Supreme Court Remains Silent on Obamacare Tax Subsidy Challenge


On July 22 of this year, two federal appellate courts issued clashing decisions within hours of each other on the meaning of a key provision of the Patient Protection and Affordable Care Act. In Halbig v. Burwell, the U.S. Court of Appeals for the District of Columbia Circuit held that the plain text of Obamacare forbids the granting of tax credits to individuals who purchased health insurance on health care exchanges operated by the federal government. In King v. Burwell, the U.S. Court of Appeals for the 4th Circuit reached the opposite conclusion, holding that while the relevant Obamacare provision might appear to cut against the federal government, the I.R.S. rule allowing tax credits via federal exchanges is nonetheless entitled to the benefit of the doubt from the federal courts. As that court put it, "we must defer to the IRS rule."

Both sides of the dispute promptly filed appeals. The Obama administration, which lost Halbig, asked the D.C. Circuit to rehear the case with a full panel of judges. The D.C. Circuit agreed to do so. The losing side in King, meanwhile, petitioned the Supreme Court to take up its case and overturn the 4th Circuit. On Friday (Halloween) the Supreme Court met in private conference to decide whether or not to do so. Today the Court issued its orders from that conference. Yet those orders made no mention of King v. Burwell. It was total silence. A short while later, the Court's docket announced that King had been relisted for another round of private discussion among the justices at this Friday's conference.

What does this mean? Why didn't the Court simply agree to hear or reject the case? At SCOTUSblog, Lyle Denniston sketches four possible explanations:

First, it could mean that one or more Justices seemed to simply want some more time to ponder the case, especially since there is at present no split among federal appeals courts on the subsidy question.

Second, it could mean that the case has not drawn the support of four Justices in favor of reviewing the dispute, but that the case was put over to see if more votes might be forthcoming.

Third, it could mean that the Justices just will not take any action on the controversy until a split does develop among federal appeals courts.   The rescheduling for another look this week would not seem to support that prospect.

And, fourth, it could mean that the Court is inclined to grant review, but is simply following in this instance its apparent new policy of not granting any new cases the first time it examines them at a Conference.  This is a policy that emerged last Term, to try to head off the chance that a case seemingly worthy of review turns out not to be on closer examination.

At the Volokh Conspiracy, Case Western University law professor Jonathan Adler, whose legal arguments have played a central role in these two challenges to the health care law, lays out the reasons why the Supreme Court may soon agree to hear King v. Burwell:

The justices often like to wait and let questions "percolate."  So whether the Court agrees to hear King will likely depend on whether the justices (or, more precisely, four of the justices) believe that a) this is a question that will (or should) eventually fall on their plate, and b) this is a question that should be resolved sooner rather than later. …

Does King satisfy both criteria?  It might.  In King there is a serious argument that it would be better to resolve the underlying question of statutory interpretation sooner rather than later.  The resolution of this litigation will alter the calculus for many political and private actors considering how to respond to the PPACA, and the statute contains various deadlines and timeframes that may become harder to navigate the longer this litigation drags on.  Among other things, states may wish to reconsider whether to create their own exchanges and seek additional support grant. Some states that created their own exchanges are planning to shift to a federal exchange; Oregon's transition is already underway.  A victory for the plaintiffs in King could force them to reconsider. It might also prompt HHS to develop rules to facilitate the state waiver process that begins in 2017.  The more time they have to do this, the easier it will be. Further, the longer the IRS rule remains in place, the more disruptive it will be should the Supreme Court ultimately decide that rule is illegal, a point made by the petitioners in their briefing and highlighted by the WSJ. Of note, it appears some insurers are making contingency plans to prepare for the possibility that the King or Halbig plaintiffs prevail.

In other words, stay tuned next Monday for developments from this Friday's SCOTUS conference.