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Hobby Lobby isn't the end: Four other anti-ACA lawsuits to watch

June 25, 2014

    Dan Diamond, Managing Editor

    Nearly two years after the Supreme Court's ruling on the Affordable Care Act captivated the nation, another major ACA decision—Burwell v. Hobby Lobby—is expected any day.

    If it seems like déjà vu—well, it kind of is. The same lawyers on the floor; the same justices on the bench. This post is even going up the same final week in June, as it appears the Court is again sitting on a blockbuster ACA ruling until the end of its term.

    On the other hand, the Hobby Lobby decision will be much more narrowly defined than NFIB v. Sebelius, the signature anti-ACA lawsuit of two years ago. That case called into question whether all of Obamacare was legal. This year's ruling will turn on just an aspect of the law: whether for-profit companies like Hobby Lobby must offer contraception as part of employees' health coverage.

    See background on the Hobby Lobby case

    "This is an important case for religious liberty, women’s public health, worker and employer rights, and corporate law," Washington & Lee law professor Tim Jost writes at Health Affairs

    "It is not a fundamental challenge to the ACA or to any of its underlying principles."

    But unlike Hobby Lobby, several still-looming cases are fundamental challenges—and have the potential to deal major changes to the ACA.

    Years of court challenges still loom

    Depending on your perspective, the current climate around anti-ACA litigation was either stifled—or catalyzed—by NFIB v. Sebelius.

    Many defenders of the law saw that ruling as the definitive word on the ACA: Led by the Chief Justice, the nation's highest court upheld Obamacare's constitutionality. As a result, these newer challenges must be viewed through a lens of probable failure, given that the Roberts Court is unlikely to reverse itself so quickly.

    “These cases are the last gasp of ACA opponents hoping to find judicial activists who will throw out a law that they do not like.”

    "These cases are the last gasp of ACA opponents hoping to find judicial activists who will throw out a law that they do not like and cannot repeal through political processes," W&L's Jost told the Daily Briefing.

    On the other hand, NFIB v. Sebelius can be perceived as a major victory for opponents of the ACA—a success that only birthed more lawsuits.

    While the plaintiffs didn't achieve their primary goal—getting the Supreme Court to strike down the ACA's individual mandate—the ruling did make the Medicaid expansion optional for states, changing the course of health coverage in nearly half the nation. (And ultimately affecting the business of providers and the lives of many Americans.)

    "I maintain that NFIB opened the door to further ACA litigation, given the success of the plaintiffs in that case, and which invited creative litigation that borders on frivolity," says Nicole Huberfeld, a law professor at the University of Kentucky.

    Given that "further ACA litigation" ranges from grievances filed by big corporations to a challenge from the actual Little Sisters of the Poor, here's a look at four of the most prominent lawsuits, and the central claim that each hangs on.

    Halbig v. Burwell: Are the federal exchanges illegal?

    This case, which could be the ACA's biggest legal threat, centers on whether Congress meant to offer subsidies through federal exchanges. And the language of the law is actually pretty clear: There's explicit mention of subsidies for state-run exchanges...but none in the federally run ones.

    Conservative scholars Jonathan Adler and Michael Cannon, who sparked the case after closely studying the law's provisions, have argued that the ACA's authors intentionally chose to exclude subsidies for federal exchanges—an attempt to dangle a carrot for states to run their own exchanges, they contend. In their eyes, the IRS is acting illegally without congressional authorization, by allowing subsidies for the millions of eligible Americans who have purchased insurance through Healthcare.gov.

    But critics of Halbig argue that the intent of Congress was even clearer: To have similarly designed ACA marketplaces, regardless of who's actually running the exchange. For example, other insurance-market measures in the law—like requiring insurers to meet new community rating requirements—apply in every state. And the ACA's famous for its many drafting errors and word omissions.

    (Here's a close look at the case, back when it was called Halbig v. Sebelius.)

    Status: At the D.C. Circuit Court of Appeals. A ruling is expected any day.

    Hotze v. Burwell: Is the employer mandate illegal?

    The lawsuit, filed by a Texas physician, argues that the ACA's employer mandate violates the Constitution's "takings clause" by forcing a private business owner to pay other businesses (insurance companies) without just compensation. While lower profile than Halbig, the challenge also has generated some political momentum: Many Republican congressmen, including Sens. Ted Cruz and John Cornyn, have joined the case.

    Status: At the Fifth Circuit Court of Appeals.

    Sissel v. HHS: Is the entire law illegal?

    This case is built around the Constitution's "origination clause." (Which Hotze also argues.) Namely, if the ACA's penalties qualify as a tax, the law itself is illegal because it did not begin as a tax-raising bill in the House. However, jurists have been skeptical of this case and similar lawsuits, which isn't surprising: a legal challenge over the origination clause has not succeded in a century. (See this post from the Incidental Economist for more context on the legal merits here.)

    Status: At the D.C. Circuit Court of Appeals.

    Coons v. Lew: Is the IPAB illegal?

    Like the Hobby Lobby case, this challenge is very narrow: The plaintiffs claim that the ACA's Independent Payment Advisory Board isn't constitutional because it consolidates power in the executive branch. (Currently, Congress has the power to set Medicare payment; the IPAB would be centered with HHS, and able to overrule Congress.) But even if the IPAB was found to be illegal, the law itself would still stand.

    Status: At the Ninth Circuit Court of Appeals.

    Legal experts pessimistic—but cautious—on newer challenges

    How seriously should we take these other lawsuits? Law experts are cautious—but split.

    "I don’t think any of these cases are ultimately going anywhere," says Jost.

    "I remain skeptical about these other challenges," agrees Huberfeld. "[But] the Roberts Court has shown willingness to hear novel constitutional theories, so settled doctrine no longer provides an easy answer."

    Jost adds that he's pessimistic about the merits of Halbig. However, "the plaintiffs were lucky [a]nd drew an ideological conservative judge that might keep their case alive a little longer," he says.

    "I've always thought Halbig was a very big deal," counters Nick Bagley, a law professor at the University of Michigan. "I've taught it the last three years in my legislation class because I think it's a tough case for the government."

    “I've always thought Halbig was a very big deal...I think it's a tough case for the government.”

    One of the architects of Halbig claims that it's following a similar track to the major ACA challenge of two years ago—a lawsuit that was initially overlooked.

    "I think Halbig fits the mold of NFIB—both the individual-mandate and Medicaid claims—in that it’s a legal argument that [ACA] supporters dismissed as meritless because they never seriously questioned the legality of the government’s actions," says the Cato Institute's Michael Cannon. He adds, "One interesting and related dynamic that my coauthor Jonathan Adler"—an administrative law professor—"has noticed is that admin-law professors are not commenting on Halbig, and the people commenting on Halbig are not admin-law professors."

    Meanwhile, the other lawsuits are seen as longer shots to ultimately reach the Supreme Court. At least one case—the challenge over IPAB—is viewed as a potential winner, if it ever proceeds.

    "Coons is on a very slow burn and, again based on an unfavorable Ninth Circuit panel that's focusing on procedural issues, unlikely to succeed," says Cannon's colleague Ilya Shapiro. "[But] IPAB is truly outrageous so I hope there's a full airing of the merits at some point."

    "The IPAB case is very real," says Bagley. "But no one has standing yet to bring it, and they probably won't for a long time to come since IPAB isn't going to do anything for a while."

    Go deeper: See how health reform is changing health care

    Our researchers have been tracking the ongoing effects of the Affordable Care Act, and how the law is changing hospital operations, health system strategy, and the underlying industry dynamics. Here's some of our latest analysis and resources, with a look at what the ACA means for providers:

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