U.S. Supreme Court Denies Review Of Case Challenging Employer Mandate

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By Mary Anne Pazanowski  

Dec. 2 --The U.S. Supreme Court denied review of a federal appeals court ruling finding that the Affordable Care Act's employer mandate is a valid exercise of Congress's power to regulate commerce and impose taxes under the U.S. Constitution (Liberty Univ., Inc. v. Lew , U.S., No. 13-306, review denied 12/2/13).

The high court announced its decision Dec. 2 in the case in which Liberty University Inc. and two individuals filed a petition Sept. 5 for a writ of certiorari, urging the high court to review a unanimous July decision by the U.S. Court of Appeals for the Fourth Circuit that upheld the ACA mandate, which requires employers with more than 50 full-time employees to provide their employees with health-care coverage that meets the mandate's affordability standards or pay an assessment (179 PBD, 9/16/13;40 BPR 2208, 9/17/13).

“The cert denial was totally expected,” according to Timothy S. Jost, a health law and policy expert who teaches at Washington & Lee University Law School in Lexington, Va. “The Supreme Court would have had to overrule decades of commerce and tax and spend decisions to strike down the employer mandate,” he said.

Mat Staver, founder and chairman of Liberty Counsel and the Christian school's lead attorney, disagreed in a statement released on the group's website. “The Liberty University case would make strong arguments that the employer mandate could not be upheld as a tax because the penalties are exorbitantly high and punitive. Deciding the case would have highlighted the absurdity of the Supreme Court's convoluted decision upholding the individual mandate as a tax,” he said.

Liberty Counsel also emphasized that “[d]enial of review does not result in an opinion on the merits.” It said the “Court could take up a similar challenge if a federal court of appeals strikes down the entire employer mandate, although no such challenge is currently pending.”

Petition Arguments

The petition had argued that high court review of the Fourth Circuit's decision was warranted, because the appeals court ignored the high court's rationale in NFIB v. Sebelius, 132 S. Ct. 2566, 2012 BL 160004 (2012), in which the Supreme Court held that the individual mandate wasn't authorized under the commerce clause (125 PBD, 6/29/12;39 BPR 1294, 7/3/12).

The Fourth Circuit's decision also was inconsistent with the NFIB decision's ruling on the extent of Congress's taxing and spending authority, the petition said.

The petition also urged the Supreme Court to consider whether the ACA's women's preventive services mandate could survive constitutional scrutiny. Although the Fourth Circuit didn't address the issue, the petition asserted that the appeals court's decision nevertheless conflicts with the ruling by the U.S. Court of Appeals for the Tenth Circuit in Hobby Lobby Stores, Inc. v. Sebelius, No. 12-6294, 2013 BL 172106 (10th Cir. 6/27/13) (125 PBD, 6/28/13; 40 BPR 1593, 7/2/13).

The Supreme Court recently granted review in that case (229 PBD, 11/27/13;40 BPR 2786, 12/3/13).

Jost told Bloomberg BNA that Hobby Lobby and Conestoga Wood Specialties Corp. v. Sebelius, No. 13-356, the case with which it has been consolidated, are the “appropriate vehicles for deciding” the contraceptive mandate issue.

Staver said Liberty would “wait on the Court's ruling” in the preventive services mandate cases “to decide whether to file a new challenge.” He said “[i]t is possible the High Court could side-step the HHS abortion mandate issue by deciding that for-profit corporations do not have free exercise of religion rights.”

Procedural Journey

The case was first before the Fourth Circuit when it was on review from a decision by the U.S. District Court for the Western District of Virginia, which had dismissed Liberty's complaint (229 PBD, 12/2/10; 37 BPR 2641, 12/7/10).

The appeals court in 2011 held that it didn't have subject matter jurisdiction, because the plaintiffs presented a pre-enforcement challenge to a tax, which was barred by the tax anti-injunction act (AIA), 26 U.S.C. § 7421(a) (175 PBD, 9/9/11; 38 BPR 1667, 9/13/11).

The Supreme Court in NFIB held that the AIA didn't apply.

On a petition from Liberty, the high court in November 2012 agreed that the Fourth Circuit should be given a shot at the merits and remanded the case to the appeals court (226 PBD, 11/27/12; 39 BPR 2312, 12/4/12).

Jost said it was “remarkable” the “Supreme Court ever gave the plaintiffs in this case a second chance at the Fourth Circuit.”

The petition was filed by Mathew D. Staver, Anita L. Staver, Horatio G. Mihet, Stephen M. Crampton and Mary E. McAlister of Liberty Counsel, Maitland, Fla., and Lynchburg, Va.


To contact the reporter on this story: Mary Anne Pazanowski in Washington at mpazanowski@bna.com

To contact the editor responsible for this story: Fabia Mahoney at fmahoney@bna.com