The Corner

Obamacare’s Almost Surely Going Back to the Supreme Court

And there you have it, ladies and gentlemen: two different federal courts of appeal, issuing completely contradictory rulings on the very same day, on the very same issue.

That’s what happened Tuesday. If nothing else, the dueling rulings should hasten the day when the next phase of litigation involving the Patient Protection and Affordable Care Act reaches the Supreme Court.

In Halbig v. Burwell, the U.S. Court of Appeals for the District of Columbia ruled against the administration, voiding an IRS regulation that provided tax credits in the form of a subsidy to individuals purchasing health insurance through exchanges run by the federal government. Meanwhile, in Richmond, the Fourth Circuit Court of Appeals held the exact opposite: In King v. Burwell, it concluded that the IRS had the power to authorize such subsidies.

The Obamacare law specifically says that the federal government can provide subsidies for insurance bought on an exchange “established by the State.” But there is no mention whatsoever of extending the subsidies to those who purchase coverage on an exchange run by the federal government. 

The language of the statute is not ambiguous, so the Justice Department was forced to argue that the IRS rule was a valid exercise of regulatory authority to implement the intent of the law. And the intent of Congress, DOJ claimed, could not have been for Americans in states that refused to set up exchanges to be unable to claim a tax credit or subsidy just because the federal government had to step in to set up the exchange.

The Halbig decision is over 70 pages, including a long dissent. But the essence of the case is well summarized in a pithy concurrence by Senior Judge Ray Randolph (an H. W. Bush appointee). Randolph writes: “an Exchange established by the federal government cannot possibly be ‘an exchange established by the State.’ To hold otherwise would be to engage in distortion, not interpretation. Only further legislation could accomplish the expansion the government seeks.” 

Randolph said this case was controlled by a prior Supreme Court decision, Iselin v. U.S., where the Supremes said:

What the government asks is not a construction of a statute, but, in effect, an enlargement of it by the court, so that what was omitted, presumably by inadvertence, may be included within its scope. To supply omissions transcends the judicial function.

Unfortunately, such inappropriate “enlargement” of the statute is exactly what the Fourth Circuit engaged in. Transcending its judicial function, it “interpreted” Obamacare to allow subsidies for federally-run exchanges despite the lack of any statutory language authorizing such subsidies. The quality and tenor of the judges’ arguments in that opinion can be judged from a concurring comment by Senior Judge Andre Davis (a Clinton appointee). Davis compared this very serious issue to (I kid you not) ordering a pizza:

If I ask for a pizza from Pizza Hut for lunch but clarify that I would be fine with a pizza from Domino’s, and I then specify that I want ham and pepperoni on my pizza from Pizza Hut, my friend who returns from Domino’s with a ham and pepperoni pizza has still complied with a literal construction of my lunch order.

Thus Davis believes that a “literal construction” of the statute allows the IRS to subsidize a federal pizza (insurance bought through a federal exchange) even though the lunch order (the Obamacare statute) only allows subsidies for state pizzas (bought through a state exchange).

While the U.S. Supreme Court accepts only about 1 percent of the cases seeking its review, it’s now roughly 100 percent guaranteed that the Court will take up these two cases. The obvious conflict created in the federal circuits by Tuesday’s rulings must be resolved quickly, simply because the stakes are so high. The subsidy issue involves enormous amounts of money and is critical to the administration of a major portion of Obamacare.

In his dissent in the D.C. Circuit case, Senior Judge Harry Edwards (a Carter appointee) claimed that the case was about the “Appellants’ not-so-veiled attempt to gut” the Obamacare law. That may or may not be the appellants’ intent. But intent is wholly irrelevant to the substantial and serious legal issues raised by the Appellants, who were represented in the case by the very able Mike Carvin, one of the best Supreme Court litigators in Washington.

— Hans von Spakovsky is a senior legal fellow at The Heritage Foundation. Along with John Fund, he is the coauthor of Obama’s Enforcer: Eric Holder’s Justice Department (HarperCollins/Broadside 2014).


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