May 10th, 2011
Today, May 10, the Fourth Circuit federal court of appeals heard oral arguments in two Affordable Care Act cases (ACA), Liberty University v. Geithner and Virginia v. Sebelius. In the Liberty University case, Judge Norman Moon of the Western District of Virginia had upheld the constitutionality of the Affordable Care Act against a challenge brought by Liberty University, a conservative university founded by Jerry Falwell, and several individuals. In the Commonwealth of Virginia case, Judge Henry Hudson of the Eastern District of Virginia had held that the minimum coverage requirement of the ACA (often referred to as the “individual mandate”) was unconstitutional.
The Fourth Circuit heard arguments in the Liberty University case first, then the Virginia case. In both cases, the government was represented by Solicitor General Neal Kumar Katyal. The Solicitor General is the chief litigator of the Justice Department and rarely argues cases except before the Supreme Court. It is an indicator of the seriousness with which the government is taking this challenge that the Solicitor General chose to argue it himself. Liberty University was represented by Matthew Staver and the Commonwealth of Virginia by its Solicitor General, Duncan Getchell.
Indeed, the importance of this case, the first case on the constitutionality of the ACA to be heard by an appellate court, cannot be overestimated. That the court is hearing two cases in which the lower courts reached opposite conclusions, and that one is brought by a state, enhances the significance of the occasion. The Virginia case drew twenty-five amicus briefs and the Liberty University case ten, including briefs from state officials, members of Congress, organizations representing providers and persons with chronic diseases, law professors, and advocacy groups — conservative and progressive.
The make-up of the appellate panel and what it means. The case was heard, as is customary in the appellate courts, by a three judge panel, chosen at random and announced on the morning of the argument. Although the fourteen judges of the Fourth Circuit are evenly divided between judges appointed by Republican and Democratic presidents, all three judges chosen for this case — Judges Diana Motz, Andre Davis, and James Wynn — are Democratic appointees: Motz was appointed by President Clinton, and Davis and Wynn were appointed by President Obama. All three are known as intelligent, fair, moderate judges, liberal by Fourth Circuit standards.
The government was undoubtedly relieved to have drawn three Democratic appointees, but too much has been made of the role of politics in ACA cases. Although all three of the district court judges upholding the ACA to date have been Democratic appointees and both of the judges striking down the law have been Republican appointees, not all of the judges who have dismissed ACA challenges have been Democratic appointees, and appellate court judges are very aware of the fact that they are bound by Supreme Court precedent and subject to its oversight. Judge Wynn, indeed, has written about the importance of judicial independence from political considerations.
The legal issues raised by the two cases. The Liberty University and the Virginia case raised similar issues. At the heart of each case was the question of whether the powers granted Congress by the Constitution authorize the adoption of a law that would require Americans who can afford health insurance to purchase it. In both cases the government argued that this authority can be found both in the Commerce Clause, which authorizes Congress to regulate interstate commerce, and in the power of Congress to lay and collect taxes; both the Commerce Clause and the taxing power are supplemented by the Necessary and Proper Clause, which allows Congress to enact laws necessary and proper to carrying out its enumerated powers.
The lower court in the Liberty University case had upheld the minimum coverage requirement as a valid exercise of the commerce authority while the Virginia case had held that the Commerce Clause did not justify the provision, since it did not allow Congress to regulate economic inactivity. Both courts held that the minimum coverage requirement did not impose a tax justified by the taxation clause.
Each case raised distinct issues on appeal however. The plaintiffs in the Liberty University case raised a number of First Amendment issues, arguing that the law requires them to purchase insurance in violation of their religious beliefs and that the statute violates the Establishment Clause and the Equal Protection Clause because its limited religious conscience and religious sharing ministry exceptions protect some who refuse health insurance for religious reasons, but not the plaintiffs. The Liberty University plaintiffs also attacked the requirement that employers offer health insurance to their employees or face a penalty if their employees received government subsidized insurance.
In the Virginia case the government argued that the case should be thrown out for lack of jurisdiction. The Constitution only allows the federal courts to hear cases involving actual cases and controversies. A long line of cases have held that states cannot sue the federal government to challenge the constitutionality of a federal law unless the state is concretely injured in some way by the law. Judge Hudson had held, however, that Virginia had standing to defend its statute that nullified the federal law. Another issue raised in the Virginia case was whether the entire ACA should be thrown out if the minimum coverage requirement is held unconstitutional. Judge Hudson had held only the minimum coverage requirement invalid, leaving the rest of the law intact, but Judge Vinson in a Florida case brought by twenty-six other states had thrown out the entire ACA upon holding the minimum coverage requirement unconstitutional.
The Liberty University Case. The oral argument in the cases, scheduled to last forty minutes per case, lasted for over two hours. Mr. Staver began the argument. He attempted to wind up as his time drew to a close, but Judge Motz, who headed the panel as its most senior judge, encouraged him to continue as long as the panel had questions, cautioning him that opposing counsel would get the same amount of time he took. At one point Judge Motz asked a brief clarifying question regarding the religious liberty question, but otherwise the entire hour and twenty minutes of questioning of both Mr. Staver and Solicitor General Katyal focused exclusively on the question of the constitutionality of the minimum coverage requirement.
Mr. Staver led with and stuck with an argument that has served opponents of the ACA well so far: the Commerce Clause only permits the federal government to regulate activity and Congress had exceeded its power in the ACA by attempting to regulate inactivity. Earlier Supreme Court cases had given Congress wide scope to regulate commercial activity, but no case precedents exist in which Congress had forced someone to participate in commerce who had not chosen to do so.
The judges continually probed this argument. Isn’t mental activity a form of activity? Where does the word “activity” appear in the Constitution? Isn’t filing a tax return and not paying the penalty for lack of insurance an activity? What if someone leaves an illegal drug at your house without your permission — is having the drug in your house activity? Couldn’t earlier Supreme Court cases allowing regulation under the Commerce Clause of wheat and marijuana grown for personal consumption be characterized as also involving an absence of commercial activity?
Judge Davis noted at a key moment that the precedential cases emphasized the practical character of the power of Congress and required the courts defer to Congress in its decisions as to how to exercise the Commerce power, free from any precise formulas or abstractions, such as an activity requirement. Throughout, Mr. Staver pressed on, contending that there was a clear difference between the regulation of activity and of inactivity, and that Congress only had power under the Commerce Clause to regulate activity.
Mr. Staver similarly argued that the Necessary and Proper Clause did nothing to expand the power of Congress beyond the Commerce Clause. He recognized that Congress had the power to regulate insurance (although he contended that Congress had heretofore left the regulation of insurance to the states, ignoring ERISA, HIPAA and a host of other federal statutes regulating insurance). But he contended again that it was not proper to require individuals to purchase insurance, and that the decision of Congress to require it was irrational. Judge Motz, who was reversed by the Supreme Court in its last major Necessary and Proper Clause case, seemed thoroughly familiar with the law in the area and corrected Mr. Staver as he characterized that case.
Judge Davis at one point posed a hypothetical involving a group of uninsured twenty-somethings who have a car accident, suffering serious injuries, being restored fully to health by treatment in a hospital to which they were medivaced, and incurring hundreds of thousands of dollars in treatment costs which are passed on to others. Has Congress no power to address the problem of uncompensated care, he asked. Mr. Staver responded weakly that the assessments imposed under the ACA are not sufficient to cover uncompensated care. His responses to the questions posed by the judges when they finally turned their attention briefly to why the assessment was not a tax were also not very satisfying. He basically said that the assessment was not a tax because Congress failed to call it a tax, despite authority to the contrary.
The judges also asked Solicitor General Katyal probing questions. Katyal argued over and over again that the statute did not regulate inactivity. He did not concede that Congress could not regulate inactivity, but said that was not the question before the court (although at one point Judge Motz reminded him that he might well have to confront the question again in another court at another time). Rather, he said that Congress had not done so in this case. All of us, he claimed, are already involved in purchasing health care; we are already active. This case merely addresses the question of how we pay for health care.
At one point Katyal engaged the argument that if Congress can make you buy health insurance, it could make you buy a General Motors car (to save the American car industry). Katyal argued that this is not the correct analogy. With respect to health care, the law effectively now lets you drive the car off the lot and make others pay for it; the minimum coverage requirement merely makes you responsible for paying for the car yourself. Katyal, acknowledged that the power of Congress is not limitless — it cannot enact laws that are only tenuously related to commerce or that interfere with state prerogatives to regulate local matters — but contended that the ACA addresses a truly national problem.
Katyal spent more time than the appellants on the Necessary and Proper Clause, contending that it gave Congress the authority to act, even in ways that were not discretely within it constitutional power, to address comprehensively major societal problems, like the problem of access to health care. The judges did press Katyal on the issue of inactivity, but at one point Judge Wynn noted that the real problem seemed to be responsibility—could Congress require individuals to act as responsible citizens. The Solicitor General addressed the taxation issue briefly, contending that the government had not conceded the issue in other cases (although it has yet to succeed with it), but the court did not seemed very interested in the tax question.
Mr. Staver offered a strong rebuttal, asking whether Congress could require everyone to buy a home to address the problem of homelessness or to eat healthy food and exercise to prevent obesity if it could require the purchase of health insurance. The court seemed to think health care was different, but did seem sympathetic to Staver’s second argument, that in earlier Commerce Clause cases the plaintiff had admitted the constitutionality of the larger regulatory scheme, challenging only the regulation as applied in a particular case, whereas this case challenged the entire ACA.
The Virginia case. In the Virginia case, the court focused almost exclusively on the technical legal issue of whether the federal court has jurisdiction to hear the Virginia case, touching only briefly on the Necessary and Proper Clause issue. Katyal relied heavily on Supreme Court cases holding that a state cannot challenge the constitutionality of a federal law unless the state is concretely injured in some way by that law. All Virginia had done in this case, he argued, was adopt a law nullifying the federal law, thus bootstrapping itself into court. If this is allowed, he argued, a state could forbid its citizens to fight in Afghanistan or participate in Social Security, and then sue to invalidate the federal law. He conceded that Liberty University had standing to challenge the law, but argued that Virginia did not.
Virginia’s Getchell contended that a state could indeed pass a law outlawing Social Security and sue to defend it. He argued that the precedents relied on by the federal government were no longer good law, and that current law allows states to sue the federal government to defend their laws. The court seemed skeptical, and may well dismiss the Virginia case on jurisdictional grounds. Getchell did not mention Virginia’s argument that the entire statute must be struck down if the minimum coverage requirement is found unconstitutional, and the court showed no independent interest in it.
The judges seemed very familiar with not only the briefs in their cases, but also those filed in other courts. A couple of times the court asked Katyal about cases or arguments raised elsewhere that he was not prepared to address. Although they questioned all attorneys closely, I will be surprised if they do not rule for the constitutionality of the ACA. The government will likely face a harder time in next month when it will argue cases defending the statute in the Sixth and Eleventh Circuits. The Sixth Circuit panel has just been announced, and it is composed of two Republican appointees and one Democratic appointee; it includes Bush appointee Jeffrey Sutton, who before he was elevated to the bench made a name for himself arguing for states’ rights before the Supreme Court.Email This Post Print This Post