Fourth Circuit Tosses Challenges To Affordable Care Act, Declines To Rule On Merits
There had been some speculation after oral argument that the panel of 4th Circuit Judges hearing the appeals in Virginia v. Sebelius and Liberty University v. Geithner may have been exploring the idea of issuing rulings that stopped short of ruling on the Commerce Clause claims raised in the case. Today, that suspicion was confirmed when the Court dismissed both cases for lack of subject-matter jurisdiction on the grounds that neither the Commonwealth of Virginia nor the individual Plaintiffs in Liberty University had standing to challenge the law at this time:
In a surprise move, a three-judge panel of a federal appeals court based in Virginia has tossed out one of the most prominent challenges to the health reform law.
This is the first appeals court to toss out a case for lack of standing after a lower court had ruled on the merits. It leaves the Affordable Care Act with an even scorecard in the courts, with one appeals court ruling in favor of health reform’s constitutionality and one against it.
Most observers had expected the Virginia panel — all Democratic appointees, two of President Obama’s — to rule in favor of the health reform law, supporting the mandated purchase of insurance.
Instead, they threw a bit of a curveball.
The U.S. Fourth Circuit Court of Appeals ruled that two plaintiffs bringing challenges — Lynchberg-based Liberty University and Virginia attorney general Ken Cuccinelli — did not have standing to bring a case against the health reform law.
There isn’t a whole lot in either of these opinions that addresses the merits of the lawsuits themselves, however they do provide some interesting arguments and a possible route by which the Supreme Court could, if it wanted to, avoid ruling on the merits of the Affordable Care Act in the upcoming term.
The Virginia lawsuit differed from the 26 state lawsuit in Florida in that there were no individual Plaintiffs involved in the case. The Commonwealth’s sole challenge to the law was based upon a statute that Virginia passed at the same time that Congress passed the ACA which made it illegal to require residents of Virginia to be required to purchase health insurance. The Fourth Circuit ruled in a fairly short opinion (33 pages, 16 of which were taken up with the case header listing multiple defendants and amicus brief filers), that the mere existence of this statute was not sufficient to grant a state standing to challenge the Constitutionality of Federal Law:
Given that the VHCFA does nothing more than announce an unenforceable policy goal of protecting Virginia’s residents from federal insurance requirements, Virginia’s “real interest” is not in the VHCFA itself, but rather in achieving this underlying goal. Snapp, 458 U.S. at 600; see id. at 602 (noting that “[i]nterests of private parties are obviously not in themselves sovereign interests, and they do not become such simply by virtue of the State’s aiding in their achievement”). But a state may not litigate in federal court to protect its residents “from the operation of [a] federal statute,” Georgia v. Pa. R. Co., 324 U.S. 439, 447 (1945), nor can it escape this bar merely by codifying its objection to the federal statute in question. See New Jersey v. Sargent The presence of the VHCFA neither lessens the threat to federalism posed by this sort of lawsuit nor provides Virginia any countervailing interest in asserting the rights of its citizens. , 269 U.S. 328, 334 (1926) (dismissing an action whose “real purpose” was “to obtain a judicial declaration that . . . Congress exceeded its own authority”). Cf. Kleppe, 533 F.2d at 677. After all, the action of a state legislature cannot render an improper state parens patriae lawsuit less invasive of federal sovereignty. See Mellon, 262 U.S. at 485-86 (emphasizing that “it is no part of [a state's] duty or power to enforce [its citizens'] rights in respect of their relations with the federal government”). Nor does a state acquire some special stake in the relationship between its citizens and the federal government merely by memorializing its litigation position in a statute. See Illinois Dep’t of Transp. v. Hinson, 122 F.3d 370, 373 (7th Cir. 1997). To the contrary, the VHCFA, because it is not even hypothetically enforceable against the federal government, raises only “abstract questions of political power, of sovereignty, of government.” Mellon, 262 U.S. at 485. The Constitution does not permit a federal court to answer such questions. See id..
The Virginia law always seemed questionable to me at best. Unless you buy into the discredited nullification arguments of the 1830s and the the pre-Civil War era, the idea that a state law can overrule Federal Law is simply absurd. In fact, there’s a specific provision of the Constitution that covers it. On the face of it, I think the Court has a fairly good point when it argues that passing a law that is merely declaratory, contains no enforcement mechanism, and may well be unconstitutional itself is not sufficient to give a state standing to challenge a Federal Law in Court. Virginia’s Attorney General Ken Cuccinelli displayed no small degree of personal political ambition when he chose to file a self-standing lawsuit against the Affordable Care Act rather than join in the multi-state lawsuit that was about to be filed in Florida. Today, the Fourth Circuit slapped him back for that decision.
The more interesting and potentially important case is Liberty University v. Geithner. In that case, the university founded by Jerry Falwell and other individual Plaintiffs had filed their own lawsuit against the PPACA. At the District Court level, that case was decided in favor of the government on the merits. However, today the Fourth Circuit ruled that the individual Plaintiffs didn’t have standing to bring the lawsuit in the first place because of a Federal law called the Anti-Injunction Act, which prohibits Federal Courts from entertaining lawsuits challenging a tax assessment before the tax is paid:
As part of the Internal Revenue Code, the AIA provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.” I.R.C. § 7421(a). The Declaratory Judgment Act authorizes a federal court to issue a declaratory judgment “except with respect to Federal taxes.” 28 U.S.C. § 2201(a). In Bob Jones Univ. v. Simon, 416 U.S. 725, 732 n.7 (1974), the Court held that “the federal tax exception to the Declaratory Judgment Act is at least as broad as the Anti-Injunction Act.” Accordingly, our holding as to the Anti-Injunction Act applies equally to plaintiffs’ request for declaratory relief. The parties concede, as they must, that, when applicable, the AIA divests federal courts of subject-matter jurisdiction. The Supreme Court has explicitly so held. See Enochs v. Williams Packin g & Navigation Co., 370 U.S. 1, 5 (1962)
By its terms the AIA bars suits seeking to restrain the assessment or collection of a tax. Thus, the AIA forbids only pre-enforcement actions brought before the Secretary of the Treasury or his delegee, the Internal Revenue Service (IRS), has assessed or collected an exaction. A taxpayer can always pay an assessment, seek a refund directly from the IRS, and then bring a refund action in federal court. See United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4-5 (2008).
In a long analysis, the Court determines that the AIA does in fact bar the Plaintiff’s action in this case despite the fact that both sides basically argue that it shouldn’t. The most persuasive fact for the Court in this regard seems to be the fact that the penalties that would be imposed if one fails to comply with the individual or employer mandate provisions of the PPACA are contained within the Internal Revenue Code. This is also the reason that the government has argued in other cases, unsuccessfully, that the mandate itself should be upheld under the General Welafare/Taxation clause of Article II, Section 8. While that argument has not been accepted, the Fourth Circuit held that the penalty was sufficiently similar to a tax for the AIA to apply, that Congress took no action to exempt those penalties from the provisions of the AIA, and that none of the exceptions to the AIA apply to these penalties. For that reason, the Court essentially holds, the Constitutionality of the mandate cannot be heard until a penalty for non-compliance has actually been paid. The implications of a holding like this should be obvious. This same argument could be used to strike down both the 11th Circuit and 6th Circuit cases without ruling on the merits.
This decision likely doesn’t do much to change the timing of the litigation at this point. The 6th Circuit case, Thomas More Law Center v. Obama is already before the Supreme Court on a Writ of Certiorari, and the 11th Circuit Case, Florida v. HHS, isn’t far behind. The cases decided today could be appealed to the full 4th Circuit, but the more likely result is another trip to the Supreme Court. In the end, though, the only impact that the Virginia cases are likely to have on the outcome of the challenges to the PPACA will be to provide the Justices with a way to deal with the cases before them without having to rule on the merits in an election year, should they choose to do so.
Here’s the opinion in Virginia v. Sebelius:
Here’s the opinion in Liberty University v. Geithner: