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.

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

Attorney General McCollum announces that his legal review has determined the health care legislation's individual mandate provision is unconstitutional and that he will file a lawsuit if the bill becomes law. (January 2010)

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.

Are The Attorneys General’s Constitutional Claims Bogus?

Professor Mark Hall, Wake Forest University School of Law

Immediately after passage of health care reform, over a dozen state A.G.s sued to declare it unconstitutional, as violating states’ rights.  The Florida complaint is here, and Virginia’s here. Reminiscent of southern governors in the 1960s blocking their state universities’ gates, these legal officers in effect are saying “not on our sovereign soil.”  Since the constitutional issues have already been hashed through so thoroughly, what’s new to talk about?

First, the Florida complaint, which a dozen other states joined (AL, CO, ID, LA, MI, NE, PA,SC, SD, TX, UT, WA), focuses mainly on the financial burdens of expanding Medicaid.  This is challenged under the “commandeering” principle, as requiring states to devote sovereign resources to achieve federal aims.  But, as we know, states are free to withdraw from Medicaid, so the argument seems to fall entirely flat.  The complaint makes a bait-and-switch type of estoppel argument , that states got into Medicaid without any expectation of this expansion, and now it’s too damaging for them to withdraw.  So, in effect, states argue that the Constitution allows them to keep the federal carrot but refuse the federal stick.  Good luck selling that to an appellate court.

Second, these states complain about having to implement the insurance purchasing exchanges and their rules, but here again, states are entirely free to opt out and let their citizens use the federal exchange.  The only reason states have to implement exchanges is that they insisted the legislation give them this option, rather than forcing everyone into a single national exchange.  States can hardly complain about the responsibilities they asked for, especially when they’re still free to duck them.

Third, there are procedural problems.  States probably have no standing to enforce arguments about violation of individual rights (which is the main concern regarding the individual mandate).  Also, consider the remedy if states were to prevail:  It would wreak havoc to overturn the mandate to purchase, but not the mandate for insurers to sell without any medical underwriting.  Doing that would cause massive adverse selection and probably destroy some companies and some portions of the market, so a court would have little option but to strike down most or all of the entire law.  Surely that measure is extreme enough to give even the most activist judge pause, and so will compel most courts to find every possible way to uphold constitutionality, regardless of political persuasion.

Finally, do state nullification statutes like Virginia’s make a difference?  Not according to Harvard’s Charles Fried (who was Reagan’s Solicitor General):

The notion that a state can just choose to opt out is just preposterous…. As long as the federal law is independently constitutional, it doesn’t matter what Virginia says… It’s like Virginia saying we don’t have to pay income tax….One is left speechless by the absurdity of it.

This leaves only the well-worn arguments about exceeding powers to regulate commerce and to tax for the general welfare.  On these, most legal scholars are loud and clear about the merits.  In sum, as Sandy Levinson’s (Univ. Texas) says, “The argument about constitutionality is, if not frivolous, close to it.”

Originally posted at the O’Neill Institute for National and Global Health, Legal Issues in Health Reform.

[Ed. Note: Also Read Professor Hall's prior post on Health Reform Watch, "Is it Unconstitutional to Mandate Health Insurance?"]

Florida Senators Move to Pass Bill to Prevent Medicaid Fraud

Photo by martin.rodvand via Flickr

Kaiser Family Foundation reports that Florida Senators will likely pass legislation aimed to prevent Medicaid fraud.

KFF states:

Florida Senate Health Regulation Committee Chair Don Gaetz (R) and state Senate Health and Human Services Appropriations Committee Chair Durell Peaden (R) at a news conference on Wednesday “expressed confidence” that lawmakers will pass legislation (SB 1986) aiming to prevent and detect Medicaid fraud, the Tallahassee Democrat reports. Medicaid fraud has become a considerable issue in Southeast Florida, where home health care clinics open quickly and operate with little to no regulation or accountability, according to Gaetz and Peaden. Miami alone has twice as many home health providers than all of California, they noted.

Florida is susceptible to heightened Medicaid abuse given its relatively large Medicaid enrollment and the concomitant funds devoted to Medicaid.  In 2005, Medicaid enrollment in Florida was almost 3 million people.  In Florida, Medicaid home health participants have increased by approximately 50% between 1999 and 2005 (from 14,793 in 1999 to 21,192 in 2005). In 2006, Florida spent approximately $12.7 Billion on Medicaid.  Approximately $1.5 billion of the $12.7 billion was spent on home health and personal care.  In 2007, Florida Medicaid expenditures increased to over $14 Billion.

In addition to other fraud prevention and detection measures, the bill would also create greater incentives for whistleblowers.  KFF states:

The bill also would increase to 25% the share of recovered money that whistleblowers would be eligible to receive. Peaden said money recovered from fraud would be redirected by his panel “into health care for the truly needy.”

Further, KFF reports:

The bill also would target companies’ recruiting of patients and the practices of filing claims for non-existent patients and ordering unneeded devices and treatments. Gaetz said Florida would work with federal and local agencies to create a database that would prevent operators of fraudulent companies from re-incorporating new clinics or home services and allow regulators to prevent fraudulent companies from renewing their operating licenses. Peaden said a companion bill is being worked out in the state House (Cotterell, Tallahassee Democrat, 3/26).

As we noted recently, a Florida case (Federal Court) which would fall rather squarely within the intended aim of the proposed legislation took 10 years to discover and prosecute.  The Florida legislation is similar in purpose to the Federal Civil False Claims Act, which members of  the U.S Senate have proposed to amend to strengthen a whistleblower’s action as well.