CINCINNATI -- (Mealey's) The individual mandate contained in the Patient Protection and Affordable Care Act (PPACA) is a valid exercise of Congress' power under the commerce clause of the U.S. Constitution, a Sixth Circuit U.S. Court of Appeals panel held June 29, (Thomas More Law Center, et al. v. Barack Hussein Obama, et al., No. 10-2388, 2011 U.S. App. LEXIS 13265, 6th Cir.), in affirming the dismissal of a case (Thomas More Law Ctr. v. Obama, 720 F. Supp. 2d 882, E.D. Mich. 2010) challenging the act.
After finding that plaintiffs Thomas More Law Center, Jann DeMars, John Ceci, Steven Hyder and Salina Hyder had standing to bring their suit challenging the PPACA against President Obama and other federal defendants, the court affirmed an order from the U.S. District Court for the Eastern District of Michigan dismissing the case.
The plaintiffs had challenged the PPACA, alleging that Congress lacked authority under the commerce clause to pass the PPACA and seeking a declaration that the individual mandate provision contained in the act is unconstitutional. The individual mandate requires most Americans to purchase health care insurance or pay a penalty, starting in 2014.
Set against the PPACA's broader statutory scheme, "the minimum coverage provision reveals itself as a regulation on the activity of participating in the national market for health care delivery, and specifically the activity of self-insuring for the cost of these services," Judge Boyce F. Martin Jr. wrote for the panel.
By regulating the practice of self-insuring for the cost of health care delivery, Judge Martin said that the minimum coverage provision is facially constitutional for two reasons: The provision regulates economic activity that Congress has a rational basis to believe has substantial effects on interstate commerce, and Congress has a rational basis to believe that the provision is essential to a larger economic scheme reforming the interstate markets of health care and health insurance.
"The minimum provision regulates activity that is decidedly economic," Judge Martin said.
The plaintiffs conceded that Congress has the power under the commerce clause to regulate the interstate markets in health care delivery and health insurance, and the PPACA uses this power to regulate prices and protect consumer by banning certain insurance industry practices that have prevented individuals from obtaining and maintaining insurance coverage, Judge Martin said.
Judge Jeffrey S. Sutton concurred in the judgment but wrote separately to deliver the court's opinion as to the government's taxing power. The government had argued that Congress had an independent authority under its taxing power to pass the individual mandate.
The individual mandate is a regulatory penalty, not a revenue-raising tax for reasons including that Congress called the sanction for failing to obtain medical insurance a "penalty," not a tax and that legislative findings in the PPACA show that Congress invoked its commerce power and not its taxing authority, Judge Sutton said, adding that Congress' taxing power cannot sustain the constitutionality of the mandate.
Also, that Congress placed responsibility for enforcing the penalty with the Internal Revenue Service does not make the minimum-coverage provision a tax because the IRS also enforces other regulatory penalties, Judge Sutton said. Additionally, the PPACA does not treat the mandate like a tax because it prohibits the IRS from using its most salient enforcement tools in collecting the penalty, he added.
Congress could have raised taxes on everyone in an amount equivalent to the current penalty, then offered credits to those with minimum essential insurance or imposed a lower tax rate on people with health insurance than those without, but Congress did not do these things, Judge Sutton said.
U.S. Judge James L. Graham of the Southern District of Ohio sitting by designation, concurred with the court's opinion on the taxing power of the government but wrote separately, saying he disagreed with the commerce clause analysis.
"Here, Congress's exercise of power intrudes on both the States and the people. It brings an end to state experimentation and overrides the expressed legislative will of several states that have guaranteed to their citizens the freedom to choose not to purchase health insurance," Judge Graham said.
[Editor's Note: Full coverage will be in the July 7 issue of Mealey's Managed Care Liability Report. In the meantime, the order is available at Mealey's Online Research Service or by calling the Customer Support Department at 1-800-833-9844. Document #31-110706-019Z. For all of your legal news needs, please visit Mealey's Legal News and Litigation Reports.]
Download the document now:
Lexis.com - Document #31-110706-019Z
Mealeysonline.com - Document #31-110706-019Z
For more information, email editor Cheryl Keely at cheryl.keely@lexisnexis.com.
Lexis.com subscribers may search all Mealey's Publications.
Non-subscribers may search for Mealey's Publications stories and documents at Mealey's Online Research Service or visit Mealey's.com.
For more information about LexisNexis products and solutions, connect with us through our corporate site
