A New Court Battle for ObamaCare

00_GOV_shutterstock_49894069_gavel_659pxIn a bombshell development that could potentially cripple ObamaCare, U.S. District Judge Paul Friedman ruled that the lawsuit aimed at blocking health care subsidies in states not running their own healthcare exchanges could move forward. The judge denied a request by U.S. Department of Justice (DOJ) to dismiss the suit, but also declined to grant a preliminary injunction sought by the plaintiffs in the case. Friedman has promised to rule on the overall merits of case by mid-February.

The plaintiffs in Halbig v. Sebelius contend that the Affordable Healthcare Act offered states a series of “carrots and sticks” to encourage them to set up healthcare exchanges. According to the suit, the biggest carrot was the offer of insurance premium subsidies, in the form of refundable tax credits from the U.S. Treasury, to low- and moderate-income resident in states that set up the exchanges. If a state refused, the stick was a federally-established, federally-run exchange with no subsidies at all.

The suit notes that, despite clear statutory language limiting premium assistance to states that set up their own exchanges, the Internal Revenue Service (IRS) established its own regulation, the Subsidy Expansion Rule, authorizing subsidies in states with federally-run exchanges. In doing so, the IRS ignored the text of the law, as well as “the clear limitations Congress imposed on the availability of federal subsidies.”

Thus, despite the fact that only 16 states and the District of Columbia have set up their own exchanges, the IRS expanded the availability of subsidies to the other 34 states that didn’t. According to DOJ attorney Joel L. McElvain, they did so because Congress never intended to favor some states over others with regard to ObamaCare. He insisted the Department of Health and Human Services was prepared to “stand in the shoes” of states that decided to let the feds run their exchanges. He further contended the failure to do so would “extinguish” the rights of those seeking affordable healthcare in those states.

One of the plaintiffs’ attorneys, Michael A. Carvin, contended the federal government’s approach amounted to giving each state “an offer you can’t refuse,” tempting them with generous subsidies to get them to set up state-run exchanges. When they refused to do so, the administration chose to ignore the law.

The plaintiffs take their argument one step further. They note that, according to the law, there are individuals who are exempt from buying health insurance if it is determined its purchase is “unaffordable.” Without the subsidies engendered only by state-run exchanges, many more people would be exempt from buying insurance. As a tangential result, they would also be exempt from paying the fine associated with failing to do so.

Moreover, if employees in those same states are ineligible for subsidies, employers who would otherwise be on the hook for “assessable payments” triggered by the employer mandate part of the bill would also be exempt. For these reasons, the lawsuit contends the Obama administration is attempting to illegally administer ObamaCare, subjecting millions of individuals and businesses to fines who shouldn’t have to pay them.

Section 1311 of the healthcare law allows tax credits to certain people in state-run exchanges. Section 1321, which regulates federally run exchanges does not. Furthermore, the actual wording contained in Section 1311 of the law is clear: “An Exchange shall be a governmental agency or nonprofit entity that is established by a State,” not through one set up by the federal government.

An IRS already enmeshed in a burgeoning scandal stayed true to form. On May 23, 2012 the agency finalized its own rule, completely bypassing Congress in the process, allowing subsidies to be implemented on both exchanges. The IRS insisted that “the relevant legislative history does not demonstrate that Congress intended to limit the premiums tax credit to State Exchanges. Accordingly, the final regulations maintain the rule in the proposed regulations because it is consistent with the language, purpose, and structure of section 36B and the Affordable Care Act as a whole.”

Note the critical difference in the two arguments being presented to Judge Friedman. The plaintiffs are demanding that the law be enforced as written. The Obama administration is arguing about what the law was intended to mean. They argue that Congress intended the online exchanges to be uniform, and that they weren’t expecting states would fail to set up their own exchanges, or opt out of doing so for political reasons.

That the administration and Democrats couldn’t imagine passing a massive entitlement without a single Republican vote against the wishes of a majority of the electorate would engender resistance is a testament to the unbridled hubris of the American left. It is a hubris buttressed by the reality that only 16 states of 50 decided to set up their own exchanges.

Ironically, the urgency of the administration’s fight may be intensified due to the government shutdown. Subsidies, which are available to Americans with annual incomes up to 400 percent of the federal poverty level, or $94,200 for a family of four, are a critical component of the healthcare bill. Without them, health insurance becomes unaffordable for many Americans.

Prior to the shutdown, the Obama administration was prepared to follow through with another “tweak” to the law they unilaterally pushed through in July, when they announced the ObamaCare’s requirement that the exchanges would have to verify the income of each enrollee was no longer operable. Instead, they were prepared to implement an honor system whereby the exchanges could “accept the applicant’s attestation regarding enrollment in eligible employer-sponsored plan . . . without further verification.” As part of the deal to end the shutdown, the requirement was reinstated.

Thus, another effort by the administration to play fast and loose with the law was extinguished. A challenge to yet another administration tweak has ended up in court as well. A Boca Raton orthodontist, characterized by the leftist Palm Beach Post newspaper as a “conservative activist,” has filed suit challenging President Obama’s unilateral decision to suspend the employer mandate part of ObamaCare until 2015. Larry Kawa, who is being represented by Judicial Watch filing suit on behalf of Kawa Orthodontics, contends that he “expended substantial time and resources, including money spent on legal fees and other costs” preparing his 70-employee practice for a law that was supposed to be implemented beginning Jan. 1, 2014. The plaintiffs contend the delay “exceeded the Obama administration’s statutory authority, is arbitrary, capricious, and contrary to the law, and is otherwise unlawful,” according to Judicial Watch president Tom Fitton. The U.S. Treasury, Treasury Secretary Jack Lew, the IRS and IRS Acting Director Daniel Werfel have been named as defendants.

“I have standing because I have made investments of both time and money, as a law abiding citizen and a local business owner to make sure that my business was in compliance with the law,” says Kawa. “And as soon as I did that, this president moved the goal posts.” The suit was filed in the U.S. District Court for the Southern District of Florida.

The findlaw.com website contends the suit is unlikely to succeed because the Obama administration’s “rational basis” for delaying the law, as in giving employers more time to comply, will be persuasive enough to prevail in court. If that is the case, one is left to wonder when the chaos surrounding the implementation of the individual mandate–ironically complicated even further by the additional numbers of Americans forced onto the exchanges by the delay in the business mandate–will be subjected to the same reasoning in a court of law.

In short, the cracks engendered by this hastily written, hastily passed mess of a law are beginning to widen. Yet in keeping with their normal modus operandi, the Obama administration will attempt to strong-arm its way through the legal minefields that await. It is up to the courts to put the brakes on its “by any means necessary” implementation of ObamaCare. It is up to Republicans to inform Americans that respect for the rule of law “as written” as opposed to what a particular administration from either party contends was “intended,” is the only thing that keeps us from becoming a banana republic.

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  • truebearing

    “That the administration and Democrats couldn’t imagine passing a massive entitlement without a single Republican vote against the wishes of a majority of the electorate would engender resistance is a testament to the unbridled hubris of the American left.”

    Ego unbridled is evil. Ignoring wholesale the wishes and wellbeing of others for the purpose of aquiring power over those being hurt is textbook political evil. That is exactly what Obamacare is all about. That is what the Left is constantly after. That is what Obama lives for. Evil.

  • cedar rebellion

    What difference will it make anyway?

    At this point Holder and Obama will simply ignore all lower court rulings pending the elimination of SCOTUS. They’ve done that before.

  • gawxxx

    we are a ” banana republic ” all ready !

  • http://www.clarespark.com/ Clare Spark

    On some of the consequences of ACA (that you may have missed) is laid out here: http://clarespark.com/2012/12/14/james-pagano-md-on-healthcare-chaos/. It was recently updated at viewer request. An ER doctor lays out the situation in layperson’s language.

  • Lanna

    There is more to come on the unworkability of Obamacare. At some point the states will not be in league with a lawless government.

    • physicsnut

      the idiots don’t understand “keep it simple, stupid”

  • onacleardayyoucanseeforever

    That name – ObamaCare – why that name? When we receive medical treatment, will we forever be showing our ObamaCare card? How in the world can the name Obama be synonymous with care? Call it ObamaDoesn’tCare, or even better don’t use that foul name at all. Its real name is the Affordable Health Care act, and that’s what it should be once Obama is taken out of it.

    • Ellman48

      I think that the “Obama Health Care Demolition Act” is a more appropriate name. It leaves little doubt about the act’s final consequences, which, as always, are mainly unintended and unexpected. You know, like in “unexpected” disappointing jobs data, or the “unexpected” disastrous consequences of forcing banks to lower their credit standards, etc. It’s a sad irony that the people who are hurt the most by inane Democratic Progressive policies and programs continue voting for them in election after election. Detroit is a perfect example of this insanity and the disastrous results which followed. Some people will never get it!

    • Fritz

      It should be called the Unaffordable Care Act. Some think that it is a prelude to socialized medicine, the system the American Lefties euphemistically call, “Single Payer”. If that is the case then they could not pick a better way to discredit the concept of state run healthcare if they had let a hard right, free marketeer to write the law for them in order to sabotage it.

  • Peter C. Hawxhurst

    I believe we are making the extinguishing of Obamacare far too complicated. The Supreme Court ruled the government could not force citizens to by a product, but judge Roberts rewrote the law in his decision by saying taxing would be acceptable. However, the Constution does not provide for Supreme Court justices writing or rewriting laws. All laws and modifications thereto must originate in the House of Representatives. Obamacare remains fundamentally unconstitutional. And Obamacare never had any basis for its funding ot all let alone originating in the House.

    Peter, Tucson

  • Alabaster AL

    The corrupt Obama Administration is incapable of building a system that works and is beneficial to anyone but its cronies and fellow power-mongers.

  • Gee

    There is only one way to defeat this illegal law – refuse to play their game. Americans wake up – if half the country refuses to tell the IRS anything they cannot lock up have the country

    • DogmaelJones1

      Americans need to launch a mass civil disobedience. They did this in 1765-1766 by refusing to pay the Stamp Tax, by opposing tax collectors, or running them out of town. Parliament repealed the Act exactly a year later. We have the template, the precedent, and it’s in our history.

      • Fritz

        At least with the Stamp Tax it was actually implemented by the British Parliament through the legal due process at the time. It was brought about in part to pay for the seven years war against France, part of the reason that Quebec is part of Canada today. Was it fair or just, no, but neither was it implemented on a whim or rewritten on the fly like this piece of crap. Rule of law is one thing, rule of man is quiet another, you can’t follow a forever changing set of rules.

      • Brucew56

        I believe the civil disobedience should go farther than they. If every non-liberal worker claimed 99 dependents, so the income tax paid into the treasury is greatly reduced. This would send a very strong message to the government about who really should run the country. If the employees just put the taxes they would have paid into a savings account and pay it on April 15th.

  • Ellman48

    The battle against Obamacare has been transformed into guerrilla warfare since the Republicans have raised the white flag of surrender. That’s fine, as long as the fight against tyranny and oppression continues in some form. Maybe the guerrilla tactics will eventually result in the defeat of this monstrosity. The Tea Party must continue to lead the fight even if it lasts a decade. Ho Chi Minh did the same in Vietnam and eventually his side was victorious. We need to employ the tactics of the Left if we are to defeat them. Take our gloves off and use our fists just like they do.

  • tagalog

    Now that computerized access to the Obamacare website has turned into yet another Obama fiasco (patent pending), I see that the Democrats in Congress are calling for a delay on imposing the tax penalty on people who don’t sign up for Obamacare and for pushing the deadline for applying for Obamacare past March 31, 2014. Well, that’s a step in the right direction, all right. And look: they got to score a good-sized hit on the Republicans for calling for delay in the implementation of Obamacare, and they’re now going to get kudos for calling for a delay in the implementation of Obamacare.

    Who says the Dems are dumb?

    • veeper

      democrats agree with Cruz and tea party after they voted against the Tea party when they tried to do just that….

      delay the individual mandate and fines….

      obama has filled democrats so full of hatred for the tea party and republicans….

      they no longer have the ability to control their actions.