RICHMOND, Va. – (Mealey’s) Saying that no case from any federal appellate court has extended the commerce clause or tax clause of the U.S. Constitution to include the regulation of a person’s decision not to purchase a product, the federal judge overseeing the Commonwealth of Virginia’s challenge of the newly enacted Patient Protection and Affordable Care Act (PPACA) today declined to dismiss the case (Commonwealth of Virginia Ex Rel. Kenneth T. Cuccinelli II v. Kathleen Sebelius, No. 10-188, E.D. Va.).
U.S. Judge Henry E. Hudson of the Eastern District of Virginia first held that Virginia Attorney General Kenneth T. Cuccinelli II had standing to bring the case, in which Cuccinelli says that the PPACA conflicts with Virginia Code Section 38.2-3430.1:1, against Health and Human Services Secretary Kathleen Sebelius, in her official capacity.
The state code provides that no resident of the commonwealth “shall be required to obtain a policy of individual insurance coverage except as required by a court or the Department of Social Services where an individual is named a party in a judicial or administrative proceeding” and that no provision of the state code will render a resident “liable for any penalty, assessment, fee, or fine as a result of his failure to procure or obtain health insurance coverage.”
A main provision of the PPACA is the requirement that most Americans without insurance obtain coverage or face a penalty.
Also, Judge Hudson said that the court had subject matter jurisdiction because “the mere existence of the lawfully-enacted statute is sufficient to trigger the duty of the Attorney General of Virginia to defend the law and the associated sovereign power to enact.”
The case also is ripe for adjudication because although the effects of the minimum coverage provision do not go into effect until 2014, its effects will be felt by the commonwealth in the near future, Judge Hudson said.
Turning to the merits of the case, Judge Hudson said that never before have the commerce clause and the associated necessary and proper clause been extended as far as proposed by the act and added that he was not persuaded that Sebelius demonstrated that the complaint failed to state a cause of action with respect to the commerce clause element. The commerce clause gives Congress power to regulate commerce, and the necessary and proper clause grants Congress broad authority to pass laws in furtherance of its constitutionally enumerated powers.
Sebelius has argued that the commerce clause supports the PPACA because a person’s decision not to purchase health insurance is “economic activity” as it has a critical effect on interstate commerce. The commonwealth countered that neither the U.S. Supreme Court nor any circuit court of appeals has upheld the extension of the commerce clause to encompass economic inactivity.
Sebelius also argued that the minimum coverage provision was a product of the government’s power to tax for the general welfare while the commonwealth countered that the noncompliance penalty of the provision does not meet the historical criteria for a tax.
The centerpiece of the complaint is the contention that Congress lacks the authority to regulate and tax economic inactivity, Judge Hudson said. There is authority arguably supporting the theory underlying each side’s position, so it cannot be said that the complaint fails to state a cause of action, Judge Hudson said in holding that resolution of the controlling issues in the case must await a hearing on the merits.
[Editor's Note: Full coverage will be in the Aug. 4 issue of Mealey's Managed Care Liability Report. In the meantime, the opinion is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844. Document #31-100804-023Z. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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