Affordable Care Act Litigation—2012 Year in Review

On June 28, 2012, in the decision National Federation of Independent Business, et al v. Sebelius, the U.S. Supreme Court ruled that the Patient Protection and Affordable Care Act (P.L. 111-148) (ACA) was constitutional. Accordingly, the individual mandate for nearly all Americans to secure health insurance is permissible under Congress’s taxing authority. The individual mandate imposed a penalty on individuals for refusing to buy health insurance; this amount is basically a tax, and as such is permitted. Because this mandate is Constitutional, additional parts of PPACA remained valid. However, the federal government cannot withdraw existing Medicaid funding from states that decide not to participate in a broad expansion of Medicaid eligibility.

In the wake of the Court’s decision, the implementation of the ACA continued at the federal level, and in some of the states. The legal wrangling over the law continued, with litigation focusing on the requirement that most employers provide health insurance coverage that includes various family planning benefits, and on the requirement that most Americans purchase health insurance. Below is a summary of the most significant cases.

Hobby Lobby Stores Inc. v. Sebelius, 10th Cir., December 20, 2012. A for-profit retail chain of crafting stores, along with its affiliated bookstore and owners, was not granted a preliminary injunction under the Religious Freedom Restoration Act (RFRA) (42 U.S.C. sec. 2000bb-1) against the enforcement of the preventative care coverage regulation requirement of the Affordable Care Act (45 C.F.R. sec. 147.130). The chain, its bookstore and owners did not show that they were likely to succeed on the merits of their First Amendment claims because they are secular, for-profit corporations and do not have free exercise rights, nor did they show they were likely to succeed on their RFRA claims because Hobby Lobby is not a “person” and did not show it would be substantially burdened by complying with the regulation. On December 26, 2012, the U.S. Supreme Court rejected a request from Hobby Lobby for an emergency injunction to block implementation of this regulation.

Tyndale House Publishers Inc. v. Sebelius, D.D.C., November 16, 2012. A for-profit Christian publisher was granted a preliminary injunction under the Religious Freedom Restoration Act (RFRA) (42 U.S.C. sec. 2000bb-1) against the enforcement of the contraceptive coverage requirement of the Affordable Care Act. The statute imposed a substantial burden on the exercise of religion by the publisher’s owners because the publisher was subject to lawsuits and substantial penalties if its insurance coverage for employees did not meet the requirements of the statute. The government did not show that applying the requirement to the publisher would serve a compelling interest. The protection of women’s health and the promotion of equality between men and women were not sufficiently compelling because: (1) the publisher only sought to exclude three specific birth control methods; and (2) so many workers were not covered by the law that the government did not treat its interests as compelling.

American Physicians & Surgeons, Inc. v. Sebelius, D.D.C., October 31, 2012. Every count was dismissed in a challenge by two associations questioning the validity of: (1) three provisions of the Social Security Administration’s (SSA) Program Operations Manual System; (2) CMS manuals and an interim final rule requiring physicians who do not participate in Medicare to complete forms for the National Provider Identifier and the Provider Enrollment, Chain and Ownership System (PECOS); and (3) the employer and individual mandates of the Affordable Care Act. The associations also alleged that breach of fiduciary duty by the HHS Secretary and the Commissioner of SSA resulted in the insolvency of the Social Security system. The court found that the Association of American Physicians & Surgeons and the Association for Natural Health-USA did not have standing to assert most of their claims, and the counts of the complaint for which they had standing did not state a claim on which relief could be granted.

Roman Catholic Archdiocese of New York, et al v. Sebelius, E.D. N.Y., December 4, 2012. A New York district court determined that the Roman Catholic Archdiocese of New York (Archdiocese) successfully claimed that it would sustain “certainly impending” future injuries when the contraception-related provisions of the ACA go into effect on January 1, 2014. The court rejected HHS Secretary Kathleen Sebelius’ argument that that an Advanced Notice of Proposed Rulemaking (ANPRM) that purported to exempt organizations like the Archdiocese from the requirement to offer contraceptive coverage through health insurance plans was sufficiently final to make the Archdiocese’s claims premature. The court denied Sebelius’ motion to dismiss with respect to the Archdiocese and two other Roman Catholic entities.

Zubik v. Sebelius, W.D. Pa., November 27, 2012. Claims brought by the Diocese of Pittsburgh and its various affiliated entities alleging that the contraceptive provisions promulgated pursuant to the Affordable Care Act violate the Religious Freedom Restoration Act (RFRA) (42 U.S.C. sec. 2000bb-1), the First Amendment, the Administrative Procedure Act (APA) (P.L. 79-404) and the Women’s Health Amendment of PPACA (42 U.S.C. sec. 300gg-13(a)(4)) were dismissed because the claims are not ripe for review. The court found that because HHS was taking clear and concrete steps to address the Diocese’s concerns, and has pledged not to enforce the challenged regulations while accommodations are being considered, the claims will not be ripe for review until January, 2014 at the earliest. Without alleging an injury in fact under existing law, the claims were dismissed without prejudice.

Physician Hospitals of America v. Sebelius, 5th Cir., August 16, 2012. The district court lacked the authority to determine whether a trade group and physician-owned hospital’s challenge to the constitutionality of sec. 6001 of the ACA because the plaintiffs are required, under Medicare law, to follow the administrative process. Section 6001 limits Medicare reimbursement for services furnished to a patient referred by a physician owner. The opinion was vacated and dismissed.

Kinder v. Geithner, 8th Cir., October 4, 2012. The court affirmed a district court ruling in a case where seven plaintiffs challenged various provisions of the ACA. The district court dismissed the suit for lack of standing. The lawsuit challenged, among other things, the ACA’s individual mandate. On appeal, plaintiffs pursued two claims that were raised in their amended complaint: (1) that Congress exceeded its authority under the Commerce Clause and the taxing power when it promulgated the mandate, and (2) that the mandate violates the Due Process Clause of the Fourteenth Amendment by abrogating their rights under the Missouri Health Care Freedom Act. Because plaintiffs did not plead sufficient facts to establish an injury-in-fact, they lacked standing to sue.

Walters v. Holder, S.D. Miss., August 23, 2012. Summary judgment was granted to the government in a case involving the individual mandate of the ACA as the court did not have jurisdiction to hear the case. The individuals bringing the case could not demonstrate that the individual mandate would result in hardship if their right to privacy of their medical and financial information were violated. In addition, their claims were not ripe for adjudication as they could present no particular facts demonstrating privacy violations specific to the individuals.