Ninth Circuit to Hear Argument Targeting the Independent Payment Advisory Board

Of all the court cases challenging the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), Coons v Lew (formerly Geithner) is the only case targeting the Independent Payment Advisory Board (IPAB), alleging that the creation of the IPAB is an unconstitutional delegation of Congressional powers to an unelected, unaccountable executive agency. On January 28, 2014, oral argument will commence in the Coons case in the Ninth Circuit Court of Appeals.

The second amended complaint in Coons, filed in the U.S. District Court for the District of Arizona, includes eight counts, namely (I) the PPACA exceeds Congress’s power under the Commerce Clause; (II) it exceeds the implied power granted by the necessary and proper clause; (III) it exceeds the federal government’s taxing power; (IV) it violates the Fifth and Ninth Amendments by restricting plaintiffs’ medical autonomy; (V) it violates the Fourth, Fifth and Ninth Amendments by violating their privacy; (VI) the establishment and entrenchment of the IPAB violates the First Amendment by burdening the legislative voting powers of federal legislators; (VII) it violates the doctrine of the separation of powers by establishing the IPAB; and (VIII) the it does not preempt Arizona state health care legislation.

In light of the U.S. Supreme Court’s decision in National Federation of Independent Business v. Sebelius, upholding the constitutionality of  PPACA, on August 31, 2012, the Arizona district court dismissed Counts I, II, and III. At that time, Counts VI and VII were also dismissed on their merits. Thereafter, on December 20, 2012, the Arizona district court dismissed the remaining Counts, IV, V, and VIII.

In the August 31, 2012 dismissal order, the district court gave a surprisingly short explanation regarding its dismissal of the separation of powers claim in Count VII, which challenged the establishment, delegation, and consolidation of Congressional authority to  the IPAB,  stating “To survive an anti-delegation challenge, Congress need only clearly delineate the general policy, the public agency which is to apply, and the boundaries of this delegated authority. It has met that test here.” The appellants disagree with this conclusion and the meager support for it, as will be discussed below.   

The central issue on appeal is whether the district court erred as a matter of law in dismissing appellants’ action, denying their opportunity to prove their claims set forth in counts IV (medical autonomy), V (privacy), VII (separation of powers), and VIII (nonpreemption). Since, as previously stated, the Coons case is the only one of record that assails the constitutionality of the IPAB, let’s focus on that claim (Count VII-separation of powers).

Appellants’ Argument

According to the appellants, PPACA (adding Soc. Sec. Act Sec. 1899A) creates an autonomous lawmaking entity called IPAB and gives to it the power to make laws without Congressional approval or the signature of the President. To wit: (1) the public cannot shape its edicts, as its members are not elected, nor are they required to engage in notice-and-comment rulemaking; (2) its actions are immune from both administrative and judicial review; and (3) its powers are vast – it can set price controls, levy taxes, and even ration care, so long as its actions are “related to the Medicare program.” In short, it combines the powers of every branch of government but is accountable to none. On appeal, the appellants argue improper delegation of authority and consolidation of power.  Let’s consider the two arguments.

Impermissible Delegation of Legislative Authority

Recognizing that it is impracticable for the legislature to deal directly with administrative details, the appellants recognize that the Supreme Court has allowed Congress to create vehicles to generate subordinate rules to implement the laws it has created. However, in doing so, the appellants’ argue that Congress must devise an “intelligible principle” for the entity to conform to or such legislative action is forbidden. In dismissing the separation-of-powers claim, however, the appellants argue that the district court did not identify any “intelligible principle” that  Congress has set forth to constrain the IPAB.

According to the appellants, PPACA empowers the IPAB to create advisory and legally binding proposals on matters related to the Medicare program to reduce the per capita rate of growth in Medicare spending; and authorizes the IPAB to make policy recommendations for the nation’s entire health insurance market, public or private, if it deems such policy related to the Medicare program.

As an example, the appellants’ contend that the IPAB must issue a report on system-wide health care costs, patient access to care, utilization, and quality-of-care that allows for comparison by region, types of services, types of providers, and both private payers and the ACA program. This report also requires attention to other areas that the IPAB determines affect overall spending and quality of care in the private sector. This mandate demonstrates that IPAB defines its own authority and that it is not limited to Medicare. The IPAB reports will serve as the basis of IPAB’s proposals, which automatically become law. The IPAB must also promulgate cost-cutting recommendations for non-federal health care programs. Finally, the appellants contend that if IPAB rations care, whether directly or indirectly, PPACA insulates the IPAB from judicial and administrative review, explicitly making the IPAB its own judge of whether it is acting lawfully.

The appellants’ conclude that the analysis applied by the district court on the issue of delegation of legislative authority was perfunctory and conclusory at best. The necessary judicial inquiry requires the identification and analysis of an “intelligible principle” guiding the IPAB.

Consolidation of Power

The IPAB, according to the appellants, also violates the principles of separation of powers by consolidating the powers of every branch of government while being accountable to none. While the “intelligible principle” test discussed above is applicable to the analysis of a non-delegation claim, when a law gives an executive agency other powers, courts must also consider how the other branches of government are affected.

The appellants contend that PPACA:

  • Is a super-legislature with full lawmaking powers, but without notice-and-comment rulemaking, and free from Congressional oversight of its proposals.
  • It avoids the President’s constitutional authority to recommend to Congress only such measures as he considers expedient, requiring the president to pass the proposals directly to Congress.
  • It is the final arbiter of its own actions, whose judgment transcends judicial and administrative review.
  • Removes Congress from its historical role as architect of Medicare policy, and cedes this authority to 15 unaccountable administrators, who may all be from one political party.
  • Attempts to forbid Congress from even repealing the provisions relating to the IPAB.

For example, in order to repeal the IPAB, Congress must enact a Joint Resolution, but is prohibited from introducing such a resolution until 2017 and no later than February 1, 2017. The Resolution must be enacted no later than August 15, 2017, or Congress is forever foreclosed from abolishing the IPAB. An unprecedented super-majority vote (3/5 of Congress) is required for repeal, and even if such a resolution could clear these hurdles, the repeal would not become effective until 2020. If Congress fails to repeal IPAB during this time frame, it forever loses the ability to replace IPAB proposals, which would forever usurp congressional authority in this area. If that were not enough, PPACA also prohibits administrative and judicial review of IPAB’s proposals, which automatically become law.

At the time of this writing we do not know the makeup of the Ninth Circuit panel that will hear the appeal. But we do know that however compelling the appellants’ argument, it is unlikely that the liberal-leaning Ninth Circuit will reverse the district court decision. However, the arguments proffered on January 28 are important, because they will give us a strong preview of what will be argued when the U.S. Supreme Court takes up the case – which is very likely.   

Coons v Lew (formerly Geithner), No. 13-15324, 9th Cir., on appeal from the U.S. District Court for the District of Arizona, No. CV-10-1714-PHX-GMS.