Health Care Reform: Strike Two!

By Sarah Bhagwandin, Davis Wright Tremaine

On Jan. 31, 2011, yet another federal district court, this one in Virginia, ruled that the individual mandate to purchase health insurance in the Patient Protection and Affordable Care Act of 2010 (the “Act”) is unconstitutional.  That makes three for two: three federal courts that have ruled in favor of the constitutionality of the individual mandate in the Patient Protection and Affordable Care Act that each individual citizen obtain a government-approved level of health insurance or pay a penalty tax, and two federal courts that have ruled against it.
 

However, there are losses…and then there are losses. For proponents of health care reform, the ruling in Virginia was particularly worrisome.

The Virginia court held that not only had Congress exceeded its authority by adopting the individual mandate (i.e., the individual mandate is unconstitutional), but because the individual mandate is a central component of the Act and not severable from the rest of the legislation, its unconstitutionality renders the entire Act void. The defendants in the case, which included the Department of Health and Human Services, the Department of the Treasury, and the Department of Labor, argued repeatedly that the individual mandate is absolutely “necessary” and “essential” for the Act to operate as it was intended by Congress. Armed with this argument of the individual mandate’s centrality, and the absence of a severability clause in the statute allowing the Act to survive if one part is determined unconstitutional, the court reasoned that the entire statute is void.

While federal district courts only have jurisdiction over their specific district, this holding was particularly confusing because the attorneys-general and/or governors of 26 states banded together as plaintiffs. Opponents of the Act argue that, in light of this holding, states (and employers) are not required to comply with the legislation until the matter is settled by the Supreme Court. Proponents of the Act urge states (and employers) to continue to comply with requirements of the Act until the matter is reviewed.

What’s a prudent employer to do? Comply and stay tuned.

On April 25, 2011, the U.S. Supreme Court declined to address the constitutionality of the Patient Protection and Affordable Care Act in an expedited review. Appeals are pending in the Fourth Circuit in Richmond, Va., the Eleventh Circuit in Atlanta, Ga., the Sixth Circuit in Cincinnati, Ohio, and the federal appeals court in Washington, D.C. Oral argument in the Eleventh Circuit has been set for June 8.

The Supreme Court is expected to take up the matter in the next 24 months.
 

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