Supreme Court

Meanwhile, in a Texas Courtroom, Is the ACA in Trouble?

While all eyes focused on the Kavanaugh hearings (and an "anonymous" op-ed), a court heard argument in the latest ObamaCare challenge.


On Wednesday, while Judge Brett Kavanaugh was fielding questions from the Senate Judiciary Committee, a district court in Texas heard oral arguments in Texas v. Azar, the latest effort to invalidate the Affordable Care Act (ACA). Here's coverage of the argument from Politico, the LA Times, and NYT.

Filed by 20 state attorneys general, the suit claims that Congress's decision to zero out the tax penalty owed by those who fail to obtain qualifying helath insurance requires courts to invalidate the entire ACA. According to the states' argument, this is because when Congress zeroed out the tax penalty, it eliminated the factual predicate upon which Chief Justice Roberts' opinion in NFIB v. Sebelius was based. If there is nothing to be paid, the mandate does not operate as a tax, the states argue, so the mandate is no longer subject to a "saving construction" under which the mandate can be upheld as an exercise of the federal taxing power. Further, they maintain, because the mandate was a central part of the ACA, invalidating the mandate requires invalidation of the entire law. It's a clever argument, but it's also wrong, for reasons I explained in this post (and in this podcast debate). (See also Ilya's post here.)

Texas v. Azar has attracted concern because the Trump Administration has conceded large parts of the states' arguments. In particular, the Justice Department has accepted that a mandate without an accompanying tax levy is unconstitutional, and that invalidating the mandate would require invalidating the ACA's core insurance regulations requiring guaranteed issue without regard for pre-existing conditions and community rating. After all, this had been the Obama Administration's position on severability in NFIB, and the ACA contained findings suggesting the mandate was essential to the proper operation of the ACA's insurance reforms.

As a result of the DOJ filing, several more liberal states intervened in the suit to defend the ACA in its entirety. (It also prompted me to file this amicus brief with several other legal scholars representing a range of views on the ACA, as I noted in this post.)

According to the news reports linked above, Judge Reed O'Connor seemed somewhat sympathetic to the Texas argument, and pressed the blue states' attorney on why he should disregard the 2010 findings. The answer to Judge O'Connor's query is quite simple. First, the findings are just findings, not operative provisions. Second, and more important, the 2010 finding are about the law passed in 2010, not the changes Congress has made subsequently. The ACA in 2017 is not the ACA Congress enacted in 2010. It has been revised by Congress and by the Court. It is no longer the law the 2010 findings addressed. Finally, Congress chose to zero out the mandate penalty without making other changes. Whether this was because the 2017 Congress intended for the ACA to operate differently than the 2010 Congress, or because the 2017 simply lacked the votes to do more is immaterial. It did what it did. It took a tax penalty and reduced it to zero.

These aren't the only problems with the states' suit. As I explained here, there are also serious standing problems in Texas v. Azar. Inexplicably, the Justice Department did not raise standing and (according to the press reports above) it does not appear Judge O'Connor was particularly interested in them. This is a shame, as it could prolong a lawsuit that really has no legs on which to stand. After all, if the mandate is unenforced and unenforceable—because it imposes no penalty or consequence on anyone—how do the states (or anyone else) have standing to complain about it?

Some activist groups have tried to suggest the Kavanaugh nomination creates a risk that the states could prevail. Such concerns are groundless. First, whether or not Kavanaugh is confirmed, there are at least five votes to reject the states' claims. In order to rule in favor of the plaintiff states (or to accept the DOJ's concessions), the Chief Justice would have to reject his longstanding views of standing (as expressed most recently in Gill v. Whitford), the individual mandate itself (which he said imposes no obligation on anyone beyond any tax payment imposed), and severability (which is decidedly minimalist across the board, including in NFIB). This is not going to happen.

Even if the Chief Justice's vote were in play, there's no reason to think a Justice Kavanaugh would find the states' arguments any more appealing. First and foremost, Judge Kavanaugh has an established track record of applying the same narrow approach to severability as the Chief. He also tends to pay attention to standing and other justiciability concerns.

Writing in The New Yorker, Jeffrey Toobin claimed "there is every reason to believe that Kavanaugh" would accept the states' claims. According to Toobin, "Kavanaugh's approach to the interpretation of statutes suggests that he would rule against mandatory coverage for preëxisting conditions."

When I asked Toobin to substantiate this claim, he came up empty (both on Twitter and in an e-mail). He failed to offer any citation to any judicial opinon, any speech, or anything else from Judge Kavanugh suggesting anything that remotely aligns with the state's claims. There's a good reason for this, as Kavanaugh's approach to statutory interpretation actually suggests the opposite.

Instead of offering something from Kavanaugh's record, Toobin suggested that simply because other conservatives hate the ACA, and the Trump Administration hates the ACA, we should assume Kavanaugh would vote to knee-cap the ACA. Funny thing, then, that Judge Kavanaugh has repeatedly rejected anti-ACA claims. Not only did he believe the constitutional challenge to the individaul mandate was premature (due to the anti-injunction act), he has rejected other anti-ACA suits, including a constitutional challenge based upon the Origination Clause, a challenge to the the ACA's effect on Medicare, and a lawsuit brought by state AGs to challenge the Obama Adminstration's implementation of the law. In each of these cases, Kavanaugh applied or accepted fairly standard legal arguments and interpretations. Thus there is nothing in Kavanaugh's record to suggest would be at all sympathetic to the states' outlandish claims in Texas v. Azar.

I am on record saying this lawsuit will ultimately fail, and may never reach the Supreme Court. Indeed, the only scenario under which the states' claims get to SCOTUS is if they somehow prevail (in whole or in part) before the U.S. Court of Appeals for the Fifth Circuit—and then the states would be lucky to get two votes. The suit is clever, but is ultimately too clever by half.

Given all of the problems in the states' case, there's little reason to believe their claims can prevail, and little reason to believe the confirmation of Kavanaugh would have any effect on the outcome of the case. The immediate question is whether the states can obtain a temporary victory in district court. On that we'll have to see.

NEXT: Guberspace

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  1. link to your amicus brief does not work.

    1. Thanks. Should be fixed now.

  2. It’s a clever argument,

    We have differing definitions of “clever.”

  3. GOP lawyers are not up to speed on modern leftist litigation tactics.

    Instead of filing a brief conceding certain arguments, DOJ should have entered into a consent judgment setting the lawsuit in plaintiff’s favor. This would have given the left AGs little opening to timely intervene.

    The left has used this tactic for decades to get policy decisions decided in their favor. Our side needs to take advantage too.

    1. This is the “correct” answer.

      But I think it still requires judicial approval?

  4. If there is nothing to be paid, the mandate does not operate as a tax, the states argue, so the mandate is no longer subject to a “saving construction” under which the mandate can be upheld as an exercise of the federal taxing power.

    If there is no penalty, how is the mandate a mandate? It is unenforceable like most of 4 USC 1?

    1. Legally, it’s an aspiration, not a mandate. It has the same legal effect as when Congress passes a law mandating that cancer, poverty, or whatever will be completely eliminated in five years.

  5. This is where you really need sanctions to avoid making a mockery of the courts.

    This is a classic example of a collusive lawsuit, where both parties want to change the law and create a fake controversy with the pretend defense conceding the pretend plaintiff’s points. Perhaps they shop for a collusive judge, perhaps they agree to settle.

    There is no actual case or controversy, no Article III standing, when lawsuits are collusive.

    Moreover, the legal arguments here are not just frivolous, but redicously so. There is as much reason to strike down these laws as evidence that some midwife somewhere lied on a birth certificate creates reason to take away everyone’s passport who had a midwife birth, or that a handful of isolated individuals violated voting laws is reason to subpoena everyone’s supposedly secret voting results.

    This is similar. This isn’t law. It’s abuse. This is using the pretense and processes of law to get completely extralegal, and illegal, results.

    1. Well said.

      But hey, Adler thinks it’s clever.

    2. Standing is a silly principle that lets courts get out of doing their jobs. Any citizen or government in the US has a default standing to challenge a law. End of story.

      There is a case or controversy- the fact that the ACA is unconstitutional now that the mandate has been zeroed out. It’s not just a clever argument, its a correct argument.

      The courts should do their job (unlike the SC when it upheld ACA under the the not-a-penalty penalty doctrine) and strike the ACA in its entire, as that is the correct decision based on this lawsuit.

      1. “Any citizen or government in the US has a default standing to challenge a law. End of story.”

        That’s… not the law. It’s never been the law. This approach was specifically rejected by the founders.

        1. See, e.g., Scalia’s dissent in US v. Windsor, responding to Alito’s standing argument.

      2. “…the fact that the ACA is unconstitutional now that the mandate has been zeroed out.”

        That can’t be right, since the constitutional argument was that the mandate took the ACA out of the Commerce Clause power. Without the mandate, the ACA isn’t even arguably unconstitutional.

        “The courts should do their job…”

        But even assume you’re right. If the Court did its “job”, what would stop the President or Congress from just ignoring the SCOTUS decision, just like (you’ve alleged) they ignored the Constitution?

  6. When Congress changed the law to make it so we didn’t have to eat broccoli, that defeated the savings-argument. Therefore, the broccoli mandate is unenforceable because it mandates that I eat broccoli, because it doesn’t mandate that I eat broccoli. Checkmate.

    1. It mandates that you eat broccoli. It just doesn’t punish you for not eating broccoli. But if you want to be a law-abiding citizen, you still have to eat broccoli.

      1. “want to be a law-abiding citizen” doesn’t come close to meeting Article III injury-in-fact requirement.

  7. Maybe this case is “too clever by half”. But the same could be said of the Roberts decision that drove it.

    1. All the legal disputation here is nonsense.

      The penalty was logically equivalent to a tax credit for having insurance. Are tax credits unconstitutional?

      Just think, all those lawyers could have been doing something useful, like picking up litter on the highway, instead of spending time on nonsensical arguments.

  8. For years the left has been suing federal agencies that actually sympathized with its demands, in the hope that the agency will agree to a “consent decree” that may be beyond the agency’s powers to deliver on its own.

    It’s about time the right got to do it, too, and this is that case. All the Trump administration has to do is to stipulate the plaintiffs’ arguments, and the ACA goes away even though they haven’t the votes in the Senate to get rid of it legislatively.

    1. Yup. Just make sure your final sentence doesn’t show up anywhere in the record when the case goes to SCOTUS.

      Oh, wait. Maybe you’re right, because Kavanaugh.

  9. Has anyone done and FOIA request for emails regarding the crafting of the individual mandate?? It is my contention that Gruber convinced Obama to include it because he understood the CBO exaggerated its impact and it would help Obama get reelected. Had Gruber understood that he would have also understood the CBO scored it as a $300 billion cost…that money could have gone to more robust subsidies. If that scenario happened it is probably the most cynical political maneuver in history because Obama chose an inferior program to a far superior one out of pure self interest.

  10. Was the “saving construction” necessary to save the entire ACA, or just the mandate part? Couldn’t a court just declare the $0 penalty mandate to be unconstitutional now because it isn’t a tax, and leave the rest? That’s basically what Congress has already done.

  11. “The ACA in 2017 is not the ACA Congress enacted in 2010.” Prof. Adler hits the nail on the head.

    Texas is right that NFIB v. Sebelius no longer applies to Obamacare. But that doesn’t necessarily mean they win unless they can show injury.

    That said, if Congress were to insert a token sanction that cannot be construed as a tax, Obamacare challengers might get a do-over…

  12. You link to the Hall case as “a challenge to the ACA’s effect on Medicare.” If I recall correctly from arguing the case for the government in the district court, the plaintiffs were challenging a feature of Medicare that pre-dated the ACA. That having been said, the case does support your broader point, as it is an instance of Judge K. rejecting a conservative challenge to public health care legislation.

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