Lat­est ap­peals put ACA on course for Supreme Court rul­ing by June

Pro­po­nents, foes of law ap­peal to Supreme Court

Modern Healthcare - - MODERN HEALTHCARE - Joe Carl­son

The U.S. Jus­tice Depart­ment charted a le­gal course last week that could pro­duce a fi­nal de­ci­sion on the con­sti­tu­tion­al­ity of the Pa­tient Pro­tec­tion and Af­ford­able Care Act in the heat of the 2012 pres­i­den­tial cam­paign.

At­tor­neys for the Jus­tice Depart­ment filed their for­mal pe­ti­tion Aug. 28 for oral ar­gu­ments be­fore the U.S. Supreme Court to ap­peal a de­ci­sion from At­lanta’s 11th U.S. Cir­cuit Court of Ap­peals that the re­form law’s man­date for in­di­vid­u­als to pur­chase pri­vate in­sur­ance was un­con­sti­tu­tional. That same day 26 state gov­ern­ments, a national em­ploy­ers’ rights group and two pri­vate cit­i­zens—who all op­pose the re­form law—ap­pealed dif­fer­ent aspects of the same de­ci­sion.

If the Supreme Court grants an ap­peal dur­ing its next spring term, as is widely ex­pected, le­gal ex­perts said the high court jus­tices would likely de­cide the fate of one of Pres­i­dent Barack Obama’s sig­na­ture do­mes­tic is­sues by the end of June 2012.

“I’m sure all sides would like to see this is­sue dealt with prior to the national elec­tions, be­cause it’s such a sig­nif­i­cant is­sue,” said James Napoli, a se­nior coun­sel with law firm Proskauer Rose with ex­per­tise in the re­form law.

The At­lanta court re­leased a 300-page de­ci­sion Aug. 12 that found the law’s re­quire­ment for nearly all Amer­i­cans to buy health in­sur­ance by 2014 was un­con­sti­tu­tional, which is what the Jus­tice Depart­ment is ap­peal­ing. But the cir­cuit court also ruled that the rest of the re­form law should be al­lowed to stand with­out the in­di­vid­ual man­date, which is what crit­ics of the law want changed.

The National Fed­er­a­tion of Independent Busi­ness, along with pri­vate cit­i­zens Kaj Ahlburg of Washington state and Mary Brown of Florida, say that Congress it­self said the man­date was “es­sen­tial” to the law, and that govern­ment lawyers have con­ceded as much in oral ar­gu­ments.

Greg Kat­sas, a Jones Day at­tor­ney rep­re­sent­ing the fed­er­a­tion, said the re­form law’s re­quire­ment that in­sur­ance com­pa­nies is­sue poli­cies to vir­tu­ally any­one who ap­plies would be­come dys­func­tional with­out the cor­re­spond­ing re­quire­ment that nearly ev­ery­one buy in­sur­ance. “The ques­tion is, if Congress couldn’t have the man­date, would they want that dys­func­tional and un­sus­tain­able scheme? The an­swer seems, pretty clearly, no,” he said.

A Jus­tice Depart­ment of­fi­cial who spoke on con­di­tion of anonymity with re­porters on a con­fer­ence call Sept. 28 said the man­date is es­sen­tial to the law’s pro­vi­sions on pri­vate in­sur­ance be­cause with­out it, “peo­ple could the­o­ret­i­cally buy in­sur­ance on the way to the hos­pi­tal.”

The case might be com­pli­cated by the ques­tion of whether the man­date is ac­tu­ally a tax, since the penalty for fail­ing to buy in­sur­ance is en­forced by the IRS as an in­come-tax penalty.

On Sept. 8, the 4th U.S. Cir­cuit Court of Ap­peals in Rich­mond, Va., dis­missed a law­suit chal­leng­ing the law af­ter con­clud­ing that the man­date was a tax, and that the fed­eral Anti-In­junc­tion Act pro­hibits us­ing the courts to chal­lenge fed­eral taxes be­fore they have been paid. The court ruled that no one would have stand­ing to chal­lenge the man­date be­cause no taxes could be paid un­til 2014.

While crit­ics of the law op­pose that rea­son­ing, so does the Obama ad­min­is­tra­tion, be­cause a Supreme Court find­ing that the man­date is a tax would es­sen­tially de­lay a fi­nal rul­ing on the re­form law for at least an­other two years, the Jus­tice Depart­ment of­fi­cial said.

Mean­while, leg­is­la­tures, gov­er­nors or at­tor­neys gen­eral with 26 states ar­gued in their Supreme Court ap­peal of the At­lanta court’s de­ci­sion that the re­form law in­cludes an un­con­sti­tu­tional re­quire­ment that forces states to ex­pand their costly Med­i­caid pro­grams.

The re­form law forces states with Med­i­caid pro­grams to ac­cept ben­e­fi­cia­ries with in­comes less than 139% of the fed­eral poverty level by 2014, and to ex­pand the num­ber of of­fered Med­i­caid ser­vices. States that don’t com­ply could lose all fed­eral Med­i­caid fund­ing—typ­i­cally more than $1 bil­lion a year each.

Although the co­er­cion ar­gu­ment has been re­jected by ev­ery fed­eral judge that has heard it, Florida At­tor­ney Gen­eral Pam Bondi was con­fi­dent of a dif­fer­ent re­sult from the high court. “If we don’t par­tic­i­pate in this, we lose all Med­i­caid fund­ing. And if that’s not co­er­cion, I don’t know what is,” Bondi said in an in­ter­view.

The Jus­tice Depart­ment of­fi­cial who spoke with re­porters Aug. 28 said the Med­i­caid-co­er­cion ar­gu­ment has no merit. “The prob­lem with that ar­gu­ment is that Med­i­caid is vol­un­tary and it is a well-es­tab­lished le­gal prin­ci­ple that states can­not ac­cept the money and not abide by the terms by which the money was supplied,” he said.

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