May 3, 2019

DOJ asks appeals court to invalidate the ACA. (Kind of.)

Daily Briefing

    The Department of Justice (DOJ) on Wednesday submitted a legal brief formally outlining the Trump administration's arguments for why the entire Affordable Care Act (ACA) should be invalidated.

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    Background on the case

    DOJ filed the brief in a case brought by attorneys generals (AGs) from 20 Republican-led states that challenges the ACA's constitutionality. In the suit, the GOP AGs argue that a 2017 tax reform law rendered the ACA's individual mandate unconstitutional by zeroing out the tax penalty for remaining uninsured. The GOP AGs argue that the ACA cannot be severed from the individual mandate, meaning the entire health reform law is unconstitutional.

    U.S. District Judge Reed O'Connor in December 2018 agreed with the plaintiffs, but Democratic AGs from 18 states and the District of Columbia, which are defending the ACA in the case, appealed O'Connor's ruling to the 5th U.S. Circuit Court of Appeals.

    During initial arguments in the case, DOJ argued that striking down the individual mandate should not invalidate the entire law. But DOJ in March changed tactics and said it agrees with O'Connor's ruling that the entire ACA should be struck down—a reversal that surprised some policymakers and legal experts.

    DOJ's latest arguments

    DOJ on Wednesday submitted a legal brief to the Fifth Circuit Court of Appeals in which it outlined its new position in more detail.

    In the brief, DOJ argued that because Congress eliminated the individual mandate's penalty for remaining uninsured, the mandate no longer operates as a tax, and therefore should be found unconstitutional. DOJ rejected defendants' arguments that zeroing out the penalty did not remove the tax from the books.

    DOJ goes on to argue that the mandate cannot be severed from the ACA's guarantee issue and community ratings provisions, noting that when Congress passed the ACA in 2010 it included language that said the individual mandate was key to carrying out the law's protections for individuals with pre-existing conditions. DOJ rejected defendants' arguments that Congress in 2017 severed those provisions when it eliminated the individual mandate penalty and left the rest of the law in place.

    DOJ wrote, "Once the individual mandate and the guaranteed-issue and community-rating provisions are invalidated, the remaining provisions of the ACA should not be allowed to remain in effect—again, even if the government might support some individual provisions as a policy matter."

    While DOJ acknowledged that "there are other provisions that might be able to operate in the manner that Congress intended" even if the law's individual mandate and insurance reforms are struck down, the department cited the 2012 NFIB v. Sebelius Supreme Court case to argue that they should be struck down anyway. DOJ wrote that the joint dissent in that case made clear that when a court is "confronted with such a so-called 'Christmas tree,' a law to which many nongermane ornaments have been attached, … the proper rule must be that when the tree no longer exists the ornaments are superfluous."

    DOJ acknowledged that it's latest brief conflicts with its previous position to allow other ACA provisions to stand without the individual mandate, but explained that O'Connor's ruling prompted the department to reconsider that position.

    DOJ weighs in on legal standing

    However, Inside Health Policy reports that DOJ's argument that minor provisions should be invalidated because they were attached to the ACA conflicts with the department's argument on the individual plaintiffs' standing in the case. DOJ did not address the issue of the state AGs' standing in the case.

    DOJ argued that the individual plaintiffs in the case have standing to challenge the parts of the ACA that caused them direct harm, such as the law's individual mandate, community rating, essential health benefits, and guaranteed issue. DOJ argued that those insurance reforms "limit choices in the insurance markets that both plaintiffs would prefer."

    However, DOJ said the individual plaintiffs should not be granted relief from parts of the law that do not affect them. For example, DOJ cited the ACA's changes to Medicare fraud and anti-kickback laws. According to the Health Affairs Blog, DOJ likely cited the ACA's fraud provisions because it continues to prosecute people under the law, and one Florida man facing prosecution recently cited DOJ's position to invalidate the entire ACA in his defense.

    Instead of trying to reconcile the department's position that the plaintiffs have no legal standing to challenge parts of the law that do not affect them with the department's belief that O'Connor was correct in invalidating the entire law, the department recommended the appeals court send the case back to O'Connor to narrow the rulings scope. "The district court can determine the precise scope of the judgment on remand," DOJ wrote.

    According to the Health Affairs Blog, this would task O'Connor with determining whether the individual plaintiffs have standing to challenge the entire law or just the law's insurance reforms.

    Reactions

    University of Michigan Law Professor Nicholas Bagley said DOJ's brief "seems to speak out of two sides of its mouth," simultaneously arguing that the entire law should and should not be struck down. "The plaintiffs have already received declaratory relief that sweeps well beyond their supposed injuries. So, is it the [DOJ's] view that they're entitled to that relief? Or not?" Bagley asked.

    Bagley also noted that just two DOJ lawyers signed the brief—a move he says is unusual for such a high profile case, and could signal the department struggled to find support for the arguments.

    In their appeal, Xavier Becerra (D), the California AG who is leading a group of Democratic AGs defending the law, and his coalition argued that zeroing out the penalty does not make the individual mandate unconstitutional—noting that the framework for the tax remains in place.

    Becerra in a statement said, "The Trump administration chose to abandon ship in defending our national health care law and the hundreds of millions of Americans who depend on it for their medical care. Our legal coalition will vigorously defend the law and the Americans President Trump has abandoned."

    Next steps

    The appeals court is expected to hold oral arguments in the case in July, with a decision possible by the end of the year. However, legal experts have said they expect the case will ultimately be appealed to the Supreme Court (Hoffman/Goodnough, New York Times, 5/1; Baker, Axios, 5/2; Alonso-Zaldivar, AP/PBS NewsHour, 5/1; Lotven/Haseley, Inside Health Policy, 5/2; Keith, Health Affairs Blog, 5/2).

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