear a challenge to the ACA this Term. And this case seems the most likely vehicle, for all the reasons argued by the NFIB: This case puts it all before the Court--Commerce Clause, Taxing Clause, severability, Tenth Amendment, federalism, and the AIA. Both sides want a ruling on the whole thing, and this is the right case.
[Image: Pieter Huys, A Surgeon Extracting the Stone of Folly, Wikimedia Commons]
September 28, 2011 in Cases and Case Materials, Commerce Clause, Congressional Authority, Federalism, Jurisdiction of Federal Courts, News, Opinion Analysis, Spending Clause, Supreme Court (US), Taxing Clause, Tenth Amendment | Permalink | Comments (0) | TrackBack (0)
Thursday, September 8, 2011
The same day that a unanimous three-judge panel ruled that the State of Virginia lacks standing to challenge the individual health insurance mandate in the Affordable Care Act, the same three-judge panel ruled by a vote of 2-1 in Liberty University v. Geithner that the Anti-Injunction Act bars individual plaintiffs from challenging the mandate as exceeding congressional taxation authority. (The AIA bars preenforcement suits challenging "any tax." The ACA imposes a tax penalty on anyone who doesn't obtain health insurance and on employers who get notice that an employee received a government subsidy for health insurance.) The ruling means that the AIA bars the suit (the first ruling of this kind by a circuit court). But it says nothing about the merits (although Judge Wynn in concurrence and Judge Davis in dissent both got to the merits--and both would have upheld the mandate).
Judge Motz wrote for herself and Judge Wynn on the AIA question. She looked to the plain language of the ACA to determine that the mandate was a tax for AIA purposes, and therefore that the AIA barred a preenforcement challenge to it. She rejected arguments that the ACA operated as a "penalty," not a "tax," that Congress intended it to operate as a penalty, and that it wasn't designed to raise revenue. But because she ruled that the AIA barred the suit, she said nothing about the underlying issue--whether Congress had authority to enact the mandate under its taxing power under the General Welfare Clause.
The ruling was (oddly) a loss for both the plaintiffs and the government on this narrow AIA question. The government previously argued that the AIA barred the suit, but it abandoned its previous position presumably to get a ruling on the merits. It didn't get such a ruling from this panel. But Judge Wynn, in addition to agreeing with Judge Motz that the AIA barred the suit, also wrote that Congress had authority to enact the health mandate under its taxation authority under the General Welfare Clause. And while Judge Davis dissented on the AIA point, he wrote that Congress had authority to enact the mandate under the Commerce Clause.
All this means that two judges on this Fourth Circuit panel would have ruled that the government had power to enact the mandate under some authority. That's the real story of the case.
Wednesday, June 29, 2011
A three-judge panel of the Sixth Circuit today upheld the individual health insurance mandate in the federal Patient Protection and Affordable Care Act (ACA) under Congress's Commerce Clause authority. The ruling affirmed District Judge Steeh's earlier ruling in the case, Thomas More Law Center v. Obama.
The panel split on a couple issues. Here are the highlights of the opinion:
Commerce Clause Authority: Two of the three judges, Judge Martin and Judge Sutton, agreed that Congress has authority under the Commerce Clause to enact the individual mandate. But they agreed for slightly different reasons--see below. Judge Graham disagreed.
Regulating Action versus Regulating Inaction: Given the play this distinction has received in litigation and in public debates, this is the most important--and most interesting--part of the case. All three judges agreed that there's no constitutional line between activity and inactivity--and that there's therefore no per se restriction on Congress regulating inactivity. While they agreed on this point for slightly different reasons, they all seemed to agree (at least) that the text of the Constitution does not support the distiction. Beyond that, they had just slightly different reasons for rejecting the distinction, mostly focusing on how it doesn't square against the Court's Commerce Clause precedents and how it's unworkable in practice.
Outside the Market: Judges Martin and Sutton agreed, again for different reasons, that those who decline to purchase health insurance are nevertheless part of the market--the market for national health care--because they self-insure for the cost of health care services. Judge Graham disagreed. He wrote that those who self-insure (and again, the "inactivity" didn't give him a constitutional bother), are not a part of the relevant market--the market for health insurance.
Taxing Authority: Judges Sutton and Graham agreed that the tax penalty goes beyond congressional authority under the General Welfare Clause. Judge Sutton wrote at length detailing why. Judge Martin (like Judge Steeh below) didn't reach this issue, because he concluded that the Commerce Clause adequately supported the individual mandate.
In all, the three opinions well reflect the array of arguments in this case (and in other cases, and in the public debate). Between the three, they reflect a spectrum--with Judge Martin ruling most clearly that Congress had authority under the Commerce Clause, Judge Martin ruling the same way but with a shade greater caution, and Judge Sutton ruling against.
Friday, April 15, 2011
Tax day, usually April 15 but this year with a filing extension until Monday, remains a suitable day to appreciate numeracy and try to maintain a sense of humor. The law review article, The Law of Prime Numbers, 68 NYU Law Review 185 (1993), authored by 19 authors, attempts to do both.
Slight on text, the article's footnotes are appreciations of individual prime numbers. Footnote “l” of the article highlights the prime number “37” with a discussion of a famous tax footnote, a more loosely linked interpretative question, and an even more tangentially related, but exceedingly important, constitutional criminal procedure case:
37 was the footnote number in Crane v. Commissioner, 331 U.S. 1, 14 (1947), in which the Supreme Court set forth a proposition that would bedevil tax practitioners and scholars for decades. In what has come to be acknowledged as the most famous footnote in tax history, see Boris I. Bittker, Tax Shelters, Nonrecourse Debt and the Crane Case, 33 Tax L.Rev. 277 (1978), the Court suggested that the inclusion in income occurring on the relief of a liability for which the taxpayer had no personal liability should be limited to the fair market value of the property securing the debt, rather than the full amount of the debt. It was not until the Court revisited the issue in 1983, in Commissioner v. Tufts, 461 U.S. 300, 307 (1983), that footnote 37 was repudiated, laying the issue to rest (we think). In the intervening period, however, much effort was consumed in the pursuit of the true meaning of this cryptic footnote. See, e.g., Christian C. Day, Commissioner v. Tufts: The Fall of Footnote 37; The Confirmation of the Functional Relationship, 45 U.Pitt.L.Rev. 803, 804 n. 3 (1984) (“If footnote 37 did not launch a thousand ships, it certainly killed more than its share of trees in its day and still continues to do so.”).
37 dollars was the price per 100 pounds of chicken established in the contract at the heart of Frigaliment Importing Co. v. B.N.S. Int'l Sales Corp., 190 F.Supp. 116, 117 (S.D.N.Y.1960). A dispute arose between the buyer (plaintiff) and seller (defendant) as to whether the chickens that were delivered met the specifications of the contract. Judge Friendly faced the difficult hermeneutical issue of just what, exactly, is a “chicken”:
Plaintiff says “chicken” means a young chicken, suitable for broiling and frying. Defendant says “chicken” means any bird of that genus that meets contract specifications on weight and quality, including what it calls “stewing chicken” and plaintiff pejoratively terms “fowl.” Dictionaries give both meanings, as well as some others not relevant here. To support it, plaintiff sends a number of volleys over the net; defendant essays to return them and adds a few serves of its own. Assuming that both parties were acting in good faith, the case nicely illustrates Holmes' remark “that the making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs—not on the parties' having meant the same thing but on their having said the same thing.” I have concluded that plaintiff has not sustained its burden of persuasion that the contract used “chicken” in the narrower sense.
Id. (citation omitted). Upon learning of the court's decision, the plaintiff undoubtedly clucked “FOWL.”
37 was the age of the detective who arrested Clarence Earl Gideon when he testified at Gideon's retrial. Gideon had secured a retrial by successfully arguing to the U.S. Supreme Court that, as an indigent, he had a constitutional right to representation by counsel. See Anthony Lewis, Gideon's Trumpet 233 (1966). In Gideon v. Wainwright, 372 U.S. 335, 345 (1963), the Warren Court established the right of indigent defendants to the appointment of counsel in both federal and state prosecutions. The Court generously referred to members of the legal profession in this instance as “necessities, not luxuries.” Id. at 344.
[image: Arabic numerals via]
Sunday, April 3, 2011
The government on Friday filed its opening brief in Florida v. HHS, the appeal before the Eleventh Circuit of Judge Vinson's (N.D. Fla.) ruling that federal health reform is unconstitutional. (Thanks to the ACA Litigation Blog for the link to the brief. Recall that Judge Vinson ruled that the individual health insurance mandate was unconstitutional, that it was not severable from the rest of the Affordable Health Act, and that the entire Act was therefore unconstitutional. Our last post on the case is here.)
The government's core arguments are by now familiar; there are no major surprises. There's just one new piece to the appeal, based on Judge Vinson's sweeping ruling: The government argues that his ruling that the entire Act is unconstitutional (because the individual mandate is not severable) goes too far, and that he fails to address several plaintiffs' lack of standing. (These arguments begin on page 55 of the brief.)
Here are the point-headings from the Table of Contents:
I. The Minimum Coverage Provision Is a Valid Exercise of Congress's Commerce Power.
A. The minimum coverage provision regulates the way people pay for health care services, a class of economic activity that substantially affects interstate commerce.
1. The minimum coverage provision regulates the practice of obtaining health care services without insurance, a practice that shifts substantial costs to other participants in the health care market.
2. The minimum coverage provision is essential to the Act's guaranteed-issue and community-rating insurance reforms.
B. The minimum coverage provision is a necessary and proper means of regulating interstate commerce.
1. The provision is plainly adapted to the unique conditions of the health care market.
2. Congress can regulate participants in the health care market even if they are not currently "active" in the insurance market.
II. The Minimum Coverage Provision Is Also Independently Authorized by Congress's Taxing Power.
III. The District Court Impermissibly Departed from Controlling Doctrine in Declaring the Affordable Care Act Invalid in Its Entirety and in Awarding Relief to Parties Without Standing.