Constitutionality of the ACAOverview and Predictions

Michael R. ShpieceKITCH DRUTCHAS WAGNER VALITUTTI & SHERBROOK 

One Woodward Ave, Ste 2400Detroit, MI 48226

Direct Line: (313) 965-7994Fax: (313) 965-7403

michael.shpiece@kitch.com   

Horace W. GreenGreen & HumbertThe Mills Building

220 Montgomery Street, Suite 1418San Francisco, CA 94104

(415) 837-5433(415) 837-0127 (Fax)

horaceg@lifehealthlaw.com

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TOPICS TO COVER

(1)What does PPACA do

(2)Relevant Constitutional provisions

(3)Constitutional challenges

(4)How will Supreme Court rule

(5)Recusal issue

(6)Other challenges2

BACKGROUND

• The Patient Protection and Affordable Care Act, P 111-48

• The Health Care and Education Reconciliation Act of 2010, PL 111-152.

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What Does ACA Do?

• 1. Increase the number of people with health care coverage.

• - Adult Children covered to age 27

• - Prohibit rescissions.• - Coverage for high-

risk individuals with pre-existing conditions.

• 2. Decrease costs for individuals and employers.

-Various tax credits and other programs-Reinsurance and grants for

early retiree coverage

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What Does ACA Do (cont.)?

• 3. Increase the “comprehensiveness” of coverage.-Reduce “donut hole” in

Medicare Part D-Eliminate annual and lifetime

maximums-Cover Preventative Care

• 4. Improve Quality/Effectiveness of health care.-Research and Pilot Projects-ACOs, Medical homes

• 5. Establish Health Exchanges and other means to improve accessibility.

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What Does PPACA Do (cont.)?

• 6. Increase rate regulation and Insurance Market reforms.

• 7. Improve Program Integrity/Enforcement/ Accuracy of payments.

• 8. Increase availability, education, and training of Health Care Workers.

• 9. Improve availability of Drugs and Innovative Therapies.

• 10. Other Provisions: Nursing Mothers/“Economic Substance” Doctrine/ Funding for Elder Justice Programs/Simple Cafeteria plans/Health FSA limits/Wellness programs 2d Amendment

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Relevant Constitutional Provisions

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COMMERCE CLAUSEArt. I, Sec. 8, Clause 3.

The Congress shall have the Power:

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

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NECESSARY AND PROPER CLAUSE, Art. I, Sec. 8, Clause 18

Congress shall have the Power:

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

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Tax and Spending ClauseArt. I, Sec .8, Clause 1

• The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States

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The 10th Amendment

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

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Constitutional Challenges

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Preliminary Issues

1. Standing

2. The Anti-Injunction Act

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Do the Plaintiffs Have Standing to Challenge the ACA

(1) Injury in fact, (2) fairly traceable to the statute, (3) redressed by favorable judgment

State of Florida (11th Cir) – individuals can challenge mandate, States can challenge Medicaid

Thomas More Law Center v. Obama – mandate’s requirements “imminent” & affected current spending habits

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No Standing to Challenge the ACA

• Virginia v. Sebelius (4th Cir.) – State lacks standing to challenge individual mandate

• N.J. Physicians, Inc. v. President of the United States (3d Cir.) – no allegation of present impact or whether claimant would be exempt in 2014

• Baldwin v. Sebelius (9th Cir.) – no allegation that claimant currently lacked insurance or had to save now to buy insurance in 2014

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The Tax Anti-Injunction Act

• 26 U.S.C. Sec. 7421(a) • “no suit for the purposes of

restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such a person is the person against whom such tax is assessed."

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Does the Anti-Injunction Act bar challenges to the ACA?

Yes - Liberty University v. Geithner (4th Circuit) – employer & ind. mandates held “taxes” = any exaction enforced by the Internal Revenue code; “penalty” label not dispositive

No - Thomas More v. Obama (Judge Sutton, concurrence); State of Florida v. DHHS; Susan Seven Sky, et al., v. Holder; - Act refers to “penalty”: mandate’s goal is not to raise revenue

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Individual Mandate

All “applicable individuals”

Excludes religious opponents, health care sharing ministry members, illegal immigrants, prisoners, low income individuals, and members of Native American tribes

Must maintain “minimum essential coverage”

Government sponsored programs (such as Medicare, Medicaid, and/or veteran’s health care programs); employer-sponsored plans; individual plans; grandfathered health plans; or state benefit risk pools.

If no “minimum essential coverage”, penalty = $95 per person ($285 per family) in 2014, $350 ($1,050) in 2015, and $750 ($2,250) in 2016 and thereafter (subject to cost of living increases).

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COMMERCE CLAUSE ISSUES

1. Heart of Atlanta Motel, Raich, and Wickard v. Morrison and Lopez

2. Activity v. Non-Activity

3. Federalism /10th Amendment

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RELATED ISSUES

1. Necessary and Proper Clause

2. Taxing and Spending Clauses (Medicaid expansion)

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Is the Individual Mandate Constitutional? - Yes

Thomas More Law Center v. Obama (6th Circuit)

Susan Seven Sky, et al., v. Eric H. Holder, Jr. et al. (D.C. Circuit Court)

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Is the Individual Mandate Constitutional? - No

State of Florida v. Dept. of Health and Human Services (11th Circuit)

(This is the case in which the Supremes granted cert)

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Severability

• Test: would Congress have enacted the rest of the law without the unconstitutional section? If severable, does the whole law fall or only those sections closely related to the unconstitutional provision?

• Presumption in favor of severability

• Effect of severability or non-severability clause

• Is ind. mandate an essential feature?

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Is the Individual Mandate Severable from the Affordable Care Act?

Yes – State of Florida v. Dept. of Health and Human Services (Circuit court)

No – Florida v. DHHS (Dist. Court);U.S. Senate amicus brief;

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Medicaid Expansion

• States required to cover adults under 65 incomes below 133% of poverty level & their children

• Maintain existing eligibility until Exchanges are operational

• Children under 26 now Medicaid eligible

• Increase Medicaid payments to primary physicians to 100% of Medicare rates for 2013-14

• Govt pays add’l cost 2014-16

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Does the Act's Expansion of Medicaid Violate the Spending Clause?

Issue – violates 10th amendment by using spending power to coerce states to comply with federal objective

No – Florida v. DHHS – Congress reserved right to amend statute; Fed. Govt. bearing most of cost; states can decide to opt out 26

How will the Supreme Court Rule?

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Justice Alito - NO

1986 memo (as A.G.) - “it is the States, and not the federal government, that are charged with protecting the health, safety and welfare of their citizens.”

U.S. v. Rybar dissent (cited Lopez) - concern re “meaningful limits on congressional power” BUT also emphasized importance of Congressional findings

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Justice Breyer - YES

Has never found a law unconstitutional on Commerce Clause grounds

Voted with majority in Raich, dissents in Morrison and Lopez

Lopez dissent – “courts must give Congress leeway in determining connection between regulated activity and interstate commerce”

Morrision dissent – “rational basis”

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Justice Ginsburg - YES

Has never found a law unconstitutional on Commerce Clause grounds

Voted with majority in Raich, dissents in Morrison and Lopez

Has also dissented from other Tenth and Eleventh Amendment decisions vindicating the interests of state sovereignty.

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Justice Kagan - YES

Appointed by Administration that is largely responsible for the form and content of the Act

Confirmation hearing – Sen. Coburn’s “eat your vegetables” question – “whether it is a dumb law is different from . . .whether it’s constitutional. . .the courts would be wrong to strike down laws that they think are senseless, just because they’re senseless”

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Justice Kennedy - YES

Voted with majorities in Lopez, Morrison, and Raich

Judicial duty to enforce limits on govt. v. federal power to regulate a national economy

Lopez concurrence – “the Federal Govt. undertakes activities today with would have been unimaginable to the Framers . . .”

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Chief Justice Roberts - YES

Confirmation hearings - Raich as showing Congress "has the authority to determine when issues affecting interstate commerce merit legislative response at the federal level."

U.S. v. Comstock – “If . . . the means adopted are really calculated to attain the end . . . the relationship between the means adopted and the end to be attained, are matters for congressional determination alone.”

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Justice Sotomayor - YES

Appointed by Administration that is largely responsible for the form and content of the Act

Joined majority in U.S. v. Comstock

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Justice Scalia - NO

Voted with majority in Lopez and Morrison

Raich concurrence mentions “activity” 42 times

Jointed Thomas’ dissent in U.S. v. Alderman - "Today the Court tacitly accepts the nullification of our recent Commerce Clause jurisprudence."

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Justice Thomas - NO

Voted with majority in Lopez and Morrison

Raich dissent – “substantial effect” test is “rootless and malleable”

Lopez concurrence – “wrong turn” in 1930’s from “a century and a half of precedent”

U.S. v. Alderman – “nullification of our recent Commerce Clause jurisprudence”

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Other Issues

Recusal (Kagan, Thomas) Physician Hospitals of America,

et al., v. Sebelius (challenge to Medicare payment cuts to physician owned hospitals)

Wollschlaeger v. Farmer (possible 1st Amendment challenge to firearms data in wellness programs)

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Recusal

• Justice Kagan - Solicitor General when the Administration briefed/defended ACA

• Justice Thomas – wife is paid lobbyist/consultant opposing the law

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Standards

• 28 U.S.C. § 455 - a) Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.

• (b) He shall also disqualify himself in the following circumstances:

• (3) Where he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case in controversy;

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Standards (cont.)

• (b) He shall also disqualify himself in the following circumstances:

• (5) He or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person:

• (iii) Is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding;

• (c) A judge should inform himself about his personal and fiduciary financial interests, and make a reasonable effort to inform himself about the personal financial interests of his spouse . . .

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Standards (cont.)

• Justices decide for themselves whether recusal warranted

• No higher court to review a Justice’s decision not to recuse

• Canon 14 of the original 1924 Canons of Judicial Ethics: 'should not be swayed by partisan demands, public clamor or considerations of personal popularity or notoriety, nor be apprehensive of unjust criticism’.

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Thank You! 42