The Legal Battle Over Health Reform, Continued
Saturday, October 20, 2012

Months after a divided U.S. Supreme Court upheld historic federal health reform legislation in its landmark opinion, National Federation of Independent Business v. Sebelius, the legal battle over the legislation continues.

On Oct. 1, 2012, the Supreme Court asked the federal government to respond to a petition for rehearing of a challenge to the law involving Liberty University, Inc., a private Christian university in Virginia.

After issuing its opinion in Sebelius, the Court declined to review Liberty’s case, in which the U.S. Fourth Circuit Court of Appeals held that it was jurisdictionally precluded from resolving the merits of Liberty’s constitutional challenges to two central provisions in the reform law—a provision mandating most Americans to maintain health insurance or pay a penalty, and another mandating large employers to pay an assessment if at least one employee receives governmental assistance to pay for health insurance. The Fourth Circuit reasoned that the challenges amounted to a pre-enforcement action to restrain the collection of taxes and thus were barred by federal law. But the Supreme Court explicitly rejected this line of reasoning in ultimately ruling that the individual insurance mandate was a constitutional exercise of Congress’s taxing power.

In light of the conflict between the Supreme Court and Fourth Circuit decisions, Liberty asks the Court to reconsider its initial refusal to review the case, and to instead vacate and remand it. That way, Liberty could continue to press its claims that the employer mandate exceeds Congress’s enumerated constitutional powers and that the individual mandate violates constitutional protections of religious freedom and equal protection—the latter of which the Supreme Court did not address in sustaining the individual mandate.

Meanwhile, the state of Oklahoma has renewed its own challenges to the reform legislation after filing an amended complaint in federal district court there in late September. Because the Court in National Federation upheld the individual mandate only as a revenue-raising measure that taxes certain individuals who forgo insurance, the state now claims, the decision does not invalidate the state’s sovereign authority to exempt individuals from the health insurance market, as it did with the passage of a provision of the Oklahoma Constitution to this effect. The state argues that the state constitutional provision accordingly retains its legal effect and requests that the court provide declaratory and injunctive relief to this end.

The state also asserts a new claim to its original complaint challenging the employer mandate. As noted, this provision of the reform law imposes an assessment on large employers with at least one employee of a certain income level who does not have access to a qualified health insurance plan through his or her employer and whose insurance is therefore subsidized by the federal government in insurance marketplaces, called exchanges. According to the state, this intricate scheme operates only where a state has established the exchange and thus does not apply where the federal government establishes an exchange in a state in the absence of state action, as it is poised to do in Oklahoma and several other states. In issuing regulations to implement this scheme, however, the federal government has reached the opposite conclusion, determining that subsidies and tax credits will be available to eligible individuals even where the federal government has created the exchange. This interpretation, Oklahoma contends in seeking declaratory and injunctive relief, exceeds the scope of the health reform legislation, violates the procedural requirements that govern federal agency rulemaking, and works to infringe the state’s constitutional sovereignty.

As these developments indicate, the employer mandate may be emerging as the center of the next phase of litigation challenging the reform legislation, as new challenges to the individual mandate percolate to the forefront. And so the legal battle over health care reform lives on, even after the Supreme Court’s historic attempt in National Federation to put it to rest.

 

NLR Logo

We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up to receive our free e-Newsbulletins

 

Sign Up for e-NewsBulletins