Jim Blumstein on why the procedural posture of King v. Burwell might matter

(Reuters/Joshua Roberts)

Below is a guest post by James Blumstein, university professor of constitutional law and health law and policy at Vanderbilt Law School and director of the Vanderbilt Health Policy Center, discussing why the procedural posture of King v. Burwell could be relevant should the plaintiffs prevail. Blumstein is a noted health law and administrative law scholar who testified on the IRS tax credit rule in 2012. He also authored an amicus brief in NFIB v. Sebelius arguing that tying traditional Medicaid funding to state acceptance of the Medicaid expansion was unconstitutional, which foreshadowed portions of the Supreme Court's analysis of that issue. His prior posts on the lawsuits challenging the IRS tax credit rule can be found here and here.

With only three decision days still scheduled for this Supreme Court Term (Thursday, Friday, and Monday), the waiting for the Court's decision in King v. Burwell will soon be over. Can there still be something new to say or think about at this point? Remarkably, the answer is yes.

King involves the question of whether the Internal Revenue Service (IRS), by regulation, can authorize tax subsidies to income-qualified persons who purchase medical insurance on federally-run exchanges. The Affordable Care Act (ACA) provides for two types of exchanges—those established by a state and, where states do not set up such an exchange, those established by the federal government.

The ACA expressly provides subsidies to income-qualified persons who purchase medical insurance through an exchange established by a state. Under the ACA, subsidies are not available to persons who purchase medical coverage outside an exchange. As in the case of persons who purchase medical insurance outside an exchange, the ACA makes no provision for subsidy for individuals who purchase medical insurance through a federally-run exchange.

http://www.washingtonpost.com/posttv/national/health-science/what-you-need-to-know-about-king-v-burwell-in-two-minutes/2015/06/05/a0d6911a-0b95-11e5-951e-8e15090d64ae_video.html

The IRS deemed this to be a gap and sought to fill it by adopting a regulation that authorizes subsidy for medical insurance purchased on a federal exchange. King addresses the issue whether the IRS's regulation is valid under the ACA.

The broad implications of the King decision have been front and center for a long time. How should a Court construe a statute whose governing text seems so clear but whose broader objectives and their analytical implications are contested? How should what the Obama Administration regarded as a gap in subsidy be remedied—by an act of Congress or by rulemaking by an executive-branch agency? What effect, if any, should be given to the practical consequences of overturning the IRS regulation, and are those consequences coercive on states or empowering of them?

Lost in these discussions—especially those that have focused on the potential for immediate disarray in state insurance markets—has been the procedural posture of the litigation now pending before the Supreme Court. Sometimes, and this is one of those times, analysts have to view the courts as, well, courts—governed by procedural rules that normally apply to courts and that govern their behavior and outcomes.

So, this is the point here—the cries of immediate disarray are shrill but misdirected because of the procedural posture of the pending case before the Supreme Court.

The lower court (the Court of Appeals for the Fourth Circuit) granted the government's motion to dismiss the case. A motion to dismiss is premised on the following reasoning: Even if plaintiffs' facts are correct, their legal claim is unwarranted—there is no legal violation asserted in the pleadings. If the Supreme Court agrees with the plaintiffs' challenge in King, holding that the IRS regulation is invalid, then the Court can only overturn the lower courts' granting of the government's motion to dismiss. Procedurally, that is the only relief that the Supreme Court can grant at this stage.

Of course, if the Supreme Court rules favorably for plaintiffs' position, the plaintiffs will win their case—eventually. But some additional procedural steps are needed, and they will take some time.

If they prevail at the Supreme Court, plaintiffs must turn that decision into a judgment. Courts speak through orders and judgments. If the Supreme Court overturns the dismissal, then the case would return to the Court of Appeals for the Fourth Circuit in Richmond for further proceedings.

That Court could entertain a motion for summary judgment by plaintiffs, which seems like the appropriate procedure since there is no dispute on material facts at this point. But the more likely scenario is that the Court of Appeals would not take up such a motion for the first time. It would likely take a reasonable amount of time (say a month) and then send the case back to the district court. The Court of Appeals could even ask the parties to brief the procedural points, asking whether a remand to district court is the appropriate next step. That briefing schedule could easily extend the one month time frame to three months.

If, as seems likely, the Court of Appeals sends the case back to district court, then that court would entertain a motion from plaintiffs for summary judgment (or revive a pending motion for summary judgment). Since there is a pending motion for summary judgment already filed at an earlier stage, the district court could well decide to enter summary judgment on its own or upon proper motion, based on the Supreme Court's decision. But one could also see the district court asking for briefing on the remedy and timing issues. And an engaged district judge could even call for mediation among the parties, with an aim of reaching a settlement on the remedy and timing issues.

All of this procedure will take some time. So, one can confidently conclude that the predictions for imminent disarray are more of the stuff of Chicken Little than Oliver Wendell Holmes. Even on a fast track, this will take a few months—and it is very likely that the matter will extend beyond calendar year 2015.

At oral argument, Chief Justice John Roberts was aware of the procedural posture of the case—a motion to dismiss. And Justice Samuel Alito asked about the Court's options for a phase-in type of remedy. The Court is not oblivious to these practical considerations and might even incorporate thoughts or instructions on these remedial and transitional matters. My guess is that these are the very matters of refinement still being worked out if, as I now suspect, the Supreme Court rules for plaintiffs. And these discussions might be particularly delicate as the remedial and timing issues might involve different coalitions of justices than on the issues concerning the merits of the case itself.

This breathing room will give the various players—states, Congress, the Obama Administration, insurance carriers, hospitals and other providers—time to consider next steps; and it will allow for a transition to the next stage without an abrupt change in the insurance status of those currently receiving subsidies but whose subsidies are not legally appropriate under a proper interpretation of the ACA.