Friday, January 17, 2014
On Wednesday, Judge Friedman (U.S. District Court, District of Columbia) granted summary judgment to Secretary Sebelius in Halbig v. Sebelius (2014 WL 129023). Individual plaintiffs and small businesses, supported by the Cato Institute, Competetive Enterprise Institute, and others, challenged the availability of tax credits in federally-run Health Insurance Exchanges as exceeding the IRS's administrative authority. The court found that the statute, Congress's intent, and the legislative history of the Affordable Care Act supported the IRS's regulations. Thus, tax credits will be available in Exchanges whether the insurance is purchased on an exchange created by a state or an exchange created by the federal government standing in the state's shoes. The opinion engaged in careful statutory analysis and found the first part of the Chevron test answered the legal questions the plaintiffs presented (though a footnote provided a quick second step analysis anyway). Professor Gluck called this decision a big win for the ACA given that Chevron deference was not necessary in the court's analysis, and the court's methodical statutory analysis is certainly persuasive. (Professor Bagley posted a similarly sanguine analysis here.) By all accounts, this decision is a win for the Obama Administration.
This solid decision ought to end this frivolous litigation, but the plaintiffs have already stated that they will file an appeal. As I discussed here and here, even though these challenges have no statutory traction, the plaintiffs are financially well supported, and they have the means to continue pressing their theories up the federal court ladder. And, the political climate inspires unhappy policy losers to pursue their desired outcome through the judicial branch when they have lost in the legislative and executive branches. Although the decision in NFIB v. Sebelius allowed the ACA to move forward, it opened the courthouse doors to litigation such as this, which pushes legal reasoning in directions that would not have been considered serious before the successes of the NFIB litigation. While I do not believe that Halbig et al. have a real case for preventing tax credits in federally-run exchanges, that will not necessarily prevent another federal court from finding a differently.