Supreme Court Opens Door Slightly to New Review of Health Reform Law

As the U.S. Supreme Court opened its new term on the first Monday in October, it also opened the door slightly to a reconsideration of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). At the same time, other cases seeking to overturn all or some of the law were making their way through the federal court system. 

But let’s back up a moment. 

In September 2011, the Fourth Circuit Court of Appeals ruled in Liberty University v. Geithner that the district court incorrectly exercised jurisdiction to hear a challenge to PPACA sec. 1501, the individual mandate to carry health insurance. When the individual mandate goes into effect in 2014, individuals who do not have minimum essential health insurance coverage must pay a penalty to the Internal Revenue Service (IRS). The 4th Circuit ruled that the matter was barred under the Anti-Injunction Act (AIA). 

According to the court, the AIA provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person”; this applies to any “exactions” by the federal government, regardless of the words Congress used. The assessment of charges against eligible individuals was a tax because it was contained in the Internal Revenue Code and was based on the individuals’ income and its relationship to the cost of minimum essential coverage. The provision barring the use of levies or liens to collect the penalty has no bearing on the question whether the charges are a tax for purposes of the AIA. 

According to the 4th Circuit, the U.S. Supreme Court has interpreted the AIA broadly because of the need to prevent litigation from interfering with the functions of government, so that a charge may be a tax under the AIA but a penalty beyond the taxing power of Congress. 

Liberty University requested a hearing to the U.S. Supreme Court, which rejected the request on June 29, the day after it issued its ruling upholding PPACA in National Federation of Independent Business v. Sebelius. Liberty University filed a request for rehearing in July, asking the Court to vacate the 4th Circuit’s ruling that it lacked jurisdiction, and remand the case to be reconsidered in the wake of the NFIB decision. 

The request for rehearing noted that because the Court’s decision in NFIB basically annulled the 4th Circuit’s ruling that the AIA deprived it of subject matter jurisdiction, Liberty University’s challenges to PPACA sec. 1501 (the individual mandate) and sec. 1513 (the employer mandate) should be remanded to the 4th Circuit for further consideration. 

Instead of simply rejecting Liberty’s request in its order list issued October 1, the Supreme Court gave the Obama administration 30 days to file a response to the request for rehearing. According to a post on the SCOTUSblog , “there is no timetable for the Court to act on the petition after the government response has been filed at the end of this month.” 

In another case related to PPACA, the District Court for the Eastern District of Missouri on Sept. 28 rejected a request by an owner of a private company who said that regulations issued after PPACA was enacted violated the First Amendment, the Religious Freedom Restoration Act (RFRA), and the Administrative Procedure Act (APA) (O’Brien v. HHS). 

Frank O’Brien, who runs a mining and processing company in St. Louis, MO., challenged regulations issued by HHS that require most employers to offer women’s preventive health services as defined by HHS as part of its group health coverage for employees. The regulations provide an exemption for certain religious employers. Under PPACA, if employers do NOT offer health insurance, they are subject to fines. 

O’Brien, who is Catholic, stated that he and his company faced a choice of  “complying with [the ACA’s] requirements in violation of their religious beliefs, or paying ruinous fines that would have a crippling impact on their ability to survive economically.” 

The court rejected the claim that the regulations violated O’Brien’s rights under RFRA because “the challenged regulations are several degrees removed from imposing a substantial burden on [O’Brien’s company] and one further degree removed from imposing a substantial burden on …. O’Brien. Because there is no substantial burden imposed on either plaintiff’s religious exercise, plaintiffs have failed to state a claim under RFRA.” 

The court further concluded that the regulations are neutral and generally applicable, and do not offend the First Amendment’s Free Exercise Clause.

The blog for the journal Health Affairs has an overview of other cases that different courts have considered in the wake of the U.S. Supreme Court’s June decision. As the writer for this blog notes, while there are many PPACA-related cases being adjudicated in different federal courts, a new flood of cases is likely if Mitt Romney is elected president in November.