Federal Judge Allows Virginia's Health Care Case To Proceed

Judge Henry E. Hudson (E.D. Va.) on Monday denied the federal government's motion to dismiss the State of Virginia's case challenging the federal health insurance mandate, enacted this spring as part of the federal health care reform bill.  The ruling--the first federal court ruling on the health insurance mandate--allows the case to proceed beyond the pleadings and says only that Virginia can bring the suit and has alleged minimally sufficient facts in its complaint to withstand a judgment on the pleadings.  (Thanks to Courthouse News for the link to the ruling.)

But Judge Hudson also wrote that the health insurance mandate marked bold new territory for the federal government and strongly suggested that it pushed the outer boundaries of congressional authority--if not outright exceeded congressional authority. 

The government in its motion argued that Virginia lacked standing, that the case was not yet ripe, and that Congress had authority to enact the mandate under the Commerce Clause and the General Welfare Clause.  Judge Hudson rejected these arguments.  He wrote that Virginia had standing and that the case was ripe, because Virginia was defending its own law, the Virginia Health Care Freedom Act, which prohibits any government from requiring its citizens to purchase health insurance and because the state had taken measures to comply with the federal mandate.  In so ruling, Judge Hudson rejected the government's argument that the Virginia Health Care Freedom Act was merely a gambit to gain standing to challenge the mandate in federal court. 

On the merits, Judge Hudson wrote that the government did not show that Virginia's complaint failed to state a claim upon which relief could be granted.  He wrote that the mandate was novel--a congressional attempt to regulate a decision "not to participate in interstate commerce"--and that the law was unsettled:

While this case raises a host of complex constitutional issues, all seem to distill to the single question of whether or not Congress has the power to regulate--and tax--a citizen's decision not to participate in interstate commerce.  Neither the U.S. Supreme Court nor any circuit court of appeals has squarely addressed this issue.  No reported case from any federal appellate court has extended the Commerce Clause or Tax Clause to include the regulation of a person's decision not to purchase a product, notwithstanding its effect on interstate commerce.  Given the presence of some authority arguably supporting the theory underlying each side's position, this Court cannot conclude at this stage that the Complaint failed to state a cause of action.

Op. at 31. 

Judge Hudson was careful to limit his ruling to the government's motion to dismiss and not to prejudge the ultimate outcome.  But at the same time, he clearly framed the issues in terms of Virginia's theory of the case--that the mandate is a regulation of a decision not to participate in the interstate economy--and commented throughout on the "complex constitutional issues."  This language does not look good for the federal government, which argued, and lost, that the mandate is a simple regulation of interstate commerce that fits comfortably into the Supreme Court's jurisprudence on the Commerce Clause and General Welfare Clause.  The federal government will likely have a tough time getting Judge Hudson to move away from Virginia's view of the case.

But as Judge Hudson also writes, he will certainly not have the last say on this.

SDS