Federal Judge Rules Health Law Violates Constitution

Published: January 31, 2011 - New York Times

A second federal judge ruled on Monday that it was unconstitutional for Congress to enact a health care law that requires Americans to obtain commercial insurance, evening the score at two-to-two in the lower courts as conflicting opinions begin their path to the Supreme Court.

Like a Virginia judge in December, Judge Roger Vinson of Federal District Court in Pensacola, Fla., said he would allow the law to remain in effect while the Obama administration appeals his ruling, a process that could take two years. But unlike his Virginia counterpart, Judge Vinson ruled that the entire health care act should fall if the appellate courts join him in invalidating the insurance requirement.

“The act, like a defectively designed watch, needs to be redesigned and reconstructed by the watchmaker,” Judge Vinson wrote.

In a 78-page opinion, Judge Vinson held that the insurance requirement exceeds the regulatory powers granted to Congress under the Commerce Clause of the Constitution. Judge Vinson wrote that the provision could not be rescued by an associated clause in Article I that gives Congress broad authority to make laws “necessary and proper” to carrying out its designated responsibilities.

“If Congress can penalize a passive individual for failing to engage in commerce, the enumeration of powers in the Constitution would have been in vain,” Judge Vinson wrote.

In a silver lining for the Obama administration, the judge rejected a second claim that the new law violates state sovereignty by requiring states to pay for a fractional share of a Medicaid expansion that is scheduled for 2014.

Judge Vinson, the first judge to address that question, dismissed the contention that states were being illegally coerced by the federal government. He said they always have the option, however impractical, to withdraw from Medicaid, a joint state and federal insurance program for those with low-incomes.

The judge’s ruling came in the most prominent of more than 20 legal challenges to some aspect of the sweeping health law, which was enacted last year by a Democratic Congress and signed by President Obama in March.

The plaintiffs include governors and attorneys general from 26 states, all but one Republican, as well as the National Federation of Independent Business, which represents small companies. Officials from six states joined the lawsuit this month after shifts in party control brought by November’s elections.

The ruling by Judge Vinson, a senior judge appointed by President Ronald Reagan, solidified the divide in the health litigation among judges named by Republicans and those named by Democrats.

In December, Judge Henry E. Hudson of Federal District Court in Richmond, Va., who was appointed by President George W. Bush, became the first to invalidate the insurance mandate. Two other federal judges named by President Bill Clinton, a Democrat, have upheld the law.

The Florida plaintiffs ensured they would draw a Republican-appointed judge by filing the lawsuit in Pensacola.

Like Judge Hudson before him, Judge Vinson declined to enjoin the law and ruled that it could remain in place pending appeals. The insurance requirement, known as the individual mandate, does not take effect until 2014.

Judge Vinson had telegraphed his leanings last year in a preliminary ruling and in comments from the bench during a pair of hearings. His opinion hangs on a series of Supreme Court decisions that have defined the limits of the Commerce Clause by granting Congress the authority to regulate “activities that substantially affect interstate commerce.”

The plaintiffs in the Florida case characterized the insurance requirement as an unprecedented attempt to regulate inactivity because citizens would be assessed an income tax penalty for failing to purchase a product. Their lawyers argued that there effectively would be no limits on federal authority, and raised the specter of government-mandated gym memberships and broccoli consumption.

Justice Department lawyers, representing the Obama administration, asserted that a choice to not obtain health insurance is itself an active decision. Taken in the aggregate, they said, those decisions place a heavy economic burden on hospitals, governments and privately insured ratepayers that absorb the cost of uncompensated care for those without coverage.

In his decision, Judge Vinson wrote: “It would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause.” If Congress has such power, he continued, “it is not hyperbolizing to suggest that Congress could do almost anything it wanted.”

The Pensacola case now likely heads to the Court of Appeals for the 11th Circuit in Atlanta, considered one of the country’s most conservative appellate benches. The Richmond case is already with another conservative court, the Court of Appeals for the 4th Circuit in Richmond, which has set oral arguments for May.

That court will consider diametrically opposed rulings from courthouses 116 miles apart, as it was a judge in Lynchburg, Va., Norman K. Moon, who issued one of the two decisions upholding the law. Meanwhile, the Court of Appeals for the Sixth Circuit in Cincinnati is already receiving briefs on the other decision backing the law, which was delivered by Judge George C. Steeh in Detroit.

Although Judge Vinson’s ruling will have no instant effect on implementation, it further arms Republicans in Congress who are waging a fierce campaign against the health care act. The new Republican majority in the House voted early this year to repeal the law, a largely symbolic measure that is given no chance in the Democratic-controlled Senate.

The Obama administration argues that the insurance mandate is essential to its goals of covering more than 30 million uninsured and offering protections to those with pre-existing health conditions. Unless everyone is required to have insurance, the administration contends, consumers might simply wait until they are sick to enroll, undercutting the actuarial soundness of risk pooling and leading to an industry “death spiral.”

But the mandate’s legal and political problems have prompted a few Democratic senators to join Republicans in exploring alternatives that would encourage citizens to buy insurance without requiring it.

For instance, people could be given a narrow window to enroll, and those who miss the deadline would face lengthy waiting periods for coverage. Alternately, those who apply late and are eligible for government tax credits under the law coverage could be penalized through a reduction of their subsidies.