Supreme Court Oral Arguments on the ACA, Part 1: Wheat, Guns, and Yes, Healthcare Reform

March 19, 2012

March 19, 2012 — For years, many physicians have groused about what they call Big Government and its role in healthcare.

On March 26, the Supreme Court will take up that subject, and more, during oral arguments in the case over the constitutionality of healthcare reform and, in particular, its requirement that individuals obtain insurance coverage or else pay a penalty.

The court's decision, expected before July 1, could redefine the power of Congress (and hence the federal government), as well as sway voters in the coming presidential election.

Although the high court will consider 3 other issues involving the Affordable Care Act (ACA), the law's individual mandate will take center stage during oral arguments, which extend through March 28. The question before the court is whether the mandate lies within the authority of Congress to regulate interstate commerce, as granted by the Constitution's Commerce clause.

The 9 justices and attorneys representing the Obama administration and the law's challengers — elected officials of 26 states and the National Federation of Independent Business (NFIB) — are expected to hash over past high court rulings on laws that have nothing to do with healthcare. Instead, these laws sought to regulate everything from wheat production to guns in public schools. What they share in common with the ACA is that the federal government justified them in the name of the Commerce clause.

The "What Ifs" of Oral Arguments

The Obama administration, challengers of the ACA, and dozens of "friends of the court" or amici curiae allied with each side have filed a veritable library of legal briefs in the Supreme Court case. These come on top of their pleadings in lower federal courts that issued conflicting opinions on the law's constitutionality. The 9 high-court justices presumably have digested them all.

Robert Shapiro

Come March 26, the paper chase is suspended, as the opposing attorneys reiterate their written arguments before the high court. They have the opportunity to fine-tune their case for the ears of individual justices, based on their past rulings, said Robert Schapiro, interim dean of the Emory University School of Law in Atlanta, Georgia, in an interview with Medscape Medical News. "The strategy is, 'How am I going to convince Justice Kennedy to come over to our side,' for example," said Schapiro.

At the same time, the justices will pepper the opposing attorneys with questions that test the soundness of their positions. Schapiro said these questions often boil down to, "If we decide the case this way, what are the implications in other matters?" Justices will push an argument to a logical extreme to determine whether advocates can espouse a "limiting principle" that would prevent an unreasonable or impractical outcome in another legal dispute.

Robert Alt

"They're not just thinking about this case, as monumental as it is," said Robert Alt, a senior legal fellow at the Heritage Foundation, a conservative think tank. "They're thinking about what impact this case will have on subsequent litigation in the circuit courts, and their own litigation docket."

The justices directly engage the advocates, and indirectly engage each other, according to Alt. Some of their questions are designed to elicit responses from advocates that will address the doubts or concerns of a fellow judge.

"They're having a conversation among themselves," Alt said.

Day 1: Should This Case Be Considered Later?

On March 26, the court considers whether a law that strengthens the government's ability to collect taxes should bar it from reaching a decision on the individual mandate's constitutionality until after it takes effect in 2014.

The potential speed bump here is the Anti-Injunction Act (AIA), which prohibits lawsuits that seek to restrain the assessment or collection of a tax — pay it first, and fight it in court later, in other words. A federal appeals court in Richmond, Virginia, agreed with Liberty University and several other opponents of the law last year that the penalty owed by individuals who do not obtain insurance coverage amounts to a tax.

Citing the AIA, that appellate court said it could not rule on the individual mandate before someone pays the penalty, which the Internal Revenue Service would begin to assess in 2015. It warned that allowing the ACA lawsuit to go forward could open the floodgate for antitax lawsuits that could "in the long run, wreak havoc on the [government's] ability to collect revenue."

Neither the Obama administration nor its foes in the Supreme Court case maintain that the AIA should delay consideration of the ACA, but the high court has taken up the issue at the administration's request to clear the legal air. Unlike the appellate court in Richmond, several other federal courts decided that the AIA does not preclude ruling on the mandate's constitutionality before the penalty is assessed, and the Supreme Court typically intervenes to resolve clashing opinions in lower courts.

Curiously, the Obama administration had argued that lawsuits against the ACA should be dismissed on account of the AIA in a number of district court cases, including 2 that were appealed to the US Court of Appeals for the Fourth District in Richmond. In that appellate court, the government changed its tune, a reversal that those judges called contradictory. In its written brief for the Supreme Court, the administration argues that Congress chose the word "penalty" rather than "tax" to describe the consequences of not complying with the individual mandate. Such a penalty, it said, does not trigger "the AIA's jurisdictional bar."

What might strike nonlawyers as even more curious is that in another brief for the high court, the Obama administration contends that the individual mandate is authorized not only by the Constitution's Commerce clause but also by the constitutional prerogative of Congress to levy taxes. The reason? The mandate, the administration stated, operates as a tax law, never mind that it speaks only of a penalty.

Elizabeth Wydra

In light of these seemingly incongruent stances, Obama administration attorney Donald Verrilli Jr "will have to engage in a very delicate dance" on the AIA question, said Elizabeth Wydra, chief counsel for the Constitutional Accountability Center, a progressive think tank and law firm in Washington, DC.

Verrilli, the government's solicitor general, "has to argue that the AIA does not apply to the penalty, even though the mandate can be considered a tax law," Wdyra told Medscape Medical News.

"They'd Rather Know in June"

The Supreme Court appointed attorney Robert Long Jr as a friend of the court, or amicus attorney, to argue that the AIA indeed forbids the review of the ACA case in 2012. In his oral argument on March 26, Long will restate what he laid out in his written brief: that the AIA applies because Congress specified that the individual mandate penalty be collected and assessed in the same way as a tax.

Long also disputes the position taken by the 26 states and the NFIB that the AIA is irrelevant because they are challenging the mandate, rather than the penalty itself. The Supreme Court in the past has rejected similar arguments as "circular," he said. Furthermore, the 26 states and the NFIB, he added, directly attacked the penalty, as well as the mandate, in their initial suit in a federal district court in Florida.

If the Supreme Court were to agree with Long and throw out the ACA case because of the AIA, the Obama administration could count that as a victory of sorts, said Wydra. A ruling that treats the mandate penalty as a tax, she explained, buttresses the administration's argument that the mandate is justified merely under the constitutional power of Congress to levy taxes. For that reason, "conservatives are afraid of [the penalty] being ruled as a tax."

All the parties in the case, as well as physicians, consumers, and state legislatures, prefer immediate closure on the ACA, however, said Wydra. "They'd rather know in June than 3 years from now."

Day 2: Does the Mandate Open the Door for Big Brother?

The Obama administration has defended the ACA and the individual mandate in more than 2 dozen federal court cases. Over and over, the government has contended that healthcare reform hinges in large measure on the mandate. For one thing, it cures the problem of cost-shifting caused by uninsured patients. They inevitably require medical care, the argument goes, and the cost of uncompensated care, which is estimated at more than $40 billion a year, gets passed on to the public in the form of higher insurance premiums, which makes coverage even more unaffordable.

By putting everyone in the insurance risk pool, the mandate makes it feasible for the ACA to forbid commercial insurers from boosting rates or denying coverage based on preexisting conditions, the administration has said. Without the mandate, Americans could wait until they were ill before they paid for their guaranteed coverage, which would bankrupt insurers.

Some lawsuits attacking the individual mandate were dismissed outright on technical grounds, such as the plaintiff's standing to sue. Of the courts that ruled on the actual merits of the case, 4 district courts and 2 appellate courts gave the mandate a clean bill of health.

However, 3 federal district courts (one in Pensacola, Florida; one in Richmond, Virginia; and a third in Harrisburg, Pennsylvania) struck down the mandate as violating the Constitution's Commerce clause. A federal appeals court in Atlanta, Georgia, upheld the Florida ruling, and it is that appellate decision which the Supreme Court is reviewing.

The Court Upholds a Wheat Mandate

Two key issues frame the great debate about whether the individual mandate is permitted under the Commerce clause. One issue is that Congressional powers, such as the power to regulate commerce, are enumerated (literally numbered) and limited, thereby leaving room for states and individuals to act freely in other matters. The other issue is how to interpret and apply the words of a document written more than 200 years ago.

Elliott Pollack

"You can't look at commerce in the 21st century as the framers looked at it in the 18th century," said Elliott Pollack, an attorney in Hartford, Connecticut, and the health law editor for a journal on Supreme Court cases published by the American Bar Association.

Over the years, the high court's understanding of what constitutes commerce has expanded. The Obama administration has noted, for example, that the court once prevented Congress from regulating manufacturers on the grounds that commerce consists of buying and selling something, not making something. That distinction eventually disappeared.

In 1942, the Supreme Court dramatically enlarged the scope of the Commerce clause in a case titled Wickard v. Filburn. Four years earlier, Congress had passed a law limiting how many acres of wheat a farmer could cultivate. The purpose was to stabilize the supply of wheat, and hence its price. The government fined an Ohio farmer named Roscoe Filburn for exceeding his wheat quota by nearly 12 acres. Filburn sued, saying the excess wheat was never put on the market, but rather used on his farm to feed his animals and family and provide seeds for future crops. So what did consumption of homegrown wheat have to do with interstate commerce?

Plenty, the court ruled. In a landmark opinion, the justices said that consuming homegrown wheat allowed Filburn to avoid buying another farmer's wheat. Although Filburn's action by itself might have had only a trivial effect on the wheat market, it would have a major effect if other farmers did it on a widespread basis, the court ruled. Contrary to Filburn's position, the court said, the Commerce clause covers activities that have only an indirect effect on commerce.

For the next 53 years, the Supreme Court sustained broader and broader applications of the Commerce clause. For example, it ruled that the clause authorized the Civil Rights of Act of 1964 and its ban on racial discrimination by hotel and motel owners.

In 1995, however, the court under Chief Justice William Rehnquist ruled that Congress had overstepped its Commerce clause authority with a law that banned guns in schools. In a case titled United States v. Lopez, the Rehnquist court said that gun control had nothing to do with commerce, and that the government's attempt to argue otherwise, that guns create a poor learning environment, which affects the future workforce, which affects future productivity, was a chain of weak links.

"To uphold the government's contention, we would have to pile inference on inference," the court said.

Furthermore, the government failed to produce any valid limiting principle in Lopez that would prevent Congress from regulating other spheres (marriage and divorce, for example) that might be construed to raise or lower economic productivity, according to the high court. It reasoned the same way in a 2005 case (United States v. Morrison) in which it invalidated part of a law concerning victims of gender-motivated violence, said by the government to influence interstate commerce.

So What Is the Limiting Principle?

The appellate court in Atlanta cited Lopez and Morrison when it declared that the individual mandate lies outside the blessing of the Commerce clause, and therefore "imperils our federalist structure." The court agreed with ACA critics who said that although Congress may have broad powers to regulate commerce, it has no power to compel someone to engage in commerce in the first place, as in buying health insurance. Otherwise, Congress would be free to make Americans buy or do anything (the now-famous broccoli argument), and penalize them for their inactivity.

The appellate court faulted the Obama administration for failing to establish any limiting principle (shades of Lopez) that would keep Congress from running amok under the Commerce clause. It also rejected the government's cost-shifting argument as another instance of piling "inference upon inference," noting that the high court had rejected similar cost-shifting rationales in Lopez and Morrison.

Elizabeth Wydra said she expects the Supreme Court justices to press administration attorney Donald Verrilli about a limiting principle to its Commerce clause theory. However, the justices also are likely to challenge the attorneys for the ACA opponents on a weakness in their position, she said. They assert that the individual mandate errs in regulating commercial inactivity, yet where does the Constitution speak of activity vs inactivity?

"There is no textual support for that," Wydra said, noting that one federal appellate judge — a Reagan appointee — who ruled in favor of the mandate reached the same conclusion.

Look for Verrilli and the other attorneys to tailor their remarks to win over individual judges on the mandate, said Robert Schapiro.

"Chief Justice [John] Roberts has a concern about the institutional integrity of the court," said Schapiro. "He might be open to arguments that this is a case well-grounded on the government's side. It will be easier for him to vote a particular way if he doesn't see it as a drastic change."

Schapiro said he expects Verrilli to attempt to persuade Justice Antonin Scalia, who views the constitution as more of a static document, that the ACA case resembles a 2005 case called Gonzalez v. Raich. In that case, the court reviewed a federal ban on growing marijuana for personal medicinal use, even in states where medical marijuana is legal. The court upheld the ban as allowable under the Commerce clause. Scalia, voting with the majority, wrote a separate opinion stating that another justification of the ban is the Constitution's Necessary and Proper clause, which gives Congress the power to enact laws that enforce its other powers.

Verrilli already has warmed up Scalia on that point by making a "necessary and proper" argument for the individual mandate in a Supreme Court brief.

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