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Challenge to ACA Rejected by Fourth Circuit Court of Appeals

 

The U.S. Court of Appeals for the Fourth Circuit issued two rulings today (September 8, 2011) regarding challenges to the insurance mandate provision of the Affordable Care Act (ACA). In the first ruling, the court ruled that a constitutional challenge to the mandate provision was filed prematurely. In the second ruling, the Fourth Circuit held that the state of Virginia had no legal standing to bring a challenge to the mandate.

The Fourth Circuit panel found that the insurance mandate and corresponding financial penalty is a form of federal tax, and the Anti-Injunction Act (AIA) bars lawsuits attempting to block enforcement of a tax measure before it officially goes into effect. The insurance mandate does not officially go into effect until 2014. Subsequently, the lawsuit is premature. Further, the court held that no federal court has jurisdiction to hear such a challenge at this point. The Fourth Circuit is the first federal appeals court to dismiss constitutional challenges to the ACA based on the Anti-Injunction Act. The Obama administration had argued for the AIA theory in previous cases, but the theory was abandoned with the appeal to the Fourth Circuit. Though the theory was not advanced on appeal, the Fourth Circuit came to the AIA theory on its own.

The Fourth Circuit is the third federal appellate court to rule on the constitutionality of the ACA’s mandate provision. The Sixth Circuit supported the mandate, and the Eleventh Circuit ruled against the individual mandate portion of the law. All three federal appellate court rulings were 2-1 decisions.

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