Federal Judge Allows Multi-State Lawsuit Against Health Care Reform Law To Proceed

A Federal Judge in Florida has handed a significant, albeit procedural, victory to the opponents of ObamaCare.

A Federal Judge in Florida has ruled that a lawsuit brought by more than twenty states asking that the Affordable Care Act of 2010 be declared unconstitutional may proceed to a trial on the merits:

PENSACOLA, Fla. — A federal judge ruled Thursday that parts of a lawsuit by 20 states seeking to void the Obama administration’s health care overhaul can go to trial, saying he wants hear additional arguments from both sides over whether the law is unconstitutional.

In a written ruling, U.S. District Judge Roger Vinson said it needs to be decided whether the plan violates the Constitution by requiring individuals to have health insurance or be penalized through taxes and by overburdening the states by expanding their Medicaid programs. Another federal judge in Michigan threw out a similar lawsuit last week.

Vinson set a hearing for Dec. 16. The lawsuits will likely wind up before the U.S. Supreme Court.

Florida Attorney General Bill McCollum issued a statement praising the ruling as a victory.

“It is the first step to having the individual mandate declared unconstitutional and upholding state sovereignty in our federal system,” McCollum said

As with the ruling in Virginia’s lawsuit in August, today’s decision should be seen as a victory for the Plaintiffs, albeit only a procedural one. From here, the case moves on to hearings on a Motion for Summary Judgment and a final ruling on the merits. After that, the case will quite obviously be appealed to the 11th Circuit Court of Appeals and ultimately, the Supreme Court.

Based on Judge Vinson’s ruling, though, it looks like, as in Virginia, the Federal Government is in for a tough road at the Summary Judgment phase. For example,  Vinson devotes an extensive section of the opinion to analyzing, and rejecting, the government’s argument that the mandate to purchase health insurance can be justified under Congresses taxation power:

In Virginia v. Sebelius, 3:10cv188, one of the twenty or so other lawsuits challenging the Act, the federal government’s lead counsel (who is lead defense counsel in this litigation, as well) urged during oral argument in that case that the penalty is proper and sustainable under the taxing power. Although that power is broad and does not easily lend itself to judicial review, counsel stated, “there is a check. It’s called Congress. And taxes are scrutinized. And the reason we don’t have all sorts of crazy taxes is because taxes are among the most scrutinized things we have. And the elected representatives in Congress are held accountable for taxes that they impose.” See Transcript of Oral Argument  (Virginia case), at 45 (emphasis added).

This foregoing statement highlights one of the more troubling aspects of the defendants’ “newfound”8 tax argument. As noted at the outset of this order, and as anyone who paid attention to the healthcare reform debate already knew, the Act was very controversial at the time of passage. Irrespective of the merits of the arguments for or against it, the legislation required lawmakers in favor of the bill to cast politically difficult and tough votes. As it turned out, the voting was extremely close. Because by far the most publicized and controversial part of the Act was the individual mandate and penalty, it would no doubt have been even more difficult to pass the penalty as a tax. Not only are taxes always unpopular, but to do so at that time would have arguably violated pledges by politicians (including the President) to not raise taxes, which could have made it that much more difficult to secure the necessary votes for passage. One could reasonably infer that Congress proceeded as it did specifically because it did not want the penalty to be “scrutinized” as a $4 billion annual tax increase, and it did not want at that time to be “held accountable for taxes that they imposed.” In other words, to the extent that the defendants are correct and the penalty was intended to be a tax, it seems likely that the members of Congress merely called it a penalty and did not describe it as revenue generating to try and insulate themselves from the potential electoral ramifications of their votes.

Regardless of whether the members of Congress had this specific motivation and intent (which, once again, is not my place to say), it is obvious that Congress did not pass the penalty, in the version of  the legislation that is now “the Act,” as a tax under its taxing authority, but rather as a penalty pursuant to its Commerce Clause power. Those two exactions, as previously noted, are not interchangeable.

On the Commerce Clause challenges, Judge Vinson reaches largely the same conclusion that Judge Hudson did in August, that Commerce Clause jurisprudence has never been extended as far as it would need to be in this case to justify the individual mandate:

At this stage in the litigation, this is not even a close call. I have read and am familiar with all the pertinent Commerce Clause cases, from Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 6 L. Ed. 23 (1824), to Gonzales v. Raich, 545 U.S. 1, 125 S. Ct. 2195, 162 L. Ed. 2d 1 (2005). I am also familiar with the relevant Necessary and Proper Clause cases, from M’Culloch v. Maryland, 17 U.S. (4 Wheat.) 316, 4 L. Ed. 579 (1819), to United States v. Comstock, — U.S. —, 130 S. Ct. 1949, 176 L. Ed. 2d 878 (2010). This case law is instructive, but ultimately inconclusive because the Commerce Clause and Necessary and Proper Clause have never been applied in such a manner before. The power that the individual mandate seeks to harness is simply without prior precedent. The Congressional Research Service (a nonpartisan legal “think tank” that works exclusively for Congress and provides analysis on the constitutionality of pending legislation) advised Congress on July 24, 2009, long before the Act was passed into law, that “it is unclear whether the [Commerce Clause] would provide a solid constitutional foundation for legislation containing a requirement to have health insurance.” The analysis goes on to state that the individual mandate presents “the most challenging question . . . as it is a novel issue whether Congress may use this clause to require an individual to purchase a good or service.” Congressional Research Service, Requiring Individuals to Obtain Health Insurance: A Constitutional Analysis, July 24, 2009, at 3. Even Thomas More Law Center, supra, 2010 WL 3952805, which recently upheld the individual mandate, seems to recognize that the individual mandate is without any precedent. See id. at *8 (“The Supreme Court has always required an economic or commercial component in order to uphold an act under the Commerce Clause. The Court has never needed to address the activity/inactivity distinction advanced by plaintiffs because in every Commerce Clause case presented thus far, there has been some sort of activity”).

Where this goes from here is anyone’s guess, but I wouldn’t at all be surprised to see both Judge Vinson and Judge Hudson issue rulings declaring the individual mandate unconstitutional.

Opinion embedded below:

State of Florida v. United States Dept of HHS

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. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Brummagem Joe says:

    The benefits of venue shopping?

  2. Steve Plunk says:

    It’s too bad we can’t just get this to the Supreme Court where it will end up anyway so it would save us all the time and uncertainty which impedes economic growth.

  3. Alex Knapp says:

    What’s personally interesting to me is that Republicans on the state level could very easily avoid the individual mandate and other portions of the bill when they become active by crafting alternative legislation and certifying that it provides for the same policy goal as what’s being waived. In other words, the states could simply walk out of “ObamaCare” by reforming the health care system at the state level, and the law doesn’t dictate HOW so long as the results meet certain specified criteria.

    That Republicans are going the litigation route rather than the reform route tells you exactly how serious the Party is about reforming a terrible, terrible health care system: not at all serious.

  4. sam says:

    Here’s a very nice summary of the Michigan decision (Thomas More Law Center vs. Obama, Case No 10-CV-11156, ED MI.):

    Judge Steeh on the merits.

    [H]e concluded that the minimum coverage requirement was within Congress’s commerce power on both of the grounds asserted by the federal government. First, he rejected the plaintiffs’ characterization of the regulated conduct as “inactivity.” Specifically, he reasoned that, “[f]ar from ‘inactivity,’ by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of health insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants.” (Slip op. at 16-17.) Consequently, the authority to regulate these decisions is well within the power recognized even in Lopez and Morrison. Because the regulated activity is economic in nature, it can be aggregated, and as such has a substantial effect on interstate commerce.

    Second, Judge Steeh also embraced the government’s alternative rationale that the minimum coverage provision constitutes an essential aspect of a broader regulatory scheme, which regulatory scheme clearly regulates an interstate commercial market. “The provision at issue addresses cost-shifting in [the health care services] markets and operates as an essential part of a comprehensive regulatory scheme.” (Slip op. at 18.) Importantly, Judge Steeh commented that, under Raich, Congress is empowered to regulate “wholly intrastate, wholly non-economic matters that form ‘an essential part of a larger regulation of economic activity.'” (Slip op. at 18) (quoting Raich, 545 U.S. at 24-25). Thus, Judge Steeh reads Raich as not limiting Congress to reaching only those activities, reached as a means of supporting a larger regulatory scheme, that are economic in nature. The nature of activities so regulated — economic or non-economic, commercial or non-commercial — is immaterial. http://acalitigationblog.blogspot.com/2010/10/thomas-more-law-center-v-obama-quick.html

  5. sam says:

    BTW, here’s what Orin Kerr has to say about all these circuit court cases:

    [I]n my view, what district courts do with the individual mandate is essentially irrelevant for all but political purposes. The issue in this case is legal, not factual, and an appeal is guaranteed. This means all of the district court decisions are just for show, and the real issue is whether any circuit court panels will get a majority to vote against the mandate, survive en banc challenge, and therefore create a split that prompts Supreme Court review. I personally doubt they will, and I would guess that the Supreme Court won’t review the issue without a split. If the Supreme Court does take the case it seems like a likely 8–1 to me, with Justice Thomas dissenting. But I’m not sure it’s going to get there, so the key for now is to watch for a split that survives en banc review in the circuit courts. http://volokh.com/2010/10/08/the-individual-mandate-and-applying-versus-inventing-doctrine/

  6. sam says:

    I should have written, ‘district court cases, sorry.

  7. Zelsdorf Ragshaft III says:

    If the democrats were serious about reform there would have been tort reform in the bill, but then we know trial lawyers are more interested in their lawsuits than the health of the country.

  8. Herb says:

    “That Republicans are going the litigation route rather than the reform route tells you exactly how serious the Party is about reforming a terrible, terrible health care system: not at all serious.”

    Not at all serious about their typical “judicial activism” critiques either….

  9. Steve Plunk says:

    Perhaps we should realize our health care system is expensive rather than “terrible, terrible” and that the reform in place is showing no signs of making it less expensive. Sometimes government needs to accept it cannot right every wrong or fix every problem. Even when they can something like this needs to be fixed a piece at a time not through an experimental comprehensive reform.

    The Dems passed it and passed it in a very unconventional manner so it’s partisan to blame the Republicans for not offering up something better. It belongs to our president and the Democrat controlled congress. The Dem leadership wanted socialized medicine but all they could get in this garbage and the public wants neither.

    The Republicans are very serious about effective repeal through various means. How’s that for a plan?

  10. sam says:

    @Plunk

    “Perhaps we should realize our health care system is expensive rather than “terrible, terrible” and that the reform in place is showing no signs of making it less expensive.”

    Kinda early for that pronouncement, doncha think, since the bill will not be fully implemented until 2014 and the effects will show up after that.

    @Plunk2

    “The Dems passed it and passed it in a very unconventional manner ”

    Would you please supply the details of the unconventionality. If I recall, it was pretty straightforward: The Republicans said no, the Democrats said yes, and the bill was passed. Now I’m the first to say the process was pretty, and that short description covers a multitude of the trading of horses, but if you think the process was unconventional, well, you’re just uninformed about how things go on in the Congress — no matter who is in power (see, Drug Benefit and the magical, elastic, unexpiring time limit for the final vote.)

  11. sam says:

    Oh, and one more thing:

    “The Republicans are very serious about effective repeal through various means. How’s that for a plan?”

    And very, very good luck to them.

  12. An Interested Party says:

    “How’s that for a plan?”

    Rather pathetic, if all they are going to try to do is tear up Obamacare…

  13. Trumwill says:

    The Republicans are very serious about effective repeal through various means. How’s that for a plan?

    Actually, they’re not. They’re looking at keeping the feel-good stuff (forced coverage for pre-existing conditions) while repealing the adult portions of it geared towards avoiding a Free Rider problem.

    If the Republicans repeal the part that they want to repeal, insurance companies will have to cover PECs and everybody can wait until they’re sick to get insured. I can’t imagine a better way to drive insurance rates up so high that nobody will be able to afford it. I didn’t support Obamacare, but I am disgusted by the irresponsibility of the “fiscally responsible” party.

  14. John Burgess says:

    Reps may indeed want to keep PECs, but with Obama example to guide them, they will permit the insurance companies to jack the rates on PECs. That way, the system doesn’t go bust.

  15. ratufa says:

    I don’t think the Republicans, if they gain control of Congress, will try to repeal ObamaCare outright — it does contain some popular things, after all, and Obama will veto an outright repeal.

    More likely is that they will do their best to screw up bits and pieces of it, via defunding some parts, amendments tacked on to other bills, etc, so that the implementation is a total mess. If the Republicans succeed, since Obama and the Democrats are the ones who pushed HCR through, they’ll get blamed for that mess and the worse the mess is the easier it’ll be to gut HCR entirely down the road. And if Obama & the Dems try to push back on this by vetoing budget bills and other means, Republicans may think that they can win the public relations battle.

  16. anjin-san says:

    > all the time and uncertainty which impedes economic growth.

    Its funny, I never hear successful folks whining about what is holding them back. Guess they are too busy making things happen and making money in the process.

  17. Trumwill says:

    Reps may indeed want to keep PECs, but with Obama example to guide them, they will permit the insurance companies to jack the rates on PECs.

    Only until 2014 when the mandatory coverage (that the GOP wants to repeal) takes effect. Maybe the GOP will make that part permanent, though they’ve done a stellar job of avoiding the tough questions so I am skeptical. They neither address that nor the Obama Administration’s Open Enrollment Period idea. It’s belated and insufficient, but at least the Obama Administration is confronting these questions. The GOP has not shown the same wherewithal.

    Blah. Maybe the situation will work itself out so that whomever is in charge will have to find some way to accommodate the insurance companies so that they don’t drop non-group coverage altogether. In the end, I guess I have the same problem with the GOP that I have with the Democrats. They are taking the current system that is not working and just entrenching us further into it.