Argument was held on May 10, 2011 in the United States Court of Appeals for the Fourth Circuit in Liberty University, Inc. v. Geithner and Commonwealth of Virginia v. Sibelius.  At issue were challenges to the Patient Protection and Affordable Care Act (ACA).  In Liberty University, Judge Moon of the Western District of Virginia rejected contentions that the ACA impinged on religious freedom and exceeded Congress’s power under the Commerce Clause.  In Virginia v. Sibelius, Judge Hudson of the Eastern District of Virginia declared ACA’s mandate that individuals obtain health insurance or pay a penalty unconstitutional. 

In accord with Fourth Circuit practice, the composition of the panel was not disclosed until this morning.  The Panel consisted of the Hon. Diana Gribbon Motz (presiding), appointed by President Clinton in 1994, and the Hon. Andre Davis and the Hon. James A. Wynn, Jr., appointed by President Obama.  Judge Davis previously served as a federal district court judge in Maryland; Judges Motz and Wynn served on the intermediate courts of appeal in Maryland and North Carolina respectively.  All the judges had obviously given the cases a great deal of study and participated actively in the questioning which dominated the arguments.

Liberty University was argued first and the argument focused primarily on the merits of the Commerce Clause issues.  Mathew D. Staver, Liberty Counsel, argued for the appellants.   Questions during his argument, and to a lesser extent during the government’s, focused on how to draw the line between what the federal government can force a person to do affirmatively versus what it can prohibit a person from doing.  Although it is always dangerous to draw conclusions from questions from the Bench, Judge Davis’s questions strongly suggested that he was inclined to view the mandate as a legitimate exercise of Congressional power.  Judge Motz seemed troubled by the scope of Congressional power suggested by the government’s position.

In contrast to Liberty University, the Virginia v. Sibelius oral argument focused on whether the Commonwealth of Virginia had standing to sue the federal government to invalidate the individual mandate.  The Commonwealth brought suit based on a statute passed by the Virginia legislature to the effect that no citizen of the Commonwealth could be required to purchase health insurance.  The court seemed concerned both with the circumstances under which a state may sue the federal government generally and with whether in this case the Commonwealth had attempted to “manufacture” standing by deliberately putting its own statute in conflict with a federal law for the purpose of filing a lawsuit.

Oral argument on the constitutionality of the ACA will be heard in the Sixth Circuit on June 1 and in the Eleventh Circuit on June 8, 2011.  The panel in the Sixth Circuit has already been announced.  It will consist of Circuit Judges Boyce F. Martin, Jr. and Jeffrey S. Sutton, and United States District Judge James L. Graham (Southern District of Ohio), sitting by designation.  Judge Martin is the most senior active judge on the circuit; he was appointed by President Carter in 1979.  Judge Sutton was appointed by President George W. Bush and was once a law clerk to Justice Scalia; he has served on the circuit since 2003.  Judge Graham was appointed by President Reagan in 1986; he took senior status in 2004.

 

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Judge Roger Vinson of the U.S. District Court for the Northern District of Florida on January 31 released his long-awaited decision on the constitutionality of the Patient Protection and Affordable Care Act (PPACA) a/k/a “Obamacare.”  In Florida v U.S. Dep't of Health & Human Servs., -- F.Supp.2d ----, 2011 WL 285683 (ND Fla.), he declared the individual mandate provisions of PPACA unconstitutional because they are beyond the powers of Congress under the Commerce Clause.  In addition, he held that the individual mandate could not be severed from the rest of the law and declared the entire statute void.  There is currently a link to the decision on the DRI homepage.

In his 78-page opinion, Judge Vinson reviewed the origins and history of the Commerce Clause and concluded that the key question before him was whether the federal government’s exercise of power pursuant to the Commerce Clause required that there be an “activity” to regulate.  In other words, does the Commerce Clause allow Congress to mandate that commerce occur when a citizen has chosen not to engage in a particular kind of commerce?  The Court noted that the Supreme Court had never addressed this question and that Congress had not previously attempted to compel individuals to engage in commerce.  He held that including “inactivity” within the reach of the Commerce Clause “would be a radical departure from existing case law…”   2011 WL 285683 at*22  Throughout his opinion, he stressed that Congress requiring citizens to buy a product is not supported by the words or intent of the Commerce Clause.

It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place.  [2011 WL 285683 at*22]

Judge Vinson next analyzed the question of whether the failure to buy health insurance is an “activity.”  The government argued that such a failure is economic “activity” because everyone is in the health care market - no one can predict when they will need medical care.  Since hospitals are required to provide services to the uninsured and these costs are passed on to others if the uninsured cannot pay, the failure to buy insurance has economic implications for everyone.  The government claimed that this impact makes health insurance unique.  After pointing out that the inability to opt out of certain activities and cost-shifting are not in fact unique, the Court held that whether PPACA addresses a unique problem does not matter because rarity is not a justification for an unconstitutional exercise of power. 

The opinion further states that “the status of being without health insurance, in and of itself, has absolutely no impact whatsoever on interstate commerce (not ‘slight,’ ‘trivial,’ or ‘indirect,’ but no impact whatsoever)”…  2011 WL 285683 at*26.  There is an impact only if an uninsured gets sick, cannot pay for care and the cost is shifted to others.  The court refused to pile “inference upon inference” to find “activity” in the failure to purchase.  It also rejected the argument that there is “activity” if a person makes the “economic decision” not to buy health insurance, or life insurance, or disability insurance, instead relying on the government or others as a “backstop.”  Judge Vinson further held that the Necessary and Proper Clause does not expand Congress’s powers under the Commerce Clause.  Therefore, the government’s arguments that the individual mandate is necessary to support PPACA’s requirement that insurance companies insure everyone, regardless of pre-existing conditions, also failed.

On the question of severability, the opinion relies heavily on the government’s own arguments that the mandate is essential for the insurance market reforms of PPACA to survive.  Having found the individual mandate to be unconstitutional, Judge Vinson held that it was not severable, noting that the statute had no severability clause and that both the language of the statute and the government’s arguments strongly suggested that the mandate alone could not be removed.  He declined to go through the law’s several hundred provisions trying to determine whether Congress would have passed each of them absent the individual mandate, holding that it would be unfeasible and improper for a court to do a job more properly done by Congress.

In striking down the entire statute, Judge Vinson diverged from Judge Hudson’s December 13, 2010 decision in Virginia v. Sibelius, 728 F.Supp.2d 768 (ED Va. 2010), which severed the individual mandate and left the rest of PPACA intact.  The federal government appealed Virginia v. Sibelius to the Fourth Circuit over a month after it was decided although it announced its decision to appeal almost immediately.  Virginia intends to ask the Supreme Court to take the appeal immediately without waiting for the Fourth Circuit decision.  With the Justice Department opposing this move, it is unlikely that the Court will grant this request.  Justice has already announced that it will appeal Judge Vinson’s decision to the Eleventh Circuit.  Another district court decision upholding PPACA is making its way to the Sixth Circuit.  With the government not interested in expediting the appeals, these cases are unlikely to reach the Supreme Court before 2012, pushing the final decision on constitutionality well into 2012.

Like Judge Hudson, Judge Vinson declined to enter an injunction against the federal government to prevent it from enforcing the law.  Both indicated that they expected the Executive Branch to comply with their decisions without the necessity of an injunction.  In the Virginia case, the issue of enforcement is not quite as important from the government’s perspective as it is in the Florida case, since the individual mandate provision does not become effective until 2014.  However, since some other provisions of the law are effective now, it is likely that the Justice Department will seek a stay of Judge Vinson's order.

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Attached is Judge Hudson's opinion striking down the individual mandate provisions of the Patient Protection and Affordable Care Act.  In Commonwealth of Virginia v Sibelius, he granted summary judgment to the Commonwealth and denied the government's cross-motion.  The essence of the 42-page opinion is as follows:
 
The Commerce Clause cannot extend so far as to force a citizen into economic activity.  Supreme Court precedent to date deals with some activity put in motion by the individual or entity the federal government wished to regulate.  The Necessary and Proper Clause cannot extend the reach of the Commerce Clause.  The penalty for failure to buy insurance is not a "tax" - the U.S. argued that "penalty" in the health care bill should be read as "tax".  Last but not least, Judge Hudson severed Sec. 1501 from the law.  Notwithstanding the Secretary's argument that the individual mandate was the linchpin of the law, he declined on the current record to strike the entire law because it is not clear whether Congress would have passed the bill without the penalty.

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