Health-care challenge at US Supreme Court: Justices seek way past Day 1 hurdle

Health-care reform proponents and detractors were on the same side Monday at the US Supreme Court, advocating that the justices move on to the constitutional issue on Tuesday.

Dana Verkouteren/AP
This artist rendering shows Solicitor General Donald B. Verrilli, Jr. speaking in front of the Supreme Court Justices in Washington, Monday, as the court began three days of arguments on the health-care law signed by President Obama.

It is the issue no one wanted to argue.

The US Supreme Court is poised to begin examining the constitutionality of President Obama’s health-care reform law first thing Tuesday morning. But before that could happen, the high court sought Monday to address a legal issue that could derail the entire looming constitutional showdown.

At issue is whether the lawsuit filed by 26 states, a business group, and two small business owners seeking to overturn the Patient Protection and Affordable Care Act must be thrown out of court under a law called the Anti-Injunction Act (AIA).

The AIA requires the dismissal of any lawsuit that seeks to restrain the assessment or collection of a tax. Instead, such lawsuits challenging any tax or assessment must be filed after the tax or assessment has been paid.

This AIA requirement would undercut the current challenge to the health-care law because the so-called individual mandate will not be enforced until 2014. Since the mandate is not yet in effect, no one has paid any penalty, and, therefore, no one can seek a refund – yet.

Those challenging the reform law say they are not challenging the penalty, rather they are challenging the constitutionality of the government mandate that all Americans must purchase an approved level of health-care insurance or pay a penalty.

Before that argument could be made, the lawyers first had to address the Anti-Injunction Act issues.

What was unusual Monday is that both the government and lawyers for the states argued that the Anti-Injunction Act does not apply to this case. Both are urging the high court to quickly dismiss the AIA claim and move on to the broader aspects of the litigation.

In a somewhat unusual move, the court had earlier appointed a lawyer, Robert Long of Washington, D.C., and assigned him 40 minutes to argue why the AIA did in fact apply to the case.

Most legal analysts believe the Anti-Injunction Act issue will not end the case and undercut the broader constitutional challenge. And several justices seemed to be fishing on Monday for a way to avoid the prospect of tossing out one of the most highly anticipated Supreme Court cases in years.

“I count at least four cases in the court’s history where the court has accepted a waiver [of the AIA] by the solicitor general and reached a tax issue,” Justice Sonia Sotomayor told Mr. Long. “Given that history … isn’t the fairer statement that Congress has accepted that in the extraordinary case we will hear the case?”

Long said that the AIA was intended by Congress to impose a pay first, litigate later rule that would help prevent a flood of lawsuits threatening government revenue. The idea, he said, was to require that any lawsuits over tax issues be filed after the tax was paid with the payer seeking a refund.

He said the AIA applies to the Affordable Care Act in part because Congress required that financial penalties be assessed and collected in the same manner as a tax.

“If it’s being collected in the same manner as a tax [that] doesn’t automatically make it a tax,” Justice Stephen Breyer said.

Long countered that any penalty under the Affordable Care Act would be assessed and collected by the IRS. He added: “The Anti-Injunction Act applies not only to every tax in the [tax] code, but, as far as I can tell, to every tax penalty in the code.”

The AIA issue puts government lawyers in a difficult position. Solicitor General Donald Verrilli urged the justices to find that the financial penalty that would be imposed under the Affordable Care Act’s individual mandate was not actually a “tax” subject to the Anti-Injunction Act.

Nonetheless, he is preparing to argue on Tuesday that Congress used its taxing authority to pass the individual mandate.

The situational gymnastics caught the attention of Justice Samuel Alito. “Today you are arguing that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing that the penalty is a tax,” he said.

Mr. Verrilli said that Monday’s argument at the court involved an effort to construe the meaning of a statute, the Anti-Injunction Act, where the precise choice of words is critical. “Tomorrow the question is whether Congress has the authority under the taxing power to enact [the individual mandate] and the form of words doesn’t have a dispositive effect on that analysis,” he said.

Oral argument in the health-care reform case is scheduled to continue on Tuesday with two hours of argument on the constitutionality of the individual mandate.

Arguments will continue on Wednesday examining whether certain parts of the Affordable Care Act can survive alone if the individual mandate is declared unconstitutional. In addition, the court will hear argument on Wednesday afternoon on whether the health-care reform law violates states’ sovereignty by forcing them to accept significant increases in the Medicaid program.

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