If comments by the Justices of the United States Supreme Court are any indication of their likely decision, then the Court seems ready to decide whether the Patient Protection and Affordable Care Act’s (ACA) minimum coverage provision (also known as the individual mandate) is constitutional.  The Justices’ questions in Monday’s oral argument gave little indication of how they might rule on the constitutionality of the individual mandate, but they suggested that rule they would – and before this July. They are not likely to take the easier route of delaying consideration of the issues until well after the November elections. That is certainly the sentiment of most reporting on Health Affairs Blog (see posts by Tim Jost and Sara Rosenbaum) and elsewhere, although Bill Sage adds a note of caution regarding this sentiment in his Health Affairs Blog post.

The case before the Court was U.S. Department of Human Services v. Florida, on writ of certiorari from the federal court of appeals for the 11th Circuit.  The first day of oral argument was over whether the federal Anti-Injunction Act prevents the courts from hearing the challenge until 2015 or later.  The Anti-Injunction Act (AIA), enacted in 1867, prohibits anyone from bringing a lawsuit claiming that a tax is unlawful until after the tax has been paid; then they can sue for a refund.  This approach was tagged as “pay first, litigate later” by Robert Long, Jr., amicus curiae appointed by the Court.  If the AIA bars the challengers’ claim, then no court could hear the case until 2015 – after someone first refuses to obtain coverage and pays the penalty when filing a tax return for the year 2014.

The Justices appeared to be searching for a way to decide the merits of the case, which they will hear on Tuesday, without jettisoning the AIA.  Although the arguments may seem arcane, tax lawyers should be watching closely.  After all, as Justice Breyer noted, “taxes are, for better or worse, the life’s blood of government.”  If taxpayers could avoid paying taxes by claiming that a tax was unlawful, the courts might be flooded with objectors and the government could not rely on regular revenues. All the Justices, except Justice Thomas, who almost never speaks during oral argument, pushed all the attorneys to articulate a defensible reason for steering clear of the AIA.  Justice Kennedy, who will be closely watched tomorrow, said very little.

The Solicitor General, Donald Verrilli, Jr., was in a somewhat uncomfortable position to respond.  The federal government had originally argued that Congress had the constitutional authority to enact the minimum coverage provisions under both its power to tax and to regulate interstate commerce, and that the AIA barred the lawsuit challenging the provision.  However, the government dropped its AIA argument and asked the federal courts to decide the matter, even before the tax penalty took effect.

In the Supreme Court, the Solicitor General argued that, while the AIA does bar pre-enforcement tax claims, the AIA should not apply in this particular case. The challengers, Florida and other states and taxpayers, agreed that the AIA should not bar this case. Because the opposing parties all agreed on this point, the Supreme Court appointed an independent, private attorney, Robert Long, Jr., of the law firm Covington & Burling, as amicus curiae to argue that the Court did not have jurisdiction to decide the matter.

Alternative Approaches To The Anti-Injunction Act

Several possible approaches to the AIA emerged from the argument. The first was from Mr. Long, who offered a fine academic argument that the AIA deprived the courts of the power (jurisdiction) to hear tax pre-enforcement tax challenges.  But few Justices appeared to welcome that approach.  Justice Scalia jumped in immediately and initiated a lengthy debate over whether the AIA deprived the courts of their power (jurisdiction) to hear all tax cases or whether there might be exceptions.  Justice Sotomayor displayed a command of precedent, noting that in the 1937 case upholding the Social Security Act tax, the Court heard the case because the government waived any objection under the AIA.  If the government could waive the application of the AIA then, why not now?  She did not appear to be overly worried about the consequences of making an exception, asking “Assuming we find that this is not jurisdictional, what is the parade of horribles that you see occurring?”

Gregory Katsas, counsel for the respondents, took the opposite position, arguing that the AIA is not jurisdictional at all, so the courts are free to hear the case .  Several Justices seemed to bristle at that idea.  It would hollow out the protection provided by the AIA.  A few Justices commented on a third alternative that would allow courts to make an equitable exception to the AIA in cases of extraordinary importance. Presumably, this is such a case. But the idea of allowing judges to make up exceptions without clear standards rarely appeals, even to judges.

The Solicitor General argued a fourth approach:  that the AIA is jurisdictional — that is, that it bars pre-enforcement tax challenges — but that the AIA does not apply to this case; it does not apply because Congress called the exaction for violating the ACA’s minimum coverage provision a penalty and not a tax.  That seems overly semantic, but some Justices might buy it, if only to have a clean distinction between claims barred by the AIA and those that are not.  However, it does run into Supreme Court precedents finding that the name that Congress gives something — tax or penalty — does not necessarily determine its function or how it should be treated in law.  Justice Alito noted that two former Commissioners of the Internal Revenue Service had filed a brief arguing that the federal government’s position would invite a flood of litigation by people who disagreed with the mandate and did not want to pay the penalty.  The Justice also poked a bit of fun at the Solicitor General on this point, saying “today you are arguing that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing that the penalty is a tax.”

Foreshadowing The Argument Over The Constitutionality Of The Minimum Coverage Provision

The sparring over whether the minimum coverage provision is enforced by a tax or a penalty foreshadowed Tuesday’s argument. The key issue then will be whether it is a valid exercise of either Congress’s power to tax or to regulate interstate commerce.  Congress’s power to tax is broad enough to easily uphold the provision. It is the scope of the commerce power that is controversial.

However, the taxing power will only support the exaction for violating the minimum coverage provision if it is deemed a tax. During the argument, Justice Breyer pointed out, “Now, here, Congress has nowhere used the word ‘tax.’  What it says is penalty. Moreover, this is not in the Internal Revenue Code ‘but for purposes of collection.’ And so why is this a tax?”  “And,” Justice Ginsburg added, “this is not a revenue-raising measure, because, if it’s successful, they won’t — nobody will pay the penalty and there will be no revenue to raise.” Justice Kagan noted, “Congress, it must be supposed . . . made a decision . . . that it should instead be a regulatory command and a penalty attached to that command.”

We may expect to hear similar comments in Tuesday’s argument over the constitutionality of the individual mandate.  If a majority of the Justices believe that the mandate is a penalty and not a tax (and one cannot assume that they do), then there should be a fascinating debate over whether the scope of the commerce clause is broad enough to authorize the mandate.

Editor’s note: Wendy Mariner co-organized (and signed) the “Brief of 104 Health Law Professors as Amici Curiae in Support of Petitioners,” submitted January 13, 2012, in United States Department of Health and Human Services et al. v. Florida et al. (Case No. 11-398), with Charles Fried as Counsel of Record.