WASHINGTON, D.C. - (Mealey's) In a
sweeping opinion covering four issues addressed over three days of oral
argument, the U.S. Supreme Court today found that the Anti-Injunction Act (AIA)
does not bar challenges to the Patient Protection and Affordable Care Act
(PPACA), that the individual mandate contained in the act is constitutional and
that the federal government can expand Medicaid but cannot withhold existing
funding from the states for noncompliance with the expansion (Department of
Health and Human Services, et al. v. State of Florida, et al., No. 11-398,
U.S. Sup.; National Federation of Independent Business v. Kathleen Sebelius,
et al., No. 11-393; State of Florida, et al. v. Department of Health and
Human Services, et al., No. 11-400, U.S. Sup.; See 4/4/12, Page 4 [enhanced version available to lexis.com subscribers]).
In a 5-4 opinion, Chief
Justice John G. Roberts Jr. and Justices Ruth Bader Ginsburg, Stephen G.
Breyer, Sonia Sotomayor and Elena Kagan found the individual mandate to be
constitutional. Justices Antonin Scalia, Anthony M. Kennedy, Clarence
Thomas and Samuel A. Alito Jr. found the individual mandate to be
unconstitutional and nonseverable from the act.
The challenges to the PPACA
stem from States of Florida,
et al. v. Department of Health and Human Services, in which the U.S.
District Court for the Northern District of Florida held that the individual
mandate contained in the PPACA is an unconstitutional regulation of commerce
and that because the PPACA contains no severance clause, the entire law must
fail. A split 11th Circuit U.S. Court of Appeals panel affirmed that the
individual mandate is unconstitutional but reversed the holding that the
provision is not severable from the rest of the act. The 11th Circuit
also affirmed that the act's expansion of Medicaid is constitutional.
The majority, in an opinion
written by Chief Justice Roberts, held that the AIA does not bar the suit,
saying that the act "does not require that the penalty for failing to comply
with the individual mandate be treated as a tax for purposes of the
However, the majority went on
to hold that Congress was within its power under the taxing clause of the U.S.
Constitution in implementing the individual mandate. The act describes
the payment for failure to obtain insurance as a "penalty" and not a "tax," but
that label "does not determine whether the payment may be viewed as an exercise
of Congress's taxing power," the majority said.
"While the individual mandate
clearly aims to induce the purchase of health insurance, it need not be read to
declare that failing to do so is unlawful. Neither the Act nor any other
law attaches negative legal consequences to not buying health insurance, beyond
requiring a payment to the IRS," the majority said. "[I]f someone chooses
to pay rather than obtain health insurance, they have fully complied with the
The court held, however, that
the mandate was not a valid exercise of Congress' powers under the commerce and
necessary and proper clauses, saying that that the "power to regulate commerce
presupposes the existence of commercial activity to be regulated."
"The individual mandate
forces individuals into commerce precisely because they elected to refrain from
commercial activity. Such a law cannot be sustained under a clause
authorizing Congress to 'regulate Commerce,'" the court said.
Justice Ginsburg wrote
separately, agreeing with Justice Roberts that the AIA does not bar
consideration of the case and that the mandate is a proper exercise of
Congress' taxing power. She wrote separately to say that she would also
hold that the commerce clause authorizes Congress to enact the minimum coverage
provision and that the spending clause permits the Medicaid expansion as
Congress enacted it.
Justice Sotomayor joined
Justice Ginsburg's opinion, and Justices Breyer and Kagan concurred in parts
and dissented in parts to Justice Ginsburg's opinion
Justice Kennedy wrote the
dissenting opinion, saying that the PPACA "exceeds federal power both in
mandating the purchase of health insurance and in denying nonconsenting States
all Medicaid funding."
"Whatever the conceptual
limits upon the Commerce Clause and upon the power to tax and spend, they
cannot be such as will enable the Federal Government to regulate all private
conduct and to compel the States to function as administrators of federal
programs," the dissenting justices said.
"These parts of the Act are
central to its design and operation, and all of the Act's other provisions
would not have been enacted without them. In our view it must follow that
the entire statute is inoperative," they said.
Justice Thomas wrote a
separate dissenting opinion to address the commerce clause argument. "I
adhere to my view that 'the very notion of a "substantial effects" test under
the Commerce Clause is inconsistent with the original understanding of
Congress' powers and with this Court's early Commerce Clause cases,'" Justice
"[T]he Court's continued use
of that test 'has encouraged the Federal Government to persist in its view that
the Commerce Clause has virtually no limits,'" Justice Thomas said. "The
Government's unprecedented claim in this suit that it may regulate not only
economic activity but also inactivity that substantially affects interstate
commerce is a case in point," he added.
The majority also held that
the act's expansion of Medicaid is unconstitutional but that the violation is
remedied by precluding the Department of Health and Human Services from
withdrawing existing Medicaid funds for failure to comply with the expansion's
requirements. The PPACA expands the federal-state Medicaid insurance
program for the poor to cover people with incomes up to 133 percent of the
federal poverty level and to cover childless adults for the first time,
starting in 2014.
The states argued that the
expansion is coercive because it is tied to the nonvoluntary individual
mandate. The government countered that Congress could fix the terms on
which it appropriates federal funds and that Congress expressly reserved the
right to amend the Medicaid statute, which it has done repeatedly over the
"Nothing in our opinion
precludes Congress from offering funds under the Affordable Care Act to expand
the availability of health care, and requiring that States accepting such funds
comply with the conditions on their use. What Congress is not free to do
is to penalize States that choose not to participate in that new program by taking
away their existing Medicaid funding," the majority said.
Deputy Solicitor General
Edwin S. Kneedler, U.S. Solicitor General Donald Verrilli, Assistant
Attorney General Tony West, Deputy Assistant Attorney General Beth S.
Brinkmann, Assistant to the Solicitor General Joseph R. Palmore and attorneys
Mark B. Stern, Alisa B. Klein, Samantha L. Chaifetz and Dana Kaersvang, all of
the U.S. Department of Justice; George W. Madison of the Department of
Treasury; M. Patricia Smith of the Department of Labor; William B. Schultz,
acting general counsel, and Kenneth Y. Choe, of the Department of Health and
Human Services, all in Washington, represent the government.
Greg Kastas of Jones Day in
Washington, Florida Attorney General Pamela Jo Bondi, Florida Solicitor General
Scott D. Makar and Louis F. Hubener, Timothy D. Osterhaus and Blaine H. Winshop
of the Florida Attorney General's Office, all in Tallahassee, Fla.; Paul D.
Clement and Erin E. Murphy of Bancroft in Washington; Texas Attorney General
Greg Abbott and Texas Deputy Attorney General Bill Cobb, both in Austin, Texas;
South Carolina Attorney General Alan Wilson in Columbia, S.C.; Alabama Attorney
General Luther Strange in Montgomery, Ala.; Michigan Attorney General Bill
Schuette in Lansing, Mich.; Nebraska Attorney General Jon Bruning and Katherine
J. Spohn, of Nebraska's Attorney General's Office, both in Lincoln, Neb.; Utah
Attorney General Mark L. Shurtleff in Salt Lake City; Louisiana Attorney
General James D. "Buddy" Caldwell in Baton Rouge, La.; Colorado Attorney
General John W. Suthers in Denver; Washington Attorney General Robert M.
McKenna in Olympia, Wash.; Pennsylvania Gov. Thomas W. Corbett Jr. and
Pennsylvania Attorney General Linda L. Kelly, both in Harrisburg, Pa.; South
Dakota Attorney General Marty J. Jackley in Pierre, S.D.; Indiana Attorney
General Gregory F. Zoeller in Indianapolis; Georgia Attorney General Samuel S.
Olens in Atlanta; Idaho Attorney General Lawrence G. Wasden in Boise, Idaho;
Arizona Attorney General Tom Horne and Joseph Sciarrotta Jr. and Janice K.
Brewer of the Arizona Attorney General's Office, all in Phoenix; Nevada Gov.
Brian Sandoval in Carson City, Nev.; Alaska Attorney General Michael C.
Geraghty in Juneau, Ala.; Ohio Attorney General Michael DeWine and David B.
Rivkin and Lee A. Casey of Baker & Hostetler, all in Columbus, Ohio;
Wyoming Gov. Matthew Mead in Cheyenne, Wyo.; Maine Attorney General William J.
Schneider in Augusta, Maine; Iowa Gov. Terry Brandstad in Des Moines, Iowa;
Michael B. Wallace of the Mississippi governor's office and Phil Bryant of Wise
Carter Child & Caraway, both in Jackson, Miss.; Kansas Attorney General
Derek Schmidt in Topeka, Kan.; and Wisconsin Attorney General J.B. Van Hollen
in Madison, Wis.; represent the states.
The National Federation of
Independent Business is represented by Karen R. Harned of the National
Federation of Independent Business, Professor Randy E. Barnett of Georgetown
University Law Center and Michael A. Carvin, Gregory G. Katsas, C. Kevin
Marshall and Hashim M. Mooppan of Jones Day, all in Washington.
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