Politics & Policy

Obamacare Headed to the High Court Again?

The bill began in the Senate, but taxes must originate in the House — so says the Constitution.

Developments in the last ten days make it more likely that the entire U.S. Court of Appeals for the D.C. Circuit will agree to hear the leading challenge of the Pacific Legal Foundation (PLF) to the Obamacare individual-mandate penalty — and whoever does not prevail at this level will have a compelling case to take to the Supreme Court. An order from the D.C. Circuit last week, instructing the Obama administration to respond to PLF’s petition for rehearing, and an impressive set of amicus briefs supporting PLF’s petition filed yesterday confirm that this is no ordinary litigation.

Readers will recall that Chief Justice John Roberts joined four justices in 2012 to hold that the individual mandate was not authorized by the Commerce Clause or other congressional power, but he sided with four other justices in holding that the penalty for not buying insurance could be read as a tax, pursuant to Congress’s taxing power. No judge below had accepted the tax theory, so the debate over the tax issue in the Supreme Court briefs was truly brief. The Court was careful to write that Congress still had to comply with all constitutional requirements for the exercise of its taxing power, so the initial Obamacare ruling did not purport to end litigation that raised that and other issues.

PLF subsequently amended its lawsuit on behalf of Matt Sissel to argue that if the individual-mandate penalty can be upheld only as a tax, it is still unconstitutional because it did not originate in the House of Representatives as required by the Constitution’s Origination Clause. A district court and a panel of the D.C. Circuit rejected our argument, but the panel’s reasoning would effectively gut the Origination Clause. On October 6, PLF asked the entire D.C. Circuit to rehear the case and reverse the panel decision. Things have only gotten more interesting since.

As my PLF colleague Paul Beard originally noted, the D.C. Circuit took two days to order the government to respond to our petition for rehearing. Any order to respond to a motion for rehearing is unusual. Indeed, under the circuit court’s rules, no party is even allowed to respond to a petition for rehearing en banc without court approval. Professor Randy Barnett argued yesterday that our case is more deserving of en banc review than the statutory issue the entire court agreed to review in Halbig v. Sibelius. The court need not decide that either case is more worthy of review, but we noted in footnote 2 of our petition for rehearing why judicial economy suggests it should decide our constitutional challenge first.

Compelling amicus briefs filed yesterday in support of our petition for rehearing by congressional leaders and a number of states add to the persuasive amicus briefs already on file. Tim Sandefur does a great job of summarizing four of the newer amicus briefs here, including why the panel’s reading of the Origination Clause is inconsistent with its original public meaning and would render it a dead letter, which was the focus of the brief for Senators Cornyn and Cruz and another brief for House Constitution Subcommittee Chairman Trent Franks and 42 other members of the House.

It’s also important to note that the states and other congressional officials have a compelling interest to be heard in the case, which any court should consider carefully. Texas and twelve other states argue that their taxing power is undermined if Congress does not comply with the constitutional requirements for its taxing authority. House Majority Leader McCarthy and House Majority Whip Scalise filed their own brief noting their responsibility to enforce constitutional rules for taxation and the House’s prerogatives relating thereto. In testimony I presented to Congress on the issue last spring, I also explained how the framers designed our government so that the voters could punish House members who neglected our individual rights by ignoring the requirements of the Origination Clause.

However the D.C. Circuit rules on our petition for rehearing, the matter is likely to be resolved by the High Court. Our litigation is like the first Obamacare challenge in another way. Big-government types and even most sympathetic legal scholars significantly discounted the chance that the Supreme Court would take the constitutional issues seriously. While the ultimate ruling was certainly disappointing, the Court did strike down an expansion of Medicaid on a Spending Clause ground it had never accepted before, and its ruling on the Commerce Clause was not what the 99 percent had predicted.

The Origination Clause simply can’t be dismissed as some nuisance that Congress can easily defeat by declaring multiple “purposes” for imposing a tax. That is why the Supreme Court should ultimately rule in our client’s favor, and however reluctantly, strike down Obamacare as unconstitutional.

Todd Gaziano is the executive director of the Pacific Legal Foundation’s D.C. Center and its senior fellow in constitutional law. He can be reached on Twitter @ToddGaziano.

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