On July 31, 2014, Michael Carvin, attorney for the plaintiffs in King v. Burwell, one of two parallel cases challenging an IRS rule allowing premium tax credits to be issued by federally facilitated exchange, filed a petition for a writ of certioriari in the United States Supreme Court. The petition asks the Court to review the Fourth Circuit decision affirming Judge James Spencer’s ruling rejecting their claim.

As was described here in detail last week, ACA opponents lost in the Fourth Circuit in a unanimous decision in King v. Burwell but won a split decision in the District of Columbia Circuit Court of Appeals in Halbig v. Burwell. Carvin is thus seeking Supreme Court review based on a split of authority between the circuits that must be resolved by the Supreme Court.

It is not the intent of this post to review the arguments in Carvin’s brief. Carvin argues that judges Griffith and Randolph made the right decision in Halbig, and that judges Gregory, Thacker and Davis in the Fourth Circuit and Edwards in the D.C. Circuit are wrong. There is really only one new argument in the petition that was not made below, namely that Congress’ intent to deny premium tax credits in states that failed to establish exchanges has now been conclusively established by statements made by Jon Gruber two years after the statute was adopted. This disregards the fact that Gruber neither drafted nor voted on the ACA and had earlier stated that premium tax credits were available in federally facilitated exchange states.

Rather than rehashing the merits, this post will discuss the timing of the petition, the basis on which it can be accepted, and the consequences if it succeeds. Nothing will happen immediately with this petition. The government has 30 days to respond, and can request additional time. The appellants then have 14 days to reply. This puts us into mid-September. It is unlikely, therefore, that the Supreme Court will decide whether or not to accept the petition until it reconvenes in October.

In the interim, the government has petitioned for a rehearing en banc before the entire D.C. Circuit. If a majority of the D.C. Circuit judges vote to rehear the case, the panel decision of Judge Griffith will be set aside. At that point there will no longer be conflicting circuit court decisions.

The Supreme Court receives thousands of petitions for certiorari every year, and grants only a very small number of them. Under the Supreme Court rules, a writ will be granted only for “compelling reasons.” The most common reason for granting certiorari is when a “circuit split” exists and Supreme Court review is necessary to harmonize the decisions of the lower courts nationwide. If the D.C. Circuit en banc sets aside the Halbig decision, there will no longer be a circuit split on the premium tax credit issue.

Although the Supreme Court may grant a writ in the absence of a circuit split, and has done so in extraordinary cases like Bush v. Gore or the Guantanamo Bay prison cases, for the Court to do so in a case in which a single federal appeals court had upheld a federal regulation would be an extraordinary event. Of course, the case may eventually get to the Supreme Court even if the Court denies this petition. Litigation is pending in Oklahoma and Indiana on the same issue and could eventually result in a circuit split. But that may not occur for some time.

As a final point, the appellants suggest in their brief that immediate Supreme Court review is necessary because if the Internal Revenue Service rule is eventually invalidated, millions of Americans will have to pay back premium tax credits they had received. Invalidation of the rule would certainly cause enormous disruption to insurance markets and cause millions of Americans to lose coverage prospectively, but it would not mean that individuals would have to pay back tax credits they had received.

If the IRS rule is invalidated, the IRS would have to issue a new rule in its place limiting tax credits to state operated exchanges. Under 26 U.S.C. 7805, the federal statute governing IRS regulations, the new regulation would not have retroactive effect. It would only be effective from the date a temporary, proposed, or final regulation was filed with the federal register or the IRS gave notice of the content of a proposed, temporary, or final regulation. Further, the Secretary of the Treasury has authority under the statute to provide that a judicial ruling relative to the Internal Revenue laws shall not have retroactive effect.

The IRS has consistently taken the position that the federally facilitated exchanges can issue premium tax credits, and taxpayers have relied on that position in receiving advance premium tax credits. If individuals have properly received those credits under the current rules, they need not worry about having to pay them back regardless of what the Supreme Court decides.