Virginia Challenge To Health Care Reform Act Derailed By 4th Circuit

RICHMOND, Va. - (Mealey's) A Fourth Circuit U.S. Court of Appeals panel on Sept. 8 reversed a lower court ruling holding that the individual mandate provision contained in the Patient Protection and Affordable Care Act (PPACA) was unconstitutional, finding that the State of Virginia lacked standing to bring the suit.  Because the court held that Virginia lacked standing to bring the challenge, it did not rule on the constitutional issue (Commonwealth of Virginia v. Kathleen Sebelius, No. 11-1057, 4th Cir.).

In the case, Virginia Attorney General Kenneth T. Cuccinelli sued Health and Human Services Secretary Kathleen Sebelius, in her official capacity, alleging that the PPACA conflicts with Virginia Code Section 38.2-3430.1:1 and that a main provision of the PPACA requiring that most Americans without insurance obtain coverage or face a penalty is unconstitutional. 

The U.S. District Court for the Eastern District of Virginia held that by enacting the individual mandate provision contained in the PPACA, Congress exceeded the powers granted to it under the Constitution.  The provision was severed from the rest of the act. 

The parties separately appealed the ruling to the Fourth Circuit.  Sebelius appealed the order granting summary judgment in part to Virginia and denying her summary judgment and dismissal motions.  Virginia appealed aspects of the order pertaining to severance, scope of severance and remedy. 

Virginia argued that it had standing to challenge the mandate because of an asserted conflict between the PPACA and the Virginia Health Care Freedom Act (VHFCA). 

The VHFCA does not confer on Virginia a sovereign interest in challenging the individual mandate; therefore, the state lacks standing to challenge the mandate because the mandate threatens no interest in the "enforceability" of the VHCFA, the court said. 

Contrary to Virginia's arguments, "the mere existence of a state law like the VHCFA does not license a state to mount a judicial challenge to any federal statute with which the state law assertedly conflicts," the court said.  "Rather, only when a federal law interferes with a state's exercise of its sovereign 'power to create and enforce a legal code' does it inflict on the state the requisite injury-in-fact." 

Permitting a state to litigate whenever it enacts a statute declaring its opposition to federal law "would convert the federal judiciary into a 'forum' for the vindication of a state's 'generalized grievances about the conduct of government,'" the court said. 

On remand, the court ordered the case to be dismissed. 

Judge Dina Gribbon Motz wrote the opinion for the court.  Judges Andre M. Davis and James A. Wynn Jr. concurred. 

[Editor's Note:  Full coverage will be in the Sept. 21 issue of Mealey's Managed Care Liability Reprt.  In the meantime, the order is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #31-110921-003Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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