ACA’s Post-Constitutional Fate

Last week, a federal district court judge declared the Affordable Care Act (ACA) to be unconstitutional in Texas v. United States. The Dec. 14 decision is explained in a very logical and thorough opinion that rebuts the many, sometimes highly technical, arguments advanced by the statute’s defenders.

Next Judicial Steps

District Judge Reed O’Connor granted only summary judgment on the ACA’s constitutionality, without issuing a nationwide injunction against its enforcement.

While federal district court decisions are not binding law, even in their districts, the decisions of the 13 federal circuit courts that review appeals of district court decisions are binding law in the states covered by their circuits or, in the case of the Federal Circuit, for the whole nation on some matters. And this case will surely be appealed to the Fifth Circuit Court of Appeals, where it will be heard by a panel of three judges.

The Fifth Circuit is the most conservative federal circuit court, and, statistically, a randomly-selected panel is expected to affirm Judge O’Connor’s holdings, after about a year of briefing, argument, and opinion writing.

The losers of that panel’s decision may ask for an “en banc” hearing by most or all of the 26 Fifth Circuit judges. That request is not likely to be granted — especially if Judge O’Connor’s decision is upheld — because the en banc procedure is disfavored, requires extraordinary reasons, and takes the approval of a majority of all of the active Fifth Circuit judges. The losers will then try to take the case to the US Supreme Court.

The Supreme Court is not required to hear this case, because it is not within its “original jurisdiction,” but it could agree to hear it nonetheless. A party seeking Supreme Court review must (in formal briefs) persuade at least four justices to agree to review it. The most frequent reason for the Court to grant review is to resolve conflicts between decisions of two or more federal circuit courts. There is no direct circuit court conflict in this case, but the importance and national scope of the issue may prompt the Court to review it.

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Current Ramifications

The time from now to a Supreme Court opinion could be two years or more. What will happen while this case is pending?

Staffing firms are now being charged penalties for not offering coverage or for not offering sufficiently rich and affordable coverage in 2015 and 2016. Judge O’Connor’s opinion held that the repeal of the individual mandate penalty tax, effective Jan. 1, 2019, triggers the unconstitutionality of the individual mandate itself and that, because the rest of ACA depends on the individual mandate, it also triggers the unconstitutionality of the entire ACA. That ruling, even if fully upheld, does not affect penalties for periods before 2019.

The future effect of this decision, if it is upheld, may be only to invalidate the individual mandate, or it may be allowed to have greater effect by also invalidating the Act’s employer mandate, insurance provisions, taxes, and/or massive sections that regulate the healthcare industry in ways unrelated to health insurance.

Enforcement of the employer mandate and its penalties for calendar 2019 and later years ought to be suspended or waived until the issue of the scope of ACA’s unconstitutionality is resolved. Arguably, they already are suspended by Judge O’Connor’s opinion, even though he did not issue an injunction. President Trump’s declaration that the law “remains in place” is not really within his authority, and private parties could sue to resist any attempt to enforce the law.

Regardless of the net good or bad effects of the ACA, its indefinite status for the next two years would risk harming some Americans, even if it might preserve benefits for some others. The Trump Administration, following the Obama Administration’s history of issuing waivers and delays of portions of the ACA, could provide interim relief from some oppressive aspects of the law without directly challenging Judge O’Connor’s decision. Also, Congress theoretically could fix the problem, but that is unlikely because of the present gridlocked condition of Congress.

As they say, “We’ll see what happens.”


George M. Reardon

George M. Reardon
George M. Reardon is an attorney whose practice is focused on the staffing industry. He can be reached at georgemreardon (at) aol (dot) com.

George M. Reardon

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