Obamacare

'We Must Defer to the IRS Rule': Second Federal Court Rules on Obamacare Subsidies, Votes to Uphold

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As Peter Suderman noted earlier, the U.S. Court of Appeals for the District of Columbia Circuit ruled today in Halbig v. Burwell that the plain text of the Patient Protection and Affordable Care Act trumps an I.R.S. rule granting insurance subsidies through the federally run health exchanges now operating in 36 states. In effect, according to the D.C. Circuit, the Obama administration is in violation of its own health care law.

Yet just a few hours later, a second federal appellate court, the U.S. Court of Appeals for the 4th Circuit, reached the opposite conclusion, ruling that while the relevant provision of the federal health care law might appear to cut against the federal government, the I.R.S. is nonetheless entitled to the benefit of the doubt from the federal courts.

"We cannot discern whether Congress intended one way or another to make the tax credits available on HHS-facilitated Exchanges. The relevant statutory sections appear to conflict with one another, yielding different possible interpretations," the 4th Circuit declared in King v. Burwell. "Confronted with the Act's ambiguity, the IRS crafted a rule ensuring the credits' broad availability and furthering the goals of the law. In the face of this permissible construction, we must defer to the IRS Rule."

We now have a circuit split on this fundamental question about the legality of the ACA, a fractured state of affairs that increases the likelihood of review by the U.S. Supreme Court. The next big question is whether the Obama administration will seek en banc review by the D.C. Circuit, which is a re-hearing of the case by a full bench of D.C. Circuit judges (in contrast to the 3-judge panel that just ruled). If that turns out to be the case, the Supreme Court will stay out of the dispute pending final resolution by the D.C. Circuit, a process that could take many months. But if it's not the case, Obamacare could be back before the high court next term.

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  1. Yet just a few hours later, a second federal appellate court, the U.S. Court of Appeals for the 4th Circuit, reached the opposite conclusion, ruling that while the relevant provision of the federal health care law might appear to cut against the federal government, the I.R.S. is nonetheless entitled to the benefit of the doubt from the federal courts.

    Sucks to yer penaltax, Roberts. You’ve split ALL the babies now, you ass.

  2. I’m convinced that the Judicial Branch is an overrated concept. Or at least a completely useless guardian of individual liberties.

    1. It does seem to be much more a part of the governing class than is probably good for personal liberty.

      Do judges get as rich as congresscritters?

      1. Depends how many kids they send to juvenile detention facilities. It’s good pay if you can get it.

  3. Gonna call it now – all the trolls who were conspicuously absent from the earlier thread show up in this one within the next 60 minutes.

  4. We cannot discern whether Congress intended one way or another to make the tax credits available on HHS-facilitated Exchanges

    Stupid? Malicious? Both?

    1. Both. According to Cato, it’s reiterated 6 times in the statute.

      1. I’m firmly in the Both camp on this one.

      2. Sorry, 7 times

        http://object.cato.org/sites/c…..rix-23.pdf

        Indeed, Section 1401 either employs or refers to this restrictive
        language a total of seven times.97 Even though the appearance of those
        phrases in the definition of ”coverage month” is sufficient to restrict tax
        credits to state-run Exchanges, every reference to Exchanges in Section
        1401’s tax-credit eligibility rules is to an Exchange ”established by the
        State under section 1311.” The Act contains no parallel language
        authorizing tax credits in Exchanges established by the federal
        government under Section 1321. Nor does it contain language
        authorizing the IRS to issue tax credits through the ”functional
        equivalent” of a Section 1311 Exchange.

        1. What’s the purpose of all of this language if it doesn’t even matter in the end? Why not just write a one pager stating the overall goal of the bill and then authorize the various agencies of the executive branch to write regulations to make it happen?

          1. They at least need pretense. But other than that, what they’re doing in practice is just making shit up.

    2. Keep in mind that there are a whole lot of judges appointed by both Clinton and Obama. Sure, there are a good number of Bush appointees, but his were likely more in the moderate vein. Compassionate conservatives, you know.

      One of the many things I hate about the Republicans is their refusal to bounce ideologue nominees.

    3. The ruling does not say the tax credits must be issued. Therefore, a future administration’s IRS can reverse the rule and kill the subsidies. I do not see ambiguous legislation on such a critical issue can be constitutional since it allows the IRS to change it at will.

  5. Maybe one of our attorneys can help us out here. So the State, as defined in the law doesn’t mean the State? I must have missed the FYTW clause.

    1. There’s a little wiggle room for agencies to interpret genuinely unclear laws. Here, the provisions don’t seem to be particularly unclear, but the IRS seems to be taking the position that it can reinterpret clear provisions so long as the result is suffused with a HealthCarey glow.

      1. They should just ask the IRS for the emails which show this was the intent of Congress all along.

        1. The IRS does not have Congresses’ emails. The NSA does.

  6. This really opens a pandoras shitbox from a civil liberties perspective. No longer will statutes be written for clarity, they will deliberately be written for ambiguity so that anybody, at any time, can be criminally prosecuted for almost anything whether it is addressed in a law or not.

    This is an affront to any person that values the rule of law.

    1. oh, so only the few of us then.

      1. Can’t a law be struck down for being too vague/unclear to prevent just this sort of thing?

        (I said ‘can’, not ‘will’).

        1. not a lawyer — but i believe there’s a concept of “unconstitutional vagueness.”

          1. Can’t a law be struck down for being too vague/unclear to prevent just this sort of thing?

            Which begs the question, just how vague does a bill need to be?

            Judging from the Dodd-Frank bill and the recent story on the 14k pages of regulations no one could ever learn or make complete sense of even if they tried, it’s nearly impossible to meet the standard.

            Democracy means gutless, corrupt, and opportunistic politicians can pass bills that give unelected bureaucrats real legislative power.

            1. That is what Progressivism means. Inadvertently, you have given the definition of Progressivism.

              Progressivism means living by technocrats who decide policy rather than politicians deciding policy through debate and vote.

              The correct meaning of Conservatism is that exactly ? deciding policy through debate and vote rather than by technical administrators.

              The doctrines arose during the Progressive Era.

              The rhetoric from progressives since that time has been to label themselves as advanced, scientific and conservatives as backward and prudish.

              1. Life will be so much easier when they push us too far and we have to reduce their numbers.

        2. They’re actually supposed to be struck down for that alone. Also, any arbitrary enforcement can invalidate any rules, and there’s also such a thing as an improper delegation, which, of course, this is, too.

          Really, most of the limits on governmental power are gone. Why this doesn’t have people freaking out is beyond me.

          1. Because they think it’s only going to effect their enemies.

            1. Yes, I know, rule of law doesn’t matter anymore, accountability doesn’t matter anymore, legitimacy doesn’t matter anymore, sanity doesn’t matter anymore.

    2. anybody, at any time, can be criminally prosecuted for almost anything whether it is addressed in a law or not

      So it will be just like having Child Protective Services show up

    3. For quite some time, most laws passed by congress are mini versions of that Godwin chap’s Erm?chtigungsgesetz. Some executive agency gets a free hand in interpreting and enforcing the law while constantly widening the scope of their remit under it. The legislators forget about what they did and repeat with more such laws. It has gotten continuously worse as this example shows.

      1. No, they really are not. The Enabling Act clearly stated that all the powers were handed to the chancellor for the good of the country.

        That is nothing like what’s going on here: Congress passing laws with clear language and Obama ignoring that language.

        1. WORSE THAN HITLER

        2. In this case it’s the courts that are ignoring the clear language.

  7. Barry sez territories don’t get OCare because they aren’t ‘states’. The term only has meaning when he needs it to.

    The black letter law deadlines ignored until after the closest election, the penaltax, the fact that as a tax it needed to start in the House, and now this. Come on, Weigel, explain how OCare isn’t just an Enabling Act.

    1. That’s what may bite them in the ass here, actually.

      I,think the court gave him a ruling on O-care and realize that it’s given him the hubris to go,off the rails and do all kinds of unconstitutional shit. This could be a big smack down if it gets to the Supremes next session.

      1. So wait, this could go a year or more without being resolved? This is so great! Can we bill the IRS for back subsidies like they do for back-taxes that we couldn’t possibly have known about?

    2. The Enabling Act explicitly gave the German chancellor unlimited powers. Obama, on the other hand, simply ignores laws and the courts are unwilling to act.

  8. Confronted with the Act’s ambiguity, the IRS crafted a rule ensuring the credits’ broad availability and furthering the goals of the law. In the face of this permissible construction, we must defer to the IRS Rule.

    What this means – if I ever want to get promoted as a liberal or conservative judge, I better stick to the party line. Max Baucus, nominally the primary author of the bill, stated clearly that the intent of the law was to make subsidies contingent on states building their own exchanges.

    This is the problem with judicial review as a concept. Judges are the lackies of the two major parties. It’s naive to think that you slap a robe on a lawyer, and he becomes and unbiased, benevolent wise man above human nature. Especially when his career arc is determined by appointments from politicians.

    So, if this makes it to the Supreme Court, I look forward to a partisan ruling that won’t be determined by the actual law at all.

    1. It’s naive to think that you slap a robe on a lawyer, and he becomes and unbiased, benevolent wise man above human nature. Especially when his career arc is determined by appointments from politicians.

      I don’t think anybody really thinks that. The best we can do is hope that the appointments balance out over time, particularly on the higher courts.

      But it should be noted that federal judges are appointed for life which means they don’t have to worry about reappointment as do (some? all?) state court judges. Now, if they are really ambitious they may bide their time hoping to be elevated to the Court of Appeals or SCOTUS.

      I also commend to you the example of Justice Lewis Powell who was appointed by Nixon and who was expected to be a party-line kinda guy. Justice Powell turned into the court’s swing vote and authored many thoughtful opinions.

      1. Earl Warren is the classic example of the ol’ switcheroo. Eisenhower appointed him thinking he was a solid conservative vote.

      2. I’m sure there are some very good judges. I’m also pretty sure that most are still too influenced by their own personal biases.

        If the best we can hope for is it balances out over time, that doesn’t really change the fact that when it is too skewed one way or the other you end up with bad precedent.

        It doesn’t matter if eventually a court is packed or evenly split if for a few crucial decisions it is slanted one way or the other. The decisions made still have lasting repercussions.

        There may not be a better alternative, but it is depressing thought that over time our laws are destined to be stretched out of political convenience to the point that they are completely arbitrary.

  9. I’ll note the 4th Circuit panel was made up of two Obama appointees and one Clinton appointee.

    1. Also, the DC Circuit panel was made up of two George W. Bush appointees and a Carter appointee (he dissented).

      Isn’t it great to have a non-politicized, independent judiciary?

      1. Yeah. I don’t know how you get around the problem though. Its like California’s “nonpartisan” redistricting panel. Who the fuck wants to devote several thousand hours of their lives to redistricting unless they are a political junkie? Similarly, who the hell would want to toady to Congresscritters except the type who can be bought and stay bought on the Federal bench?

        1. You establish the Censor, independent of government, yet with power over government officials. The power to remove. I’m willing to do it to start with, until we can train young men and women to the extremely high ethical and constitutional biases needed to remove officials with extreme prejudice.

          “When in doubt, kick scum out.” Except we’ll say it in Latin.

          1. Sounds good to me. Can I serve on the enforcement arm?

          2. BuSab.

            1. Same basic concept, and sure. In fact, why not both? I’ll run the Censor, you run BuSab.

            2. BuSab.

              I remember how ridiculous that seemed when I was a kid. It doesn’t seem so ridiculous any more.

              1. It’s fucking brilliant. First, overdose on the spice. Next, join BuSab. Finally, ride sandworms over DC.

                1. Too bad those things don’t all exist in the same universe.

                  1. So you say. Herbert’s dead. Maybe there was a unification novel coming. Besides, I want prescience and sandworms for my BuSab agents.

        2. Why does Iowa’s redistricting panel seem to work?

          1. 1) Because there’s only one party in Iowa, the Ag-Subsidy party
            2) Not enough minorities to warrant non-Euclidean districts
            3) The Iowans that stayed are the people boring enough to live a life in Iowa

        3. It’s an inherent feature of the system. Only lawyers get appointed to the bench. Lawyers are political creatures. The appointment process is controlled by the parties, and rewards ideological compliance.

          Come up with a better system, and I’m all ears.

          1. Well, maybe some more checks and balances would be nice. For instance, a Senate that was somehow composed of people appointed by state legislatures rather than popularly elected, because what’s the fucking point of that?

            1. I’ve come to the conclusion that ‘checks and balances’ are part of the problem.

              Eliminate them all.

          2. Lawyers aren’t just “political creatures”, politicians make them wealthy: every regulation and law Congress passes means more business and more power for lawyers. That’s why lawyers are overwhelmingly Democrats.

            1. Well, what you’re really talking about are plaintiffs’ attorneys. Most of them are fans of the Democrats, even if they don’t really adhere to their politics.

              1. No, you can make a nice living in trying to interpret the garbage that Congress passes each year to the regulated. Not much of a sense of accomplishment, though. But it’s better than being a PI lawyer.

      2. Trying to figure out where you came up with the notion that the judiciary was supposed to be non-political.

        1. The Founders certainly didn’t expect that. They just hoped they’d be less political than elected officials, particularly with the lifetime tenure, which, in many instances, has been truer than not. But getting rid of politics is well-nigh impossible.

  10. Roger Gregory was a Clinton recess appointment, but W nominated (re-appointed?) him

  11. Hey remember when we had to pass it to find out what is in it? Now the fuckwits that crammed it down our throats are finding out that it has stuff in it they don’t like. Easy peasy, just have a judge say it is what we wish it was, the wording of the law be damned.

    This is what a banana republic looks like people. Fuck the rule of law. One party uses the power of the state to impose it’s will on the rest of us. Obumbles really needs to get himself a big hat and lots of medals.

    1. *its will

  12. And add to that the FEC and IRS abuses against their political opponents w/o any accountability.

  13. We cannot discern whether Congress intended one way or another to make the tax credits available on HHS-facilitated Exchanges.

    Huh.

    1. Great work, Congress. You must be so proud. And now, we can eliminate the ACA and deal with the billions wasted, or try to figure out a cure, and deal with the billions wasted and almost certain bankrupting of the system.

  14. One of the many things I hate about the Republicans is their refusal to bounce ideologue nominees.

    Professional courtesy exists even among rats, I guess.

    1. Yes, but the Dems are perfectly willing to do it, at least on occasion. I’ve been shocked at who the Republicans have let through when they controlled the Senate.

  15. ” the I.R.S. is nonetheless entitled to the benefit of the doubt from the federal courts”

    To a bunch of liars?

    1. And why would the IRS even care? They didn’t pass the law, they are simply there to implement whatever money collection Congress asks them to perform. What “benefit of doubt” are they “entitled” to?

  16. Where the heck does the 4th District Court get the idea that they have to defer to the IRS????

    The IRS is not a legislative body.

    1. It would be a real shame if those judges happened to get caught up in an audit…

  17. the bigger problem seems to be that we have illiterate judges that don’t know what “established by the State” means.

  18. Ah, yes, when in doubt, defer to the regulators. This has been a problem now for 50 years. If Congress wrote a law that cannot be read, say so.

    1. But they didn’t. This isn’t “we wrote something ridiculous because we didn’t properly read what we wrote”, this is “our game of chicken with the states failed, but we don’t want to be forced to expend political capital to fix our mistake legislatively.”

      If you need proof, just remember that the law as passed by Democrats stripped all Medicaid funding (not extra, every last bit) from states that did not establish exchanges.

  19. We must recover the original meaning of parts of the Constitution- as it was originally understood by the mass of people at its ratification. This includes the several “terms of art” that are used, and were understood quite clearly at the time. One of these “good behavior” as applied to the Federal judiciary, meant that the judges would act in a properly judicial manner, hewing closely to the letter of the law, neither extending it, nor diminishing it. It should be a part of every judges’ duties, to give a definitive meaning to a piece of legislature that comes before him. If a judge would ever making a ruling that would include something like this: ” It pains me in the extreme to sentence this person to ten years imprisonment, but the law requiring it was passed according to all legislative restraints, and does not violate any part of the Constitution. It is my duty to follow the law and jurisprudence, not to pick results based on my desires or moral shadings. Legislature- do your sworn duty to change this law as a matter of justice, and in the same spirit pardon this man.” A sort of legal “check your premises.” This has always seemed to me to be an important role of the court- for if every bad law will be vacated by the courts- *sometmes* then what does the legislature do for a living?

  20. In fact, the Congressional staffers seem to have made a good-sized boo-boo.

  21. There was another legal challenge to ACA on the grounds that it did not originate in the House (despite being a tax). What’s the word on that?

    1. Is there an actual challenge or is it just a gleam in someone’s eye? Because I can’t figure who would have standing except maybe 100 million citizens who believe they are being illegally compelled to pay a tax that some random government body foisted on them. Would that work?

  22. The ACA subsidy is a text credit advanced to the private insurance provider during the year and recovered later if the taxpayer does not qualify (like under estimated their 2014 income)

    Let’s say the DC court’s opinion ultimately prevails ? that only people who are residents of states that set up their own exchanges get to claim federal tax credits when they file their 1040 in 2015.

    What are the unintended consequences of this “victory” over Obamacare? The rest of the affordable care act stays. People living in states covered by the federal exchange would not qualify for the subsidy they’ve been receiving for seven months and have to pay it back. They will quickly learn that there is an exception and they never wererequired to have health insurance at all – because it is “unaffordable”

    Would states quickly establish “state exchanges”? Would people move to states with exchanges before year end? Would HHS create legal fiction that states outsourced their exchanges to HHS? Would HHS “clawback” all the money it already paid to Blue Cross and Coventry – and drive them into bankruptcy?

    Get the popcorn ready ? it’s round three. A software designer at the IRS needs to know what to do.

  23. Commie ruling by commie paid interests to commie judges. Case closed. Where’s the HOUSE ON UNAMERICAN ACTIVITIES when you need them?

  24. The court deferred to the IRS because the court viewed the legislation as ambiguous. That ambiguity allows a future IRS nullify the rule of the current IRS. Just as no Congress is beholden to embrace the rules of a previous Congress, no future IRS is beholden to embrace the rules of a previous IRS.

    In other words, the court did not say, and cannot say, those who sign up using the federal exchange must be granted a subsidy because the law includes wording that specifically excludes it one place, but seems to allow it in another. That, in effect, leaves the IRS to interpret the law as they please with respect to this critical issue. I do not see how ambiguous language of this magnitude can be ruled constitutional, since it can be changed by the Administration at will, granting the IRS the power to write and rewrite legislation.

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