Supreme Court to Decide the Fate of the Obama Administration’s Landmark Healthcare Reform Act
By Michelle Browning Coughlin, Holland N. (“Quint”) McTyeire, V, and Peter L. Thurman, Jr., Bingham Greenebaum Doll LLP, Louisville, KY
On Monday, November 14, 2011, the United States Supreme Court granted certiorari to hear arguments regarding the constitutionality of the Patient Protection and Affordable Care Act (“PPACA”).1
Cases challenging PPACA have been moving through courts across the United States. In general, the cases filed have examined whether a mandate requiring individuals to purchase health insurance exceeds Congress’s power under the Commerce Clause of the United States Constitution.2 Although the United States Court of Appeals for the Sixth Circuit was the first federal appellate court to issue a decision addressing the constitutionality of PPACA, the Supreme Court’s grant of certiorari actually pertains to three cases from the Eleventh Circuit, namely, the National Federation of Independent Business v. Sebelius, Florida v. Department of Health and Human Services, and Department of Health and Human Services v. Florida.3
The Road to the Supreme Court
The first decision to be issued on the merits in a case challenging PPACA came from the United States District Court for the Eastern District of Michigan in October, 2010, in Thomas More Law Center v. Obama.4 The case was brought by the Thomas More Law Center, a public interest law firm, and four individual plaintiffs. Like most of the cases challenging PPACA, the plaintiffs in Thomas More Law Center alleged that Congress exceeded its authority under the Commerce Clause when it mandated the purchase of health insurance by individuals, most commonly referred to as the “Individual Mandate.” The district court held the Individual Mandate to be constitutional, and the plaintiffs appealed the decision to the Sixth Circuit.
On June 29, 2011, the Sixth Circuit became the first federal appeals court to issue an opinion in a case challenging the constitutionality of PPACA.5 In its 2-to-1 decision, the Sixth Circuit issued a 64-page analysis in which it held the Individual Mandate to be constitutional. The Sixth Circuit found that the Individual Mandate is a valid use of the Commerce Clause powers, since the regulation is aimed at economic activity that has a “substantial effect on interstate commerce,” noting that purchasing health insurance is “decidedly economic.”6 The Sixth Circuit concluded that Congress had a “rational basis for concluding that the minimum coverage requirement is essential to the broader reforms to the national markets in health care delivery and health insurance.”7
While the Sixth Circuit was the first circuit to issue an opinion as to the constitutionality of PPACA, the Fourth Circuit was already considering a similar case. In fact, in April, 2011, Virginia Attorney General Kenneth Cuccinelli II requested that the Supreme Court grant expedited review of the constitutionality of PPACA. Virginia’s request however, was denied, and instead, the Fourth Circuit was asked to decide two separate cases, Virginia, ex rel. Cuccinelli v. Sebelius8 and Liberty University Inc. v. Geithner.9
In the meantime, the Eleventh Circuit was also hearing arguments in similar cases challenging PPACA. While it was expected that the Fourth Circuit, which had heard oral arguments prior to the Eleventh Circuit, would issue a decision on PPACA first, the Eleventh Circuit was actually the second circuit to issue its opinion, doing so on August 12, 2011. The plaintiffs who brought the Eleventh Circuit case included two private individuals, the National Federation of Independent Business, and 26 individual states.10 The Eleventh Circuit issued a 300-plus page opinion finding by a 2-to-1 majority that the Individual Mandate is unconstitutional, thereby creating a split of authority between the Circuits.11
The Eleventh Circuit heard this appeal from the United States District Court for the Northern District of Florida, which found the Individual Mandate to be an unconstitutional exercise of Congress’s powers under the Commerce Clause.12 The district court also found that the Individual Mandate was not severable from the remainder of PPACA, meaning that the entire Act was invalid. The plaintiffs in the district court case also argued that PPACA’s expansion of Medicaid was unconstitutional, but the district court granted the government summary judgment on that issue and the Eleventh Circuit affirmed that court’s decision.13
The Eleventh Circuit’s opinion traces the jurisprudence of the Commerce Clause powers with a review of the most influential Supreme Court cases, beginning with the 1942 Wickard v. Filburn14 decision through the 2005 Gonzalez v. Raich15 decision. Ultimately, the court reasoned that “even assuming that decisions not to buy insurance substantially affect interstate commerce, that fact alone hardly renders them a suitable subject for regulation.”16 The opinion further states that the connection between the regulated subject matter and interstate commerce is lacking, and “[t]o connect this conduct to interstate commerce would require a ‘but-for causal chain’ that the Supreme Court has rejected, as it would allow Congress to regulate anything.”17
Almost one month later, on September 8, 2011, the Fourth Circuit issued opinions in two separate cases on the issue of PPACA’s constitutionality. The Fourth Circuit’s decisions were anticipated to be a tie-breaker of sorts, but ultimately, the Fourth Circuit dismissed both cases on procedural grounds and did not provide a substantive opinion as to the constitutionality of PPACA.
In the case that had previously been denied expedited review by the Supreme Court, the Fourth Circuit issued a unanimous and relatively brief 33-page opinion dismissing the case for lack of subject matter jurisdiction.18 The plaintiff in the case was the Commonwealth of Virginia, and although the district court found the challenged provision to be unconstitutional, the Fourth Circuit determined that the Commonwealth lacked standing to sue because a state typically does not have standing to sue the federal government on behalf of its citizens. The Fourth Circuit vacated the district court’s judgment and remanded the case with instructions to dismiss.
In the second of the two cases decided by the Fourth Circuit on September 8, 2011, Liberty University and two individuals challenged both the Individual Mandate and a similar employer mandate, requiring employers to provide certain minimum coverage.19 In this case, the claims were brought under a theory that the Individual Mandate was, in effect, a tax. The district court had upheld the constitutionality of both the Individual Mandate and the employer mandate, but the Fourth Circuit issued a 2-to-1 decision that viewed the suit as a pre-enforcement action seeking to restrain the assessment of a tax. In a procedurally-complex, 140-plus page opinion, the Fourth Circuit reasoned that the Anti-Injunction Act20 stripped the district court of jurisdiction over the matter. Thus, the court vacated the district court’s judgment and remanded the case with instructions that it be dismissed for lack of jurisdiction.
While the Fourth Circuit’s two decisions did not provide guidance on the constitutionality of the Individual Mandate, the lower court’s decisions nonetheless provided further evidence of the disagreement among the Circuits with regard to the Individual Mandate and the interpretation of PPACA as a whole. This split of authority among circuits was further affirmed when, on November 8, 2011, the D.C. Circuit issued an opinion on the merits in Seven-Sky v. Holder21 finding that the court had jurisdiction over the matter and, in agreement with the Sixth Circuit, finding that PPACA is constitutional.
Supreme Court Grants Certiorari to the Eleventh Circuit Cases
Petitions for Writ of Certiorari by the Supreme Court were filed in six cases, namely, Thomas More Law Center, from the Sixth Circuit; three cases from the Eleventh Circuit, National Federation of Independent Business, Department of Health and Human Services (“HHS”), and Florida; and two cases from the Fourth Circuit, Virginia, ex rel. Cuccinelli, and Liberty University Inc. The Supreme Court granted certiorari to hear a total of four questions from the three Eleventh Circuit cases, specifically, the question of severability, the constitutionality of the Individual Mandate, the issue of ripeness under the Anti-Injunction Act, and federalism as it relates to Medicaid funding. Signaling the significance of this decision, the Supreme Court granted an unprecedented five-plus hours for oral arguments in its grant for certiorari.
In its November 14, 2011 Order granting certiorari, the Court first consolidated National Federation of Independent Business and Florida as to the issue of severability, and allotted ninety minutes for oral arguments on this issue.22 The question presented is: in the event the Individual Mandate is found unconstitutional, whether the Individual Mandate can be severed from PPACA or whether the entire Act must be stricken.
Second, the Court granted certiorari to Department of HHS as to the central question in almost every case brought before the courts challenging PPACA: the constitutionality of Congress’s requirement that all individuals purchase health insurance, enacted under Congress’s powers under the Commerce Clause. The Court allotted two hours for oral arguments as to this issue.23
Third, the Court also granted certiorari, and subsequently allotted an hour of oral arguments, to the issue of ripeness, specifically whether any challenge is barred under the Anti-Injunction Act.24 In further explanation, a “penalty” is imposed under PPACA for failure to comply with the Individual Mandate, and this “penalty” is codified as part of the federal tax code. If the “penalty” is actually a tax, then such tax would not be imposed until after the Individual Mandate takes effect in 2014, and therefore, a suit opposing the tax is barred until such “tax” is actually imposed.
Fourth, the Court granted certiorari with regard to the issue of whether PPACA violates principles of federalism and exceeds its Spending Powers25 by tying the states’ receipt of federal Medicaid funds to compliance with conditions of PPACA. The Court allotted a final hour of oral arguments to this issue.26
The Court appointed amicus curiae attorneys to address both the issues of ripeness under the Anti-Injunction Act and severability of the Individual Mandate provision, essentially because none of the parties are arguing that the Individual Mandate is severable or that the Anti-Injunction Act bars the suit. On November 18, 2011, the Court issued an Order naming H. Bartow Farr, III, of Washington, D.C., to brief and argue the case in support of the severability of the Individual Mandate.27 The Court then named attorney Robert A. Long, also of Washington, D.C., to brief and argue the case in support of the position that the Anti-Injunction Act bars the suit brought by respondents to challenge the Individual Mandate.28 The Court’s Order appointing these two individuals as amicus curiae was very brief and did not provide explanation as to the reason behind their selection.
On December 8, 2011, the Court issued its Order setting the briefing schedule.29 The briefing schedule sets out the word limits and deadlines for filing the briefs and reply briefs, beginning in January 2012 and extending through mid-March. On December 19, 2011, the Court announced that it will hear the oral arguments over a three-day period in March 2012, specifically March 26, 27 and 28.
Election Day Woes or Procedural Side-Step?
With the oral arguments schedule in place, it is anticipated that a decision could be handed down by the end of June prior to the recess of the Court. A Supreme Court decision on a central piece of President Obama’s legislation in the heat of what is likely to be a very contentious Presidential election year makes the decision even more pressing. Speculation has arisen that the Court could potentially prevent inserting itself into the political hotbed by finding that the suit is barred under the Anti-Injunction Act, meaning the Court would not hear the case until at least 2015.
Pub. L. No. 111-148, 124 Stat. 119.
|2 ||U.S. Const. art. I, §8, cl. 3.|
Nos.11-393, 11-398, & 11-400 (U.S. cert granted Nov. 14, 2011).
Thomas More Law Center v. Obama, 651 F.3d 529 (6th Cir. 2011), petition for cert. filed, 70 U.S.L.W. 3065 (U.S. July 26, 2011) (No. 11-117).
702 F.Supp. 2d 598 (E.D. Va. 2010), rev’d 656 F.3d 253 (4th Cir. 2011), cert denied, 131 S.Ct. 2152 (2011).
753 F.Supp. 2d 611, vacated 2011 WL 3962915 (4th Cir. Sept. 8, 2011), petition for cert filed, 80 U.S.L.W. 3240 (U.S. Oct. 7, 2011) (No. 11-438).
The twenty-six states are Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, Wisconsin, and Wyoming.
Florida ex. Rel. Atty. Gen. v. U.S. Dep’t of Health and Human Services, 648 F.3d 1235 (11th Cir. 2011), cert granted sub nom National Federation of Independent Businesses v. Sebelius, 80 U.S.L.W. 3198 (U.S. Nov. 14, 2011) (No. 11-303); Dep’t of Health and Human Services v. Florida, 80 U.S.L.W. 3199 (U.S. Nov. 14, 2011) (No. 11-398); and Florida v. Dep’t of Health and Human Services, 80 U.S.L.W. 3297 (U.S. Nov. 14, 2011) (No. 11-400).
Florida ex rel. Bondi v. U.S. Dep’t of Health and Human Services, 780 F.Supp. 2d. 1256 (N.D. Fla. 2011), order clarified by 780 F.Supp. 2d. 1307. (N.D. Fla. 2011).
317 U.S. 111 (1942).
545 U.S. 1 (2005).
Cuccinelli, 656 F.3d 253.
Liberty Univ. Inc., 2011 WL 2396915.
26 U.S.C. 7421 (The Anti-Injunction Act prevents a tax-payer from seeking relief from the imposition of a tax prior to that tax actually being imposed).
2011 WL 1113489.
Order Granting Certiorari as to No. 11-393, 565 U.S. __, 2011 WL 5515163.
Order Granting Certiorari as to No. 11-398, 565 U.S. __, 2011 5515164.
|25 ||Art. I, Sec. 8, Cl. 1 (Congress can use its spending power to condition states’ receipt of federal funds on the states’ compliance with certain Congressional mandates.) See e.g. South Dakota v. Dole, 483 U.S. 203, 205 (1987).|
|26 ||Order Granting Certiorari as to No. 11-400, 565 U.S. __, 2011 WL 5515165.|
|27 ||Orders in Pending Cases of Nov. 18, 2011, 565 U.S. __, 2011 WL 5607401 (No. 11-393).|
|29 ||Orders in Pending Cases as of Dec. 8, 2011, 565 U.S. __, 2011 WL 6091725.|
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