Feds respond to PLF's Obamacare petition

October 17, 2014 | By PAUL BEARD

The Federal Government filed its opposition brief to our petition for rehearing en banc today—one week early. The opposition is more interesting for what it doesn’t say than for what it does.

Our petition relies on two of the Circuit Court’s recognized reasons for en banc rehearing:  (1) the panel decision conflicts with a number of Supreme Court and Circuit Court precedents, and (2) the case involves a question of exceptional importance.  As to the second ground, we argue that the case puts at issue one of the Affordable Care Act’s key provisions (the individual mandate and penalty tax)—which will affect the healthcare and financial decisions of every American.  Moreover, we argue, the case turns on the interpretation and application of one of the Constitution’s key structural limitations on Federal Government power:  the Origination Clause.  We point out that just last month, the Circuit Court granted rehearing en banc in Halbig v. Burwell, another challenge to the Act that involves a question of statutory interpretation—namely, whether the Act authorizes an IRS regulation that provides federal subsidies to individuals in States with federally established (as opposed to state-established) Exchanges.  If a challenge to an ACA regulation is worthy of en banc review, surely this case—a constitutional challenge to a cornerstone provision of the Act—must be as well.

In its brief, the Federal Government does not oppose the second ground for rehearing.  It doesn’t dispute that this case involves a question of “exceptional importance.”  And it doesn’t try distinguish Halbig—which it successfully fought to get reheard en banc—from this case.  One can only conclude that the Government agrees that this case raises questions of exceptional importance—which, of course, is an independent ground for en banc rehearing (even if the panel decision didn’t conflict with existing precedents).

On the question of whether the panel decision conflicts with existing precedents, the brief basically rehashes the same arguments it made before the three-judge panel.  With respect to the Origination Clause issue, the Government argues that the panel decision is consistent with applicable Supreme Court cases:  The “primary purpose” of the penalty tax imposed on individuals who do not buy health insurance is to encourage people to do so, not to raise revenues for general government operations.  Therefore, the tax is not subject to the Origination Clause.  Our petition explains that this purposive approach is a novelty that finds no support in existing precedents.  And it explains why this new purposive approach would render the Origination Clause a dead letter, since the Senate could always insulate taxes it originates by declaring them to have primarily a social, non-revenue-raising purpose—a declaration to which the courts would have to defer, under the Government’s (and panel’s) rule.  The Government never responds to these two points.

The Government goes on to argue that, even if the tax were subject to the Origination Clause, it should be upheld as a proper Senate amendment to a House revenue-raising bill (which the Origination Clause authorizes).  The problem for the Government, of course, is that the six-page House bill, entitled “Service Members Home Ownership Tax Act, H.R. 3590,” was not a revenue-raising bill.  In fact it was a bill intended to reduce taxes by providing a tax credit to home-purchasing veterans.  Moreover, the 2000+ pages of the Affordable Care Act, which originated in the Senate, bears no relationship whatsoever to H.R. 3590.  The Government counters that “substitution amendments have been employed by the Senate since the beginning of the Republic.”  True enough, but in prior cases, the Senate substitution was germane to the House bill it replaced.  The Senate’s tactic in this case is unprecedented, in that two Senate’s Affordable Care Act and the House’s “tax credits for veteran homebuyers” bill are as unrelated as two bills can be.

As the amicus brief in support of our petition for rehearing filed by Texas and twelve other states put it:

Given that federal courts are obligated [by Supreme Court precedent] to adjudicate claims under the Origination Clause, federal courts must give meaningful effect to the constitutional provision—rather than reading it, as defendants would, to be a “meaningless and formalistic rule.” If the Origination Clause means anything, it must mean that the [Affordable Care Act] is unconstitutional.

With the Government’s opposition filed, we now await the Circuit Court’s decision on our petition.