Corporate Accountability

ACA Backers Take Heart In High Court’s SOX Ruling

By Jeff Overley

 

Law360, New York (February 25, 2015, 7:24 PM ET) — Affordable Care Act supporters seized on a U.S. Supreme Court decision Wednesday interpreting the Sarbanes-Oxley Act to assert that justices in a looming case will interpret the ACA as allowing universal tax credits, but experts cautioned against assuming that one ruling tips the court’s hand.

 

Justices in Yates v. U.S. were divided about how to interpret the scope of a SOX provision, but they largely aligned on the need to take a holistic approach and not just read a few words in isolation. That’s relevant for the ACA case, King v. Burwell, which asks whether the law’s authorization of tax credits in exchanges “established by the state” can be read to include exchanges established by the federal government. 

 

ACA supporters contend that the challengers’ position only makes sense if the four-word phrase is read by itself, and those supporters argued that the justices on Wednesday signaled their intentions to look at the 900-page statute more broadly.

 

“It’s important because the justices agree [that] to determine the plain meaning of the phrase, you look at it in context,” said Robert N. Weiner, an Arnold & Porter LLP partner who helped defend the ACA while at the U.S. Department of Justice.

 

Other aspects of Wednesday’s decision also brightened the spirits of ACA enthusiasts. For one, the plurality opinion said that if Congress wanted the SOX provision to cover all types of physical evidence, it would have provided a “clearer indication” of such intent. That called to mind a key argument of ACA supporters, who say Congress would not have threatened to limit tax credits without making such a threat unmistakable.

 

Notably, the plurality opinion featured three liberal justices as well as Chief Justice John G. Roberts Jr., who is widely seen as the conservative most likely to side with the government in King v. Burwell, which will be argued on March 4.

 

In addition, Wednesday’s dissent mentioned the importance of legislative history. That’s a focal point of King v. Burwell because little, if any, evidence shows that lawmakers discussed limiting subsidies during extensive debate in 2009 and 2010.

 

“With the King argument just a week away … the ACA’s challengers can’t be happy to see the court’s opinions in Yates,” the liberal Constitutional Accountability Center wrote on its blog Wednesday.

 

However, even if Wednesday’s outcome seems to square with the government’s position in King v. Burwell, legal experts warned that there are key differences between the cases. For starters, the SOX provision concerns criminal penalties, whereas the ACA is a law that helps people get health benefits.

 

“I’m not sure it means much,” Jonathan Adler, a legal scholar who helped devise the anti-ACA challenge, said of the Yates decision. “There are considerations in play in the context of a criminal prosecution that are not in play in King, and vice versa.”

 

Richard L. Hasen, a critic of the anti-ACA lawsuit who teaches statutory interpretation at the University of California in Irvine, added that nothing the justices said Wednesday would bind them to a particular position on ACA subsidies.

 

“There are statutory interpretation principles the justices can choose to rely upon to reach either decision in the King case,” Hasen said. “Precedent like Yates won’t confine any justice’s ability to vote for or against the Obamacare challengers in King.”

 

Similarly, many observers say that Supreme Court precedent — even if it tilts in one direction — is often clouded by the justices’ ideological leanings. The potential for such leanings to affect rulings is at its highest in politically charged cases, and few cases are more charged than King v. Burwell.

 

“​I don’t think the court cares a lot about consistency, especially in high-profile cases,” said Eric J. Segall, a professor at the Georgia State University College of Law and a prominent critic of the anti-ACA suit.

 

That the court agreed to hear King v. Burwell in the first place is viewed as a bad sign for the ACA, given that subsidies were not threatened at the time. With that in mind, some of the law’s supporters described Wednesday’s outcome as at least a reason for optimism, even if their case remains very much up in the air.

 

“Every situation is different in some respects. … [But] that doesn’t mean that this doesn’t provide a signal as to the court’s thinking,” Weiner said. “Is it dispositive? No. Is it suggestive? Yes, I think it is.”

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