The Obama Administration Gets Its Wish In Legal Challenge to Obamacare Subsidies



This morning, the DC Circuit decided to grant an en banc review of the case of Halbig v. Burwell, which challenges the legality of the administration's decision to allow subsidies within Obamacare's federal exchanges.

This is what the administration wanted, and what challengers had hoped to avoid. A three judge panel in the DC Circuit had previously ruled against the administration, accepting the argument made by challengers that the law's subsidies are not authorized. The decision to go back to the full court for a rehearing immediately vacates the earlier ruling against the law. 

Basically, the court decided to start over, but this time with the whole court involved rather than just the original three-judge panel.

This is what the administration had asked for. The whole court is seen as much more likely to be sympathetic to the administration's arguments following Senate Majority Leader Harry Reid's decision to pursue the nuclear option last year with regard to judicial appointments. There are now seven Democratic nominees, and just four judges nominated by Republicans. 

Does that make this a politicized decision? Well, it's certainly rare and unusual. The DC Circuit almost never takes this route; last year it reviewed none of its cases. This year, it reviewed two.

As Adam J. White, an attorney who helped file an amicus brief on behalf of challengers in the case, wrote in The Wall Street Journal last month, an en banc review like the one announced today represents a "sharp break from history." 

The low [en banc review] numbers are thanks to the court's high standard, found in the Federal Rules of Appellate Procedure: En banc rehearing "is not favored and ordinarily will not be ordered" unless the case satisfies one of two standards. First, an en banc rehearing may be needed to "secure or maintain uniformity of the court's decisions." A three-judge panel is not allowed to overrule old precedents, even when precedents are in conflict; only the full court can do so, en banc.

Second, en banc rehearing is appropriate for what the federal appellate rules call cases of "exceptional importance." For the D.C. Circuit, this standard has been met almost exclusively by cases raising serious constitutional issues. Over the past decade seven of the nine cases reheard en banc raised difficult questions of constitutional law, such as the rights of Guantanamo detainees or of terminally ill patients.

Cases that will substantially affect the court's own workings also can be deemed of "exceptional importance." In 2011, the court sat en banc to decide whether taxpayers could file lawsuits challenging IRS procedures for obtaining tax refunds.

Halbig checks none of these boxes. It is a straightforward statutory interpretation case. The administration's supporters seem to believe that Halbig has "exceptional importance" because the Affordable Care Act is exceptionally important to them and the panel's decision was, in their eyes, wrong.

The challengers wanted the case to go directly to the Supreme Court, arguing that it's critical to get a timely resolution to the question of whether or not the subsidies doled out through the federal health exchange are legal. An en banc review means that, at minimum, a High Court hearing will have to wait. And it's possible that it could discourage the Supreme Court from taking a crack at it. Either way, though, as Case Western Reserve Law Professor Jonathan Adler recently noted, it may not be final; there are are still two additional challenged to the subsidies rule in the works.