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Health Care Law Challenges Move Toward Supreme Court: Michigan Suit Denied as Florida Suit Moves Forward

Posted Oct 19 2010 8:38pm

800px-hurdle_psf Just a week after a Michigan judge prevented a suit challenging the Patient Protection and Affordable Care Act from moving forward, a Florida judge allowed a similar challenge to be judged on its merits. Both cases, Thomas More Law Center v. Obama and Florida v. U.S. Department of Health and Human Services , challenge the new health care law. Specifically, the suits alleged that the individual mandate provision of the health care law, which is scheduled to go into effect in 2014 and would require every individual (except for a number exempted) in the U.S. to purchase health care, violates the constitution. In Michigan, a judge held that it does not. In Florida, a judge held that, due to its unprecedented nature, it could violate the constitution and denied the motion to dismiss, which will allow the case to move forward based on its merits.

Many commentators believe these lawsuits and others, like Virginia v. Sebelius in Virginia and Kinder v. Geithner in Missouri, will ultimately end up in the U.S. Supreme Court.

Florida v. Department of Health and Human Services

The Florida suit alleged that the statute violates the U.S. Constitution by mandating that every American purchase health care or else pay a penalty. The six-count complaint charged that the statute exceeded congressional authority under the commerce clause, violated due process and otherwise interfered with states’ sovereignty rights.

The 65-page opinion begins by determining whether, for analytical purposes, the prescribed payment for non-compliance with the individual mandate was a penalty or a tax. The court considered it a penalty, therefore holding that the statute cannot be considered constitutional based only on the federal government’s taxation powers.

The court also considered whether the plaintiffs had standing to pursue the litigation, which, in short, requires that a plaintiff has suffered a concrete harm  by the defendant which is capable of being redressed by the court. The court held that it did because while the individual mandate provision will not take effect until 2014, the injury is impending and will occur in due time.

Addressing the merits of the case, the court dismissed plaintiffs’ claim that the law interfered with the individual states’ (19 others joined Florida in the suit) sovereignty rights as employers. The court also dismissed plaintiffs argument that the individual mandate violates due process rights, holding that the freedom to decide whether or not to buy health care is not a “fundamental right.”

The plaintiffs argued that the federal government exceeded its power over the states by “coercing” them to expand Medicare. The court ruled that the argument was “shaky,” but nevertheless allowed it to move forward because little law in the Fourth Circuit (which includes Florida) addresses the coercion theory: that is the theory that the federal government may induce states to participate in federal programs through financial incentives, but it cannot put the states in a position where rejecting a federal program would be so burdensome as to tip the scale from mere inducement to actual coercion. The theory came from the Supreme Court’s decision in South Dakota v. Dole.

Finally, the court addressed plaintiffs’ claim that the statute improperly expands the commerce clause of the U.S. Constitution. The court reasoned that the individual mandate is unprecedented in history (apparently not having read Bradley Latino’s article, “ The Original Individual Mandate, Circa 1792 “), which alone does not make it unconstitutional. However, the court held that the unprecedented nature and novelty of the commerce clause justification makes the question as to whether the statute is an unconstitutional expansion of the commerce clause, at the very least, enough to state a claim for relief. Hence, the court ruled, the litigation may move forward. Which is to say that the plaintiffs claim survived in part the motion to dismiss for failure to state a claim. A first, but important hurdle, though governed by a deferential standard in favor of the plaintiffs. Barring the unforeseen, the next hurdle will be the motion for summary judgment .

“In American legal practice summary judgment can be awarded by the court prior to trial, effectively holding that no trial will be necessary. Issuance of summary judgment can be based only upon the court’s finding that: 1) there are no issues of “material” fact requiring a trial for their resolution, and 2) in applying the law to the undisputed facts, one party is clearly entitled to judgment.”

Thomas More Law Center v. Obama

On Oct. 7, just a week before the Florida ruling, a Michigan judge, deciding on the merits of the case, found for the defendants in a suit challenging the individual mandate to buy health insurance in the Patient Protection and Affordable Care Act. The opinion, written by Judge Steeh, found that the Plaintiffs, the Thomas More Law Center and other individually named plaintiffs, had standing even though they have not been penalized under the law for not buying health care. This provision does not take effect until 2014.

The judge ruled that the plaintiffs had standing because, even though the challenged provision of the bill does not go into effect for four more years, they suffered an immediate harm because they could be taking an action, or arranging their affairs,  such as saving money in anticipation of the mandate.

In Virginia v. Sebelius, the court also found standing for the plaintiff in a challenge to the statute. There, however, the court ruled that the plaintiff, the Commonwealth of Virginia, had standing because the commonwealth made its own statute prohibiting any individual mandates to purchase health insurance. The claim survived a motion to dismiss and will move forward.

Here, however, the motion was dismissed on other grounds. Judge Steeh rejected plaintiffs’ argument that refraining from purchasing insurance was economic “inactivity” and therefore could not be subject to federal control under the commerce clause of the U.S. Constitution. Instead, the judge reasoned that plaintiffs were making an “economic decision” to pay for healthcare services later, out of pocket, rather than sooner, by purchasing a health insurance plan.

Finally, the judge reasoned that the individual mandate is essential to a broader regulatory scheme. Citing Gonzalez v. Raich, where the Supreme Court sustained Congress’s authority to prohibit the possession of homegrown marijuana for personal use because of its impact upon the aggregate, the court noted that the individual mandate on healthcare was essential to a broader regulatory scheme. Like in Raich, the statute would not work without a mandate to purchase health insurance, the court noted, because, “the most costly individuals would be in the insurance system and the least costly would be outside it.” The court concluded that the individual mandate is a reasonable or rational means of carrying out Congress’s goal.

The Florida court’s ruling on standing makes it the third court to allow a suit challenging the individual mandate to overcome the standing argument, a procedural hurdle some commentators did not believe those opposed to the individual mandate could overcome. Having said that, the Michigan court’s decision is the first of the suits to be decided on the merits– and the Individual Mandate prevailed.

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