Physicians Lose Health Care Law Appeal in Third Circuit

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Betsy Goldman | Bloomberg Law New Jersey Physicians, Inc. v. President of the United States, No. 10-4600, 2011 BL 201152 (3d Cir. Aug. 3, 2011) The U.S. Court of Appeals for the Third Circuit affirmed the dismissal of a constitutional challenge to the U.S. government's health care overhaul brought by a group of physicians and one of their patients. In an opinion filed on August 3, 2011, the three-judge panel held that plaintiffs failed to establish that they suffered an injury in fact and, thus, they lacked standing.

Constitutional Challenge to Health Care Overhaul

In 2010, President Barack Obama signed the Patient Protection and Affordable Care Act (the Act), H.R. 3590, Pub. L. No. 111-148. The Act contains a provision, 26 U.S.C. § 5000A, which requires all "applicable individuals" to obtain a level of health insurance that qualifies as "minimum essential coverage" or pay a penalty. This individual mandate will become effective in 2014. The Act also includes an employer responsibility provision, 26 U.S.C. § 4980H, which applies to employers that employ 50 or more full-time employees on average over a calendar year. The employer responsibility provision, which will also become effective in 2014, penalizes employers that fail to offer their full-time employees the opportunity to enroll in an employer-sponsored insurance plan that satisfies the minimum essential coverage requirement of the individual mandate. Plaintiffs New Jersey Physicians, Inc., (NJP), a non-profit organization, Mario Criscito, M.D., a licensed New Jersey physician, and "Patient Roe," one of Criscito's patients, filed suit in the U.S. District Court for the District of New Jersey on March 24, 2010, alleging that the Act is unconstitutional because the individual mandate exceeds Congress's authority. Defendants included President Obama, U.S. Secretary of the Treasury Timothy Geithner, U.S. Attorney General Eric Holder, and Secretary of Health and Human Services Kathleen Sebelius. On December 7, 2010, the district court dismissed the complaint without addressing the merits of the case, concluding that it lacked subject matter jurisdiction over the dispute. It held that plaintiffs failed to establish standing because they failed to plead adequately injury in fact. Plaintiffs appealed the ruling.

Plaintiffs Failed to Plead Injury in Fact

The Third Circuit explained that injury in fact is an "irreducible" constitutional element of standing. To establish injury in fact, plaintiffs must allege an injury that is concrete and particularized, as well as actual or imminent. Injuries that are conjectural or hypothetical will not establish standing. The Court observed that none of the plaintiffs adequately pleaded facts establishing injury in fact. Specifically, the only allegations in plaintiffs' complaint pertaining to Roe's alleged injury were that "Roe is a patient of Dr. Criscito who pays himself for his care" and that Roe "is a citizen of the State of New Jersey who chooses who and how to pay for the medical care he receives from Dr. Criscito and others." According to the Third Circuit, "[t]hese allegations [were] factually barren with respect to standing" because they provided no facts concerning who Roe chooses to pay for his medical care or how he pays. The Court further noted that there were no alleged facts in the complaint indicating that Roe was presently impacted by the Act or that he would suffer a future injury. For example, the complaint was "entirely silent" regarding whether Roe would be an "applicable individual" subject to the individual mandate. Plaintiffs argued on appeal that Criscito would suffer two types of injuries as a result of the passage of the Act: an injury resulting from the individual mandate, and injury to his practice resulting from the employer responsibility provision. The Third Circuit determined, however, that "plaintiffs plead[ed] no facts in their complaint to buttress these arguments and thus prove[d] nothing more than an impermissible 'conjectural or hypothetical' injury in fact suffered by Dr. Criscito." In particular, the relevant allegations in the complaint included only that "Dr. Criscito, in the course of his individual practice of medicine, treats patients" and that "[s]ome of those patients pay Dr. Criscito for his care and do not rely on a third-party payor to do so on their behalf." The complaint also did not specify how many employees worked for Criscito, thereby failing to establish whether the employer responsibility provision of the Act would apply to his practice. The Court thus concluded that the allegations pertaining to Criscito stated "very little" and included no facts suggesting that Criscito was suffering or would suffer an actual or imminent injury. The Third Circuit observed that plaintiffs' complaint contained only one relevant allegation pertaining to NJP, namely, that its "members and their patients will be directly affected by the legislation at issue . . . should the [legislation] become effective." According to the Court, to establish associational standing, an organization must allege facts establishing that at least one member has suffered or will suffer harm. Because the complaint failed to establish that Criscito, the one member identified in the complaint, would suffer harm, plaintiffs did not meet their burden to establish NJP's associational standing. Accordingly, the Third Circuit held that "plaintiffs have not met their burden in pleading facts that establish the requisite injury in fact and therefore fail[ed] to demonstrate standing." The Court thus affirmed the district court's dismissal of plaintiffs' complaint. Disclaimer This document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy. ©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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