11th Circuit Finds PPACA's Individual Mandate Unconstitutional

ATLANTA - (Mealey's) A split 11th Circuit U.S. Court of Appeals panel on Aug. 12 reversed summary judgment involving the Patient Protection and Affordable Care Act but said the health care reform law's mandate that American buy health insurance or pay a penalty is unconstitutional (State of Florida, et al. v. United States Department of Health and Human Services, et al., Nos. 11-11021 and 11-11067, 11th Cir.).

 

In January, the U.S. District Court for the Northern District of Florida granted summary judgment to 36 states that challenged the constitutionality of the law.  The federal government appealed. 

In a 207-page opinion, Chief Circuit Judge Joel Frederick and Circuit Judge Frank M. Hull said the enactment of the individual mandate requirement as a penalty rather than a tax is not a proper exercise of congressional power under the taxing and spending clause of the U.S. Constitution. 

"Further, the individual mandate exceeds Congress's enumerated commerce power and is unconstitutional," the majority wrote.  "This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority:  the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives." 

"We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers," the majority continued.  "'Uniqueness' is not a constitutional principle in any antecedent Supreme Court decision," it said.  "The individual mandate also finds no refuge in the aggregation doctrine, for decisions to abstain from the purchase of a product or service, whatever their cumulative effect, lack a sufficient nexus to commerce." 

Unlike the Northern District of Florida, however, the majority said the individual mandate can be severed from the remainder of the health care reform law, which, for example, requires health insurance companies to insure individuals with pre-existing medical conditions and prohibits coverage from being terminated because of expensive medical conditions.   

Judges Frederick and Hull also found that the law's expansion of the Medicaid program is constitutional.  "Existing Supreme Court precedent does not establish that Congress's inducements are unconstitutionally coercive, especially when the federal government will bear nearly all the costs of the program's amplified enrollments," they wrote. 

Circuit Judge Stanley Marcus dissented as to the majority holding on the individual mandate.  He said the individual mandate "was designed and intended to regulate quintessentially economic conduct in order to ameliorate two large, national problems:  first, the substantial cost shifting that occurs when uninsured individuals consume health care services -- as virtually all of them will, and many do each year -- for which they cannot pay; and, second, the unavailability of health insurance for those who need it most -- those with pre-existing conditions and lengthy medical histories." 

Judge Marcus said the majority ignored years of development of the commerce clause of the Constitution by the U.S. Supreme Court, ignored Congress' broad power to govern commerce and ignored the growth of that power over the past two centuries.

[Editor's Note:  Full coverage will be in the Aug. 17 issue of Mealey's Managed Care Liability Report.  In the meantime, the opinion is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #31-110817-012Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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