Pending Legal/Constitutional Challenges

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Repeal >> Pending Legal/Constitutional Challenges (Last updated 8.1.14)

 

Topic Outline

1. Overview
     a. ACA Legal Cases
     b. Obama Administration Track Record in Supreme Court

2. Major Cases Outstanding
     a. IRS Challenge (Exchange Subsidies)

          1. Pruitt v. Burwell (U.S. District Court, Eastern District of Oklahoma)
          2. Halbig v. Burwell (U.S. Court of Appeals for D.C. Circuit)
          3. King v. Burwell (U.S. District Court, Eastern District of Virginia, Richmond Division)
          4. State of Indiana et al v. IRS et al, (U.S. District Court, Southern District of Indiana)

     b. Employer Mandate

1. State of Indiana v. IRS (U.S. District Court, Indiana)
2. Hotze v. Burwell (U.S. District Court, Texas)

     c. Contraception Mandate

1. Overview
2. Roman Catholic Archdiocese of New York v. Sebelius (U.S. District Court, New York)
3. Analysis

     d. Origination Clause–Sissel v. U.S. DHHS (D.C. Circuit Court of Appeals)
     e. IPAB (Separation of Powers)–Coons v. Lew (Ninth Circuit Court of Appeals)
     f.  Congressional Exemption–Johnson and Ericson v. OPM (U.S. District Court, Wisconsin)
     g. Individual Mandate–Cutler v. U.S. DHHS (U.S. District Court,  District of Columbia)

3. Pending House Suit Against President Obama

 

Overview

ACA Legal Cases

At least 114 lawsuits have been filed to date, though 100 of these consist of challenges to the contraception mandate. The following summarizes the cases that have reached the U.S. Supreme Court:

  • Individual Mandate/Medicaid Coercion. In Nat’l Fed’n of Indep. Bus. et al. v. Sebelius et al., 132 S. Ct. 2566 (2012), the Supreme Court upheld the constitutionality of the individual mandate as a tax (a majority of the Court ruled it was an impermissible use of the Commerce Clause) and invalidated conditioning of federal Medicaid funds on state acceptance of Medicaid expansion.
  • Employer Mandate. On December 2, 2013 the Supreme Court declined to review without comment a challenge to the employer mandate in the case of Liberty v. Lew (formerly Liberty v. Geithner).
  • Contraception Mandate. On June 30, 2014, the Supreme Court ruled in Burwell v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Burwell that the Religious Freedom Restoration Act applied to closely held for-profit corporations, meaning that they were not required to provide four products that Hobby Lobby said induce abortions. All documents/briefs related to Hobby Lobby are at SCOTUSblog, along with links to past SCOTUSblog coverage. A full set of legal documents related to Conestoga Wagons is here.

Currently, dozens of other lawsuits are pending. For example, “physician-owned hospitals have raised constitutional challenges to PPACA provisions limiting their reimbursement under Medicare, and other service providers are likely to challenge implementation decisions that compromise their bottom lines.”

As of August 1, 2014, there are eleven major cases now moving forward, most having cleared preliminary hurdles to being heard on their merits:

  • IRS Challenge (Exchange Subsidies)
    • Pruitt v. Burwell
    • Halbig v. Burwell
    • King v. Burwell
    • State of Indiana et al v. IRS et al
  • Employer Mandate
    • State of Indiana et al v. IRS et al (also cited above under IRS challenge)
    • Hotze v. Burwell
  • Contraception Mandate
    • Roman Catholic Archdiocese of New York v. Sebelius
  • Origination Clause–Sissel v. United States Department of Health & Human Services
  • Independent Payment Advisory Board–Coons v. Geithner
  • Congressional Exemption–Johnson and Ericson v. Office of Personnel Management
  • Individual Mandate–Cutler v. U.S. DHHS

Each of these court cases raise constitutional or significant legal questions, i.e., whose resolution has the potential to significantly disrupt implementation of the law.

Obama Administration Track Record in Supreme Court

General Track Record. According to Washington Times (6.26.13): “Despite some notable victories, the Obama administration has had an unusually poor batting average at the high court,” said Adam Winkler, a constitutional law professor at UCLA. “Like last year, the Obama administration lost more cases than it won.”

ACA Track Record. On its face, the administration has “won” 2 cases decided by the Supreme Court and lost 2 others.  However, in NFIB v. Sebelius, the Court ruled that the individual mandate was a violation of the Commerce Clause (it was saved only by declaring it a tax) and that the original penalty provision for states electing not to expand Medicaid was impermissably coercive. Thus, while it did not strike down the statute, this ruling greatly weakened it by putting constraints on how large individual mandate penalties could be and by making Medicaid expansion optional.

 

Major Cases Outstanding

IRS Challenge (Exchange Subsidies)

Employer Mandate

State of Indiana v. Internal Revenue Service (U.S. District Court, Southern District of Indiana)

Summary. On October 8, 2013, Indiana State Attorney General Greg Zoeller, joined by 15 public school districts, filed a suit challenging the employer mandate on grounds that it imposes an unconstitutional tax on sovereign states. Because the penalty for employers not providing at least 95% of workers with health coverage could greatly exceed the actual cost of providing excluded workers with subsidized exchange coverage, Indiana argues that the mandate amounts to a punitive tax designed to force public employers to cover their workers.

Current Status. Another 24 school districts joined the case on December 9, 2013.

Prospects. An earlier challenge to the employer mandate on 10th amendment grounds was rejected by Judge Roger Vinson even though he later ruled the ACA’s individual mandate was unconstitutional. Washington and Lee law professor Timothy Jost is dubious about Indiana’s chances of success given that it was a plaintiff in the earlier employer mandate challenge that was dismissed.

Documents. Complaint filed October 8, 2013.

Hotze v. Burwell (U.S. District Court, Southern District, Texas)

Summary. This case, filed in May 2013,  challenged the constitutionality of the employer mandate. The Fifth Amendment prohibits the government from taking private property for public use without “just compensation.” Steve Hotze, a doctor in Texas, is arguing that Obamacare violates this “takings clause” by mandating that his business give money to another business, specifically an insurance company, without any compensation.  The suit also argues that the law violates the Origination Clause and the Tenth Amendment (because it is not a constitutional tax).

Current Status: According to a Forbes contributor: “A district court in Texas ruled against Hotze on January 10 by calling the Obamacare business mandate a tax and not a “taking” under the Fifth Amendment. The judge based her decision on the Supreme Court’s ruling in 2012, which characterized the individual mandate as a tax. Hotze is appealing the ruling. The deadline for filing amicus briefs in support of HHS is July 17, 2014.

Prospects. In a  companion case, AAPS v. Sebelius, Supreme Court Chief Justice Roberts denied an appeal without comment on January 6, 2014.

Documents.  All documents related to case are here.

 

Contraception Mandate

Overview

As summarized by Health Care Lawsuits blog: “In August 2011, the Department of Health and Human Services issued a mandate that, as part of the Affordable Care Act’s requirements for minimum essential coverage, Women’s Preventative Care would include comprehensive coverage for all FDA-approved methods of contraception. This mandate also includes coverage for emergency contraception and sterilization services. Many religious and conscientious objectors oppose the mandate, especially because employers will be forced to pay for the coverage of these drugs and procedures for their employees, even if employers morally object. Employers who are not in compliance with the mandate can face fines of $100 per worker per day. ”

Health Care Lawsuits lists several different blog pieces about these cases. See also HHS Contraceptives Mandate Policy Focus and HHS Contraceptives Mandate Fact Sheet. The Beckett Fund for Religious Liberty maintains a complete score card, current updates, resources, and details on all 100 cases related to the HHS mandates (which collectively involve over 300 plaintiffs):

  • 49 for-profit lawsuits* have been filed over the HHS mandate. As of July 1, 2014, 1 case has been dismissed on procedural grounds. Of the 45 for-profit plaintiffs that have obtained rulings touching on the merits of their claims against the Mandate, 40 have secured injunctive relief against it, while 6 have had injunctions denied, for a current score of 40-6. 
  • 51 non-profit lawsuits have been filed against Secretary Burwell over the HHS mandate. This includes lawsuits by religious organizations such as hospitals, religious charities (40), religious colleges (27), and Catholic dioceses (15). As of March 26, 2014, 11 cases have been dismissed on procedural grounds. 28 have secured injunctive relief, while 6 has had their injunction denied for a current score of 28-6. 

Roman Catholic Archdiocese of New York v. Sebelius, (U.S. District Court, Eastern District of New York, docket 12-02542)

Summary. “Forty-three Catholic organizations, including the archdioceses of New York and Washington, as well as the University of Notre Dame and the Catholic University of America, filed 12 lawsuits earlier this year in courts across the country, arguing that the mandate violates the freedom of religion guaranteed in the U.S. Constitution’s First Amendment.”

According to Politico (November 2012), “The second category of plaintiffs are religiously affiliated entities — schools, universities and dioceses…..But some of these suits have been tossed out as “unripe” or denied an injunction because they are temporarily exempt from the contraception coverage rule. That’s because the Obama administration gave itself until next August to refine the exemption policy. Churches and some religious organizations already are exempt. But so far, a compromise has not been reached for religiously affiliated employers, who say they may still have to indirectly pay for coverage. But the courts say it’s premature for them to weigh in.”

Current Status. On December 5, 2012, the court rejected a motion to dismiss and ruled that the Roman Catholic Archdiocese of New York and two other Catholic entities can proceed with their legal challenge. On December 31, 2013, Supreme Court Justice Sonia Sotomayor “ordered a temporary halt to the Obama administration’s enforcement of the federal health-care law’s contraception requirements in a case brought by nonprofit Roman Catholic homes for the aged….The nonprofits faced fines starting Wednesday, the first day of 2014, if they failed to meet the requirement. Justice Sotomayor’s order halts those fines for now pending a government response, due by Friday [January 3], and further developments in the case…Lower courts had earlier issued temporary injunctions in many cases brought by nonprofit institutions, but Justice Sotomayor’s order was the first such action by the Supreme Court, according to the Becket Fund.”

Analysis

  • Cooper, Horace. The Birth Control Mandate is Unconstitutional. National Center for Public Policy Research. February 2012.
  • Gunter, JenThe Medical Facts About Birth Control and Hobby Lobby—From an OB/GYN. New Republic. July 6, 2014. Author argues that the 4 methods of contraception objected to by Hobby Lobby work by preventing ovulation or fertilization rather than preventing implantation or affecting the fetus following implantation. Only the copper UID possibly prevents implantation (this is unlikely but cannot be ruled out). The author asserts: “Plan B, which is one form of the morning-after pill, clearly wouldn’t. It works by inhibiting ovulation when given during a specific 48 hour window of the cycle. It has no other method of action. This is undisputed scientific fact. (Plan B is one of the best studied of all the methods of contraception).”
  • FDA Required Labeling. “Plan B One-Step is believed to act as an emergency contraceptive principally by preventing ovulation or fertilization (by altering tubal transport of sperm and/or ova). In addition, it may inhibit implantation (by altering the endometrium).”  This appears to directly contradict Gunter’s claim above.

 

Origination Clause–Sissel v. U.S. Department of Health & Human Services (D.C. Circuit Court of Appeals)

Summary. The ACA imposes a charge on Americans who fail to buy health insurance — a charge that the U.S. Supreme Court characterized in June 2012 as a federal tax. In this case,  the non-profit Pacific Legal Foundation argues that that this purported tax is illegal because it was introduced in the Senate rather than the House, as required by the Constitution’s Origination Clause.  [The Constitution’s Origination Clause. Article 1, Section 7, Clause 1 states: “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”]

The exact procedure used to pass the ACA was as follows: “On September 17, 2009, Congressman Charlie Rangel introduced a bill in the House, H.R. 3590, the “Service Members Home Ownership Tax Act of 2009,” whose purpose was “to amend the Internal Revenue Code of 1986 to modify the first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees.” The bill passed the House on October 8 by a 416-0 vote. On November 19, Harry Reid introduced his own version of H.R. 3590 in the Senate. He took the bill that had been unanimously passed by the House, renamed it the “Patient Protection and Affordable Care Act,” deleted all its contents after the first sentence, and replaced it with totally different content. What followed was the first pass of the Senate version of ObamaCare.”

A ruling in favor of the plaintiff would invalidate the entire law. Critics argue that courts could not justify setting aside the entire law based on such a procedural nuance.  As well, the identical procedure has been used in the past, for example to pass the TARP bill in October 2008.  The Supreme Court also established in 1892 an “enrolled bill rule” in its 1892 decision in the Marshall Fields Co. v. Clark case.  Under this rule, “the Court essentially says if Congress tells it a bill originated in a specific House, it simply accepts that statement of enrollment as the ‘proper origination of the bill.'” The Supreme Court has reviewed only eight Origination Clause claims in its entire history, and has never invalidated an Act of Congress on that basis.

On November 8, Representative Trent Franks (R-AZ) and thirty-nine other Republican members of the House of Representatives filed a “friend of the court” brief in support of this case. The Pacific Legal Foundation’s Paul J. Beard told the Washington Times, “this support from members of the House is especially significant because PLF’s lawsuit defends the constitutional authority of the lower chamber, the legislative body that is closest to the people.”

Current Status. Plaintiff appealed to the D.C. Circuit Court of Apppeals on Jul. 5, 2013. Briefing completed Dec. 20, 2013. Oral argument held on May 8, 2014.  On July 29, 2014, the D.C. Circuit Court of Appeals ruled against this challenge, holding that the individual mandate tax need not have originated in the House of Representatives because it does not qualify as a “bill for raising revenue” under the Constitution. In a relatively short opinion by Judge Judith Rogers, the court holds that the overall purpose of the individual mandate tax was to force people to buy insurance, not to raise revenue, and therefore the constitutional requirement that it originate in the House does not apply. Plaintiffs plan to appeal.

Prospects.  The Chairman of the House Judiciary Subcommittee on the Constitution, Rep. Trent Franks of Arizona, and 19 House colleagues co-sponsored H.Res. 153 on April 12, “Expressing the sense of the House of Representatives that the Patient Protection and Affordable Care Act of 2009 violates article I, section 7, clause 1 of the United States Constitution because it was a ‘Bill for raising Revenue’ that did not originate in the House of Representatives.”  However, because Congress complied with the letter, if not the spirit, of Article I, section 7, legal scholar Jonathan Adler argues that “believe it or not, this subterfuge is likely to survive judicial review. Federal courts are quite reluctant to second-guess whether Congress has followed relevant procedural rules, even when the rules are constitutionally mandated.”

In the aftermath of the D.C. Circuit Court of Appeals ruling against the plaintiffs, PLF argued: “nothing in the case law holds that courts can decide for themselves what the “the main object or aim” of a tax is, and then apply whenever constitutional requirements it thinks appropriate, given that “general purpose.” Under the approach that the D.C. Circuit takes here, a court could say that the “main object or aim” of a tax isn’t to raise money, but to fund the military, or to promote the general welfare—and therefore that the Origination Clause doesn’t apply. The “general purpose” approach—which the Supreme Court has never endorsed—gives courts too much power to decide when to apply constitutional restrictions, and when not.”

According to Breitbart.com, “regardless of the decision made by the Court of Appeals, it seems likely that the losing party will appeal the case to the Supreme Court, which might take the case for consideration in the fall of 2014. This would set up the announcement of a decision in June 2015.”

DocumentsPacific Legal Foundation maintains a complete set of documents related to this case, which dates back to October 7, 2010. See also Congressional Research Service, The Origination Clause of the U.S. Constitution: Interpretation and Enforcement (Mar. 15, 2011).

 

IPAB (Separation of Powers)–Coons v. Lew (Ninth Circuit Court of Appeals)

Summary. The Goldwater Institute in Coons v. Lew (formerly Coons v. Geithner) argues the federal health care law exceeds the powers of Congress and violates individual rights as well as violates the Separation of Powers doctrine. Specifically, our suit is unique among the other lawsuits pending around the country in that it challenges Congress’s creation of the Independent Payment Advisory Board (IPAB) as an unconstitutional delegation of Congressional powers to an unelected, unaccountable executive agency. This  is the only challenge to the federal health insurance law to challenge the constitutionality of IPAB.

As reported in National Review: “By the terms of the PPACA, IPAB can, within limits, exercise explicitly legislative powers to set policy for any matter “related to the Medicare program,” with other provisions making clear that IPAB can treat within that purview any “system-wide health-care costs, patient access to care, utilization, and quality of care . . . [including from] private payers.” It can do so without resorting to ordinary notice-and-comment rule-making and with very little opportunity for Congress to overturn its decisions or even amend them beyond a severely circumscribed scope. Worse, IPAB’s actions are exempt from judicial review, leaving aggrieved parties with neither legislative, administrative, nor judicial recourse in reining in unwarranted power grabs.” IPAB also is not subject to annual appropriations, further limiting Congress’s ability to making the agency accountable. Finally, ACA allows Congress to dissolve IPAB only if it follows a specified procedure during a seven-month period in 2017.

Current Status. This case was dismissed by the U.S. District Court for the District of Arizona and oral arguments were scheduled before the Ninth Circuit Court of Appeals on January  28, 2014. As reported at National Review, “The case of Coons v. Lew (formerly and better known as Coons v. Geithner​) drew a three-judge panel at the U.S. Ninth Circuit Court of Appeals that promised a reasonable hearing. One of the judges, Stephen Reinhardt, is a hard-line liberal, but the other two are the independent-minded, conservative-leaning Alex Kozinski and Jay Bybee.” Oral argument was held on June 10, 2014. On August 7, the Ninth Circuit Court of Appeals dismissed the case on grounds it had been brought too early. The Board’s powers are invoked based on a certain economic formula, but because that hasn’t happened yet, the court held that it was too early to rule on the constitutional issues involved.

Prospects. Legal scholar Jonathan Adler has reported that the provision prohibiting dissolution of the IPAB except under narrowly proscribed circumstances  is “a statutory provision even the Obama administration has acknowledged could not hold up in court.”

Documents. The full history of the case and all relevant course documents are available at Goldwater Institute.

Congressional Exemption–Johnson and Ericson v. Office of Personnel Management (7th Circuit Court of Appeals)

Summary.  A provision in the ACA stipulates that on January 1, 2014, Members of Congress and their staff would lose their current employer-sponsored health insurance provided through the Federal Employees Health Benefits Program (FEHBP). Sloppy language left substantial ambiguity over four issues: a) which staff were affected; b) whether they were required to actually enroll in the Exchange; c) what would happen to subsidies (roughly 75% of premiums) that historically have been paid by Office of Personnel Management (OPM) to help offset the cost of coverage, but which legally cannot be paid to any plans except those in the FEHBP; and d) whether OPM or DHHS has implementation authority.  OPM ruled in 2013 that the government could continue to make employer contributions to the health insurance plans of 535 members of Congress and their staff – even when they purchase coverage through the Exchanges.

Senator Ron Johnson and Brooke Ericson have filed suit on 1.3.14 against U.S. Office of Personnel Management and Katherine Archuleta, OPM’s director. As reported at Reuters, Senator Johnson filed this suit on grounds that OPM exceeded its legal authority in making this ruling. “Johnson said this violated the intent of Congress, which was that Congress would participate in the healthcare exchanges on the same terms as other Americans.”  Plaintiffs also allege the OPM rule violates the Equal Protection Clause of the U.S. Constitution by treating members of Congress and their staffs differently from other similarly situated employees who obtain insurance coverage under the terms of the ACA and do not receive tax-free subsidies.

Current Status: On March 17, 2014, the government filed a motion to dismiss the complaint, arguing that Senator Johnson and his staffer lacked standing to bring the complaint. On July 21, 2014, U.S. District Judge William Griesbach dismissed the case on grounds that the plaintiffs lacked standing to sue. According to an AP reporter, “Johnson’s belief that subsidies provided to lawmakers and their staffs are illegal isn’t a strong enough reason to disqualify him from the rule put in place under the Affordable Care Act, Griesbach said. The judge also said Johnson failed to show voters would view him negatively if his staff received subsidized insurance. And, the judge said, Johnson could simply avoid the problem by failing to designate any employees as official congressional office staff, a classification that qualifies them for the benefit.” On September 15, 2014, Sen. Johnson filed an appeal in the 7th Circuit Court of Appeals, arguing a lower court’s ruling that he lacked standing to challenge a portion of the law is “fatally flawed.” Attorney Paul Clement has been hired to represent plaintiffs.

Current Prospects.  There have been at least 23 significant changes made to the ACA through unilateral action. While many of these have been of dubious constitutionality/legality, most have been executed in a way that prevents them from being litigated because no one has standing to sue. This is a rare case in which individuals affected by unilateral administrative change in the law potentially have standing to sue.

Documents. The Wisconsin Institute for Law and Liberty is maintaining all the key documents in this legal challenge.

 

Individual Mandate–Cutler v. United States Department of Health and Human Services (U.S. District Court, District of Columbia)

Summary. On December 31, 2013, according to Wikipedia, Jeffrey Cutler filed a suit “challenging the constitutionality of the Act, both on its face and as applied to him and his constituents. Cutler asserts that the provision requiring individuals to obtain health insurance coverage or face monetary penalties violates the religion clause of the First Amendment to the United States Constitution and a previous Supreme Court Decision , “1947 Everson v Board of Education”, and allows the government to favor one religion over another religion. The process of empowering the United States Government to Certify that applicable individual is part of EXEMPT RELIGION or SECT, Cutler seeks a declaration that the Act is unconstitutional, invalid, and unenforceable. Cutler also seeks to “rollback” the law to the status it had prior to 2014 on various grounds, arguing that under newly issued rules, the law now violates the Fourteenth Amendment by allowing unequal protection under the law.(If You Like Your Plan, You Can Keep Your Plan till October 1, 2016, but only if the insurance commissioner of your state agrees.”

Current Status.  According to Wikipedia (5.17.14), the federal government’s motion for complete dismissal is under review, as is the plaintiff’s motion for partial summary judgment.

Prospects. Although it does not affect this case, legal scholar Jonathan Adler has noted that “The characterization of the mandate’s penalty as a tax has other legal implications that could also end up in court. One reason the penalty functioned as a tax, Chief Justice Roberts explained, is that it was small enough to leave covered individuals with a meaningful choice — but this also means the mandate cannot serve its intended purpose of inducing more people to obtain health coverage. A larger tax, however, would begin to look like a “penalty” and exceed the scope of the federal government’s regulatory authority. Thus, should Congress ever seek to increase the mandate’s tax penalty, more litigation would certainly follow.”

Documents. Documents are available on PACER (subscription required).

 

Pending House Suit Against President Obama

On July 30, the House voted to authorize a lawsuit to challenge the president’s failure to faithfully execute provisions of the Affordable Care Act as passed by Congress.

  • Rivkin Jr., David B. and Elizabeth Price FoleyThe Case for Suing the President. Wall Street Journal. 7.31.14.
    • “A president who unilaterally rewrites a bad or unworkable law, however, prevents the American people from knowing whether Congress should be praised or condemned for passing it. Such unconstitutional actions can be used to avert electoral pain for the president and his allies. If Mr. Obama can get away with this, his successors will be tempted to follow suit. A Republican president, for example, might unilaterally get the Internal Revenue Service to waive collection of the capital-gains tax. Congress will be bypassed, rendering it increasingly irrelevant, and disfranchising the American people.”
    • “Litigation in federal court is an indispensable way to protect all branches of government against encroachment on their authority. States have successfully sued to stop federal intrusions into their constitutionally reserved powers. State legislators have also successfully sued to protect their institutional authority when state executives nullified their legislative power. The executive branch is no different.”
  • Jacobson, LouisA closer look at claims on impeachment, House lawsuit. PolitiFact.com (8.1.14). “the House as a whole has never sued the president. However, individual lawmakers and groups of lawmakers have sued the president in the past. In fact, we found at least 14 instances in the last four decades alone.”