Court Decisions

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  • Colorado federal court issues a temporary order enjoining HHS, DOL and Treasury from enforcing contraceptive mandate against Catholic owned company. On July 27, 2012, in Hercules Industries, Inc. v. Sebelius, the U.S. District Court for the District of Colorado issued a temporary order enjoining the Departments of Health and Human Services (HHS), Labor (DOL) and Treasury from enforcing what has come to be known as the contraceptive mandate against a Catholic-owned air-conditioning company until the company's challenge that the mandate infringes on constitutional and statutory rights is resolved. Generally, HHS guidelines requiring non-grandfathered health insurance plans to cover certain preventive services for women without cost sharing under the PPACA take effect for plan years beginning on or after August 1, 2012. Under HHS guidelines, coverage for preventive services for women includes, among other things, coverage of certain contraceptive methods. Exemptions exist for religious organizations, such as churches, and a temporary enforcement safe harbor exists delaying the effective date to August 1, 2013 for nonprofit organizations with religious objections to contraceptive coverage, but no relief has been provided for other business entities that object to certain contraceptive methods for religious reasons. The injunction only applies to the company in question, but the ultimate determination of the case, and any succeeding challenges to that decision, could have broad ramifications for the contraceptive mandate.

  • Supreme Court Decision on Constitutionality of Health Reform Law, June 28, 2012.
  • 11th Circuit Ruling On PPACA Constitutionality. The Eleventh Circuit Court of Appeals has ruled that the PPACA health reform law's individual mandate is unconstitutional, but that the mandate provision is "severable" from the rest of the law, so no other part of the law is struck down. The court also rejected the challenge by state attorneys general to the expanded coverage mandates imposed on states electing to participate in the Medicaid program.

  • Florida federal court issues order to stay declaratory judgment against health reform law. On March 3, 2011 Federal District Judge Vinson issued an order that will stay his prior ruling that the individual coverage mandate of PPACA is unconstitutional and that the entire law is therefore invalid, in response to a motion for clarification by the federal government. The judge conditioned the stay upon the government filing an appeal of his declaratory judgment ruling within seven days of his March 3 order and seeking an expedited appellate review, either in the Court of Appeals or in the Supreme Court.

  • Mississippi Federal Court Dismisses Suit Challenging PPACA's Minimum Essential Coverage Provision on Jurisdictional Grounds, (Feb. 3, 2011) – The District Court for the Southern District of Mississippi dismissed a lawsuit brought by Mississippi's Lieutenant Governor along with ten individuals residing in Mississippi who do not have health insurance. The lawsuit challenged the constitutionality of the "minimum essential coverage" provision, or individual mandate, in PPACA. Specifically, Plaintiffs alleged that the minimum essential coverage provision: 1) exceeds the power granted to Congress by the Commerce Clause of Article I of the United States Constitution; 2) constitutes an unconstitutional taking pursuant to the Fifth Amendment to the United States Constitution; 3) violates substantive due process rights guaranteed by the Fifth and Fourteenth Amendments; and 4) violates the Tenth Amendment. Additionally, the Plaintiffs further contend that the tax penalty is an unconstitutional capitation or direct tax.

    The Plaintiffs argued, in part, that they had standing to bring the claims they asserted, and therefore the Court had jurisdiction to hear the lawsuit, because the minimum essential coverage provision (1) constitutes a concrete threat of injury insofar as it will force them to purchase health insurance or be subject to a financial penalty, and (2) the provision will force them to manage their financial affairs to prepare for the provision's requirements. In response, the Defendants filed a motion to dismiss the lawsuit claiming that the Court did not have jurisdiction to hear the case, because the Plaintiffs did not have standing to bring the suit.

    In ruling on the Defendants' motion to dismiss, the Court agreed with the Defendants jurisdictional challenge and found that the Plaintiffs' lacked standing to challenge the minimum essential coverage provision, because the allegations in the Plaintiffs' complaint were insufficient to show a "certainly impending" injury. For example, the Court explained that the ten private individuals did not sufficiently allege that (1) the minimum coverage provision would apply to them and (2) that they would incur the tax penalty for non-compliance in the event the provision would apply to them. However, because the Plaintiffs' complaint was dismissed without prejudice, the Plaintiffs may amend their complaint and file it again within 30 days from the date of the opinion.
  • The United States District Court for the Northern District of Florida Declares the Patient Protection and Affordable Care Act Unconstitutional. (January 31, 2011) – The United States District Court for the Northern District of Florida ruled on a suit brought by the Florida Attorney General and joined by twenty-five other states, among others, challenging the constitutionality of PPACA. While numerous challenges to the law's constitutionality were brought, the Court specifically ruled on Plaintiffs' claims alleging (1) that PPACA violates the Spending Clause and principles of federalism under the Ninth and Tenth Amendments to the extent that the law expands the Medicaid program to cover certain new classes of individuals and render the states responsible for the actual provision of health services thereunder, and (2) that Section 1501 of PPACA, commonly known as the Minimum Essential Coverage Provision or the Individual Mandate Provision, exceeds Congress's authority under the Commerce Clause.

    After finding that the Medicaid expansion complained of by the Plaintiffs did not violate the Constitution, the Court declared the Individual Mandate provision unconstitutional as Congress lacked the authority to enact the provision under the Commerce clause. The Court's conclusion is in align with the Eastern District of Virginia's ruling on December 13, 2010, but in conflict with the Eastern District of Michigan's and the Western District of Virginia's rulings in October and November of last year.

    However, unlike the Eastern District of Virginia, the Court here found that the Individual Mandate Provision was inextricably tied to the entire legislation, and therefore, could not be severed. In particular, the Court concluded:

    [N]otwithstanding the fact that many of the provisions in the Act can stand independently without the individual mandate (as a technical and practical matter), it is reasonably "evident"… that the individual mandate was an essential and indispensable part of the health reform efforts, and that Congress did not believe other parts of the Act could (or it would want them to) survive independently. I must conclude that the individual mandate and the remaining provisions are all inextricably bound together in purpose and must stand or fall as a single unit.
    As a result, the Florida Court has declared that the entire Act is unconstitutional and, therefore, void.

  • The United States District Court for the Eastern District of Virginia Issued a Declaratory Judgment Today Finding PPACA's Minimum Essential Coverage Provision Exceeds the Constitutional Boundaries of Congressional Power. The Attorney General of Virginia brought suit on behalf of the Commonwealth of Virginia challenging the constitutionality of Section 1501 of PPACA, commonly known as the Minimum Essential Coverage Provision or the Individual Mandate. This provision requires that every United States citizen, unless specifically excepted, maintain a minimum level of health insurance coverage for each month beginning in 2014, or the individual will have to pay a penalty.

    The Court found that the penalty operated, in fact, as a penalty rather than a tax necessitating that Congress's authority to enact the penalty would have to be tied to a valid exercise of the Commerce Clause and the associated Necessary and Proper Clause, rather than the General Welfare Clause. However, the Court found that Congress had lacked the power under the Commerce Clause "to compel an individual to involuntarily engage in a private commercial transaction, as contemplated by the Minimum Essential Coverage Provision." The Court went on to state that this dispute "is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it's about an individual's right to choose to participate."

    The Court ordered that Section 1501 be severed from the remainder of PPACA, but declined to issue an injunction. The ruling does not address any of the remaining PPACA provisions. The issue will now go up on appeal.

  • Michigan court upholds PPACA "Individual Mandate". A Michigan federal district court judge on October 7, 2010 denied an injunction and dismissed the plaintiffs' challenge to the "Individual Mandate" under the Patient Protection and Affordable Care Act (PPACA). The plaintiffs were a "public interest" law firm acting on behalf of its members and four individuals who asserted they do not have private health insurance and object to "being compelled to purchase heatlh care coverage". They claimed that they were being forced by the Individual Mandate to direct into saving for health insurance to be purchased in 2014 monies they would now be spendig in other preferred ways, even though the mandate and its penalties only become effective in 2014 and that Congress lacked the power to regulate "inactivity" – i.e., not buying health insurance. The court ruled that the plaintiffs did have standing and that the case was sufficiently "ripe" for resolution. On the merits, though, the court upheld Congress's power under the Constitution's interstate commerce clause to impose the penalty under PPACA for violation of the Individual Mandate to have health insurance. The court observed that the plaintiffs' "inaction" as regards purchase of health insurance effectively meant that they would purchase health care services in some other way, since they would no doubt be at some point participants in the health care services market. The federal government could regulate that choice, the court said, given the impact those choices can have on the operation of the health care marketplace. Because it upheld the law on interstate commerce clause grounds, it did not reach the separate argument by the government that the mandate penalty was enforceable under the federal government's separate taxing authority.

  • The United States District Court for the Northern District of Florida denied the Department of Health & Human Services ("HHS") motion to dismiss this action against the PPACA with respect to the individual mandate and the state coercion count. In this case, the plaintiffs contended that the PPACA violates the Constitution in the following ways: (1) the individual mandate and concomitant penalty exceed Congress's authority under the Commerce Clause and violate the Ninth and Tenth Amendments; (2) the individual mandate and penalty violate substantive due process under the Fifth Amendment; (3) "alternatively," if the penalty imposed for failing to comply with the individual mandate is a tax, it is an unconstitutional capitation or direct tax; (4) the PPACA coerces and commandeers the states with respect to Medicaid by altering and expanding the program in violation of Article I and the Ninth and Tenth Amendments; (5) it coerces and commandeers with respect to the health benefit exchanges in violation of Article I and the Ninth and Tenth Amendments; and (6) the employer mandate interferes with the states' sovereignty in violation of Article I and the Ninth and Tenth Amendments.

    First, the court determined that the individual mandate penalty was not a "tax" and, thus, HHS could not rely on Congress's taxing authority under the General Welfare Clause to justify the penalty. Second, the court held that HHS's jurisdictional challenges fail. The court then turned to the plaintiff's arguments for failure to state a claim upon which relief could be granted under Federal Rule of Civil Procedure 12(b)(6). In Count VI, the plaintiffs objected to PPACA's employer mandate, which requires the states, as large employers, to offer and automatically enroll state employees in federally-approved insurance plans or face substantial penalties. The court found that because the employer mandate regulates the states as participants in the national labor market the same way as it does private employers, and because the Supreme Court has held that adversely affecting the state fisc does not interfere with state sovereignty, the employer mandate does not violate the Constitution as a matter of law. In Count V, the plaintiffs claimed that the creation of health benefit exchanges, which states may create and operate, is really not a choice because the PPACA forces them to operate the exchanges under threat, in violation of the Ninth and Tenth Amendments. The court held that because the health benefit exchanges are voluntary and do not compel states to regulate the private conduct of their citizens, the PPACA gives the states a choice and is a type of "cooperative federalism." In Count III, the plaintiffs objected to the individual mandate penalty as an unconstitutional capitation or direct tax. The court found that Congress did not intend the individual mandate penalty to be a tax so it dismissed this count as moot. In Count II, the plaintiffs alleged that the individual mandate violates their rights to substantive due process under the Fifth Amendment. The court also dismissed this count because there was a "rational basis" for justifying the individual mandate.

    In Count IV, the state plaintiffs objected to the fundamental changes in the nature and scope of the Medicaid program. Specifically, the state plaintiffs claimed that the drastic expansion would force them to "run [their] budgets off a cliff." In light of the current state of the law, the judge found that there was little support for the plaintiffs" coercion theory, but the law did not necessarily preclude this argument. The court acknowledged that the plaintiffs are placed in an extremely difficult situation of either accepting sweeping changes to Medicaid or being withdrawn from the system entirely. Finally, in Count I, the plaintiffs challenged the individual mandate as exceeding Congress's power under the Commerce Clause. The court held that the plaintiffs had stated a plausible cause of action, as the government "has never required people to buy any good or service as a condition of lawful residence in the United States."