Why the 11th Circuit’s Opinion on Health Care Reform Self-Destructs

Like a tragic literary figure, the 11^th Circuit’s opinion declaring the individual mandate unconstitutional is doomed to failure by its own internal contradictions.  What follows is a series of quotes directly from the opinion, paired to show how desperately the majority twisted logic in order to find its path to a unsupportable conclusion:

1.  On the key necessary and proper argument, the court obfuscated as follows:

The government’s argument derives from a Commerce Clause doctrine of recent [1995] vintage: . . . the “essential part of a larger regulation of economic activity” language in Lopez. . . . Raich [is the] the only instance in which a statute has been sustained by the larger regulatory scheme doctrine.

HOWEVER, the court was well aware that

The Supreme Court’s most definitive statement of the Necessary and Proper Clause’s function remains Chief Justice Marshall’s articulation in McCulloch v.Maryland: 17 U.S. (4 Wheat.) 316, 421 (1819).

2.  Wearing this historical and precedential blinder, the court framed the relevant test as whether the mandate is “essential” to the ACA’s overall regulatory scheme:

[W]e conclude that the Supreme Court’s “larger regulatory scheme” doctrine embodies an observation put forth in the New Deal case of Jones & Laughlin Steel Corp.: “Although activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control.” . . . [The failure to purchase insurance] in no way “burdens” or “obstructs” Congress’s ability to enforce its regulation of the insurance industry. . . . The government’s assertion that the individual mandate is “essential” to Congress’s broader economic regulation is further undermined by components of the Act itself.

BUT, of course, “essential,” “burden,” and “obstruct” are not the operative tests.  Instead, the court itself explained earlier in its decision that a much more lenient rational basis test applies:

“the Necessary and Proper Clause makes clear that the Constitution’s grants of specific federal legislative authority are accompanied by broad power to enact laws that are ‘convenient, or useful’ or ‘conducive’ to the authority’s ‘beneficial exercise.’” . . . On the breadth of the Necessary and Proper Clause, the Comstock Court noted that The Supreme Court must determine whether a federal statute “constitutes a means that is rationally related to the implementation of a constitutionally enumerated power.” “[T]he relevant inquiry is simply ‘whether the means chosen are reasonably adapted to the attainment of a legitimate end under the commerce power’ or under other powers that the Constitution grants Congress the authority to implement.”

The court never invokes or applies this test, even though (and perhaps because) it is one that the government easily meets.

3.   On whether the mandate relates to commerce:

[W]e are not persuaded that the formalistic dichotomy of activity and inactivity provides a workable or persuasive enough answer in this case. Although the Supreme Court’s Commerce Clause cases frequently speak in activity-laden terms, the Court has never expressly held that activity is a precondition for Congress’s ability to regulate commerce–perhaps, in part, because it has never been faced with the type of regulation at issue here. . . . As an inferior court, we may not craft new dichotomies … not  recognized by Supreme Court doctrine. . . .

BUT, of course the decision was all about a new categorical limit:

[T]he Act is forcing market entry by those outside the market . . . Until Congress passed the Act, the power to regulate commerce had not included the authority to issue an economic mandate. Now Congress seeks not only the power to reach a new class of “activity”–financial decisions whose effects are felt some time in the future–but it wishes to do so through a heretofore untested power: an economic mandate. . . . [T]his distinction . . . in truth [] strikes at the heart of whether Congress has acted within its enumerated power. Individuals subjected to this economic mandate have not made a voluntary choice to enter the stream of commerce, but instead are having that choice imposed upon them by the federal government. . . . Never before has Congress sought to regulate commerce by compelling non-market participants to enter into commerce so that Congress may regulate them. . . . The individual mandate does not wait for market entry.

4.  On the slippery slope concern:

To connect this conduct to interstate commerce would . . .  allow Congress to regulate anything. . . . To give but one example, Congress could undoubtedly require every American to purchase liability insurance, lest the consequences of their negligence or inattention lead to unfunded costs (medical and otherwise) passed on to others in the future . . .

BUT, why is this any real concern, considering:

The fact that Congress has never before exercised this supposed authority is telling . . . Few powers, if any, could be more attractive to Congress than compelling the purchase of certain products. Yet even if we focus on the modern era, when congressional power under the Commerce Clause has been at its height, Congress still has not asserted this authority.  Even in the face of a Great Depression, a World War, a Cold War, recessions, oil shocks, inflation, and unemployment, Congress never sought to require the purchase of wheat or war bonds, force a higher savings rate or greater consumption of American goods, or require every American to purchase a more fuel efficient vehicle . . . .

5.  On the mandate’s fit with legislative purposes, the court complained that:

the individual mandate’s attempt to reduce the number of the uninsured and correct the cost-shifting problem is woefully overinclusive.

BUT, the court also criticized the mandate for being underinclusive:

Even if the individual mandate remained intact, the “adverse selection” problem identified by Congress would persist not only with respect to [the] eight broad exemptions, but also with respect to those healthy persons who choose to pay the mandate penalty. . . . Additionally, Congress has hamstrung its own efforts to ensure compliance with the mandate by opting for toothless enforcement mechanisms.

6.  The court thought the mandate is not necessary to regulate insurers because:

[T]he conduct regulated by the individual mandate–an individual’s decision not to purchase health insurance and the concomitant absence of a commercial transaction–in no way “burdens” or “obstructs” Congress’s ability to enforce its regulation of the insurance industry.

BUT, the court conceded there is universal agreement that the mandate is needed to combat adverse selection:

Distinguished economists have filed helpful briefs on both sides of the case. While they disagree on some things, they agree about the theory of adverse selection. They agree some relatively healthy people refrain from, or opt out of, buying health insurance more often than people who are unhealthy or sick seek insurance. This results in a smaller and less healthy pool of insured persons for private insurance companies.

AND, in an analogous regulatory arena (flood insurance), the court went to some length to explain that:

Without an “individual mandate,” the flood insurance program has largely been a failure. . . . One key reason for this low participation is not surprising. . . . People living in a flood plain know that even if they do not have insurance, they can count on the virtually guaranteed availability of federal funds.

7.  Finally, on the government’s burden of persuasion, the court reflexively said:

We, as all federal courts, must begin with a presumption of constitutionality . . . We are loath to invalidate an act of Congress, and do so only after extensive circumspection.

BUT of course how it really thought and reasoned was:

[T[he government has been unable, either in its briefs or at oral argument, to point this Court to Supreme Court precedent that addresses the[] constitutionality [or economic mandates]. . . . The government’s position . . .  affords no limiting principles in which to confine Congress’s enumerated power. . . . [T]he government’s insistence that we defer to Congress’s fact findings underscores the lack of any judicially enforceable stopping point . . . . At best, we can say that the uninsured may, at some point in the unforeseeable future, create [a] cost-shifting consequence. Yet this readily leads to a scenario where we must “pile inference upon inference” to sustain Congress’s legislation . . . . The government’s factbased criteria would lead to expansive involvement by the courts in congressional legislation, requiring us to sit in judgment over when the situation is serious enough to justify an economic mandate.

Cross-posted, originally appearing on Balkinization.

Mark A. Hall, J.D., is the Fred D. & Elizabeth L. Turnage Professor of Law at Wake Forest University School of Law and a regular contributor to Seton Hall Law School’s Health Reform Watch.  He is one of the nation’s leading scholars in the areas of health care law and policy and medical and bioethics and also teaches in the MBA program at the Babcock School and is on the research faculty at Wake Forest’s Medical School. He regularly consults with government officials, foundations and think tanks about health care public policy issues, and was recently awarded the American Society of Law, Medicine and Ethics distinguished teaching award. He is the author or editor of fifteen books, including Making Medical Spending Decisions (Oxford University Press), and Health Care Law and Ethics (Aspen). He has published scholarship in the law reviews at Berkeley, Chicago, Duke, Michigan, Pennsylvania, and Stanford, and his articles have been reprinted in a dozen casebooks and anthologies.

Florida, Full Speed Ahead

The Associated Press reports that the 11^th Circuit Court of Appeals has agreed to expedite hearing on Judge Vinson’s recent ruling in Florida– which found the Health Care Law unconstitutional. Judge Vinson’s Opinion in the case has been described as “A Tea Party Manifesto” on the pages of this blog. The 11^th Circuit set an even faster hearing track than the government requested. According to A.P.,

the federal government must file its first set of court papers on the issues in the case by April 4, and the state of Florida has until May 4 to file its papers. The federal government would file additional papers by May 18.

The appeals court said it had not made a decision on a request that the initial review be held before all 10 federal judges.

Sooner rather than later we’ll come to know the power of the Commerce Clause coupled with “Necessary and Proper.”

For further elucidation on the subject, I highly recommend Professor Mark Hall’s commentary, Commerce Clause Challenges to Health Care Reform.

Judge Vinson’s Tea Party Manifesto

On first read, the most striking aspect of Judge Vinson’s ruling today is not its remedy — striking the Affordable Care Act in its entirety — but the impression one gets that the opinion was written in part as a Tea Party Manifesto.  At least half of the relevant part of the opinion is devoted to discussing what Hamilton, Madison, Jefferson and other Founding Fathers would have thought about the individual mandate, including the following remarkably telling passage (p. 42):

It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place.

As I’ve written elsewhere, the same Founders wrote a Constitution that allowed the federal government to take property from unwilling sellers and passive owners, when needed to construct highways, bridges and canals.  But Judge Vinson dismissed those and other examples with the briefest of parenthetical asides:  “(all of [these] are obviously distinguishable)” (p. 39).    Instead, he twice cites and quotes the lower court opinion in Schechter Poultry (pp. 53, 55), which struck down the National Industrial Recovery Act, at the height of the Great Depression and the pinnacle of Lochner jurisprudence.

Still, it’s fair enough to conclude, absent controlling precedent, that being uninsured might not constitute interstate commerce.   What’s harder to swallow is the judge’s rejection of the Necessary and Proper Clause.  In refusing to sever the individual mandate, he not only concedes the mandate “is indisputably necessary to the Act’s insurance market reforms, which are, in turn, indisputably necessary to . . . what Congress was ultimately seeking to accomplish,” he astonishingly devotes about ten pages (63-74) to hammering home the mandate’s necessity, explaining, for instance, that:

this Act has been analogized to a finely crafted watch . . . . It has approximately 450 separate pieces, but one essential piece (the individual mandate) is defective and must be removed. It cannot function as originally designed. There are simply too many moving parts in the Act and too many provisions dependent (directly and indirectly) on the individual mandate and other health insurance provisions — which, as noted, were the chief engines that drove the entire legislative effort — for me to try and dissect out the proper from the improper

So if the mandate is so clearly necessary, why is it not “proper.”  The answer, as in Virginia’s Judge Hudson’s opinion, is a virtual tautology:  because the Commerce Clause does not permit it.  Here are critical excerpts:

the Clause is not an independent source of federal power (p. 58) . . . Ultimately, the Necessary and Proper Clause vests Congress with the power and authority to exercise means which may not in and of themselves fall within an enumerated power, to accomplish ends that must be within an enumerated power. (p. 60)

In light of [United States v. South-Eastern Underwriters], the “end” of regulating the health care insurance industry (including preventing insurers from excluding or charging higher rates to people with pre-existing conditions) is clearly “legitimate” and “within the scope of the constitution.” But, the means used to serve that end must be “appropriate,” “plainly adapted,” and not “prohibited” or inconsistent “with the letter and spirit of the constitution.” . . . The Necessary and Proper Clause cannot be utilized to “pass laws for the accomplishment of objects” that are not within Congress’ enumerated powers.  (p. 62)

The defendants have asserted again and again that the individual mandate is absolutely “necessary” and “essential” for the Act to operate as it was intended by Congress. I accept that it is.   Nevertheless, the individual mandate falls outside the boundary of Congress’ Commerce Clause authority and cannot be reconciled with a limited government of enumerated powers. By definition, it cannot be “proper.”  (p. 63)

My full rebuttal is here, but in brief: none of this is consistent with Comstock, which allows the federal government to commit mentally ill former prisoners to civil treatment, despite the clear absence of any general federal civil commitment power.  And this is inconsistent with Lopez and with Justice Scalia’s concurrence in Raich, which note that regulation, otherwise forbidden, of local noneconomic activities, can be justified when this is “an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.”  Thus, we still await a convincing explanation of why rejecting the “necessary and proper” defense is consistent with recent Supreme Court opinions, authored or joined by most of the conservative justices.

Reform Rodeo

1. The Health Care Blog has an important piece on the role of HIT in Accountable Care Organizations (ACOs) and whether they will be open networks or walled gardens.

Will ACO (accountable care organization) IT models be walled gardens or open platforms?  i.e., will ACO IT platforms focus on exchanging information within the provider network of the ACO, or will they also be able to exchange information with providers outside the ACO network?

2. Kaiser Health News  discusses rules proposed by the Obama administration that would require health insurers to justify double-digit increases in premium rates.

Under the proposal, the flagged premium increases would be subject to review by the states – or the federal government in some cases – to determine if they are unreasonable.

In following years, the Department of Health and Human Services will adjust the specific percentage threshold for each individual state. Thresholds would vary partly because medical costs vary by state.

3. The New York Times has run a piece on a new antitrust lawsuit filed against Blue Cross Blue Shield of Michigan.

Federal prosecutors contend that Blue Cross in Michigan thwarts competitors by pressuring hospitals to charge rival insurers more to provide care, a practice prosecutors say has made health care extremely expensive in a state that can’t afford it.

4.  Tim Jost provides an overview at Health Affairs of the current state of the argument over the constitutionality of the individual mandate — including the recent decision by a federal judge in Virginia ruling the mandate unconstitutional.

Virginia adopted a statute purporting to nullify the minimum essential coverage requirement even before Congress enacted the Affordable Care Act, and the lawsuit was brought to enforce this statute.  Judge Hudson had earlier this year denied a Justice Department motion to dismiss the Virginia case, holding that the Commonwealth had standing to defend its legislation.  In his earlier decision, Judge Hudson had also held that the Commonwealth had an arguable claim that the minimum coverage requirement was unconstitutional.  Subsequent briefs filed by the Justice Department and by amici (interested parties who file as “friends of the court,” or amici curiae) supporting the reform law apparently failed to change Judge Hudson’s mind.

5. The Wall Street Journal has a story outlining the tremendous pecuniary benefits that certain spine doctors are receiving for conducting spine surgeries that some question as unnecessary.

The five surgeons are also among the largest recipients nationwide of payments from medical-device giant Medtronic Inc. In the first nine months of this year alone, the surgeons—Steven Glassman, Mitchell Campbell, John Johnson, John Dimar and Rolando Puno—received more than $7 million from the Fridley, Minn., company.

Interviews with Virginia Attorney General and White House Health Reform Director

In case you missed it: courtesy of PBS, a minute and 45 seconds of recap and then interviews with White House health reform director Nancy-Ann DeParle and Virginia Attorney General Ken Cuccinelli on the constitutionality (or lack thereof) of the individual mandate. Attorney General Cuccinelli brought the suit against the mandate that won in Virginia federal court last week. (It takes a moment or two to buffer).

From Justice Story: A Postal Power Parable on Mandating Health Insurance

This just in:  Stirred by the arguments of Randy Barnett, Ilya Somin, Judge Hudson and others, Justice Joseph Story — miraculously from the grave! — has filed an amicus brief in the 4^th Circuit appeal on the constitutionality of mandating the purchase of health insurance.  Of note, he wrote his brief in the form of a parable about Congress’ power under the postal clause to build roads — an issue that was hotly contested 2 centuries ago.   Defenders of states’ rights argued that the power to “establish Post Offices and post Roads” conveyed only the power to designate which existing state roads to use for postal routes, and not the power to acquire land and build new federal roads.  From the faint echoes of this historical debate, Justice Story appears to suggest there are lessons to learn about the modern Commerce Clause (emphases added):

The grounds of the [more restrictive position] seem to be as follows. The power given under the confederation never practically received any other construction. Congress never undertook to make any roads, but merely designated those existing roads, on which the mail should pass. At the adoption of the constitution there is not the slightest evidence, that a different arrangement, as to the limits of the power, was contemplated. . . . when a road is declared by law to be a mail-road, the United States have a right of way over it; . . . It was thought necessary to insert an express provision in the constitution, enabling the government to exercise jurisdiction over ten miles square for a seat of government, and of such places, as should be ceded by the states for forts, arsenals, and other similar purposes. It is incredible, that such solicitude should have been expressed for such inconsiderable spots, and yet, that at the same time, the constitution intended to convey by implication the power to construct roads throughout the whole country, with the consequent right to use the timber and soil, and to exercise jurisdiction over them . . .  The terms of the constitution are perfectly satisfied by this limited construction, and the power of congress to make whatever roads they may please, in any state, would be a most serious inroad upon the rights and jurisdiction of the states. It never could have been contemplated. . . . The power to create the office does not necessarily include the power to carry the mail, or regulate the conveyance of letters, or employ carriers. The one may exist independently of the other. A state might without absurdity possess the right to carry the mail, while the United States might possess the right to designate the post-offices, . . .

Yet, no man ever imagined such a construction to be justifiable.  And why not? Plainly, because constitutions of government are not instruments to be scrutinized, and weighed, upon metaphysical or grammatical niceties. They do not turn upon ingenious subtleties; but are adapted to the business and exigencies of human society; and the powers given are understood in a large sense, in order to secure the public interests. Common sense becomes the guide, and prevents men from dealing with mere logical abstractions. . . .

Under the constitution congress has, without any questioning, given a liberal construction to the power to establish post-offices and post-roads. It has been truly said, that in a strict sense, “this power is executed by the single act of making the establishment. But from this has been inferred the power and duty of carrying the mail along the post-road from one post-office to another. And from this implied power has been again inferred the right to punish those, who steal letters from the post-office, or rob the mail. It may be said with some plausibility, that the right to carry the mail, and to punish those, who rob it, is not indispensably necessary to the establishment of a post-office and a post-road. This right is indeed essential to the beneficial exercise of the power; but not indispensably necessary to its existence.” . . .  If the practice of the government is, therefore, of any weight in giving a constitutional interpretation, it is in favour of the liberal interpretation of the clause.

The fact, if true, that congress have not hitherto made any roads for the carrying of the mail, would not affect the right, or touch the question. . . . But the argument would have it, that, because this exercise of the power, clearly within its scope, has been hitherto restrained to making existing roads post-roads, therefore congress cannot proceed constitutionally to make a post-road, where no road now exists. This is clearly what lawyers call a non sequitur. It might with just as much propriety be urged, that, because congress had not hitherto used a particular means to execute any other given power, therefore it could not now do it. If, for instance, congress had never provided a ship for the navy, except by purchase, they could not now authorize ships to be built for a navy, or à converso. . . . If they had never erected a custom-house, or court-house, they could not now do it. Such a mode of reasoning would be deemed by all persons wholly indefensible. . . .

It is said, that there is no reason, why congress should be invested with such a power, seeing that the state roads may, and will furnish convenient routes for the mail. When the state-roads do furnish such routes, there can certainly be no sound policy in congress making other routes. But there is a great difference between the policy of exercising a power, and the right of exercising it. But, suppose the state-roads do not furnish . . . suitable routes for the mails, what is then to be done? Is the power of the general government to be paralyzed? Suppose a mail-road is out of repair and founderous, cannot congress authorize the repair of it? If they can, why then not make it originally? Is the one more a means to an end, than the other? If not, then the power to carry the mails may be obstructed; nay, may be annihilated by the neglect of a state. . .

The supposed silence of the Federalist proves nothing. That work was principally designed to meet objections, and remove prejudices. . . .

Judge Hudson, Bartleby the Scrivener and the “Tribeless, Lawless, Hearthless One”

As I think about Judge Hudson’s decision in Virginia, I’m struck by the espoused (and yesterday winning) concept of the individual mandate to procure health  insurance (if not exempted for religious belief) as an unprecedented  regulation of “inactivity.” As I consider this choice of supposed “inactivity,” I’m struck by the insistence to supposedly not engage in the social contract: to reap the benefit of social structure in a medical sense– to have the piece of mind which comes with knowing that EMTALA, a valid law passed by a duly constructed governing body,  insures that an emergency room may not shun you if you darken its doorway, but to insist, when it comes time to make arrangements to pay to keep those doors open, that like Melville’s Bartleby the Scrivener, you’d simply “prefer not to.”  It is perhaps constructive to remember that Bartleby ultimately exercises whatever free will he has into his own starvation  inside a prison of his own preference– or more aptly, as the result of his “preferring not to” engage in activity.

In a moral sense I suppose we may consider this justification of opting  out of the individual mandate as a form of persistent objection wrought from consent based theories of governance.  The argument stems from a concept of individual liberty. But as the Supreme Court has often said, ours is a system of “ordered liberty.” It must be. Every conscription to war has told us so– in the starkest terms possible.

And given the social nature of our existence, the inter-dependence– who but Homer’s and Aristotle’s “Tribeless, lawless, hearthless one” can claim to have not reaped the benefits of the social contract? In a medical sense? Research? To oversimplify through analogy, can you drive down the road each day, but object to pay the tax for its construction and upkeep? Which is to say, can you partake of the benefit without obliging yourself?

Governing inactivity? If you fail to shovel your walkway full of snow, may you not be fined for causing a potential public harm? If you fail to provide for the regular education of  your 12 year old daughter, will there not be legal consequences? The failure to shovel or educate both qualify as inactivity– we regulate inactivity for the public good all the time. These examples leave much to be desired as matters of commerce to be governed federally, but of course, health care itself is not “regular” commerce– the economics of healthcare are essentially different from the economics of standard market transactions.The economics of healthcare are, as Professor Frank Pasquale has written here, “unconventional.”

Professor Brad Joondeph over at ACA Litigation blog, makes the point that

perhaps the biggest single legal challenge for the administration will be to convince judges that the health insurance market is unlike any other market, and that Congress’s use of the commerce power to enact 1501(b) will not justify the compulsion of Americans to purchase any other good or service.

I think that’s right.

Having said that, there is some precedent regarding the mandate to procure in defense of the common weal. For those who refer to the individual mandate to have health insurance as an “unprecedented” federal mandate, we’ve already covered that misnomer here on HRW with Bradley Latino’s piece on the “The Original Individual Mandate, Circa 1792.” For those of you unfamiliar, it may be worth quickly recapping:

The Militia Acts of 1792, passed by the Second Congress and signed into law by President Washington, [which] required every able-bodied white male citizen to enroll in his state’s militia and mandated that he “provide himself” with various goods for the common weal:

[E]ach and every free able-bodied white male citizen of the respective States . . . shall severally and respectively be enrolled in the militia . . . .provid[ing] himself with a good musket or firelock, a sufficient bayonet and belt, two spare flints, and a knapsack, a pouch, with a box therein . . . and shall appear so armed, accoutred and provided, when called out to exercise or into service

As we further wrote:

Of course, the procurement of supplies under the Militia Acts did require Americans to engage in commerce, and, perhaps, Interstate Commerce. But it is not particularly tenable to cite the Commerce Clause as the power under which Congress and President Washington moved. More apt would be the Militia Clause, wherein Congress may “call forth the Militia” coupled with the Necessary and Proper Clause:  ”Let the end be legitimate, let it be within the scope of the constitution,” as Justice Marshall famously wrote in McCulloch v. Maryland “and all means which are appropriate, which are plainly adapted to that end . . . are constitutional.”   Importantly, McCulloch is still good law (for some idea of the breadth of the Necessary and Proper Clause power, See U.S. v. Comstock, recently decided by the Supreme Court). And yes, the Necessary and Proper Clause may work in tandem with the Commerce Clause.

What is “Necessary and Proper” to the execution of one power (Militia Clause), however, may not be ultimately determined by the Court to be constitutionally so for another (Commerce Clause). But as Constitutional Law Professor Edward Hartnett of Seton Hall Law has pointedly queried, “At least so long as McCulloch v. Maryland is good law, why would the necessary and proper clause in aid of the militia power allow for an individual mandate, while the necessary and proper clause in aid of the commerce power would not?”

I don’t believe Judge Hudson has answered that question to satisfaction. But perhaps he would prefer not to.

What’s Surprising about the Virginia Ruling Striking the Individual Mandate?

Most everyone expected district Judge Hudson in Richmond VA to strike the individual mandate as unconstitutional, so the outcome of today’s decision is hardly surprising.  What was uncertain is: 1) what remedy he would grant; and 2) how he would handle the government’s strongest argument, which is based on the “necessary and proper” clause.  On both points, he either punted or fumbled.  (See also here and here.)

For the remedy, the tough choice is whether to strike most or all of the Affordable Care Act, realizing that the Act lacks a severability provision and that Congress obviously never would have enacted it without an individual mandate.  Banning medical underwriting without an individual mandate will wreak havoc on the market for individual insurance, perhaps causing many or most insurers to withdraw, as they’ve already done in the market for child-only insurance.  Despite all of that, the judge severed and struck only the individual mandate, leaving to Congress or administrative agencies the task of avoiding the train wreck of potential market collapse.

Other courts might not be so cavalier (subtle pun intended, for those from UVA), even if they were inclined to agree on the merits.  But then they would have to strike most or all of the ACA — a much bolder move.  Both the state and the federal government agreed that severing the individual mandate was not the right move — conceding, in effect, that the mandate is inextricably intertwined with the ACA’s regulation of insurance.  That naturally leads to the next issue: whether the mandate is necessary and proper.

On that question, the Richmond court reasoned inscrutably (p. 24) that

“Because an individual’s personal decision to purchase–or decline to purchase–health insurance from a private provider is beyond the historical reach of the Commerce Clause, the Necessary and Proper Clause does not provide a safe sanctuary.”

What??  I thought the whole point of the N&P clause was to expand powers beyond those enumerated.  If the Commerce Clause itself provided the power, then we wouldn’t need N&P; thus, the ONLY time we need N&P is when the power in question is beyond enumerated powers.

The court continued:

“This clause grants Congress broad authority to pass laws in furtherance of its constitutionally-enumerated powers. This authority may only be constitutionally deployed when tethered to a lawful exercise of an enumerated power. . . . The Minimum Essential Coverage Provision is neither within the letter nor the spirit of the Constitution. Therefore, the Necessary and Proper Clause may not be employed to implement this affirmative duty to engage in private commerce.”

What!?  (I’m channeling Jon Stewart here).  Doesn’t this reason that the power in question is untethered because it’s not tethered to itself?  Shouldn’t we be looking to link to OTHER powers or objectives that ARE within the Commerce Clause?  The government’s clearly stated position, summarized by the court itself, is obviously that regulating how insurance is offered and sold is easily within the core of the commerce power.  That forms the anchor to which the individual mandate is tethered - a straightforward position to which the court never responded.

Other quirks:  Although the court nodded to the challengers’ burden of persuasion and the presumption in favor of constitutionality, it emphasized the lack of any “specifically articulated constitutional authority . . . to mandate the purchase of health insurance” (p. 20).  And although the case was about government powers rather than constitutionally-protected individual rights, the judge said (p. 37) that, “At its core this dispute is . . . about an individual’s right to choose” to be uninsured.

These parts of the opinion read to me as someone determined to strike the mandate regardless of the force of argument in the way.

[Read here Professor Hall's prior articles in Health Reform Watch on the individual mandate : "Is it Unconstitutional to Mandate Health Insurance?" and "Are the Attorneys General's Constitutional Claims Bogus."]

Mark A. Hall, J.D., is the Fred D. & Elizabeth L. Turnage Professor of Law at Wake Forest University School of Law. He is one of the nation’s leading scholars in the areas of health care law and policy and medical and bioethics and a contributor to Health Reform Watch. The author or editor of fifteen books, including Making Medical Spending Decisions (Oxford University Press), and Health Care Law and Ethics (Aspen), he is currently engaged in research in the areas of consumer-driven health care, doctor/patient trust, insurance regulation, and genetics. He has published scholarship in the law reviews at Berkeley, Chicago, Duke, Michigan, Pennsylvania, and Stanford, and his articles have been reprinted in a dozen casebooks and anthologies.

Professor Hall also teaches in the MBA program at the Babcock School and is on the research faculty at Wake Forest’s Medical School. He regularly consults with government officials, foundations and think tanks about health care public policy issues, and was recently awarded the American Society of Law, Medicine and Ethics distinguished teaching award.

Just What the Doctor’s Health Lawyer Ordered: An ACA Litigation Blog

In what promises to be a tremendous resource for all keeping score on the health reform law litigation front, Brad Joondeph, Professor of Law at Santa Clara University School of Law, has put together a blog which features updates on  PPACA litigation as well as a compilation of the pertinent documents in such cases. Described as  “A place to find news updates, legal analysis, and all official documents related to the states’ constitutional challenges to the Patient Protection and Affordable Care Act (as amended by the Health Care and Education Reconciliation Act of 2010),” it is.

You can find the ACA Litigation Blog here. Going forward, HRW will gladly feature it as a live RSS feed in the far right sidebar.

(Tip of the hat to the HealthLawProf Blog for pointing it out)

Election Fallout and Why State Initiatives to Exempt Residents from Health Care Law are Not Just Symbolic

As the election results filter in and America finds itself trying on some level to read tea leaves, analysts and pollsters are hard at work trying to get a sense of why things fell out the way they did. Most pertinent to this blog, of course, is just what kind of role the health care law played in these elections. The Wall Street Journal’s Health Blog writes:

Official exit polls put health care as the second-most important issue driving votes, with 19% of those surveyed by Edison Research (for media organizations) saying it was their key issue, Politico reports. That paled, however, to the 62% who said the economy was most important.

Time Magazine’s Swampland Blog has a quick and effective breakdown of the health reform impact on a number of candidates. Entitled “Mixed Results on the Health  Reform Referendum,” you can find that here.

I have, however, issue with one aspect of the Time piece. It states:

Voters in Arizona, Colorado and Oklahoma also had a chance to weigh in on symbolic ballot initiatives to amend their state constitutions to exempts residents from portions of the Affordable Care Act. These are symbolic because federal law trumps state law — the point of the initiatives is basically to send a message of opposition. Oklahoma voters resoundingly approved their measure. (Missouri voters acted similarly in August.) It’s still early, but Colorado voters look like they are more split, with 55% of voter voting against the measure with 24% of precincts reporting. In Arizona, even fewer votes have been tallied — the count stands at 56% approving the measure with 14% of precincts reporting. (emphasis added).

I do not discount that these initiatives have symbolic value, but as I’ve noted before on this blog, such initiatives are not wholly symbolic. When the AMA’s Amed News wrote a similar story regarding the similar Missouri initiative, I noted that a federal judge in Virginia found standing in a challenge against the health care law based upon just such an initiative. I wrote:

Generalities aside, as is best in this regard, it strikes me that the Missouri initiative may have more than just symbolic value. Importantly, in the recent federal court decision regarding Virginia’s suit against the individual mandate, the judge in that case found standing for the state of Virginia–an exceedingly important, though procedural, ruling. It is exceedingly important because without standing the case could simply not go forward. The judge in the case found standing for Virginia’s 10th Amendment claim largely based upon a law passed subsequent by the state of Virginia. Regarding that matter I wrote:

In deciding the standing issue, Judge Hudson, according to Professor Jack Balkin, made much of the “Virginia Health Care Freedom Act– which asserts that no Virgina citizen may be forced to purchase health care insurance; that this law conflicts with the federal Affordable Care Act, and therefore Virginia has standing to challenge the act under the 10th amendment.”

Virginia’s Act was passed subsequent to the federal law in question; other states challenging the individual mandate do not, at present, have such a law to rely on. As Professor Balkin points out, however, the Virginia Act being deemed sufficient to buttress standing in a States’ rights Tenth Amendment claim is interesting– to say the least. It begs the question.

In more than just symbolic terms, Missouri may have just answered that question–at least in terms of 10^th Amendment standing–if, of course, its federal district court sees the matter in the same way as did Judge Hudson. Certainly not guaranteed– the Missouri Federal Court is not bound by the Federal Court of Virginia– but nonetheless, Missourian’s just laid claim to an argument that has won elsewhere.

Arizona, Colorado and Oklahoma may have just done the same.

Health Care Law Challenges Move Toward Supreme Court: Michigan Suit Denied as Florida Suit Moves Forward

Just a week after a Michigan judge prevented a suit challenging the Patient Protection and Affordable Care Act from moving forward, a Florida judge allowed a similar challenge to be judged on its merits. Both cases, Thomas More Law Center v. Obama and Florida v. U.S. Department of Health and Human Services, challenge the new health care law. Specifically, the suits alleged that the individual mandate provision of the health care law, which is scheduled to go into effect in 2014 and would require every individual (except for a number exempted) in the U.S. to purchase health care, violates the constitution. In Michigan, a judge held that it does not. In Florida, a judge held that, due to its unprecedented nature, it could violate the constitution and denied the motion to dismiss, which will allow the case to move forward based on its merits.

Many commentators believe these lawsuits and others, like Virginia v. Sebelius in Virginia and Kinder v. Geithner in Missouri, will ultimately end up in the U.S. Supreme Court.

Florida v. Department of Health and Human Services

The Florida suit alleged that the statute violates the U.S. Constitution by mandating that every American purchase health care or else pay a penalty. The six-count complaint charged that the statute exceeded congressional authority under the commerce clause, violated due process and otherwise interfered with states’ sovereignty rights.

The 65-page opinion begins by determining whether, for analytical purposes, the prescribed payment for non-compliance with the individual mandate was a penalty or a tax. The court considered it a penalty, therefore holding that the statute cannot be considered constitutional based only on the federal government’s taxation powers.

The court also considered whether the plaintiffs had standing to pursue the litigation, which, in short, requires that a plaintiff has suffered a concrete harm  by the defendant which is capable of being redressed by the court. The court held that it did because while the individual mandate provision will not take effect until 2014, the injury is impending and will occur in due time.

Addressing the merits of the case, the court dismissed plaintiffs’ claim that the law interfered with the individual states’ (19 others joined Florida in the suit) sovereignty rights as employers. The court also dismissed plaintiffs argument that the individual mandate violates due process rights, holding that the freedom to decide whether or not to buy health care is not a “fundamental right.”

The plaintiffs argued that the federal government exceeded its power over the states by “coercing” them to expand Medicare. The court ruled that the argument was “shaky,” but nevertheless allowed it to move forward because little law in the Fourth Circuit (which includes Florida) addresses the coercion theory: that is the theory that the federal government may induce states to participate in federal programs through financial incentives, but it cannot put the states in a position where rejecting a federal program would be so burdensome as to tip the scale from mere inducement to actual coercion. The theory came from the Supreme Court’s decision in South Dakota v. Dole.

Finally, the court addressed plaintiffs’ claim that the statute improperly expands the commerce clause of the U.S. Constitution. The court reasoned that the individual mandate is unprecedented in history (apparently not having read Bradley Latino’s article, “The Original Individual Mandate, Circa 1792“), which alone does not make it unconstitutional. However, the court held that the unprecedented nature and novelty of the commerce clause justification makes the question as to whether the statute is an unconstitutional expansion of the commerce clause, at the very least, enough to state a claim for relief. Hence, the court ruled, the litigation may move forward. Which is to say that the plaintiffs claim survived in part the motion to dismiss for failure to state a claim. A first, but important hurdle, though governed by a deferential standard in favor of the plaintiffs. Barring the unforeseen, the next hurdle will be the motion for summary judgment.

“In American legal practice summary judgment can be awarded by the court prior to trial, effectively holding that no trial will be necessary. Issuance of summary judgment can be based only upon the court’s finding that: 1) there are no issues of “material” fact requiring a trial for their resolution, and 2) in applying the law to the undisputed facts, one party is clearly entitled to judgment.”

Thomas More Law Center v. Obama

On Oct. 7, just a week before the Florida ruling, a Michigan judge, deciding on the merits of the case, found for the defendants in a suit challenging the individual mandate to buy health insurance in the Patient Protection and Affordable Care Act. The opinion, written by Judge Steeh, found that the Plaintiffs, the Thomas More Law Center and other individually named plaintiffs, had standing even though they have not been penalized under the law for not buying health care. This provision does not take effect until 2014.

The judge ruled that the plaintiffs had standing because, even though the challenged provision of the bill does not go into effect for four more years, they suffered an immediate harm because they could be taking an action, or arranging their affairs,  such as saving money in anticipation of the mandate.

In Virginia v. Sebelius, the court also found standing for the plaintiff in a challenge to the statute. There, however, the court ruled that the plaintiff, the Commonwealth of Virginia, had standing because the commonwealth made its own statute prohibiting any individual mandates to purchase health insurance. The claim survived a motion to dismiss and will move forward.

Here, however, the motion was dismissed on other grounds. Judge Steeh rejected plaintiffs’ argument that refraining from purchasing insurance was economic “inactivity” and therefore could not be subject to federal control under the commerce clause of the U.S. Constitution. Instead, the judge reasoned that plaintiffs were making an “economic decision” to pay for healthcare services later, out of pocket, rather than sooner, by purchasing a health insurance plan.

Finally, the judge reasoned that the individual mandate is essential to a broader regulatory scheme. Citing Gonzalez v. Raich, where the Supreme Court sustained Congress’s authority to prohibit the possession of homegrown marijuana for personal use because of its impact upon the aggregate, the court noted that the individual mandate on healthcare was essential to a broader regulatory scheme. Like in Raich, the statute would not work without a mandate to purchase health insurance, the court noted, because, “the most costly individuals would be in the insurance system and the least costly would be outside it.” The court concluded that the individual mandate is a reasonable or rational means of carrying out Congress’s goal.

The Florida court’s ruling on standing makes it the third court to allow a suit challenging the individual mandate to overcome the standing argument, a procedural hurdle some commentators did not believe those opposed to the individual mandate could overcome. Having said that, the Michigan court’s decision is the first of the suits to be decided on the merits– and the Individual Mandate prevailed.

Reform Rodeo

1. Stem Cell News: A ban imposed by a federal district court on the use of federal funding for embryonic stem cells has been stayed by a court of appeals judge.

2. Important PPACA Case: Kaiser Health News notes that a closely followed hearing is scheduled in Florida for a case filed by 20 state attorneys general that challenges PPACA’s individual mandate.

3. Primary Care no Panacea: Maggie Mahar discusses new research which finds that a greater population of primary care physicians is not a sufficient condition to improving the quality of care.

4. Bending the Cost Curve: The New York Times discusses a new study by The Center for Medicare and Medicaid Services that outlines the future costs of health care under PPACA. The study itself can be found here.

5. On Defensive Medicine: Joe Paduda describes recent research that reveals only a minimal cost for defensive medicine.

Florida Attorney General McCollum Falls Victim to Collective Mandate, Loses Bid for GOP Nomination for Governor

Attorney General Bill McCollum, noted of late for spearheading the state suits against the Individual Mandate in health reform, has lost his bid for the Republican Party nomination for governor of Florida. Political newcomer Rick Scott, a self styled “conservative outsider” and former hospital corporation CEO, poured over $30 million of his own money into the race and won the nomination.  According to Fox News/AP, Mr. Scott, who has never run for any office before, “was active last year opposing the health care legislation in Washington.”

With 93 percent of precincts reporting, Scott led McCollum 47 percent to 43 percent.

Fox/AP also reports that the result is the culmination “of months of personal attacks, name-calling and negative TV ads….”

And that

McCollum, who racked up endorsements from big Republican names, hit Scott hard for past Medicare fraud allegations. Scott was the CEO of HCA/Columbia Hospitals when it settled the biggest Medicare fraud case in history — Scott, who was forced out as CEO by his board amid the government investigation in 1997, has said repeatedly that he didn’t know about any criminal activity and was never charged.

Tip of the Hat to JanetHasty via good ol’ twitter.

Missouri Votes Against Individual Mandate, May Impact Standing Argument in Federal Court

Recently, Missouri voters overwhelmingly approved a ballot initiative which, according to the AMA’s amednews.com, “ask[ed] voters in part if they want to ‘deny the [federal] government authority to penalize citizens for refusing to purchase private health insurance or infringe upon the right to offer or accept direct payment for lawful health care services.’”

More than 71% of voters approved the initiative which seeks to negate the individual mandate, 29% voted against.

As recent events in California regarding Proposition 8 have shown, a referendum deemed unconstitutional  is without force of law.

In the AMA’s article, it is noted that

Few legal experts consider the state proposals more than symbolic, as federal law generally trumps state law. But lawsuits filed or joined by officials in 21 states challenging the federal government’s authority to require health insurance have the potential to overturn the federal law.

Generalities aside, as is best in this regard, it strikes me that the Missouri initiative may have more than just symbolic value. Importantly, in the recent federal court decision regarding Virginia’s suit against the individual mandate, the judge in that case found standing for the state of Virginia–an exceedingly important, though procedural, ruling. It is exceedingly important because without standing the case could simply not go forward. The judge in the case found standing for Virginia’s 10th Amendment claim largely based upon a law passed subsequent by the state of Virginia. Regarding that matter I wrote:

In deciding the standing issue, Judge Hudson, according to Professor Jack Balkin, made much of the “Virginia Health Care Freedom Act– which asserts that no Virgina citizen may be forced to purchase health care insurance; that this law conflicts with the federal Affordable Care Act, and therefore Virginia has standing to challenge the act under the 10th amendment.”

Virginia’s Act was passed subsequent to the federal law in question; other states challenging the individual mandate do not, at present, have such a law to rely on. As Professor Balkin points out, however, the Virginia Act being deemed sufficient to buttress standing in a States’ rights Tenth Amendment claim is interesting– to say the least. It begs the question.

In more than just symbolic terms, Missouri may have just answered that question–at least in terms of 10^th Amendment standing–if, of course, its federal district court sees the matter in the same way as did Judge Hudson. Certainly not guaranteed– the Missouri Federal Court is not bound by the Federal Court of Virginia– but nonetheless, Missourian’s just laid claim to an argument that has won elsewhere.

Judge Rules, Virginia Moves Forward Against Individual Mandate

Federal District Court Judge Henry E. Hudson has ruled that Virginia’s suit against the federal government for imposing an individual mandate to purchase health insurance can go forward. Which is to say that the suit survived the motion to dismiss for failure to state a claim. A primary consideration therein being whether or not Virginia had standing to bring such a claim.The judge ruled that it did.

Which means that the judge has ruled that the case can go forward and the issues be heard and then decided on their merits. No small thing, sine qua non in fact, but largely a procedural hurdle in what most believe will be a long and arduous trek through the legal system, subject to myriad appeals culminating, ultimately, before the Supreme Court.

In deciding the standing issue, Judge Hudson, according to Professor Jack Balkin, made much of the “Virginia Health Care Freedom Act– which asserts that no Virgina citizen may be forced to purchase health care insurance; that this law conflicts with the federal Affordable Care Act, and therefore Virginia has standing to challenge the act under the 10th amendment.”

Virginia’s Act was passed subsequent to the federal law in question; other states challenging the individual mandate do not, at present, have such a law to rely on. As Professor Balkin points out, however, the Virginia Act being deemed sufficient to buttress standing in a States’ rights Tenth Amendment claim is interesting– to say the least. It begs the question.

Balkin:

Indeed, the logic of the opinion seems to suggest that if Virginia had objections to any other part of the federal tax laws, it could pass a Virgina Tax Freedom Act related to that provision, claiming that the tax provision was beyond the reserved powers of the states under the Tenth Amendment. This new act would give it standing to challenge any other part of the Internal Revenue Code, and it would also get around the tax anti-injunction act. Moreover, under the logic of the opinion, every other state in the Union could also create its own tax freedom act, and each of them would also be entitled to begin a series of tax protest challenges to provisions of the Internal Revenue Code. This cannot be consistent with the purposes of the tax anti-injunction act.

If you have a minute, it would actually be well spent on reading Professor Balkins post. Even if you are not a lawyer, I think you’ll find his writing accessible– and rewarding. He frames the difficulties of the opinion well.

Having said that, in a recent post we recounted the NY Times recap of the government’s argument regarding “inactivity” and the Commerce Clause:

Ian H. Gershengorn, a deputy assistant United States attorney general, countered that the insurance requirement fitted well within the Supreme Court’s parameters for Congressional regulation of interstate commerce. A choice not to obtain coverage, he said, is not inactivity, as Virginia and the other state plaintiffs claim, but an active decision to pay for future medical care out of pocket.  Because many Americans cannot afford the cost of surgeries and hospitalization, their choice to go uninsured shifts the uncompensated cost of their care to hospitals, taxpayers and commercial policyholders.

The argument seems to have not persuaded Judge Hudson. Quoting from the opinion, Daily Finance writes:  “From a legal standpoint, the judge defined the issue as:

‘whether or not Congress has the power to regulate — and tax — a citizen’s decision not to participate in interstate commerce [by choosing not to buy health insurance.]‘”

For those of you with more interest in the subject, I would suggest these two posts:

1) “Is it Unconstitutional to Mandate Health Insurance? ,” which was originally published here on HRW by Professor Mark Hall and then later cited by the New York Times, Washington Post, etc.

And

2) “The Original Individual Mandate, Circa 1792,” which was originally published here on HRW by Bradley Latino, a Seton Hall Law student, and then by The Health Care Blog and on Maggie Mahar’s Health Beat Blog.

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