Bloomberg News

Health-Care Law Challenges Thrown Out by U.S. Appeals Court

September 08, 2011

(Updates with White House response in sixth paragraph.)

Sept. 8 (Bloomberg) -- A federal appeals court in Virginia threw out two challenges to the Obama administration’s 2010 health-care law, saying it lacked authority to decide whether the measure is constitutional.

With the decisions, the court in Richmond today became the second U.S. appellate panel this year to leave the law intact after lower-court judges ruled on its constitutionality. The decisions came in separate cases challenging the statute’s requirement that individuals buy health insurance or pay a tax penalty. A third appeals court threw out that mandate.

The rulings broaden the range of opinions on the health- care law among the intermediate federal courts, a division likely to be resolved by the U.S. Supreme Court.

“I was a little surprised,” Northwestern University law professor Stephen Presser said of the court’s decision to dismiss the cases on jurisdictional grounds. “I expected them to talk about the constitutional issue.”

The judges in both decisions dismissed the cases, saying the court lacked jurisdiction. In one, the judges said a statute that generally blocks lawsuits challenging the collection or assessment of taxes barred them from ruling on the health- insurance mandate. In the other, they said the state of Virginia lacked the legal right to bring its lawsuit.

“This decision is another victory for the Affordable Care Act,” said Stephanie Cutter, assistant to the president and deputy senior adviser, in a White House blog post. Cutter pointed out that two of the judges noted in one of the decisions that they would have found the law to be constitutional.

Court Victory

The administration won its first appeals court victory on June 29 when a Cincinnati panel turned aside a challenge to the law by the Ann Arbor, Michigan-based Thomas More Law Center, a Christian-based public interest law firm.

In a 2-1 decision, that court found Congress had power to enact the insurance mandate through its constitutional authority to regulate interstate commerce. Thomas More appealed the ruling to the Supreme Court on July 27.

The U.S. Court of Appeals in Atlanta invalidated the insurance-purchasing mandate in an Aug. 12 ruling, also by a 2-1 margin, concluding that Congress lacks authority to compel people to buy a product for their entire lives. It left the rest of the law in force.

Christian School

The Virginia appeals stem from one challenge by the state and another by Liberty University, a Christian school founded in Lynchburg, Virginia, by the late Rev. Jerry Falwell. In the lower courts, one judge upheld the measure while another struck down the mandate.

Mathew Staver, dean of the Liberty University School of Law, called the outcome “astounding.” He said in an interview that the school will petition the U.S. Supreme Court for review.

Virginia Attorney General Ken Cuccinelli said in a statement that he plans to appeal the ruling.

The U.S. calls the insurance mandate the linchpin of the Patient Protection and Affordable Care Act, claiming in court papers that without expanding the pool of younger, healthier customers the insurance industry won’t be able to meet its obligations for coverage under the law.

Expanded Coverage

The individual mandate and expansions of Medicaid and employer-based coverage will provide about 32 million more people with coverage by 2019, Justice Department lawyers said, citing the Congressional Budget Office.

The government argued in court that the legislation is an extension of Congress’s power to tax, as people who fail to buy coverage starting in 2014 would face a penalty to be included on an individual’s tax return.

In the decision on the Liberty University case, the judges said that the Anti-Injunction Act prevented them from ruling. In the lower courts, the Justice Department failed to win dismissal of the lawsuits on grounds of the act. The government didn’t cite the law on appeal.

“Because this suit constitutes a pre-enforcement action seeking to restrain the assessment of a tax, the Anti-Injunction Act strips us of jurisdiction,” Judge Diana Gribbon Motz wrote in a 2-1 decision.

In the Virginia case, the judges unanimously held that the state couldn’t sue to enforce a law passed in response to the federal health-care measure that bars residents from having to buy health insurance.

“To permit a state to litigate whenever it enacts a statute declaring its opposition to federal law, as Virginia has,” Motz wrote, “would convert the federal judiciary into a ‘forum’ for vindication of a state’s ‘generalized grievances about the conduct of government.’”

The cases are Liberty University v. Geithner, 10-02347, and Commonwealth of Virginia v. Sebelius, 11-01057, U.S. Court of Appeals for the Fourth Circuit (Richmond).

--Editors: Fred Strasser, Charles Carter

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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