Federal Courts and Nominations

Supreme Court case against Obamacare faces obstacles

By Richard Wolf


WASHINGTON — A legal challenge that threatens to unravel President Obama’s health care law has been stricken by a series of ill-timed setbacks before next month’s Supreme Court showdown.


The four plaintiffs’ qualifications to bring the lawsuit have been cast in doubt because of their low incomes and potential eligibility for other government benefits. At least one of the four Virginians must show that the law constitutes a burden.


The legal theory behind the complaint — that Congress intended to deny financial aid to consumers in states that use a federal health insurance exchange — has been refuted by the law’s authors. Officials from 22 states told the court they were never warned of that possibility.


The assumption that the administration, Congress or the states would rescue millions of purchasers if the court strips away their federal tax credits has been discredited (in the case of Congress acting anytime soon) or disputed (by officials in several states).


“Piece after piece after piece of evidence that they have put forward to try to support their far-fetched interpretation of the statute has fallen apart as we approach oral argument,” says Elizabeth Wydra, chief counsel at the liberal Constitutional Accountability Center. “That’s legally relevant, because it demolishes their claim that anyone thought the law works this way at the time.”


Unlike 2012, when opponents came within one Supreme Court vote of killing the law before it ever was implemented, supporters have mounted a strong counterattack this time, from legal briefs to the blogosphere.


The question looming ahead of the oral arguments March 4 is whether any of the atmospherics will influence the nine justices who have Obama’s signature domestic policy achievement in their hands. If so, they could once again uphold the law, or at least demand more proof of injury from the challengers.


“The Supreme Court decides things on the law, but they’re not isolated from what’s happening in the population,” said Robert Weiner, a former Justice Department official who oversaw the earlier legal defense of the law.


That was evident during oral arguments three years ago, when Justice Antonin Scalia raised the “Cornhusker Kickback” — a Medicaid reimbursement offer briefly floated in an effort to win the vote of then-Sen. Ben Nelson, D-Neb. The battle for Nelson’s vote was raised in the media, not in court briefs.


The forces behind the new challenge to Obamacare refuse to characterize recent developments as setbacks. In their final brief to the court, submitted Wednesday, they did not address the issue of their plaintiffs’ legal standing to sue the government.


Rather, they have doubled down on their central thesis — that the 906-page law passed in 2010 specifies that federal tax credits will be offered in exchanges “established by the State.” That language, they say, precludes such assistance in exchanges operated by the federal government in up to 37 states.


“The government cites nothing, in legislative history or elsewhere, supporting the notion that Congress did not ‘intend’ what its enacted language unambiguously said — nor rebuts the considerable contrary evidence,” the challengers’ attorney, Michael Carvin, argued.




The plaintiffs’ legal standing could be the biggest obstacle for the challengers to surmount.


In declarations filed with the federal district court in 2013, David King, Douglas Hurst, Brenda Levy and Rose Luck said that without subsidies, the most inexpensive coverage allowed under Obamacare would cost more than 8% of their estimated 2014 household income. That would allow them to go uninsured without paying a penalty.


During those court proceedings, the government contended that even with subsidies, King and Luck might have to pay more than 8% of their income, so they would not be subjected to the penalty.


“The entire premise of this lawsuit — which is that plaintiffs are injured by premium tax credits because, without those credits, they allegedly could obtain ‘cheaper, high-deductible catastrophic coverage’ — is incorrect,” the government’s appellate court brief said.


The U.S. Court of Appeals for the 4th Circuit ruled that Hurst and Levy would have to choose between buying insurance under the law or paying a penalty, which it called an “actual or imminent” harm. Still, it ruled against the challengers, who then convinced the Supreme Court to hear the case.


Since then, The Wall Street Journal and Mother Jones magazine have raised more questions about all four of the plaintiffs — such as whether King and Hurst qualify for veterans’ benefits and whether Levy and Luck would fare better under the health care law than without it.


“The flimsiness of the injury … does highlight that this is not a remedial case,” Weiner said. “It’s a political case that is part of an overall political battle raised by opponents of the Affordable Care Act.”




The lawsuit’s originators say there are millions of people who can claim harm under the 8%-of-income test — and it doesn’t matter if the plaintiffs also are Obamacare opponents.


“There’s tons of cases where you have ideological plaintiffs,” Jonathan Adler, a law professor at Case Western Reserve University, said. “If this is what (proponents) are spending their time on, they must not have anything else.”


Plaintiffs’ legal standing has been an issue in three other cases pending against the federal exchange subsidies. In two, the states of Oklahoma and Indiana were approved only as employers who faced increased costs or penalties. In the other case, the only plaintiff found by the court to have standing would have paid less than $21 annually with the subsidy he refused to take.


“Those consequences may be small, but even an ‘identifiable trifle’ of harm may establish standing,” the appeals court said.


Michael Cannon, a Cato Institute health economist who helped to conceive the court challenges, said the difficulty in finding plaintiffs stems from taking on the Internal Revenue Service.


“They don’t want to get audited,” Cannon said, “and this administration has a history of using the IRS for ideological purposes.”

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