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The Supreme Court ACA Arguments: Timothy Jost On The Anti-Injunction Act



March 26th, 2012
by Timothy Jost

The first day of Supreme Court oral arguments on the Affordable Care Act focused on the Anti-Injunction Act (AIA).  This statute, enacted in 1867, provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” Because the ACA’s minimum coverage requirement (also referred to as the individual mandate) is enforced through a penalty that is assessed under the tax code, it is arguable that the requirement cannot be challenged in court until 2015, when a penalty is first assessed. (For more on the first day of oral arguments and the Anti-Injunction Act, see additional Health Affairs Blog posts by William Sage, Wendy Mariner, and Sara Rosenbaum.)

The Fourth Circuit accepted this argument in dismissing the Liberty University case, as did Judge Kavanaugh in dissent in the Seven Sky District of Columbia Circuit decision.  On the other hand, the majority of the D.C. Circuit panel rejected this argument, as did the Sixth Circuit in the Thomas More Law Center case.

The state and private plaintiffs and the federal government would like to have the question of the constitutionality of the minimum coverage requirement settled now, and all contend that AIA does not apply in this case.  In their briefs, the states and the private plaintiffs challenged the applicability of the AIA on a broad front.  They argue, therefore, not just that the minimum coverage penalty is not a tax, but also that the AIA is not jurisdictional and can thus be waived by the Court; that the minimum coverage requirement can be challenged independently of the penalty that enforces it, whether or not that penalty is a tax; and that the states can challenge the requirement regardless of whether private plaintiffs could, because they are not “persons” governed by the statute.  Their arguments are sufficiently similar that both parties were effectively represented by a single lawyer, Greg Katsas of Jones, Day.

It is more difficult for the federal government (represented in these proceedings by Solicitor General Donald Verrilli, Jr.) to argue that the AIA does not apply.  The federal government has to contend that the minimum coverage requirement was validly enacted under Congress’ power to tax and spend, on the one hand, but, on the other, is not a tax for the purposes of the AIA.  Moreover, the Solicitor General is responsible for protecting the ability of the federal government to collect taxes generally, and thus must argue that the AIA deprives the courts of jurisdiction to hear pre-assessment tax challenges, but that special circumstances in this case make it inapplicable.

Indeed, in the early stages of the case the Justice Department moved to dismiss the case on the basis of the AIA.  The DOJ subsequently abandoned this position, presumably because the federal government wants to settle the constitutional issue now as much as the states do.

Although all parties want the issue decided now, the Court has suggested in the past that the AIA is jurisdictional, and thus it cannot hear a case that is barred by the AIA, regardless of what the parties want.  The Court therefore appointed an amicus, Robert A. Long, to argue the position that the AIA does apply.

The Court heard 90 minutes of argument—35 minutes from Mr. Long, the court-appointed amicus, 30 minutes from Solicitor General Verrilli, 20 minutes from Mr. Katsas, and finally 5 more minutes of reply from Mr. Long.  Each of the Justices asked multiple questions except for Justice Thomas (who has not asked a question in oral argument for over 6 years).

A Desire To Get Around The AIA — But Just How Is An Open Question

It seems clear from the day’s argument that the Court is not inclined to dismiss the case under the AIA.  It is less clear how they will get around it.  Most of the questions seemed to focus on three possibilities.  One, which was argued by the plaintiffs, would be to hold that the AIA is not jurisdictional, but is rather a “claims-handling” statute.  The Court would then be able to exercise discretion to hear the constitutional issue now rather than waiting until a penalty was assessed.

A second possibility, urged by the United States, is to hold that the AIA is jurisdictional, but that the penalty imposed to enforce the minimum coverage requirement is not a tax within the meaning of the AIA.  A third possibility would be to hold that the minimum coverage requirement and the penalty that enforces it are independent, and that a challenge can be brought now against the minimum coverage requirement without challenging the penalty, regardless of whether it is a tax or not.

A final possible argument–that the AIA does not apply to the states since they are not “persons” within the meaning of the AIA–was not discussed. No justice brought up an argument raised by Judge Kavanaugh’s dissent in the D.C. Circuit that the Court, for prudential reasons, ought to put off deciding the case on the merits.

Robert Long’s Argument That The AIA Applies

Seconds into Mr. Long’s argument, the justices started challenging his position that the AIA was jurisdictional and therefore the Court had no discretion to hear the case.  Justices Scalia, Kennedy, Roberts, Ginsburg, Alito, Kagan, and Sotomayor all probed Mr. Long’s position that the AIA is jurisdictional before Justice Breyer (stating “I’m probably leaning in your favor on jurisdiction”) changed the subject to the question of whether the penalty enforcing the minimum coverage requirement is in fact a tax under the AIA.

Mr. Long pointed out that the penalty is assessed and collected as a tax, but Justice Scalia rejoined that “we have a principle that ousters of jurisdiction are narrowly construed, that, unless it’s clear, courts are not deprived of jurisdiction, and I find it hard to think that this is clear.”   Justice Ginsburg joined in, noting that the penalty was not imposed to raise revenue, and, in fact, if it is successful, no one will pay it.  Justices Sotomayor and Kagan, along with Justice Breyer, continued to press Mr. Long on this, pointing to other penalties in the Internal Revenue Code or taxes in the Affordable Care Act that were covered by the AIA but distinguishable from the minimum coverage requirement penalty.

Justice Ginsburg then turned to the question of whether the minimum coverage requirement itself could be challenged independently of the penalty, a question that would face the other two attorneys as well.  Mr. Long argued that the penalty and minimum coverage requirement could not be separated, since the penalty was the means of enforcing the requirement.  Justice Alito pushed back, noting that the statute has two separate sections for the penalty and coverage requirement, but no other member of the Court joined in.

In closing, Justice Sotomayor asked Mr. Long again for his response to the federal government’s position that the penalty was not a tax subject to the AIA.  Mr. Long stated that this reading” would probably create the fewest problems,” but did not “make a whole lot of sense,” and would probably apply to a number of other penalties in the tax code.

Solicitor General Verrilli’s Argument That The AIA Does Not Apply

The Court then turned to Solicitor General Verrilli.  Seconds into his argument that the penalty was not a tax under the AIA, Justice Alito reminded him that “tomorrow . . . you will be arguing that the penalty is a tax.” General Verrilli attempted to argue that a provision can be a tax for constitutional purposes but not for anti-injunction purposes, but seemed to get confused.

Justice Ginsburg at that point turned to what the position of the United States was on the question of whether the AIA was jurisdictional or not.  In response to further questions from Justices Ginsburg and Kennedy and Chief Justice Roberts, General Verrilli made it very clear that it was important to the United States that the AIA be recognized as a jurisdictional statute so that courts not create exceptions to it and attorneys representing the government not waive it unintentionally.  When the Solicitor General got into trouble trying to distinguish an earlier case in which the Court had found jurisdiction, both Justices Breyer and Scalia came to his rescue.  Justices Kagan and Ginsburg pressed a bit further on the question of whether the statute was jurisdictional or not, but none of the justices seemed absolutely decided on this point.

Justice Sotomayor then turned the discussion to the question of whether the minimum coverage requirement could be challenged independently of the penalty—the position of the states and the NFIB.  General Verrilli argued that in fact the penalty is the only consequence of not complying with the requirement and that a number of provisions of the ACA indicate that Congress saw the two as indistinguishable.

Justice Alito and Chief Justice Roberts pushed this line of questioning further, with Justice Alito asking whether a person who went to the hospital and was eligible for Medicaid would have to enroll or whether he or she could refuse to do so and pay the penalty.  General Verrilli stood his ground, saying that people who did not want to enroll could pay the penalty instead, which prompted Justice Sotomayor to ask if people eligible for Medicaid were subject to the penalty.

General Verrilli responded that most people eligible for Medicaid will not be subject to the penalty because they fall into one of its exceptions.  At one point in this extended and fast paced exchange, General Verrilli began to refer to the penalty as a tax, prompting Justice Breyer to remind him that the government’s position was that the exaction was a penalty, not a tax.

In conclusion, Justice Alito asked whether the courts would not be faced with a flood of litigation challenging penalty assessments if the Court holds that the AIA does not apply, but General Verrilli noted that other bars to litigation would still apply, like the requirement that plaintiffs resort to administrative remedies before going to court.

Greg Katsas’s Argument That The AIA Does Not Apply

Mr. Katsas began his argument by asserting that the AIA is not jurisdictional (and therefore does not bar the Court from hearing his clients’ challenge to the ACA), but was immediately challenged by Justices Ginsburg and Sotomayor who asked him to distinguish a series of cases (including one that I cannot find cited in the briefs.)  At this point, Justice Breyer, who had been silent during the Court’s colloquy with Mr. Long about jurisdiction, weighed in at some length as to the policy reasons why it might be important to recognize that AIA as a jurisdictional statute to protect the government’s ability to collect taxes because “taxes are, for better or worse, the life’s blood of government.”

After a further discussion of the jurisdictional question with Justices Sotomayor and Kagan, Mr. Katsas turned to his clients’ other central argument, that the minimum coverage requirement was independent of the penalty, and thus a challenge to it was not subject to the AIA.  Here Chief Justice Roberts proclaimed, “But the idea that the mandate is something separate from whether you want to call it a penalty or tax just doesn’t seem to make much sense.”  He continued to say “It’s a command.  A mandate is a command.  . . . It seems very artificial to separate the punishment from the crime.”  Mr. Katsas responded at length as to how the penalty and mandate were completely separate, but Chief Justice Roberts pressed on, “Why would you have a requirement that is completely toothless?”

The argument that Mr. Katsas proceeded to make that the mandate applies even to the very poor, who are not subject to the penalty, provoked a question from Justice Kagan as to whether individuals subject to the mandate but not to the penalty are injured in any way by it that would allow them to challenge it.  This led to the claim that the states are injured by the requirement because it will force millions of individuals onto the Medicaid rolls, many of whom are eligible now but not enrolled.

Justice Kagan expressed surprise that a state would be injured by having to cover Medicaid recipients whom it has already decided are eligible for the benefit.  Justice Ginsburg asked why people would resist enrolling for Medicaid if they were eligible, and when Mr. Katsas said that he did not know why, she suggested that perhaps they had not been given sufficient information about their eligibility.  Justice Sotomayor finally said she could not understand how the states were injured by the minimum coverage requirement, but Mr. Katsas responded that it was because the requirement would force people onto Medicaid.

Mr. Long concluded with a brief reply, interrupted only by Justice Breyer, who pressed further the federal government’s argument that the penalty was not a tax.

Conclusion

In sum, the Court seems unlikely to let the AIA stop it from hearing the underlying challenge to the ACA. Several justices seem inclined to conclude that the AIA is not a total bar to court jurisdiction in tax challenges, but there seem to be also members of the Court, notably Justice Breyer, inclined to go with the federal government’s argument that the minimum coverage requirement penalty is not a tax.

The support that Chief Justice Roberts showed for the position that the minimum coverage requirement and the penalty are not severable should give the Department of Justice hope for the success of its argument that the Medicaid expansion is constitutional; as General Verrilli pointed out, most Medicaid recipients are not subject to the penalty, and therefore the argument of the states that the ACA compels them to expand Medicaid by forcing their citizens to enroll in it evaporates.  Justices Ginsburg and Kagan also showed little sympathy for the state’s argument that they are injured by the Medicaid expansions.

The argument that the coverage requirement and penalty are inseparable is also at the heart of the federal government’s argument that the coverage requirement is authorized under the power of Congress to tax and spend, but the Court is unlikely to hold that the penalty is not a tax for purposes of the AIA but is for constitutional purposes.

In the unlikely event that the Court should decide that the AIA applies, it would still be able to decide the state’s challenge to the Medicaid expansions, which does not involve a tax.  Congress can also always amend the AIA to exclude the Affordable Care Act from its reach, and might well do so.  The statute already has a dozen exceptions.  The case would be right back in court again then.  This is one more reason to get the issue decided now rather than dismiss it under the AIA.

Editor’s note: Timothy Jost signed an amicus brief by health policy history scholars in support of the constitutionality of the ACA’s minimum coverage requirement.

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