August 2013 Volume 9 Number 12

One More Time with Feeling: PPACA Cases Post 2012

By Bruce F. Howell, Schwabe, Williamson & Wyatt, Portland, OR*

AuthorAfter the United States Supreme Court decision in 2012 upholding the constitutionality of the Patient Protection and Affordable Care Act (“PPACA” or the “Act”)1, new challenges to the provision of the Act have arisen.

These challenges have taken the form of (a) challenging the individual mandate’s requirement that individuals purchase a minimum level of health insurance coverage, and (b) challenging the employer mandate’s requirement to provide insurance to their employees and their dependents or suffer the “penaltax” found by Chief Justice Roberts to be under the taxing power of Congress and, thus, constitutional.2

Much of the focus during the four days of arguments before the Supreme Court in 2012 concerning the constitutionality of PPACA was on the power of Congress under the Commerce Clause.3 In these post-decision follow-up cases, both the Commerce Clause and the rights of individuals to practice their religion unfettered under the First Amendment have surfaced.

There are two distinct lines of challenge to the Act. The first deals with the constitutionality of the Act from an employer’s point of view; the second is its constitutionality from an individual’s point of view. Both of these issues may wind up back at the Supreme Court.

The Employer’s Point of View

On July 11, 2013, the Fourth Circuit Court of Appeals held in Liberty University, Inc. v. Lew that the “tax” on employers that do not provide health insurance under the Act is constitutional.4 While the mandate for individuals to have health insurance under PPACA was held constitutional by the Court in 2012, this is a different challenge. Here, the petitioners argued that the “penaltax” on the employers (those who do not provide health insurance must pay a non-deductible penalty) was unconstitutional under the Commerce Clause.

The reasoning of the Fourth Circuit is that such a penalty/tax is a valid exercise of the Commerce Clause power by Congress since it does not “create” a new form of commerce but merely upholds the power of Congress to regulate commerce between the states, an argument that was advanced by the government in the original cases concerning PPACA before the Court. This case is the primary case involving this challenge.

The Individual’s Point of View

The second set of cases that are likely to result in Supreme Court review are the cases involving freedom of religion under the First Amendment and the Religious Freedom Restoration Act of 1993 (“RFRA”).5 Under the former, the Constitution states: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof….”6 Under the latter, the operative language is:

Government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability, [except] (1) in furtherance of a compelling governmental interest and (2) [when the burden on a person’s exercise of religion] is the least restrictive means of furthering that compelling governmental interest.7

Many cases have been brought concerning the rights of individuals who own private companies and are religiously opposed to contraception. The argument is that the requirement for such private companies to provide women’s’ preventative services under PPACA violates their rights under the First Amendment and RFRA.

Cases in the Tenth, Seventh and Third Circuits have reached different results. In the Tenth Circuit, the Appellate Court would not grant a temporary injunction because “the particular burden of which plaintiffs complain is that funds, which plaintiffs will contribute to a group health plan, might, after a series of independent decisions by health care providers and patients covered by [the corporate] plan, subsidize someone else’s participation in an activity that is condemned by plaintiff’s religion. Such an indirect and attenuated relationship appears unlikely to [succeed].”8 On June 28, 2013, a federal judge issued a temporary restraining order that prevented the government from levying fines against Hobby Lobby for refusing to abide by the mandate pending the appeal. Given the extension of the employer mandate to January 1, 2015, the issue of fines is moot for the moment.

In the Seventh Circuit there was a different result. The Court of Appeals granted temporary injunctions in two cases preventing the application of the contraceptive mandate to private employers who object to such requirement on religious grounds. The reasoning in those cases was that “[a]n injunction pending appeal temporarily interferes with the government’s goal of increasing cost-free access to contraception and sterilization. That interest, while not insignificant, is outweighed by the harm to substantial religious-liberty interests on the other side. The cost of error is best minimized by granting an injunction pending appeal.”9 These cases were argued in May; the results should be forthcoming shortly.

In the Third Circuit a divided three-judge panel refused to rule that a for-profit corporation has the same religious freedom rights as an individual.10 The Court refused to extend the United States Supreme Court Decision in Citizens United v. Federal Election Commission11 (which had found corporations to have free speech rights) to religious freedom rights.

For the sake of convenience, a timeline of the different religious challenges cases is appended hereto.

On June 28, 2013, the Administration declared that the contraceptive requirement for all employers (except non-profit religious employers and houses of worship) would still be required even in light of the pending religious freedom cases.

Conclusion

On July 2, 2013, the Administration announced that it would postpone the implementation of the “employer mandate” until January 1, 2015. Thus, both the religious freedom cases and the employer mandate cases do not need to be resolved in as short a timeframe as originally thought.

It is certain that, unless there is a major change in policy, these issues will come before the Supreme Court. As with the initial cases challenging the Act in 2010 through 2012, these matters bear careful watching so as to be able to counsel clients accordingly.


*The author wishes to acknowledge the superb job done by Juan Jasso of the University of Oregon School of Law in his invaluable contributions to this article.

** Not every case included in the timeline is discussed in this article due to overlap between relevant cases challenging PPACA.


1

26 USCS § 5000A.

2

Grote v. Sebelius, 708 F.3d 850, 853 (7th 2013) (“The mandate is backed by heavy financial penalties; employers who do not comply face enforcement actions, see 29 U.S.C. § 1132(a); a penalty of $100 per day per employee, see 26 U.S.C. § 4980D(a)-(b); and an annual tax surcharge of $2,000 per employee, see id. § 4980H”).

3

See Bruce F. Howell & Michael A. Clark, “If It Quacks Like a Duck…” An Analysis of the United States Supreme Court Decision in National Federation of Independent Business v. Sebelius, ABA The Health Lawyer Vol. 24, No. 6, at 18 (August 2012).

4

Liberty University, Inc. v. Lew, 2013 U.S. App. LEXIS 14052, 38 (4th Cir. 2013) (“Accordingly, we hold that the employer mandate is a valid exercise of Congress’s authority under the Commerce Clause”).

5

42 U.S.C. § 2000b – 2000bb-4.

6

U.S. C ONST. amend. I.

7

42 U.S.C. § 2000bb – 1(a)-(b).

8

Hobby Lobby Stores, Inc. v. Sebelius, 2012 U.S. App. LEXIS 26741, 8 (10th Cir. 2012).

9Korte v. Sebelius, 2012 U.S. App. LEXIS 26734, 14 (7th Cir. 2012); see also Grote v. Sebelius, 708 F.3d 850, 855 (7th Cir. 2013) (“There is not material distinction between the motion in this case and the one . . . addressed and granted in Korte”).
10

Conestoga Wood Specialties Corp. v. Sec’y of the United States HHS, 2013 U.S. App. LEXIS 15238 (3d Cir. Pa. July 26, 2013).

11Citizens United v. Federal Election Comm’n, 558 U.S. 310 (2010).

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