King v. Burwell

This is an old revision of this page, as edited by 108.11.225.129 (talk) at 10:38, 31 December 2014 (Undid revision 640245165 by Gaijin42 (talk)Gruber is cited in briefs for the case...http://dailycaller.com/2014/12/22/obamacare-architect-gruber-going-to-the-supreme-court/~~~~). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Revision as of 10:38, 31 December 2014 by 108.11.225.129 (talk) (Undid revision 640245165 by Gaijin42 (talk)Gruber is cited in briefs for the case...http://dailycaller.com/2014/12/22/obamacare-architect-gruber-going-to-the-supreme-court/~~~~)(diff) ← Previous revision | Latest revision (diff) | Newer revision → (diff)

King v. Burwell, Halbig v. Burwell, Pruitt v. Burwell, and Indiana v. IRS are a set of related lawsuits challenging U.S. Treasury regulation, 26 C.F.R. § 1.36B-2(a)(1), issued under the Patient Protection and Affordable Care Act (ACA). The challengers argue that the text of the ACA only allows for subsidies on state-run exchanges, and that the regulation as implemented by the Internal Revenue Service (IRS), providing for subsidies on state-run exchanges as well as federal exchanges, exceeded the authority Congress granted to it. All of the "v. Burwell" cases were originally titled "v. Sebelius" until Kathleen Sebelius was replaced by Sylvia Mathews Burwell as United States Secretary of Health and Human Services.

If the challenge is successful, approximately 5 million Americans who obtained coverage through federal exchanges could lose their tax credits and, in all likelihood, their health insurance coverage. The individual mandate, employer mandate, and tax credits for employers to provide health-insurance coverage might also be overturned in states with federal exchanges. However, insurers would likely still be required to cover all applicants regardless of pre-existing conditions, which could destabilize the insurance market in states with federal exchanges and lead to rapid rises in premiums and the possible collapse of the insurance market in those states.

Only 14 states have set up their own exchanges. If the mandates and subsidies are struck down in the other 36 states, many think that the economic foundation of the ACA would be undermined, putting the entirety of the legislation at risk. Supporters of the plaintiffs, as well as some politicians, argue that the effects of striking down the mandates and subsidies would be mitigated by government action (including the possibility of states setting up their own exchanges in response to a ruling in favor of the plaintiffs).

Ruling on the same day, the Fourth Circuit Court of Appeals in King and the D.C. Court of Appeals in Halbig came to opposite conclusions, creating a circuit split. When the D.C. appeals court decided to rehear the case en banc, however, the court vacated its initial ruling, removing the split. On November 7, 2014, the Supreme Court granted certiorari in the King case, with oral arguments scheduled for March 4, 2015 and a decision expected by late June or early July 2015.

Text of the law and regulation

The ACA legislation includes the language "enrolled in through an Exchange established by the State under 1311" where the IRS regulation implements a more broad definition encompassing both the state exchanges and the federal exchanges set up under section 1321. The legislation includes the phrase "established by the State under 1311" in nine different locations.

Internal Revenue Code section 36B, enacted as part of the ACA, includes the following provision:

In the case of an applicable taxpayer, there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the premium assistance credit amount of the taxpayer for the taxable year.
(2) (a) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer's spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act,

The IRS regulation reads as follows:

(a) In general. An applicable taxpayer (within the meaning of paragraph (b) of this section) is allowed a premium assistance amount only for any month that one or more members of the applicable taxpayer's family (the applicable taxpayer or the applicable taxpayer's spouse or dependent)—
(1) Is enrolled in one or more qualified health plans through an Exchange

The IRS defined the term "Exchange" as:

a governmental agency or non-profit entity that meets the applicable standards of this part and makes QHPs available to qualified individuals and/or qualified employers. Unless otherwise identified, this term includes an Exchange serving the individual market for qualified individuals and a SHOP serving the small group market for qualified employers, regardless of whether the Exchange is established and operated by a State (including a regional Exchange or subsidiary Exchange) or by HHS .

Chevron test

In Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. the Supreme Court ruled that congress may delegate regulatory authority to an agency, and that the agency's regulations carry the weight of the law, if the regulations pass the two part "Chevron test".

(1) "First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court as well as the agency must give effect to the unambiguously expressed intent of Congress."

"If the Court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction of the statute . . . Rather,

(2) f the statute is silent or ambiguous with respect to the specific question, the issue for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron U.S.A. v. NRDC, 467 U.S. 837, 842–843 (1984).

Arguments

Legislative intent

Plaintiffs argue that Congress intentionally restricted payment of subsidies to state exchanges to induce states into setting up exchanges so their citizens could receive subsidies.

The government argues that the law intends for federal exchanges to be treated identically to state exchanges (and therefore qualifying individuals are entitled to subsidies whether or not their state has set up an exchange), or, in the alternative, if the law were ambiguous, that the regulation at issue was a permissible interpretation of the law.

Lyle Denniston wrote that the parties' positions offer differing views on how to interpret legislation: while the plaintiffs argue that only the words of a statute can govern its interpretation, the government argues that courts can look outside the text of a statute to consider policy objectives Congress intended to achieve.

In a 2009 paper published in The Journal of Law, Medicine & Ethics, Timothy Jost argued that one way to avoid a commandeering issue with the ACA would be "by offering tax subsidies for insurance only in states that complied with federal requirements." Jost later published an oped in the Washington Post arguing that allowing subsidies for Federal exchanges is "the only way of reading the statute that makes sense." In an article on Forbes, Jost pointed out that his original law journal article proposed "several alternatives through which Congress could encourage the states to establish exchanges, one of which was to limit the availability of tax credits to states that operate exchanges. The first alternative was that Congress ask the states to establish exchanges, but create a federal fallback exchange in the event they failed to do so."

Others have argued that the issue is due to a drafting error during the legislative process. Yale Law School Professor Abbe Gluck said that the unusual maneuver of having the ACA become law through reconciliation required a preliminary version of the bill to become law without the "usual legislative clean-up process".

On January 18, 2012, Jonathan Gruber, a Massachusetts Institute of Technology economist who was a consultant on the ACA, said, "What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits." On January 10, 2012, Gruber said, "... if your governor doesn’t set up an exchange, you’re losing hundreds of millions of dollars of tax credits to be delivered to your citizens."

On November 13, 2014, Comments made by Jonathan Gruber, a Massachusetts Institute of Technology economist and Obamacare’s architect—in which he stated he and his colleagues that were Democrats had concealed the health law’s true costs from the public in order to take advantage of the “stupidity of the American voter” just to pass the bill. Based on statements made in videos that Gruber’s remarks about the intelligence of the American voter were not spontaneous remarks, but a regular remark “punch line” in his standard speeches to audiences around the country. Three videos have been discovered. The first one made widely public was from the University of Pennsylvania of the 24th Annual Health Economics Conference in October 2013; the second was from a lecture that Mr. Gruber delivered at Washington University in St. Louis in October 2013, called the “Cost of health Care,” and third discovered to date was from the Fall 2012 Honors Colloquium, at the University of Rhode Island on November 1, 2012. The the University of Rhode Island speech was just prior to presidential election. Critics have cited these comments as important to the Supreme Court agreeing to review the case. On December 9, 2014, Jonathan Gruber testified before a congressional panel chaired by Darrell Issa along with Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner."

Gruber has characterized his earlier statements as "a mistake". Sarah Kliff of Vox cited as corroborating evidence of Gruber's comments being mistaken the fact that Gruber did not explicitly mention the denial of subsidies to reporters at the time, and his models assumed that subsidies would be available on both state and federal exchanges. In a December 2014 Congressional hearing, Gruber characterized his comments as "reflecting uncertainty about the federal exchange". Gruber's statements have been widely quoted by proponents of the plaintiff's position, and were used in Oklahoma Attorney General Scott Pruitt's case (Pruitt v. Burwell).

Fourth Circuit decision

King v. Burwell

Court	United States Court of Appeals for the Fourth Circuit
Argued	May 14, 2014
Decided	July 22, 2014
Court membership
Judges sitting	Stephanie Thacker, Roger Gregory, Andre M. Davis
Case opinions
The plaintiffs contend that the IRS’s interpretation is contrary to the language of the statute, which, they assert, authorizes tax credits only for individuals who purchase insurance on state-run Exchanges. For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.
Keywords
Internal Revenue Service, Affordable Care Act

The Fourth Circuit court unanimously upheld the regulation, saying that the wording in the statute was ambiguous, and that the IRS wording was a reasonable interpretation of the statute:

The plaintiffs-appellants bring this suit challenging the validity of an Internal Revenue Service (“IRS”) final rule implementing the premium tax credit provision of the Patient Protection and Affordable Care Act (the “ACA” or “Act”). The final rule interprets the ACA as authorizing the IRS to grant tax credits to individuals who purchase health insurance on both state-run insurance “Exchanges” and federally-facilitated “Exchanges” created and operated by the Department of Health and Human Services (“HHS”). The plaintiffs contend that the IRS’s interpretation is contrary to the language of the statute, which, they assert, authorizes tax credits only for individuals who purchase insurance on state-run Exchanges. For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion. Rejecting all of the plaintiffs' arguments as to why Chevron deference is inappropriate in this case, for the reasons explained above we are satisfied that the IRS Rule is a permissible construction of the statutory language. We must therefore apply Chevron deference and uphold the IRS Rule....

Although the court ruled unanimously for the government, the opinion stated that it "cannot ignore the common-sense appeal of the plaintiffs’ argument; a literal reading of the statute undoubtedly accords more closely with position," and "the the stronger position, although only slightly."

Supreme Court

On November 7, 2014, the Supreme Court granted certiorari in the plaintiff's appeal of the 4th Circuit ruling. A ruling is expected by June 2015.

The decision to grant certiorari was unusual. It was believed that the Supreme Court would not grant certiorari given the lack of a circuit split, instead awaiting further decisions from lower courts before reviewing the issue. University of Michigan Law School Assistant Professor Nicholas Bagley described the decision to grant certiorari as indicating that "four justices apparently think—or at least are inclined to think—that King was wrongly decided".

Halbig v. Burwell

Halbig v. Burwell
No. 14-5018
Court	United States Court of Appeals for the District of Columbia Circuit
Argued	March 25, 2014
Decided	July 22, 2014
Case history
Prior actions	Summary judgment for government defendants, 2014 WL 129023 (D.D.C. Jan. 15, 2014)
Subsequent action	Rehearing en banc ordered (D.C. Cir. Sept. 4, 2014).
Court membership
Judges sitting	Thomas B. Griffith, A. Raymond Randolph, Harry T. Edwards
Case opinions
The IRS does not have the statutory power to grant subsidies to Federally-established insurance marketplaces known as exchanges established under the Affordable Care Act, as the enabling legislation defines exchanges as being established by states themselves. Reversed and remanded with instructions to grant summary judgment to the appellants and to vacate the IRS rule, 2–1. Opinion by Judge Griffith, concurrence by Judge Randolph. Judge Edwards dissents.
Keywords
Internal Revenue Service, Affordable Care Act

DC Court of Appeals decision

On July 22, 2014, the U.S. Court of Appeals for the D.C. Circuit ruled 2–1 in favor of the plaintiffs.

The Court of Appeals stated:

Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges "established by the State", we reverse the district court and vacate the IRS's regulation .

As part of the government's briefs, they argued that none of the plaintiffs had standing to file suit. David Klemencic, one of the plaintiffs, residing in West Virginia was found to have standing under the Administrative Procedure Act (APA). Although West Virginia is geographically in the Fourth Circuit, the APA grants the D.C. Circuit shared jurisdiction over any issue involving a Federal agency based in Washington, D.C.

Court of Appeals rehearing

On September 4, 2014, the U.S. Court of Appeals for the D.C. Circuit granted the U.S. Secretary of Health's petition for rehearing the case en banc. The order also vacates the previous July 22 judgment.

On November 12, the Court of Appeals put further proceedings in Halbig into abeyance pending the Supreme Court's ruling in King.

Pruitt v. Burwell and Indiana v. IRS

On September 9, 2014, in Pruitt v. Burwell, the U.S. District Court for the Eastern District of Oklahoma ruled against the IRS saying

The court holds that the IRS Rule is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, pursuant to 5 U.S.C. §706(2)(A), in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, pursuant to 5 U.S.C. §706(2)(C), or otherwise is an invalid implementation of the ACA, and is hereby vacated.

In November 2014, the appeal was placed in abeyance pending the Supreme Court's decision in King. Oklahoma requested that the Supreme Court take up the Pruitt case before appellate judgment so that the Pruitt plaintiffs can present their own arguments alongside the King plaintiffs. The government responded that the Supreme Court should not hear the Oklahoma case, stating that the states could proceed as amici curiae in the King case and that granting the Oklahoma case would raise additional jurisdictional concerns not presented in the King case.

In Indiana v. IRS the state of Indiana and multiple Indiana school districts are suing the IRS claiming that the employer mandate should not apply to schools or local governments. The IRS argued that the plaintiffs did not have standing to sue, but that argument was rejected and Judge William T. Lawrence in the U.S. District Court for the Southern District of Indiana ruled that the case could proceed. Oral arguments occurred in October 2014 but a ruling has not been issued.

References

Jost, Timothy S. (2014). "Subsidies and the Survival of the ACA — Divided Decisions on Premium Tax Credits". New England Journal of Medicine. 371 (10): 890–891. doi:10.1056/NEJMp1408958. PMID 25075618.
^ McIntyre, Adrianna (November 7, 2014). "King v. Burwell: The new Supreme Court case that could gut Obamacare, explained". Vox. Vox Media.
Liptak, Adam (November 7, 2014). "Justices to Hear New Challenge to Health Law". The New York Times.
Bagley, Nicholas; Jones, David K.; Jost, Timothy Stoltzfus (December 10, 2014). "Predicting the Fallout from King v. Burwell — Exchanges and the ACA". New England Journal of Medicine. doi:10.1056/NEJMp1414191. {{cite journal}}: |access-date= requires |url= (help)
Adler, Jonathan H. (November 3, 2014). "Will the Supreme Court grant certiorari in King v. Burwell?". The Volokh Conspiracy.
Ferris, Sarah (December 22, 2014). "Supreme Court to hear ObamaCare subsidy challenge in March". The Hill.
^ Denniston, Lyle (November 7, 2014). "Court to rule on health care subsidies". SCOTUSblog.
Cannon, Michael F. (January 30, 2014). "George F. Will: 'Four Words In The ACA Could Spell Its Doom'". Forbes.com.
^ Jost, Timothy S. (July 14, 2014). "The Halbig Cases: Timothy Jost Responds (Guest Post)". Forbes.com.
Editors (March 23, 2014). "ObamaCare's Latest Legal Challenge". The Wall Street Journal. {{cite web}}: |author= has generic name (help)
Fund, John (July 13, 2014). "Obamacare's Biggest Legal Threat". National Review Online.
Cannon, Michael F. (March 25, 2014). "Halbig v. Sebelius could force Obama administration to follow its own law". USA Today.
"26 U.S. Code § 36B - Refundable credit for coverage under a qualified health plan".
26 C.F.R. § 1.36B-2(a)(1).
45 C.F.R. section 155.20, by reference to 26 C.F.R. § 1.36B-1(a) and (k) and 26 C.F.R. § 1.36B-2(a)(1).
Adler, Jonathan H. (March 24, 2014). "What the district court got wrong (and right) in Halbig v. Sebelius". The Volokh Conspiracy.
Jost, Timothy S. (2009). "Health Insurance Exchanges: Legal Issues". The Journal of Law, Medicine & Ethics. 37 (S2): 51–70. doi:10.1111/j.1748-720X.2009.00420.x.
Cannon, Michael F. (July 10, 2014). "Why One Should Take Timothy Jost's 'Halbig' Pronouncements With A Grain Of Salt". Forbes.com.
Jost, Timothy S. (July 9, 2014). "Courts won't void the Affordable Care Act over semantics". The Washington Post.
Weigel, David (December 17, 2013). "Obamacare Is Over (If You Want It)". Slate.
Carlson, Joe (June 14, 2014). "Obamacare legal battle threatens subsidies for millions". Modern Healthcare.
Gluck, Abbe (December 12, 2013). "How Congress Works (And the ObamaCare Subsidies Lawsuit)". The Institution for Social and Policy Studies. {{cite web}}: External link in |website= (help)
Cannon, Michael F. (July 25, 2014). "ObamaCare Architect Jonathan Gruber: "If You're A State And You Don't Set Up An Exchange, That Means Your Citizens Don't Get Their Tax Credits"". Forbes.com.
Cannon, Michael F. (July 25, 2014). "Oops!...Gruber Did It Again". Forbes.com.
Awik, Roy (November 13, 2014). . Forbes.com. {{cite web}}: Check |url= value (help); Missing pipe in: |url= (help)
Cohn, Jonathan (July 25, 2014). "Jonathan Gruber: 'It Was Just a Mistake'". The New Republic.
Kliff, Sarah (November 16, 2014). "The Jon Gruber controversy and what it means for Obamacare, explained". Vox. Vox Media. Retrieved November 29, 2014.
^ Weigel, David (December 9, 2014). "The Three-Pronged, Four-Hour Grilling of Jonathan Gruber". Bloomberg Politics. Retrieved December 12, 2014.
Weigel, David (July 30, 2014). "The Great Obamacare Gaslighting of 2014". Slate.
Cannon, Michael F. (July 29, 2014). "Oklahoma AG Cites Jonathan Gruber To Rebut Government Expert Jonathan Gruber (Pruitt v. Burwell)". Forbes.com.
Adler, Jonathan H. (July 22, 2014). "Fourth Circuit upholds IRS tax credit rule". The Volokh Conspiracy.
"UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT" (PDF). Pdfserver.amlaw.com. Retrieved November 15, 2014. {{cite web}}: line feed character in |title= at position 31 (help)
Cannon, Michael F. (November 10, 2014). "Symposium: Seven myths about King v. Burwell". SCOTUSblog.
Pipes, Sally (August 11, 2014). "A Silver Lining in the Legal Threats to Obamacare?". Forbes.com.
Suderman, Peter (October 1, 2014). "Oklahoma Court Rules that IRS Obamacare Subsidy Rule is "arbitrary, capricious, an abuse of discretion"". reason.com.
Adler, Jonathan H. (November 7, 2014). "Supreme Court to hear King v. Burwell challenge to IRS tax credit rule". The Volokh Conspiracy.
Order list, Nov. 7, 2014, King v. Burwell, U.S. Supreme Court, case no. 14-114 (certiorari granted).
Mears, William (November 7, 2014). "Supreme Court: Another Obamacare legal challenge". CNN.
Rovner, Julie (November 7, 2014). "In Surprise Move, Supreme Court Takes On Fate Of Obamacare Again". Kaiser Health News. NPR.
Bagley, Nicholas (November 8, 2014). "The Supreme Court will hear King. That's bad news for the ACA". The Incidental Economist.
Staff (July 22, 2014). "DOJ to appeal 'incorrect' Halbig ruling". Politico.
"Separate US appeals court upholds Obamacare subsidies". CNBC. Reuters. July 22, 2014.
King v. Burwell, No. 14-1158, U.S. Court of Appeals for the Fourth Circuit (July 22, 2014).
Halbig v. Burwell, No. 14-5018, U.S. Court of Appeals for the District of Columbia Circuit (July 22, 2014).
Wolf, Richard (December 9, 2013). "Obama, Dems make mark on second most powerful court". USA Today.
McGrail, Michael C. (Deputy Clerk of Court) (September 4, 2014). "Order (Granting Petition for Rehearing En Banc), Halbig v. Burwell, No. 14-5018" (PDF). U.S. Court of Appeals for the District of Columbia Circuit. Amlaw.com. PACER Document 1510560.
Denniston, Lyle (November 12, 2014). "D.C. Circuit steps aside on health care dispute". SCOTUSblog.
Cannon, Michael F. (October 1, 2014). "Judge White's Conclusion In Pruitt v. Burwell". Forbes.com.
State ex rel. Pruitt v. Burwell, No. CIV-11-30-RAW (E.D. Okla. September 30, 2014).
Denniston, Lyle (November 22, 2014). "Oklahoma seeks faster health care appeal". SCOTUSblog.
Denniston, Lyle (December 29, 2014). "U.S. opposes Oklahoma plea on health care". SCOTUSblog. Retrieved December 30, 2014.
Baynes, Terry (October 8, 2013). "Indiana government, school districts sue over IRS healthcare rule". Reuters.
Adler, Jonathan H. (August 15, 2014). "Lawsuit challenging IRS tax credit rule proceeds in Indiana". The Volokh Conspiracy.

Categories: