D.C. ap­pel­late court gives Oba­macare sub­si­dies a re­prieve

Modern Healthcare - - NEWS - By Paul Demko and Bob Her­man

Oba­macare may be less likely to face another har­row­ing U.S. Supreme Court test now that the U.S. Court of Ap­peals for the Dis­trict of Columbia Cir­cuit has thrown out a three-judge panel rul­ing block­ing pre­mium sub­si­dies to Americans liv­ing in 36 states. Last week, the court de­cided to have all its 11 judges re­hear the case. Oral ar­gu­ments are sched­uled for Dec. 17.

Many le­gal ob­servers say it’s likely the full court, with a majority of judges ap­pointed by Demo­cratic pres­i­dents, will agree with the 4th U.S. Cir­cuit Court of Ap­peals’ July decision that the In­ter­nal Rev­enue Ser­vice rule al­low­ing sub­si­dies in the 36 states served by the fed­eral in­surance ex­change is valid.

On July 22, a D.C. Cir­cuit Court panel ruled 2-1 in Hal­big v. Bur­well that the Pa­tient Pro­tec­tion and Af­ford­able Care Act clearly does not al­low fed­eral pre­mium tax cred­its for res­i­dents of states that do not es­tab­lish their own ex­changes and over­turned the IRS rule. Later that day, a 4th Cir­cuit panel ruled unan­i­mously in King v. Bur­well that the law is am­bigu­ous and that un­der the U.S. Supreme Court’s Chevron doc­trine for in­ter­pret­ing statutes, the IRS rule is a plau­si­ble in­ter­pre­ta­tion of the law.

The full D.C. Cir­cuit Court decision to va­cate the panel decision and re­hear the case—a rare move for that court—means there is no split for now be­tween dif­fer­ent fed­eral ap­pel­late courts, mak­ing it less likely the Supreme Court will take up the is­sue.

Block­ing sub­si­dies in states served by the fed­eral ex­change likely would cause mil­lions of Americans to lose cov­er­age and would be a se­vere blow to the health­care re­form law. Sup­port­ers of the law would pre­fer not to have its fate rest in the hands of the Supreme Court’s con­ser­va­tive majority. Four of those jus­tices pre­vi­ously showed their dim view of the law in their dis­sent in the land­mark 2012 case that nar­rowly up­held the law’s con­sti­tu­tion­al­ity but made Med­i­caid ex­pan­sion op­tional for the states.

Op­po­nents of the Af­ford­able Care Act had praised the D.C. panel’s July rul­ing, say­ing the two Repub­li­can-ap­pointed judges up­held the plain text of the law. Many other le­gal ob­servers, how­ever, ar­gued the court ig­nored a num­ber of pro­vi­sions in the law that sug­gested Congress meant to make sub­si­dies avail­able in all states. They noted that the cov­er­age ex­pan­sion and in­surance re­form goals of the law de­pend heav­ily on sub­si­dies be­ing avail­able in ev­ery state, and that no law­mak­ers or ob­servers thought when the law was passed that sub­si­dies would not be avail­able through the fed­eral ex­change.

Lau­rence Tribe, a lib­eral-lean­ing con­sti­tu­tional law scholar at Har­vard Law School, said the full D.C. Cir­cuit Court “is quite likely to re­verse the panel decision by tak­ing a pur­po­sive and func­tional ap­proach to the ACA rather than a nar­rowly lit­eral ap­proach.” The re­hear­ing en banc “would not have been granted oth­er­wise.” And the like­li­hood of the Supreme Court tak­ing the case “would go down sub­stan­tially” if the full D.C. Cir­cuit sides with the Obama ad­min­is­tra­tion. “This is un­likely to be the kind of is­sue that the Supreme Court would be ea­ger to take up in the ab­sence of a cir­cuit con­flict,” Tribe added.

Ja­cob Huebert, se­nior at­tor­ney with the Chicago-based Lib­erty Jus­tice Cen­ter, which sup­ports the po­si­tion of the plain­tiffs chal­leng­ing the sub­si­dies, ac­knowl­edged that hav­ing the full D.C. Cir­cuit re­con­sider the case doesn’t bode well for his side. But he noted there are pend­ing fed­eral law­suits in In­di­ana and Ok­la­homa that haven’t yet been de­cided at the trial level. They could pro­duce de­ci­sions cre­at­ing a cir­cuit split. That would make it likely that the Supreme Court would take up the is­sue.

The plain­tiffs in the King case had asked the Supreme Court to take their case di­rectly, with­out wait­ing for the full D.C. Cir­cuit to act in the Hal­big case. But Tim Jost, a Wash­ing­ton and Lee Univer­sity law pro­fes­sor who is an ex­pert on the ACA, said it’s un­likely the high court would take up the King case be­fore the D.C. Cir­cuit hears the Hal­big case and is­sues its rul­ing. “It would be ex­tremely un­usual for the Supreme Court to take (up the is­sue) if you have two ap­pel­late courts that have both up­held a fed­eral rule,” he said. “It would also be seen as purely a po­lit­i­cal decision.”

How­ever, it re­quires the votes of only four jus­tices for the Supreme Court to take a case. That means the four con­ser­va­tives who pre­vi­ously found the ACA un­con­sti­tu­tional could drive the decision to con­sider the is­sue. And that would put Chief Jus­tice John Roberts in the po­si­tion of de­ter­min­ing the law’s fate again.

“The in­ter­est­ing ques­tion is re­ally what Jus­tice Roberts would want to do, since he’s the one who saved Oba­macare last time,” said Ker­mit Roo­sevelt, a con­sti­tu­tional law ex­pert at the Univer­sity of Penn­syl­va­nia Law School.

Many le­gal ob­servers say it’s likely the full U.S. Court of Ap­peals for the Dis­trict of

Columbia Cir­cuit will agree with the 4th U.S. Cir­cuit Court of Ap­peals’ July decision.

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