Day One: Has All This Fuss Been For Nothing?

Think of the long-running litigation over the ACA, and you probably think of the “individual mandate” requiring most Americans to purchase health insurance:  Is it constitutional?  Will the Supreme Court strike it down?  If so, will the rest of the ACA fall with it?

Those questions are at the heart of the case.  But before we get there, we had today’s preliminaries:  With Cabinet Secretary Kathleen Sebelius, Virginia Attorney General Ken Cuccinelli, and a host of other political power brokers looking on, the Justices heard 90 minutes of oral argument on whether a 150-year-old statute called the “Anti-Injunction Act” takes away the Court’s power to hear the case at all.  If the Court rules that the Act applies, then the last two years of litigation will be out the window, and the parties will have to come back and do it all over again starting in 2014.

Fair warning:  Today’s arguments were far more technical and legalistic than any we’ll see for the rest of the week.  But they are important to understand.  Bear with me and, after the jump, I’ll walk through the parties’ arguments and how the Justices reacted.  Up front, my takeaway is this:  While it’s always difficult to predict how a case will come out from the Justices’ questions alone, at least five suggested that they want to brush aside the Anti-Injunction Act, reach the merits, and rule on the individual mandate’s constitutionality.  I think the odds are better than 50-50 that the Court will take that approach, and that this case won’t have to start all over again two years down the road.

Read more …

The Parties’ Arguments

The Anti-Injunction Act is a federal statute that says “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.”  That means that, in most cases, taxpayers can’t file a lawsuit asking a court to block a federal tax in advance.  Instead, the taxpayer has to pay the tax and sue for a refund, or refuse to pay and fight the IRS over the deficiency.

The Anti-Injunction Act is relevant to the fight over “Obamacare” because people who are required to buy insurance under the individual mandate and fail to do so must pay a penalty to the government.  That penalty is assessed and collected by the IRS.  As a result, some courts and commentators have argued that the mandate and the penalty are really a “tax.”  And because they’re a “tax,” the argument goes, the Anti-Injunction Act means taxpayers can’t sue in advance.  Instead, they have to wait until the penalty is actually assessed in 2014.

At today’s arguments, none of the parties agreed with this position – all of them want the case to move ahead to the merits now.  But they have different ideas of what the Court should do to reach that result:

  • The plaintiffs who are suing to strike the law down argued that the Anti-Injunction Act is not “jurisdictional.”  That means the government would have the power to decide whether to invoke the Act or not – and thus whether to let the lawsuit go ahead – each time a taxpayer sues to block a tax.  If the plaintiffs win on this argument, that should be curtains for the Anti-Injunction Act part of the case.  That is so because the Obama Administration has not sought to invoke the Act to block the plaintiffs’ lawsuit.
  • The plaintiffs also argued that even if the Act is jurisdictional – which means it always applies to tax lawsuits, whether the government wants it to or not – it has nothing to do with this case because the individual mandate is not a “tax.”
  • Finally, the plaintiffs argued that even if the penalty part of the ACA is a “tax,” that’s not the part they’re challenging.  Instead, they’re challenging the mandate itself, which clearly is not a tax.
  • The Obama Administration agreed that the individual mandate, and the associated penalty, are not a “tax” for purposes of the Anti-Injunction Act.  But here’s where the government’s arguments gets complicated:  The Administration argued that the penalty is a tax in the sense that Congress could enact it using its Tax Power.  That argument didn’t go over well with at least one member of the Court.  More on that below.

Since none of the parties think the Anti-Injunction Act applies, the Court appointed a lawyer – Robert Long, a longtime Washington, D.C. appellate specialist – to argue that it does apply.  Long argued that the Act is jurisdictional.  He also argued that the individual mandate and penalty are a “tax.”  That was so, he said, because the word “tax” has a broad meaning that encompasses penalties, and because the ACA says the penalty should be assessed and collected as if it were a tax.

Today’s Arguments

The Court-Appointed Attorney.  Robert Long argued first, and the Justices quickly jumped on him with comments suggesting that they don’t think the Anti-Injunction Act is jurisdictional (and thus that the case can move ahead to the merits).  Chief Justice Roberts and Justice Alito pointed out that, in a few previous cases, the Court has let the government “waive” the Act – in other words, it has given the government the power to decide that a tax lawsuit should proceed.  That is important because the government can’t waive jurisdictional statutes.  Justices Kagan and Sotomayor pointed out that, in other cases, the courts have crafted special exceptions to get around the AIA.  That also isn’t usually possible with a jurisdictional statute.  And Justice Scalia pointed out that the Court requires Congress to say so very clearly when it wants to make a statute jurisdictional; he suggested that Congress didn’t do so here.  If those questions were a signal of what the Justices are really thinking, then the odds are good that the Court will bypass the Anti-Injunction Act and rule on the ACA’s constitutionality.

The Administration.  U.S. Solicitor General Donald Verrilli argued next on behalf of the federal government – and that’s when the fireworks began.  Verrilli began laying out the government’s legalistic position that the ACA penalty is a “tax” for purposes of Congressional power, but not for purposes of the Anti-Injunction Act, when Justice Alito cut him off.  “General Verrilli,” he said, “today you’re arguing that the penalty is not a tax. Tomorrow you’re going to be back and you’ll be arguing that the penalty is a tax.”  Amid laughter in the courtroom, Alito asked:  “Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act?”  Verrilli said no.

The Justices also asked Verrilli about the plaintiffs’ argument that it’s possible to separate the mandate from the penalty and challenge only the mandate.  Justice Sotomayor asked Verrilli “whether there are any collateral consequences for the failure to buy” health insurance under the mandate, other than the penalty.  Verrilli said no; the penalty was the only consequence.  Following up, Justice Kagan asked whether someone who refuses to buy insurance under the mandate, and instead pays the penalty, has broken federal law.  Verrilli again said no.

The Plaintiffs.  Washington, D.C. appellate lawyer Greg Katsas argued for the plaintiffs.  When he tried to argue that the mandate and the penalty can be considered – and challenged – separately, Chief Justice Roberts pounced:  “A mandate is a command. If there is nothing behind the command – it’s sort of, well, what happens if you don’t file the mandate?  And the answer is nothing.  It seems very artificial to separate the punishment from the crime.”  Katsas separately argued that even if the Anti-Injunction Act is jurisdictional, and even if the ACA penalty is a “tax,” the Court still should proceed to the merits because some of the plaintiffs are states, and in this type of case the Anti-Injunction Act doesn’t block states from suing.

The Takeaway

As I said at the outset, it’s always hard to know where the Court will come out based on argument alone; not all the Justices speak, and those who do don’t necessarily tip their hand.  But after today’s argument, it’s fair to say there is a good chance that the Court will brush aside the Anti-Injunction Act and rule on the individual mandate’s constitutionality.  It could do that by deciding that the Act is not “jurisdictional” and that the Administration waived it.  It could do that by deciding that the penalty is not a “tax.”  Or it could do that by deciding that even if the penalty is a “tax,” the Anti-Injunction Act doesn’t block states from suing.

Please tune in again at 3 p.m. with your questions.  I’ll start another thread at about 2:45, and questions can be posted in the comments.



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