Effect of Scalia's Death on Health-Care Cases Uncertain

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By Mary Anne Pazanowski

Feb. 16 — The legacy of Justice Antonin Scalia, who died Feb. 13 at the age of 79, is “immense,” health-policy expert Timothy S. Jost, emeritus professor at the Washington and Lee University School of Law in Lexington, Va., told Bloomberg BNA.

Scalia “moved the law steadily to the right on” a variety of legal issues, and his decisions are now settled law, Jost said.

But that legacy is less about the results than about the way Scalia changed how courts interpret the law, Stuart M. Gerson, of Epstein Becker & Green in Washington, told Bloomberg BNA. Gerson, a former acting U.S. attorney general, said Scalia didn't issue many “landmark” decisions, with a few notable exceptions, including a gun rights case, District of Columbia v. Heller, 554 U.S. 570, 2008 BL 136680 (2008), in which the court overturned a District of Columbia handgun ban, holding that the Second Amendment protects an individual's right to possess a firearm unconnected with service in a militia, and to use that firearm for traditionally lawful purposes.

But, thanks to Scalia, Gerson said, even liberals now use an originalism approach when analyzing constitutional issues, asking what the Constitution's framers intended when the document was written. Less accepted today is the argument that the Constitution is a living document, whose interpretation can change with the times.

Going forward, Scalia's absence could mean several cases will end in a tie, Jost and Gerson said. Gerson noted that most cases aren't that close, but several still to be decided this term may wind up with the justices split 4-4, including the cases having the most impact on health care.

In the event of a tie, the decision of the court of appeals stands, but isn't precedential, Jost said. Thus, the decision would be the governing law in that circuit, but not anywhere else in the country, leaving in place the circuit split a Supreme Court decision may have been intended to resolve.

Alternatively, the court could reschedule the case for reargument once a ninth justice is seated, Gerson said. Neither Jost nor Gerson believes that a new justice will be confirmed before a new president is sworn in in January 2017, though both said they believe President Barack Obama will send a nomination to the Senate.

Argued Cases

A 4-4 tie is likely, but not a certainty, in several cases having an impact on the health-care industry, Jost and Gerson said. In cases that have been argued, but no opinion has been released, Scalia's vote is a nullity, Supreme Court experts say. A vote in conference is not final, and doesn't become final until the decision issues, they said.

Scalia's death, therefore, might have an impact on the outcome of Gobeille v. Liberty Mut. Ins. Co., U.S., No. 14-181, oral arguments 12/2/15. The issue in that case was whether the U.S. Court of Appeals for the Second Circuit erred in holding that the Employee Retirement Income Security Act preempts Vermont's health-care database law as applied to the third-party administrator for a self-funded ERISA plan.

“All-payer” claims databases, which nearly 30 states either have implemented or are considering, collect information from parties that pay for medical services—such as insurance companies—about services provided to state residents. Proponents of the databases consider them a crucial tool in states' efforts to improve public health, control costs, aid research, provide transparency and foster competition among providers.

Critics, including Liberty Mutual Insurance Co., the insurance company that brought the lawsuit against Vermont's program, say the databases burden health plans by forcing them to comply with varying and expensive state requirements. They also claim the programs are preempted by ERISA, to the extent that they apply to employers that fund their own health plans.

Jost said the ultimate decision may be 5-3, not 4-4, given that the justices at oral argument appeared convinced of the value of these databases. Justice Stephen G. Breyer, in particular, pressed counsel about why states have developed varying standards for data collection—which arguably creates administrative and financial burdens for health plans—rather than petitioning federal agencies to facilitate a more uniform system.

Union Dues

Given the prevalence of unionized workplaces within the health-care industry, another case where Scalia's absence might be felt is Friedrichs v. Cal. Teachers Ass'n, U.S., No. 14-915, oral arguments 1/11/16. At issue there was whether the First Amendment prohibits public employers from entering into “fair share” or agency-shop agreements that unions depend on to finance their representation of public sector workers. In other words, whether non-union public-sector employees may be required to pay union dues that go to fund nonrepresentational expenditures.

At issue in the case was whether the court should overrule Abood v. Detroit Bd. of Educ., 431 U.S. 209 (1977), in which the court previously held that such agency-shop arrangements in the public sector pass muster under the First Amendment if nonmembers' agency fees go solely toward the costs of bargaining, contract administration and grievance adjustment.

Gerson told Bloomberg BNA he's “virtually certain” the vote there will be 4-4, given the questioning by the justices at oral argument. Whether Scalia would have voted to overturn Abood, though, will never be known.

ACA Cases

As for the Affordable Care Act, Scalia was one of five justices who joined a decision holding that a controversial provision violated the rights of religious objectors, but he fell on the losing side in two crucial cases that tested the viability of Obama's signature health-reform law itself.

In July 2015, in dissent, Scalia called “quite absurd” the court's decision that the ACA permitted individuals who bought health insurance on federal exchanges, as well as individuals who bought plans on state-operated marketplaces, to qualify for tax credits or subsidies that would enable them to afford the coverage. The statute nowhere said that federally operated exchange purchasers were eligible for federal assistance, he said in King v. Burwell, 135 S. Ct. 2480, 2015 BL 202885 (U.S. 2015), rejecting the majority's argument that Congress must have intended the subsidies to be widely available because the entire law would fail if they were not.

In 2012, he joined Justices Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr. in dissent in Nat'l Fed'n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2012 BL 160004 (U.S. 2012). A five-justice majority, in a decision by Chief Justice John G. Roberts Jr., held the ACA's individual mandate constitutional, saying the provision requiring virtually all citizens to have health insurance or pay a fine was a valid exercise of Congress's power under the taxing and spending clause.

Other than Roberts, the justices in the majority also would have held the provision valid under the Constitution's commerce clause.

The dissenters, including Scalia, wrote that the individual mandate exceeded “federal power … in mandating the purchase of health insurance.” Because the mandate was central to the ACA's “design and operation, and all the Act's other provisions would not have been enacted without” it, “it must follow that the entire statute is inoperative,” they said.

Contraceptive Mandate

But it was Scalia's majority vote in the 2014 decision in Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2014 BL 180313 (U.S. 2014), that might have the most impact this term.

The five-member majority held in that case that an ACA regulation requiring employers to provide cost-free coverage of all Food and Drug Administration-approved contraceptive drugs, devices and related services in employee health plans violated the rights of closely held for-profit corporations whose owners objected to providing the coverage on religious grounds.

In an opinion written by Alito, the court held that the Religious Freedom Restoration Act (RFRA), 42 U.S.C. §2000bb, prohibited the Department of Health and Human Services (HHS) from requiring closely held corporations to provide health-insurance coverage for methods of contraception that violate the sincerely held religious beliefs of the companies’ owners. The court said the regulation substantially burdened the owners' exercise of religion and didn't constitute the least restrictive means of serving a compelling government interest.

On March 23, the court is scheduled to hear oral arguments in Zubik v. Burwell, U.S., No. 14-1418, argument scheduled 2/23/16. This actually is a consolidation of seven cases, in which religious nonprofit organizations that object to the contraceptive mandate on religious grounds argued that they should be exempt from its provisions.

The government argued that an accommodation, which places the duty for providing contraceptive coverage on the groups' insurers once they notify the HHS in writing of their objections, removed the groups from the equation. The case is captioned Zubik v. Burwell in compliance with the Supreme Court's practice of naming a case for the first-filed petition for review.

Gerson told Bloomberg BNA the religious nonprofit organizations “may lose” this case, “even with only eight justices voting.” In Hobby Lobby, he said, the court said the government had to meet the minimally feasible standard and, Gerson said, the government “can't go any lower” than it has in the accommodation.

Jost predicted a 5-3 vote in the government's favor. The justices are sympathetic to the religious nonprofits' arguments—witness the number of stays and preliminary injunctions it has entered to keep the government from enforcing the mandate against the groups while their challenges were pending. But, while a 4-4 decision is “pretty likely, it's not inevitable,” Jost said.

Gerson and Jost agreed that it's Justice Anthony M. Kennedy who may cast the deciding vote in this case. Jost said it's likely Kennedy may side with the government, given his concurring opinion in Hobby Lobby, where he said that the lack of an accommodation for closely held corporations, like the one for religious organizations, suggested that the regulation wasn't narrowly drawn.

The Hobby Lobby majority assumed, without deciding, that the regulation served a compelling governmental interest.

Gerson said the religious nonprofits will have to pull Kennedy to tie the case, and “Kennedy is very unpredictable.” Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan are very likely to rule for the government, leaving Breyer the only “liberal” justice who may be up in the air. Breyer, though, “is a pragmatist,” Gerson said, and isn't likely to change his vote from Hobby Lobby.

The “hard part” for the religious nonprofits will be “to hold on to the other four justices,” given Kennedy's unpredictability, Gerson said.

The religious nonprofits' case always “has been strong,” Mark Rienzi, senior counsel at the Becket Fund for Religious Liberty in Washington, told Bloomberg BNA, adding that the group, which represents several challengers, including the Little Sisters of the Poor, “still feels good about the case.”

While Rienzi said Scalia's passing is a “terrible and sad tragedy,” he doesn't see the remaining justices forcing a group of Roman Catholic nuns to participate in the mandate, especially because many employers are exempt from it, and the government has other ways to ensure women are given access to contraception.

Rienzi said an employee of an objecting group, like the Little Sisters, can go to an exchange and obtain a plan that provides the coverage to which the groups object. The “government doesn't need to involve the nuns,” and Rienzi said he doesn't see the justices disagreeing with that.

Abortion

Also before the court this term is the constitutionality of provisions of a Texas law that requires doctors who perform abortions to have admitting privileges at nearby hospitals and requires abortion clinics to meet the same standards as ambulatory surgical centers.

The U.S. Court of Appeals for the Fifth Circuit held those provisions constitutional, saying they were rationally related to a legitimate state interest and that they didn't place a substantial obstacle in the path of women seeking to exercise their constitutional right to abortion in Texas (Whole Woman's Health v. Hellerstedt, U.S., No. 15-274, argument scheduled 3/2/16).

Similar laws exist or have been proposed in several other states, making the Supreme Court's decision critical to the availability of legal abortion throughout the country. The case also is the first in nearly a decade in which the court has granted review of a decision upholding state abortion regulations.

Gerson said he “had no doubt” prior to Scalia's passing that the vote would be 5-4 upholding the Fifth Circuit's decision. Now, the result is likely to be 4-4, though, again, no one can predict how Kennedy will vote, he said.

Another wildcard may be Roberts. One could expect Roberts to vote in favor of the Texas abortion provisions, but he has shown—most vividly in NFIB—a willingness “to go pretty far” to build a consensus among the justices, Gerson said.

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

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com