House of Representatives prevails in Obamacare suit, but will decision withstand appeal on standing? [Updated]

Today, a federal district court in Washington ruled in favor of the House of Representatives—and against the Obama administration—in House v. Burwell, concluding that funds to pay cost-sharing subsidies to health insurers under Section 1402 of the Affordable Care Act had never been appropriated by Congress. In her opinion, Judge Rosemary Collyer concluded that, insofar as such subsidies have been paid, it was unlawful for the executive branch to do so. This is a significant ruling, and one that is certain to be appealed to the U.S. Court of Appeals for the D.C. Circuit.

Here is the introduction to Collyer's opinion:

This Court previously held that the U.S. House of Representatives "has standing to pursue its allegations that the Secretaries of Health and Human Services and of the Treasury violated Article I, § 9, cl. 7 of the Constitution when they spent public monies that were not appropriated by the Congress." U.S. House of Reps. v. Burwell, 130 F. Supp. 3d 53, 81 (D.D.C. 2015). The merits of that claim are now before the Court.

This case involves two sections of the Affordable Care Act: 1401 and 1402. Section 1401 provides tax credits to make insurance premiums more affordable, while Section 1402 reduces deductibles, co-pays, and other means of "cost sharing" by insurers. Section 1401 was funded by adding it to a preexisting list of permanently-appropriated tax credits and refunds. Section 1402 was not added to that list. The question is whether Section 1402 can nonetheless be funded through the same, permanent appropriation. It cannot.

"If the statutory language is plain, we must enforce it according to its terms." King v. Burwell, 135 S. Ct. 2480, 2489 (2015). Although the "meaning-or ambiguity-of certain words or phrases may only become evident when placed in context," id., the statutory provisions in this case are clear in isolation and in context. The Affordable Care Act unambiguously appropriates money for Section 1401 premium tax credits but not for Section 1402 reimbursements to insurers. Such an appropriation cannot be inferred. None of Secretaries' extra-textual arguments-whether based on economics, "unintended" results, or legislative history-is persuasive. The Court will enter judgment in favor of the House of Representatives and enjoin the use of unappropriated monies to fund reimbursements due to insurers under Section 1402. The Court will stay its injunction, however, pending appeal by either or both parties.

There is no question that the federal government will promptly appeal Collyer's opinion. I expect this appeal will focus primarily on whether the House of Representatives has standing to sue the executive branch in federal court. In an earlier decision, Collyer concluded that the House had standing, at least with regard to certain claims. Note that the House may also appeal insofar as Collyer rejected the House's standing on other claims, such as the lawfulness of the employer mandate delay.

As I've noted before (see also here and here), I am skeptical of the argument for standing. Under current doctrine (and given the current makeup of the U.S. Court of Appeals for the D.C. Circuit), it's difficult to argue that the House has standing, and the administration's arguments are stronger on standing than they are on the merits. In short, the House's claims are quite strong on the merits, but the case that this dispute should be resolved in federal court (as opposed to in the political branches) is relatively weak.

I'll have more to say on this decision after I've had time to digest the opinion.

UPDATE: Here's a little more.

The central merits question here is whether cost-sharing subsidies under Section 1402 require an annual appropriation in an appropriations bill or whether these subsidies are subject to a permanent appropriation (like the tax credits under Section 1401) authorized by the ACA.

Part of the strength of the House's argument on this question comes from the fact that, up until Congress decided not to appropriate the funds for these payments, the executive branch acted as though annual appropriations were necessary. As Collyer details in her opinion, the administration expressly included the 1402 funds in its annual appropriations request and acknowledged that Section 1402 funds were subject to the sequester (whereas permanent appropriations are not). There is also no question that Congress expressly and explicitly refused to include funds for the 1402 cost-sharing subsidies in the relevant appropriations bills that the president signed. It was only after these bills were passed that the administration decided that the relevant funds could be obtained from the Section 1401 permanent appropriations. It also undermines the administration's claims that this case is really just a little dispute over statutory interpretation, as there is no question that Congress a) accepted the administration's prior position that appropriations were necessary and b) refused to appropriate the desired funds.

The facts of this case also, in an indirect way, buttress the House's claim for standing. Normally, one would expect that a dispute between the legislative and executive branches over the appropriation of funds would be resolved politically. If the executive branch spends money in a way that the legislature does not like, the legislature can be expected to make its intentions clearer in the next appropriations go-round. Here, however, insofar as it appears that the administration is acting opportunistically, and deploying a post-hoc rationale for spending the money everyone knows Congress refused to appropriate, it looks as though Congress lacks the ability to discipline the executive. That is, if the executive branch is going to spend money the House expressly refuses to appropriate, how can we say that the House has a political (i.e. non-judicial) remedy? The answer, I believe, is that the House has still other remedies, including the ability to cut off other money the administration cares about. This is enough to convince me that the House lacks standing, but I understand why the nature of the administration's actions might give a federal judge pause.

All that said, here's another excerpt from Collyer's opinion outlining her overall reasoning in the case:

The question is whether Congress appropriated the billions of dollars that the Secretaries have spent since January 2014 on Section 1402 reimbursements. The Secretaries rely on 31 U.S.C. § 1324, which expressly appropriates money for Section 1401 premium tax credits. In order to explain their paying Section 1402 reimbursements out of a permanent appropriation for IRS refunds, the Secretaries posit that Sections 1401 and 1402 are economically and programmatically integrated. A contrary reading of the amended appropriations statute, they contend, would yield absurd economic, fiscal, and healthcare-policy results.

The only result of the ACA, however, is that the Section 1402 reimbursements must be funded annually. Far from absurd, that is a perfectly valid means of appropriation. The results predicted by the Secretaries flow not from the ACA, but from Congress' subsequent refusal to appropriate money. Such an appropriation cannot be inferred, no matter how programmatically aligned the Secretaries may view Sections 1401 and 1402. See 31 U.S.C. § 1301(d) ("A law may be construed to make an appropriation out of the Treasury . . . only if the law specifically states that an appropriation is made"). "This principle is even more important in the case of a permanent appropriation." Remission to Guam & Virgin Islands of Estimates of Moneys to be Collected, B-114808, 1979 WL 12213, at *3 (Comp. Gen. Aug. 7, 1979).

Paying out Section 1402 reimbursements without an appropriation thus violates the Constitution. Congress authorized reduced cost sharing but did not appropriate monies for it, in the FY 2014 budget or since. Congress is the only source for such an appropriation, and no public money can be spent without one. See U.S. Constitution, Art. I, § 9, cl. 7 ("No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law . . . ."). The Secretaries' textual and contextual arguments fail.

UPDATE: Nicholas Bagley largely concurs here.