A Possibly Telling Request From The Court In The Virginia ObamaCare Lawsuits

The 4th Circuit has asked for supplemental briefs on an issue that could put a quick end to the lawsuits against the Affordable Care Act.

The ACA Litigation Blog reports that the three judge panel hearing the appeal of Virginia v. Sebelius and Liberty University v. Geithner has sent the following order to all the parties:

The court directs the parties to file supplemental briefs, not to exceed 10 pages, by the close of business on May 31, 2011 addressing the following questions:

1. When applicable, does the Anti-Injunction Act, 26 U.S.C. § 7421(a), deprive a federal court of subject-matter jurisdiction? See J.L. Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 5-8 (1962). If so, does it divest federal courts of jurisdiction in this case? See Bob Jones University v. Simon, 416 U.S. 725, 736-48 (1974).

2. Can a court determine that a challenged exaction qualifies as a “tax” for purposes of the Anti-Injunction Act without reaching the question of whether the exaction qualifies as a “tax” for purposes of Art. I, § 8, cl. 1? Compare Bailey v. George, 259 U.S. 16 (1922), with Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922).

3. Assuming the Anti-Injunction Act does apply in this case, does a plaintiff have the ability to challenge the exaction provided by § 5000A in a refund suit or otherwise? See 26 U.S.C. § 7422(a); 28 U.S.C. §§ 1331, 1340, 1346.

Entered at the direction of Judge Motz with the concurrence of Judge Davis and Judge Wynn

All of this is directed at the question, which has not actually been accepted by any of the Courts that have heard it, that the individual mandate is actually a tax, and thus subject to the much less stringent requirements of the General Welfare Clause. The Anti-Injunction Act, usually called the Tax Anti-Injunction Act, becomes an issue because it essentially provides that a Federal Court has no jurisdiction to hear any case regarding the collection of a tax, even if it is brought by the person against whom the tax is assessed, unless one of the fourteen exceptions applies. The basic purpose of the law is to force someone who wants to challenge a tax assessment to actually pay the tax and then challenge it through the IRS’s administrative procedures.

This may indicate that the three judges in the 4th Circuit are looking for a way to rule on the mandate without directly ruling on the Commerce Clause issue. As I already noted when I wrote about the oral arguments, the judges also seemed to be focusing on the question of whether or not Virginia has legal standing to pursue a lawsuit in its case based solely on the fact that it passed a statute making insurance mandates illegal.

If the judges rule that the Anti-Injunction Act bars the suit until the tax has been paid, then that would mean that neither of these cases could proceed until after 2014 when the mandate (and associated penalties) go into effect. What will be interesting to see is whether either the Courts or the litigants in the other major cases, which are pending in the Sixth and Eleventh Circuits respectively, bring this issue up. Briefing is essentially completed in Thomas More Center v. Obama (the Sixth Circuit Case) and nearly complete in Florida v. HHS (the Eleventh Circuit Case). However, since the same Solicitor General has taken over oral argument in all three cases one would expect he would bring the issues raised in the 4th Circuit up in oral argument before the other panels. How they’ll react to it remains to be seen, however if they’re at all inclined to deal with these cases in a manner that essentially ends them for now this could be the way to do it.

FILED UNDER: Health Care, Law and the Courts, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. I can’t wait to see the administrations answer to question 2, where they will no doubt try to argue it’s a tax when they want it to be, but not when they don’t. (The Patient Protection and Affordable Care Act, it’s a dessert topping AND a tax!)

  2. The government has already fully briefed in all of these cases the argument that the mandate is a tax.

  3. Herb says:

    Wow, so you really think this could quash the lawsuits until 2014? That would be a significant cooling down period…..

  4. Jay Tea says:

    Doug, I believe that Stormy is referring to all the arguments in Congress by the Act’s proponents that it was not a tax in any way, shape, or form, and would never be referred to as such. You’re the lawyer here, but I believe that such arguments can be cited as indicators of the intent of a law — and in this case, there is plenty of documentation from the Act’s backers denying that it was a tax.

    For example, President Obama himself:

    I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.

    And here’s this little tidbit: Congress specifically worked to NOT call it a tax:

    Nevertheless, in an attempt to prevent the court from ruling on the constitutionality of the individual mandate, the Obama Justice Department argued that the penalty was in fact a tax. The Justice Department argument failed because the individual mandate provision was written in a way clearly to avoid using the word “tax.”

    The defense of the Act seems to be “it’s a tax when it needs to be a tax; it’s not a tax when it needs to not be a tax.”

    Maybe some court might find that acceptable, but I sincerely hope not.

    J.

  5. sam says:

    About the penalty vs tax “argument”. Suppose I fail to pay my taxes in some year, and the government catches up with me. They assess me the taxes owed and a penalty for not paying when I was supposed to. Do I send the Treasury two checks, one for the taxes owed and one for the penalty? Or do I send only one check? And if I send only one check, what, then, is the difference between the tax and the penalty? I.e., isn’t the penalty just a further tax on me?

    Punchline: If you guys want to grasp at the slender reed of “a penalty is not a tax” — good luck.

  6. sam says:

    ” the judges also seemed to be focusing on the question of whether or not Virginia has legal standing to pursue a lawsuit in its case based solely on the fact that it passed a statute making insurance mandates illegal.”

    But that’s separate from the tax-or-penalty question and the Anti-Injunction Act, no? The question of Virginia’s standing is more primordial: Basically, Virginia asked to court to validate its claim that its citizens were not subject to federal law. SCOTUS has ruled that federal district courts do not have jurisdiction in such cases.

  7. The government has already fully briefed in all of these cases the argument that the mandate is a tax.

    Yes, but the specific reference to Art. I, § 8, cl. 1 implies the court may be thinking there’s an issue that the proposed system is not uniform. I expect that administration will try to come up with some handwaving to explain why it should be a tax in terms of the anti-injunction law, but not a tax in terms of the uniformity requirement.

  8. So much of this seems to be a conclusion in search of a rationale.

  9. sam says:

    @Stormy

    The government has already fully briefed in all of these cases the argument that the mandate is a tax.

    Yes, but the specific reference to Art. I, § 8, cl. 1 implies the court may be thinking there’s an issue that the proposed system is not uniform.

    Hmm. The article says:

    The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

    Taxes aren’t mentioned in the uniformity requirement, only “Duties, Imposts and Excises”. And, as a matter of fact, federal taxes are not uniform (as some of the commenters here are forever reminding us). But, interestingly in this case, the tax would be uniform (Warren Buffet would pay the same as Joe Nobody), right?

  10. And, as a matter of fact, federal taxes are not uniform

    Only in the case of taxes linked to income, which is because there is an ammendment specifically permitting the government to do so.

    And the lack of uniformity is not between rich and poor, it’s between various states. Healthcare costs vary widely in different parts of the country. Requiring everyone to purchase a certain type of insurance places a significantly hire burden on residents of some states than it does on residents of other states.

  11. (also, don’t forget art. I, § 2, cl. 3 and art. I, § 9, cl. 4)

  12. sam says:

    “Only in the case of taxes linked to income, which is because there is an ammendment specifically permitting the government to do so.”

    Well, (1) the tax (penalty, for those who wish it) is to be administered through the IRS (via the tax code) — does this make a difference? And (2),

    Requiring everyone to purchase a certain type of insurance places a significantly [higher] burden on residents of some states than it does on residents of other states.

    I would just note that the same is true of folks purchasing their homes via some federally-backed mortgage: Folks on a flood plain – who’ve purchased their home, etc – have a higher insurance burden placed on them than folks not living on a flood plain. And couldn’t the proposed subsidies address this (if it is a problem)? That is, if it is a problem, the subsidies could address the differential impact.

    As for, “(also, don’t forget art. I, § 2, cl. 3 and art. I, § 9, cl. 4)” — I see the spectre of the Necessary and Proper clause arising….

  13. ej says:

    “So much of this seems to be a conclusion in search of a rationale.”

    Isn’t that how pretty much all modern con-law works?

  14. I would just note that the same is true of folks purchasing their homes via some federally-backed mortgage: Folks on a flood plain – who’ve purchased their home, etc – have a higher insurance burden placed on them than folks not living on a flood plain.

    Yes, but no one is mandated to participate in those programs.

  15. sam says:

    “Yes, but no one is mandated to participate in those programs.”

    In your estimation, then, does the whole thing come down to the constitutionality of the individual mandate?

  16. Wiley Stoner says:

    It it is ruled a tax, then just pay the tax until you need medical treatment. It would be far less expensive than paying for healthcare insurance under this or any other plan. That is unless you plan some draconian tax of thousands yearly. I wonder how long the donks would even have a seat in congress with everyone mandated to pay a $10,000 per year tax for healthcare?

  17. I have no idea what it comes to, but the court apparently feels there is a potential article I issue involved with calling it a tax, or they wouldn’t have asked the question.

    I was just speculating what that issue could be.