Perspective
Not So Fast — Jurisdictional Barriers to the ACA Litigation
N Engl J Med 2011; 365:e34October 20, 2011
- Article
Interactive Timeline
Key Court Decisions Regarding the Affordable Care Act.
The Affordable Care Act (ACA) has been under attack in the federal courts for the entire 18 months of its existence. Approximately 30 lawsuits have been filed challenging the law, and review by the Supreme Court by June 2012 now appears likely, given the government's petition for such review filed on September 28.
Most cases claim that Congress exceeded its constitutional authority in enacting the ACA, but the Constitution also limits the authority of the federal courts. Article III allows federal courts to hear only “cases . . . [or] controversies” over which Congress has given them jurisdiction.1 The Supreme Court is acutely aware of these limits. It recently stated, “Continued adherence to the case-or-controversy requirement of Article III maintains the public's confidence in an unelected but restrained Federal Judiciary. . . . For the federal courts to decide questions of law arising outside of [their jurisdiction] would be inimical to the Constitution's democratic character.”2
Difficult jurisdictional issues lurk in the ACA challenges. In some cases, the government, which hopes that the courts will soon uphold the ACA on the merits, has not objected that courts lack jurisdiction, but the courts must consider jurisdictional issues regardless of whether parties raise them. At least 10 ACA challenges have been dismissed for lack of jurisdiction, with four dismissals coming from or affirmed by federal appellate courts (see table
Federal Court of Appeals Cases on the ACA's Constitutionality, 2011., and interactive timeline, available with the full text of this article at NEJM.org).The first jurisdictional issue is whether the plaintiffs have “standing” to sue. The Supreme Court has interpreted the Constitution's “case or controversy” requirement to mean that federal courts lack jurisdiction unless a plaintiff can demonstrate an actual or imminent “injury in fact” that the courts can redress. Since the requirement that Americans obtain minimum health insurance coverage — the primary focus of the lawsuits — won't go into effect until 2014, with penalties for those who don't comply first assessed in 2015, it may appear that no one is currently injured. Several courts have, however, found that individuals who claim they must save money now to afford health insurance in 2014 suffer actual present injury.
Then there are the lawsuits brought by states. In Florida v. Health and Human Services — in which Florida and 26 other states argued that Congress lacks authority to impose the individual mandate — the Eleventh Circuit did not rule on the states' standing, because the court held that private plaintiffs in the case alleged sufficient financial injury to have standing and because the states were also challenging Medicaid's expansion, which affects them directly. But the minimum-coverage requirement affects individuals, not states, and only that requirement is at issue in Commonwealth of Virginia v. Sebelius, in which the state claimed it had standing to defend its own law protecting Virginia residents from being required to obtain insurance.
The Fourth Circuit dismissed Virginia's suit, invoking well-settled law that states may not sue to protect their citizens from federal law, since state citizens are also federal citizens. Although Virginia argued that it has standing to protect its own sovereign interests by virtue of its new statute nullifying the minimum-coverage requirement, the Fourth Circuit held that a state cannot manufacture standing simply by declaring statutory opposition to federal law. Although the Supreme Court hasn't decided this precise question, it has shown little openness to states' attempts to raise abstract constitutional questions.
Related to, but distinct from, the standing requirement is the legal doctrine of “ripeness.” Courts decline to hear cases, even those brought by plaintiffs with standing, if they are filed prematurely, before the controversy is fully developed. For instance, the ripeness requirement would bar current litigants from challenging the ACA's eventual application to their particular financial and family situations, but the cases filed to date are not such “as-applied” challenges; rather, they challenge the minimum-coverage requirement “on its face,” claiming that it's invalid in most or all applications. Most courts have been willing to hear ACA challenges now on this basis.
But not all ripeness concerns can be swept aside so easily. Ripeness receives special protection in tax cases, under a federal statute called the Anti-Injunction Act (AIA). The AIA states 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.”3
The AIA's purpose and effect is to force taxpayers to pursue tax disputes through the normal processes of tax assessment and enforcement. Suits to enjoin tax collection before actual assessment would introduce unnecessary uncertainties about how much is owed and could greatly complicate the enforcement efforts of the Internal Revenue Service (IRS). Although the ACA lawsuits do not involve routine tax-collection disputes, the AIA still arguably deprives the courts of jurisdiction to decide them.
The ACA's individual mandate is enforced through the federal income tax system. Two of the three Fourth Circuit judges ruled in Liberty University v. Geithner that the lawsuit — challenging penalties imposed both on individuals who do not purchase health insurance and on employers that do not provide it — has the “purpose of restraining the assessment or collection of any tax,” depriving the court of jurisdiction.4 The dissenting Fourth Circuit judge and the Sixth Circuit disagreed, reasoning that the ACA's enforcement provision is a penalty, not a tax, and therefore falls outside the AIA. The Fourth Circuit responded that the AIA clearly applies to some penalties, such as those for violating the tax laws themselves, and that however one labels the ACA's “exaction,” it falls within the AIA's broad scope. The D.C. Circuit also seemed interested in this issue at recent oral arguments in Seven-Sky v. Holder, another challenge to the individual mandate filed by several individuals.
Is the minimum-coverage requirement a tax, a penalty, an assessment, an exaction, or none of the above, and what difference does that make? Both the federal government and the law's challengers want this question decided on the constitutional merits and therefore argue that the AIA doesn't apply or that it should be waived. The government also contends, however, that the minimum-coverage requirement is a valid exercise of Congress's constitutional power to tax. It thus has the most difficult argument to make — that the requirement is imposed through a constitutional tax but that the AIA's reference to “any tax” does not bar a challenge now. The government argues that the AIA does not apply to all exactions in the tax code and that Congress didn't intend it to apply to the ACA. The Fourth Circuit rejected both these arguments, but the Sixth Circuit agreed with the first point. The losing parties in both cases are petitioning for Supreme Court review.
The challengers have a more consistent argument: they simply claim that the minimum-coverage requirement is not imposed through a tax. But the AIA sweeps very broadly, and the requirement could be a tax for AIA purposes whether or not it is one for constitutional purposes. One Fourth Circuit judge declined to decide whether the requirement is a valid tax, but one judge concluded that it is valid.
Ironically, states may have an easier time than individuals avoiding the AIA. In the Virginia case, the lower court reasoned that the AIA's reference to “person” does not include states, that the states' purpose is to challenge the mandate itself and not its enforcement, and that states cannot challenge the law through the normal IRS process. But the Fourth Circuit found that the state had no standing. Virginia will seek review, but the Supreme Court would have to recognize states' standing before getting to the AIA issue.
All the litigants — the Obama administration, the states, and the private litigants — want a definitive ruling on the question of whether Congress constitutionally adopted the minimum-coverage requirement. But first the courts must decide whether they can constitutionally decide this question. The jurisdictional issues are sufficiently cloudy at this point that it is difficult to predict how the Supreme Court will resolve them.
Disclosure forms provided by the authors are available with the full text of this article at NEJM.org.
This article (10.1056/NEJMp1111295) was published on October 5, 2011, at NEJM.org.
Source Information
From Washington and Lee University School of Law, Lexington, VA (T.S.J.); and Wake Forest University Schools of Law and Medicine, Winston-Salem, NC (M.A.H.).
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