4th Circuit: Court Lacks Jurisdiction To Hear Challenge To Health Care Act

RICHMOND, Va. -- In a divided opinion, the majority of Fourth Circuit U.S. Court of Appeals panel on Sept. 8 held that the Anti-Injunction Act strips the court of jurisdiction to hear a challenge to the Patient Protection and Affordable Care Act (PPACA) and remanded the case with instructions to dismiss the case for lack of jurisdiction.  The dissenting judge said he would affirm the lower court's decision that Congress acted within its powers in passing the challenged provisions of the act  (Liberty University, et al. v. Timothy Geithner, et al., No. 10-2347, 4th Cir.). 

On Nov. 30, the U.S. District Court for the Western District of Virginia dismissed a challenge to the PPACA brought by Liberty University Inc., Martha A. Neal, Michele G. Wadell, Dr. David Stein, Pausanias Alexander, Mary T. Bendorf, Joanne V. Merrill, Kathy Byron and Jeff Helgeson against U.S. Treasury Secretary Timothy Geithner, Health and Human Services Secretary Kathleen Sebelius, Secretary of Labor Hilda L. Solis and U.S. Attorney General Eric Holder, finding that Congress acted within its constitutionally delegated powers under the commerce clause when it passed the employer and individual mandates contained in the PPACA. 

Following the May 10 oral arguments, the Fourth Circuit asked the parties to file supplemental briefs addressing whether the Anti-Injunction Act deprived the court of subject matter jurisdiction. 

The majority, in an opinion written by Judge Diana Gribbon, held that the suit constitutes a pre-enforcement action seeking to restrain the assessment of a tax and, therefore, the act stripped the court of jurisdiction.  The majority held that the judgment of the District Court must be vacated and the case remanded with instructions to dismiss for lack of jurisdiction. 

The Anti-Injunction Act bars suits seeking to restrain the assessment or collection of a tax, meaning it forbids only pre-enforcement actions brought before the Internal Revenue Service has assessed or collected an exaction, the majority said. 

The parties in this case recognize that the plaintiffs have brought a pre-enforcement action, and the parties do not claim that any of the exceptions to the act applies, the majority said.  Resolution of the case turns, therefore, on whether the suit seeks to restrain the assessment or collection of "any tax," the majority said. 

The exaction imposed for failure to comply with the mandate constitutes a tax; therefore, the Anti-Injunction Act bars the action, the majority said. 

Judge James A. Wynn Jr. wrote a separate opinion, saying he agrees that the Anti-Injunction Act applies to bar the case.  He noted that Judge Andre M. Davis, in his dissent, addressed the merits of the case and said that although Judge Davis' position on the commerce clause is persuasive, if he were to reach the merits, he would uphold the PPACA on the basis that Congress had the authority to enact the individual and employer mandates under its plenary taxing power. 

In his dissent, Judge Davis said he disagreed that the Anti-Injunction Act stripped the court of jurisdiction and said he would reach the merits, holding that the challenged provisions of the PPACA are a proper exercise of Congress' authority under the commerce clause to regulate the interstate markets for health services and health insurance. 

Judge Davis said he did not believe that constitutional review of the PPACA requires the courts to decide whether the commerce clause discriminates between activity and inactivity, but even if he were to assume that the plaintiffs were "inactive," he could not accept their contention that a distinction between "activity" and "inactivity" is vital to the commerce clause analysis.  He said he would affirm the District Court's dismissal of the suit. 

[Editor's Note:  Full coverage will be in the Sept. 21 issue of Mealey's Managed Care Liability Report.  In the meantime, the order is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #31-110921-004Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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