Appellate Court Upholds ACA In Opinion By Prominent Conservative Judge

Yesterday, November 8, the United States Court of Appeals for the District of Columbia became the second federal court of appeals to uphold the constitutionality of the minimum coverage requirement of the Affordable Care Act.

To date, one federal appellate court has held the minimum coverage  requirement to be unconstitutional (although severable from the remainder of the ACA), while five other appellate court decisions have held that the courts lacked jurisdiction to consider the challenge brought to them, either because the plaintiffs in the particular case had not been injured by the minimum coverage requirement or because a federal statute, the Anti-Injunction Act, denies jurisdiction.

This is a very important decision.  Judge Laurence Silberman, who wrote the majority opinion upholding the statute, is a highly-respected conservative judge, appointed by President Reagan.  Judge Harry T. Edwards, a Carter appointee, joined Judge Silberman in the majority.  Judge Brett M. Kavanaugh, another well known conservative judge appointed by George W. Bush, dissented in an opinion that was much longer than the majority opinion, but on jurisdictional grounds rather than on the merits.  Kavanaugh would have held, as the Fourth Circuit did in the Liberty University case, that the Anti-Injunction Act deprives the federal courts of jurisdiction.  In the course of his lengthy opinion, Judge Kavanaugh suggests that there may be prudential as well as legal reasons why the courts may want to stay out of this fight, and suggests that if there is in fact a constitutional defect with the ACA (which he does not decide), it could be easily fixed by Congress.

This decision comes down two days before the Supreme Court will consider, and quite possibly decide, whether or not to take certiorari in one or more of four other appellate court cases that have been decided in ACA challenges.  Although a grant of certiorari is almost certain at this point, the D.C. Circuit’s decision, as well as the earlier opinion of Judge Jeffrey Sutton, another prominent conservative who sided with the constitutionality of the ACA in a Sixth Circuit case, will certainly be noted by the Supreme Court justices.  Moreover, the media narrative that seemed to explain the district court opinions—Republican appointees strike down the law while Democratic appointees uphold it—seems again not to work for appellate court judges.  It may not work for predicting the Supreme Court vote either.

The Anti-Injunction Act. Half of Judge Silberman’s majority opinion and all of Judge Kavanaugh’s dissent deal with the Anti-Injunction Act.  The AIA is a nineteenth century statute adopted to prohibit the federal courts from enjoining the assessment and collection of exactions (including taxes and penalties) under the Internal Revenue Code.  It protects the federal revenue by ensuring that taxpayers must await the assessment of an exaction and then proceed through regular channels to challenge it.

The penalty that individuals must pay if they fail to comply with the minimum coverage requirement is enforced through the Internal Revenue Code.  Thus the AIA arguably applies, and therefore the constitutionality of the requirement may not be subject to challenge in the federal courts until April of 2015 when the penalty is first assessed against individuals who failed to comply with the requirement in 2014.

Judge Kavanaugh expressly recognizes that the debate over whether the AIA prohibits the federal courts from considering challenges to the minimum coverage requirement is “not for the faint of heart,” and I will not analyze it here.  The fact that Judge Kavanaugh would hold that the AIA does apply and that the majority takes the argument seriously enough to spend half of its opinion refuting it suggests that this is not a trivial issue.  It is conceivable that the Supreme Court will decide not to decide.  Indeed, Judge Kavanaugh believes that the country would be better off if it would.

On the other hand, the majority opinion lays out the most thorough defense to date of the proposition that the AIA does not apply to the minimum coverage requirement.  It presents a plausible, if not wholly persuasive, course for the Supreme Court to track if it, as is likely, decides to decide the case rather than reject it on jurisdictional grounds.

The majority opinion. Judge Silberman begins his majority opinion by declaring “Since so much has already been written by our sister circuits about the issues presented by this case–which will almost surely be decided by the Supreme Court–we shall be sparing in adding to the production of paper.”  Although no paper is spared in the court’s discussion of the AIA, the merits are addressed concisely—though effectively.

The plaintiffs, Judge Silberman recognizes, are claiming that the Commerce Clause only authorizes Congress to regulate existing commerce, not to require individuals to purchase a product when they do not wish to.  “Appellants’ central objection to the mandate is that Congress, for the first time, has actually commanded that all Americans purchase a product, health insurance, that many of them have never purchased before, never wish to purchase, and may never need.”  Congress, the plaintiffs claim, may only regulate activity, not persons who are “inactive” with respect to health insurance.

While the minimum coverage requirement is “somewhat novel,” Judge Silbeman notes,  so is the plaintiffs’ argument.  In perhaps the most important paragraph of the opinion, Silberman parses the Commerce Clause itself, quoting Samuel Johnson’s dictionary for 18th century definitions, to demonstrate that “there is no textual support” for the plaintiffs’ argument in the Constitution itself.  This argument is obviously aimed at the conservative textualists on the Supreme Court and will be noted by them.

Silberman proceeds, however, to demonstrate that neither can the plaintiff’s find succor in Supreme Court precedent.  Indeed, Silberman argues persuasively that the Court’s 1942 Wickard v. Filburn case, which established modern Commerce Clause jurisprudence, came “very close to authorizing a mandate similar to ours.”  In that case the Agricultural Adjustment Act of 1938 was applied to an individual who claimed to not be in the stream of commerce because he was growing wheat only for consumption on his own farm and thus was inactive in the national wheat market.  Even, moreover, if the activity/inactivity distinction could be found in earlier cases, Silberman proceeds, it would be difficult to apply in particular circumstances and is the kind of distinction the Supreme Court has repeatedly rejected in its commerce clause jurisprudence.

“Since appellants cannot find real support for their proposed rule in either the text of the Constitution or Supreme Court precedent,” Silberman next states, “they emphasize both the novelty of the mandate and the lack of a limiting principle.”  But plaintiffs’ arguments are also novel, and the acts of Congress must be presumed to be constitutional, even if novel.  Silberman admits that he is troubled by the lack of a limiting principle, but finds that the lack of limits is not fatal.  The unique nature of health care markets justifies upholding the application of the Commerce clause here—further extensions of government power will be adjudicated another day.

In fact, however, Silberman recognizes, there are limits.  Congress does not exercise general police powers like the states. Congress cannot under the Commerce clause regulate areas of non-economic concern or issues that do not in some way affect interstate commerce.  But Congress has long regulated health care and health insurance and can continue to do so, even in novel ways.

Silberman notes that the real concern of the plaintiffs’ seems to be about due process, about individuals being compelled to engage in activity that they as individuals wish not to engage in.  But, Silberman states, it has long been recognized that the focus of Congress’ authority under the Commerce Clause is the overall dynamics of markets.  Laws can be based on “generalizations about likely future behavior,” and analysis of their constitutionality does not focus on their effects on the actual behavior of particular individuals.   “[T]he actual impact of any one individual’s conduct on interstate commerce is immaterial, so long as a rational basis exists for believing that a congressional enactment, as a whole, substantially relates to interstate commerce.”

“That a direct requirement for most Americans to purchase any product or service seems an intrusive exercise of legislative power surely explains why Congress has not used this authority before–but that seems to us a political judgment rather than a recognition of constitutional limitations.”  Silberman concludes.  “The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local–or seemingly passive–their individual origins.”

Judge Edwards’ concurrence. Judge Edwards short concurrence seems to be written for an audience of one.  Almost the entire opinion consists of quotes from Justice Scalia’s concurrence in the Raich case holding that the Necessary and Proper Clause permits Congress to take actions “reasonably adapted” to pursuing a legitimate end under the Commerce Clause.  Scalia’s opinion in Raich (the medical marijuana case), which Silberman also quotes, recognizes expansive authority in Congress under the Necessary and Proper Clause and suggests that Scalia certainly is not a sure vote for invalidating the minimum coverage requirement.

Does the ACA represent a new paradigm for the social safety net? Perhaps the most interesting part of the decision, however, is Judge Kavanaugh’s musings at the close of his opinion.  Judge Kavanaugh asserts that the minimum coverage requirement is an unprecedented expansion of federal authority and this deeply troubles him.  On the other hand, he also recognizes that the courts must be very reluctant to strike down legislation enacted to address an important national problem after a vigorous national debate.  He then goes on to recognize:

This case also counsels restraint because we may be on the leading edge of a shift in how the Federal Government goes about furnishing a social safety net for those who are old, poor, sick, or disabled and need help. The theory of the individual mandate in this law is that private entities will do better than government in providing certain social insurance and that mandates will work better than traditional regulatory taxes in prompting people to set aside money now to help pay for the assistance they might need later. Privatized social services combined with mandatory-purchase requirements of the kind employed in the individual mandate provision of the Affordable Care Act might become a blueprint used by the Federal Government over the next generation to partially privatize the social safety net and government assistance programs and move, at least to some degree, away from the tax-and-government-benefit model that is common now. Courts naturally should be very careful before interfering with the elected Branches’ determination to update how the National Government provides such assistance.

The minimum coverage requirement in fact comes out of free-market advocacy groups, and at least one eminent federal judge—one sympathetic to their cause—remembers this.  Perhaps the conservatives on the Supreme Court will recognize it as well.

Timothy Stoltzfus Jost, J.D., holds the Robert L. Willett Family Professorship of Law at the Washington and Lee University School of Law. He is a coauthor of a casebook, Health Law, used widely throughout the United States in teaching health law, and of a treatise and hornbook by the same name.

This post first appeared at Health Affairs Blog on 11/09/2011. Copyright ©2010Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.


8 replies »

  1. I am just a dumb ER doc. i just know the difference between right and wrong. This is wrong. Healthcare is by and large a bondoggle.

    It has become a secular religion.

    It should not be funded by the tax payor.

  2. Do you know what the 14th Amendment is about, or the history of its interpretation? It’s about equal protection under the law for racial and (later) religious groups. You seem to be saying that having levels of financial responsibility for something based on income is somehow unconstitutional, which is neither implied by the 14th amendment nor any other part of the Constitution, nor consistent with the practice of the Federal government for the last century.

    But then, I’m no Constitutional scholar and I have no idea how the Justices will rule.

  3. That is a factually incorrect statement. If you make below a certain income there is no penalty and you are eligible for essentially free coverage. Penalties are tied to taxable income. This is not an existence tax, full stop. It includes a tax/penalty tied to income and many benefits to fix, among other things, the broken market for individual insurance.

  4. The mandate is an existence tax. There is no federal constitutional power to tax us for merely being here. And if you do not buy the mandate you get to pay a fine without due process.

    Furthermore, if it is constitutional, then there should be no exemptions for anyone. The law is full of exemptions to avoid making the law political poison. That violates the equal protection clause.

    It is not regulating commerce, it is mandating commerce.

    I am not a lawyer and I have never stayed in a Holiday Inn Express. But this is so blatantly unconstitutional I really cannot see the SCOTUS coming close to upholding the entire law. Since all the savings are dependent on the mandate, I think Florida got it right.