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In a 2-1 decision, the U.S. Court of Appeals for the Eleventh Circuit Aug. 12 struck down a key provision of the federal health reform law, but stopped short of declaring the entire statute unconstitutional (Florida v. HHS, 11th Cir., No. 11-11021, 8/12/11).
The court held that Congress exceeded its powers under the U.S. Constitution's commerce clause when it enacted the Patient Protection and Affordable Care Act‘s individual mandate, a provision scheduled to take effect in 2014 that would require most Americans to buy health insurance or pay a penalty.
The decision sets up a circuit split, as the U.S. Court of Appeals for the Sixth Circuit held June 29 that the individual mandate passed constitutional muster. In Thomas More Law Center v. Obama, also a split decision, the Sixth Circuit said that the individual mandate “falls within Congress's power to regulate activities that substantially affect interstate commerce” (126 HCDR, 6/30/11). Two of the Sixth Circuit judges, however, suggested that the U.S. Supreme Court should weigh in on the question and define the limits of the commerce clause.
Thomas More Law Center, a public interest law firm that was a plaintiff in the action, filed a petition for review with the Supreme Court July 26 (145 HCDR, 7/28/11). The circuit split makes it more likely the Supreme Court will grant review in at least one of the cases.
On appeal was a decision by the U.S. District Court for the Northern District of Florida that declared the entire PPACA invalid after finding the individual mandate unconstitutional. The decision was the most sweeping of those by district courts, and it was appealed by the Obama administration (66 HCDR, 4/6/11).
The action was closely watched at all stages, as it was joined by 26 states. The other plaintiffs were two individuals and an association of small businesses.
In an opinion by Chief Judge Joel F. Dubina, joined by Judge Frank M. Hull, the court said Congress could do many things under the commerce clause, but one thing it could not do was “mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”
“The federal government's assertion of power, under the Commerce Clause, to issue an economic mandate for Americans to purchase insurance from a private company for the entire duration of their lives is unprecedented, lacks cognizable limits, and imperils our federalist structure,” the court wrote.
The court said Congress has never before passed legislation that required individuals who are not in interstate commerce to enter the interstate market. The uniqueness of the health care market and the complexity and importance of the problems the individual mandate was designed to address did not justify Congress's using the commerce clause power in this fashion, it said.
The court also said that Congress, in enacting the mandate, trespassed on matters within the concern of the states. Although the federal government has power to regulate health care and insurance, both areas are traditionally reserved for state regulation, it said.
“Congress's encroachment upon these areas of traditional state concern is yet another factor that weighs in the plaintiffs' favor, and strengthens the inference that the individual mandate exceeds constitutional boundaries,” the court wrote.
In addition, the court held that the mandate was not constitutionally enacted pursuant to the Constitution's necessary and proper clause or Congress's taxing power under the general welfare clause.
Unlike the district court decision under review, the Eleventh Circuit declared that the individual mandate was severable from the remainder of PPACA. In invalidating the entire act, the court said, the Northern District of Florida placed too much emphasis on the fact that the act did not contain a severability clause. The proper test, it said, was whether Congress would have enacted the statute in the absence of the individual mandate provision.
The court concluded that PPACA—even sections requiring insurers to issue policies to people with pre-existing conditions—would have passed without the individual mandate.
The court also confirmed that PPACA‘s Medicaid expansion provision was constitutional. Plaintiffs had argued that the provision, which requires states to expand eligibility requirements for Medicaid, was unduly coercive because a state that refused to go along with the new provisions would lose Medicaid funding—something no state could afford.
Although it expressed “some hesitation,” the court said that the Medicaid provision was not unduly coercive. Several factors influenced its decision, the court said, including the fact that states were warned from the beginning of the Medicaid program that Congress reserved the right to make changes to it, as well as the fact that the federal government will bear the costs of the expansion. The court also said it was not a “foregone conclusion” that states that opt out of the expansion would lose all their federal funding.
Judge Stanley Marcus dissented in part, saying “the majority has ignored many years of Commerce Clause doctrine developed by the Supreme Court,” including “the undeniable fact that Congress' commerce power has grown exponentially over the past two centuries, and is now generally accepted as having afforded Congress the authority to create rules regulating large areas of our national economy.”
Marcus acknowledged that “there is no Supreme Court decision squarely on point dictating the result that the individual mandate is within the commerce power of Congress.” But, he said, “the rationale embodied in the Court's Commerce Clause decisions over more than 75 years makes clear that this legislation falls within Congress' interstate commerce power.”
“These decisions,” he said, “instruct us to ask whether the target of the regulation is economic in nature and whether Congress had a rational basis to conclude that the regulated conduct has a substantial effect on interstate commerce.” The individual mandate satisfies that test, Marcus said.
Several stakeholders reacted swiftly to the opinion. On the White House blog, Stephanie Cutter, deputy senior adviser, wrote that the administration “strongly” disagrees with the decision and is “confident it will not stand.”
Florida Attorney General Pamela J. Bondi (R) “declared victory” in a press release. “Today we have prevailed in preventing Congress from infringing on the individual liberty protected by the U.S. Constitution,” Bondi said. “The ruling …upholds our position that the federal health care law exceeds Congress' power,” she said.
Virginia Attorney General Kenneth T. Cuccinelli II (R) called the decision a “major victory” and congratulated his fellow attorneys general. In a press release, Cuccinelli said he was pleased that the Eleventh Circuit “ruled in favor of the two key arguments” present in Virginia's lawsuit challenging the individual mandate.
Two appeals, including one from a decision of the U.S. District Court for the Eastern District of Virginia invalidating the individual mandate, Virginia ex rel. Cuccinelli v. Sebelius, 4th Cir., No. 11-1057, were argued in the U.S. Court of Appeals for the Fourth Circuit May 10. A ruling has not yet been issued.
Several members of Congress also commented. Speaker of the House John Boehner (R-Ohio) said in a press release that the ruling validates the “American people's rejection of Obamacare” and “brings us one step closer to the inevitable demise of the law.” Boehner said the mandate not only is unconstitutional, but it also is “bad for health care and damaging to the economy.”
Sen. Mitch McConnell (R-Ky.) said he “welcome[d]” the Eleventh Circuit's ruling. “Forcing Americans to buy health insurance approved by the government was an unprecedented, unwelcome, and unconstitutional expansion of federal power, and today's decision only strengthens and adds more momentum to the efforts of those of us who are working to repeal it,” he said.
House Ways and Means Committee Chairman Dave Camp (R-Mich.) said the decision “strikes a severe blow to this fatally-flawed law” and presents the Supreme Court with “the final opportunity to overturn the law in its entirety.”
House Energy and Commerce Committee ranking member Henry A. Waxman (D-Calif.) expressed disappointment with the decision but said he “remain[ed] confident that the Supreme Court will ultimately uphold the constitutionality of the law.”
Cory Andrews, litigation counsel with the Washington Legal Foundation in Washington, told BNA that “now that the circuits are irrevocably split, Supreme Court review is absolutely certain.” He added that “those who have argued that opponents of the individual mandate's constitutionality are well outside the legal mainstream have some serious soul searching to do today.”
American Benefits Counsel (ABC) President James A. Klein agreed that the Eleventh Circuit's decision “should dispel all doubt as to who will ultimately decide this issue.” The Supreme Court “must resolve it,” he said, “and the sooner the better.”
Elizabeth Wydra, chief counsel of the Constitutional Accountability Center in Washington, said she remains convinced that “the mandate is unquestionably constitutional under the broad powers granted to Congress in our Constitution.” In a statement released Aug. 12, Wydra said the Eleventh Circuit “transformed a political disagreement into a constitutional violation.”
“Letting their policy views get the better of them, the majority ignored the text and history of the Constitution, centuries of Supreme Court precedent, and the basic reality of our modern health care system,” she said.
Ron Pollack, executive director of Families USA, saw some positive news in the Eleventh Circuit's decision. The court's ruling allows PPACA “to move forward,” he said in a press release. “All the provisions of the Act save one …will be implemented in states across the country,” he said, adding that his group is “very pleased” about the court's rulings on the Medicaid and severability issues.
ABC's Klein, however, said these aspects of the decision do “not make the situation any clearer.”
“More than anything else,” he said, “employers need certainty in order to focus on their core business missions …. At least with regard to the constitutionality of the health law, only the Supreme Court can provide that clarity.”
By Mary Anne Pazanowski
Full text of the court's opinion is at http://op.bna.com/hl.nsf/r?Open=mapi-8knqab .
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