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ATLANTA - (Mealey's) An 11th Circuit U.S. Court of Appeals panel heard more than two hours of oral argument on June 8 in the federal government's challenge to a district court's decision finding the minimum coverage provision in the Patient Protection and Affordable Care Act (PPACA) unconstitutional and declaring the act in its entirety invalid (State of Florida, et al. v. United States Department of Health and Human Services, et al., No. 11-22021, 11th Cir.).
Attorneys general in 26 states, Kaj Ahlburg, Mary Brown and the National Federation of Independent Business challenged the constitutionality of the PPACA. U.S. Judge Roger Vinson of the Northern District of Florida held that the provision of the PPACA that mandates that individuals buy health insurance is an unconstitutional regulation of commerce. Because the law contains no severance clause, the judge said, the entire law must fail.
Chief Circuit Judge Joel Dubina said that it is clear that Congress has been given expansive powers under the commerce clause but that limits do exist. If the individual mandate is upheld, Judge Dubina asked whether there would be any limits to Congress' power left.
Acting Solicitor General Neal Katyal said that Congress would still have limits and that the individual mandate falls in line with existing U.S. Supreme Court authority in that people cannot be forced to buy something, but in the instance of health care, people are already seeking the good. "This is all about financing a good," Katyal said. "It's about failure to pay, not failure to buy."
In response to questioning from Circuit Judge Frank M. Hull, Katyal said it is clear that Congress could pass a law requiring people to buy insurance at the point of sale - or when they used the service. That, Katyal said, would be more coercive than what the government is doing now.
In response to questioning by Circuit Judge Stanley Marcus as to whether the penalty is a fine or a tax, Katyal said that it looks like a tax, functions like a tax and therefore is a tax under Supreme Court precedent.
Paul Clement of Bancroft PLLC in Washington, D.C., arguing for the plaintiffs, said the question is whether the federal government has the power to force people to engage in commerce.
Judge Marcus questioned whether the government has the power to regulate the health insurance market on one hand and the payment for consumption of health care services on the other hand. Clement said the government can regulate in both of those areas but not if it involves compulsion in one of the markets.
Clement also agreed with Judge Marcus' question that the government can regulate the price and method at the time of consumption and at the time of consumption can compel an individual who doesn't have health insurance to buy health insurance or pay a penalty. However, it is coercion at the time a person has entered the market, while with the mandate, the government is forcing people to enter into the market, Clement said.
The government could have passed a tax, called it a tax and given people a tax credit for buying qualifying health insurance, Clement said.
Judge Marcus asked Clement if he was saying that the government could have done what it did in a better way and if, so, whether the court's job would be done because it is for the legislative branch to make those decisions. Clement said the court's job was not finished because the government could have done the same thing and done it constitutionally. The government has not relied on incentives but has forced people to purchase something, and the individual mandate provision is the only provision like that in existence, he said.
[Editor's Note: Full coverage will be in the June 15 issue of Mealey's Managed Care Liability Report. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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