Bloomberg News

Oklahoma Health-Care Act Suit’s Dismissal Sought by U.S.

December 04, 2012

Oklahoma’s lawsuit contending a key part of President Barack Obama’s 2010 health-care reform legislation is blocked by the state’s constitution should be thrown out, lawyers for the U.S. said in a court filing.

“Oklahoma lacks standing to sue the federal government to deprive its residents of the benefits of federal law,” U.S. Justice Department attorneys argued in papers filed yesterday in federal court in Muskogee, Oklahoma.

State Attorney General Scott Pruitt, a Republican, filed the lawsuit in January 2011, about 10 months after the president signed into law the Patient Protection and Affordable Care Act that made the acquisition of basic health insurance mandatory for almost all Americans. That part of the law takes effect in 2014.

In November 2010, Oklahomans voted to amend the state constitution to bar any rule or law that compels a person, an employer or health-care provider to participate in a health-care system.

The U.S. Supreme Court in June upheld most of the federal health-care law, including the purchase mandate, which it deemed a valid exercise of of Congress’s power to levy taxes.

In September, Pruitt filed a revised complaint in which he said the individual mandate remained inoperable in his state. He also challenged U.S. tax rules on the establishment of health- insurance exchanges to make coverage available for residents.

IRS Rule

Pruitt said in the complaint that the state wouldn’t establish such an exchange.

While the Affordable Care Act treats states differently, depending on whether they establish an exchange or leave that task to the U.S. Health and Human Services Department, an accompanying Internal Revenue Service regulation eliminates that distinction.

“If the final rule is permitted to stand, federal subsidies will be paid under circumstances not authorized by Congress, employers will be subjected to liabilities and obligations under circumstances not authorized by Congress,” according to the revised complaint, “and states will be deprived of the opportunity created by the Act to choose for itself whether creating a competitive environment to promote economic and job growth is better for its people than access to federal subsidies.”

Tax Credits

“Oklahoma’s lawsuit has never been about the policy or politics of the affordable care act,” Pruitt said in a statement today responding to the U.S. dismissal request.

The lawsuit is about the legality of the accompanying IRS rule and ensuring that the federal government complies with its own law, the attorney general said.

The Obama administration argued in its filing that, without a health-insurance exchange, about 380,000 Oklahoma residents would forgo tax credits worth an average of $5,000 a person and some large employers who don’t offer qualifying coverage would face tax penalties.

Federal law prevents Oklahoma from asking the court to block the U.S assessment of that penalty or payment of those credits, according to yesterday’s filing.

“Oklahoma’s generalized assertions of the purported economic effects of the Act’s tax credits and tax penalties do not state an actual injury that could support its claim of standing,” according to the U.S. brief.

The case is State of Oklahoma (STOOK1:US) v. Sebelius, 11-cv-00030, U.S. District Court, Eastern District of Oklahoma (Muskogee).

To contact the reporter on this story: Andrew Harris in Chicago at aharris16@bloomberg.net

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


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus