ACA and Healthcare Reform

District Of Columbia Appeals Panel Affirms Dismissal Of ACA Suit

WASHINGTON, D.C. — (Mealey’s) Plaintiffs cannot squeeze the individual insurance mandate in the Patient Protection and Affordable Care Act (ACA) into an “arbitrary as-applied” exemption to Congress’ taxing power, a panel of the District of Columbia Circuit U.S. Court of Appeals affirmed March 7 (Association of American Physicians & Surgeons Inc., et al. v. Kathleen G. Sebelius, et al., No. 13-5003, D.C. Cir. [enhanced opinion available to lexis.com subscribers]) 

The panel rejected the plaintiffs’ Fifth Amendment challenges to the individual insurance mandate in 26 U.S. Code Section 5000A.  

The plaintiffs attempt to squeeze their claim into a narrow exception to Congress’ taxing power in Brushaber v. Union Pac. Railroad Co. (240 U.S. 1, 24-25 [1916]), in which the court rejected the power where it was so arbitrary as to constitute a confiscation of property rather than a tax, the panel said.  The panel rejected the argument that Kelo v. City of New London, Conn. (545 U.S. 469 [2005]) [enhanced opinion] stood for the proposition that a sovereign may not take the property of one private party solely for the purpose of transferring it to a second private party, even when it compensates the first party.

 “But it is impossible to read that sentence in Kelo (even if we were to treat it as a holding, which it isn’t) as suggesting that any redistributive purpose sweeps an otherwise valid tax into the narrow group of measures condemned by Brushaber,” the panel said. 

Standing 

The American Association of Physicians and Surgeons Inc. (AAPS) and Alliance For Natural Health USA sued Kathleen G. Sebelius, secretary of Health and Human Services (HHS), and Michael J. Astrue, commissioner of the Social Security Administration, in the U.S. District Court for the District of Columbia pursuant to the Medicare Act, the Social Security Act and the Administrative Procedure Act (APA), seeking to enjoin the defendants from compelling AAPS members to participate in Medicare Part A as a condition of receiving Social Security benefits and to purchase health insurance approved by HHS.  The plaintiffs also challenged the ACA’s individual insurance mandate. 

The District Court dismissed the case, saying that the plaintiffs lacked standing or failed to state claims for which relief could be granted. 

The plaintiffs appealed to the D.C. Circuit. 

‘As-Applied’ 

In its ruling, the panel said the plaintiffs give no reason why viewing the mandate “as-applied” rather than facially would yield a different result. 

Nor did National Federation of Independent Business v. Sebelius (132 S. Ct. 2566 [2012]) (NFIB) do anything to change the outcome of the plaintiffs’ challenges to the ACA’s origination, the panel said.  The District Court asked for supplemental briefing regarding NFIB but limited it to whether NFIB required dismissal of any portion of the instant case, the panel said.  The briefing was not, as portrayed by the plaintiffs, a request to examine the impact of NFIB, the panel said. 

The panel then rejected statutory challenges to Social Security Administration provisions automatically entitling eligible individuals for enrollment in Medicare Part A.  Precedent clearly forecloses on the plaintiffs’ challenge, the panel said.  As written, Medicare Part A “precludes any option not to be entitled to its benefits,” the panel said.  The panel also rejected the plaintiffs’ claim that such a change required a notice-and-comment period, saying the lack of any possible remedy from such a process makes it unnecessary. 

Fiduciary Duties 

Nor did Astrue or Sebelius violate their fiduciary and equitable duties by failing to provide a honest accounting of Social Security and Medicare, the panel said.  On this issue, the plaintiffs provide no legal argument and cite no statute or other basis for this argument and “do not even sketch a penumbra possibly emanating from any part of the laws or Constitution of the United States,” the panel said. 

Judge Stephen F. Williams wrote for the court, joined by Judges Judith W. Rogers and David B. Sentelle. 

Lawrence J. Joseph represents the plaintiffs.  Acting Assistant Attorney General Stuart F. Delery, U.S. Attorney Ronald C. Machen Jr. and trial attorneys Mark B. Stern and Dana Kaersvang, all of the U.S. Justice Department, represent the defendants.  All are in Washington.

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