Politico
Health care law cases rejected by 4th Circuit Court of Appeals
By Jennifer Haberkorn
September 8, 2011

A federal appeals court on Thursday threw out two challenges to President Barack Obama’s health care overhaul on procedural grounds.

Delivering a two-pronged win to the Obama administration, the 4th Circuit Court of Appeals said Virginia has no right to challenge the law’s requirement that nearly all Americans buy insurance. The court also said that Liberty University couldn’t challenge the law before the mandate goes into effect.

The legal victories might not provide the administration with much political ammunition against the law’s critics, though, since the rulings didn’t focus on the merits of the law. And the law’s opponents can play down the impact of the rulings, since the judges were all appointed by Democratic presidents — including two nominated by Obama.

The 4th Circuit issued by the side-by-side rulings in response to separate lawsuits brought by Virginia and the conservative Liberty University. Both cases challenged that the health law’s requirement that nearly all Americans have to buy health insurance is unconstitutional.

The court said Virginia had no right to bring its lawsuit because “the sole provision challenged here — the individual mandate — imposes no obligations” on the state itself.

In the case of Liberty University, the court said the legal challenge had come too soon: “Because this suit constitutes a pre-enforcement action seeking to restrain the assessment of a tax, the Anti-Injunction Act strips us of jurisdiction. Accordingly, we must vacate the judgment of the district court and remand the case with instructions to dismiss for lack of jurisdiction.”

The 4th Circuit is the first court to side with the administration’s legal argument that the mandate’s penalty is a tax.

While the court bought the argument, it said that since the mandate is a tax, it doesn’t have jurisdiction to judge whether it is constitutional because of the Anti-Injunction Act. The act requires Americans who want to challenge taxes to first pay the tax and then ask for a refund. Essentially, the court said that Liberty can’t challenge the mandate until 2014.

While Obama repeatedly said through the health debate that the penalty wasn’t a new tax on the middle class, and Congress didn’t use the word when it wrote the law, administration lawyers have repeatedly argued that it is. The law imposes fines starting in 2014 on people who don’t get health coverage.

The law’s supporters have embraced the tax argument because Congress has a clear authority to tax.

“Simply because the Legislature uses one label or another doesn’t determine whether or not it’s a tax,” said Elizabeth Wydra, chief counsel of the Constitutional Accountability Center, which has written briefs in support of the law.

Both Liberty and Virginia have said they would appeal any rulings against them.

Of the judges, Diana Gribbon Motz was nominated to the bench by former President Bill Clinton, while the other two — Andre M. Davis and James A. Wynn Jr. — were nominated by Obama. The three were randomly selected.

Wynn and Davis wrote in opinions dissenting with various pieces of the ruling that they would have upheld the law if it reached the merits.

The 4th Circuit was widely expected to rule that Virginia had no right to bring the suit after oral arguments in May, in which the panel spent most of its time discussing the so-called “standing” issue and not the merits of the case.

The ruling in the Liberty case was more of a surprise. But the panel hinted it was looking at the tax question when it asked lawyers on both sides of the case for written responses to Anti-Injunction Act questions.

The rulings mark wins for the Obama administration by effectively ending both suits. They can be appealed, but the plaintiffs would have to spent significant time arguing the procedural issues.

But the rulings don’t help the overall tally of health reform cases on their path to the Supreme Court. The health law now effectively stands 1-1.

The ruling comes nearly a month after the 11th Circuit Court of Appeals struck down the individual mandate in a lawsuit by 26 states, and more than two months after the 6th Circuit Court of Appeals upheld the legislation in a separate challenge.

The 4th Circuit was the first federal appeals court to hear an appeal in one of the more than 30 legal challenges to the health law. But it’s the third to issue a ruling.