In the most significant decision to date involving the numerous challenges to Obamacare, a district court today ruled in favor of the Commonwealth of Virginia’s challenge, and declared the individual mandate portion of the Patient Protection and Affordable Care Act unconstitutional. The fact that the decision is based upon cross motions for summary judgment means among other things, in simple English, that the parties have had two major hearings and two sets of merit briefs before the Court, which has now issued its second major opinion (and this is leaving aside a slew of motions decided by the court). The decision, accordingly, is the most well-developed of any court yet to address the matter, and therefore should cause quite a bit of indigestion for defenders of Obamacare.
Judge Hudson first addressed the Obama administration’s claims that the law is constitutional under the Commerce Clause. After weighing the arguments and the case law, he found that the mandate’s scheme was without precedent in our country’s history: “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”
The judge noted that even under the broadest application of the Commerce Clause, there had to be some self-initiated action, whereas here there is not. Accordingly, the court found that the mandate violated the Commerce Clause because it did not regulate economic activity. The court further found that it could not be justified even under an expansive view of Necessary and Proper, because it was not tethered to a lawful exercise of an enumerated power. The court concluded that “[t]he Minimum Essential Coverage Provision [mandate] is neither within the letter nor the spirit of the Constitution.”
Second, the court rejected the far more dubious claim that the mandate is justified under Congress’s taxing power. This claim is a shameful, post-hoc rationalization that does not comport with the operation (the provision raises no general revenue), the language of the law (which uses tax and penalty with precision), or the statements of proponents (President Obama emphatically denied that this is a tax), and so it is not surprising that this claim failed yet again (a Florida court rejected this claim at the Motion to Dismiss stage).
After declaring the individual mandate and the alleged tax (really a penalty) unconstitutional, the judge had to confront two remedial issues. The first is whether the unconstitutional provisions could be severed from the rest of the 2700 page law or whether he would have to strike down the entire act. After discussing the general presumption that courts should try to sever only the “problematic portions while leaving the remainder intact,” and the difficulty in divining whether Congress would have enacted the law without the offending provision, the court essentially threw up its hands and applied the general presumption only to strike the individual mandate provision and “directly-dependent provisions which make specific reference to [it].”
Although the severability question is far from clear, we think the best evidence of what Congress and the President would have done is found in the statements of its leading sponsors (including Sen. Baucus) and President Obama that the individual mandate was absolutely essential to the economic scheme in the rest of the act. In short, they would not have enacted the law without the individual mandate, and thus, the entire law should be struck down. Notwithstanding this possible error, the Fourth Circuit Court of Appeals and Supreme Court are free to reexamine this pure legal issue without deferring to any findings by the district court.
And even if the Supreme Court struck down the individual mandate but was also inclined not to strike down the rest of the act (for proper reasons or out of cowardice), the end result might still be similar. That’s because we think Sen. Baucus and President Obama got one thing right: the economic scheme in the rest of the act—and the prohibition against denying coverage for preexisting conditions—cannot survive without the coerced payments and coverage of the individual mandate. In short, Congress would have to open up the entire act again or the medical insurance industry would fail.
The other remedial issue was whether to grant Virginia’s request for a ruling enjoining the implementation of the individual mandate pending appeal, which requires a federal judge to make additional findings. Judge Hudson had no problem finding that Virginia was likely to win on appeal, but he did not think there likely would be “irreparable harm” if he did not enjoin the provision before the appellate court reviewed the matter. To the extent that Virginia has already argued that its implementation of preparatory steps will cause irreparable harm, it can also seek an injunction in the Fourth Circuit as well. On this one point, we think it is less likely to prevail. However, it can also renew its motion if it wins at the next level.
Co-authored by Todd Gaziano.