The Necessary and Proper Clause

Judge Hudson's decision today held that the ACA's minimum coverage provision exceeds (1) Congress's commerce power, and (2) its commerce power as augmented by the Necessary and Proper Clause. His analysis of this second point, though, was rather cursory, occupying only one paragraph (on p. 24 of the opinion).

Here is what Judge Hudson says, in full:

"Because an individual's personal decision to purchase--or decline to purchase--health insurance from a private provider is beyond the historical reach of the Commerce Clause, the Necessary and Proper Clause does not provide a safe sanctuary. This clause grants Congress broad authority to pass laws in furtherance of its constitutionally-enumerated powers. This authority may only be constitutionally deployed when tethered to a lawful exercise of an enumerated power. As Chief Justice Marshall noted in McCulloch, it must be within 'the letter and spirit of the constitution.' The Minimum Essential Coverage Provision is neither within the letter nor the spirit of the Constitution. Therefore, the Necessary and Proper Clause may not be employed to implement this affirmative duty to engage in private commerce." (citations omitted)

It is not entirely clear what this means. On one reading, it seems to say that, if Congress cannot regulate the conduct directly with its commerce power, then it cannot reach it with the Necessary and Proper Clause, either. But that would seem to render the Necessary and Proper Clause surplusage. One would think that there are at least some instances (as Justice Scalia discusses in his Raich concurrence) that the Necessary and Proper Clause makes a difference. Comstock would seem to be one, for instance.

Another understanding is that Judge Hudson's categorical rule--that Congress can never regulate inactivity--applies just as much to the commerce power as augmented by the Necessary and Proper Clause as it does to the commerce power standing alone. This makes more sense structurally. But if this articulates Judge Hudson's view, it is not particularly well spelled out in the opinion.

This may be much ado about nothing. But it also might be quite important down the road. For the United States's strongest argument in defense of the individual mandate is that, even if one  characterizes the regulated conduct as "inactivity," its regulation is "appropriate" (that is, necessary and proper) to the effectuation of the ACA's broader regulation of the health insurance market--regulation that, when taken as a whole, is plainly within the commerce power.

UPDATE: Professor Orin Kerr makes a similar point at the Volokh Conspiriacy, which you can read here. Professor Kerr reads Judge Hudson as making the first of these two moves. And I wholly agree that, if that is what he meant, it really cannot be right. A fundamental point that Marshall makes in McCulloch--regardless of how one otherwise understands that opinion--is that the Necessary and Proper Clause expands Congress's legislative powers.

Judge Hudson's three critical analytic moves

Judge Hudson's decision concerning the Commerce Clause ultimately rests on three related analytic moves, which together render the minimum coverage provision beyond the commerce power.

1. ACA 1501(b) regulates "inactivity" -- the non-purchasing of health insurance. This rejects the United States's conception of the regulated activity as a conscious decision of how to finance health care. From the United States's perspective, everyone is engaged in the health care market. 1501(b) therefore regulates a choice as to the financing of that activity, making it a regulation of affirmative action (and an economic one at that).

2. The commerce power, categorically, does not reach inactivity. Unless the regulated individual has made some "self-initiated action" to enter the relevant market (here, the health insurance market), Congress cannot regulate that individual pursuant to its commerce power.

3. The Necessary and Proper Clause affords Congress no additional leeway in that respect. That is, just as Congress cannot regulate this "inactivity" directly under its commerce power, nor can it regulate such activity as an "appropriate" means to effectuating a broader regulation of a commercial market.

There are a few additional details, but those three points constitute the essence of Judge Hudson's decision.

The remedy

Judge Hudson's decision that the minimum coverage requirement exceeds Congress's enumerated powers is rather unsurprising. Also unsurprising is his rationale: (1) that Congress cannot regulate conduct when the individual has not yet made any voluntary act to enter the market, and (2) that 1501 is not a bona fide tax, as Congress intended it to be a regulation, and thus cannot be justified by the General Welfare Clause.

Perhaps more interesting part is what he said with respect to the remedy:

1. He declared that only 1501, and any directly-dependent provisions that specifically refer to 1501, are unconstitutional.

2. He denied Virginia's request for injunctive relief, and instead merely provided a declaratory judgment.

More to follow soon.

1501(b) ruled unconstitutional

Judge Hudson, unsurprisingly, held that the minimum coverage provision is unconstitutional. Details coming.

UPDATE: The opinion is here.

UPDATE 2: Critical line: "Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market." (Op. at 24)

UPDATE 3: Because Congress clearly intended the minimum coverage provision to be a regulation, accompanied by a sanction for violating that regulation, it cannot be justified under the General Welfare Clause as a valid exercise of Congress's taxing power.

UPDATE 4: The court will sever only 1501 "and any directly-dependent provisions which make specific reference to 1501." The rest of the ACA is constitutional.

UPDATE 5: No injunction, because there are no exigencies. Declaratory relief is sufficient, as the ruling does not affect anything set to go into effect until 2013 at the earliest.

Three things to watch

It is now noon in Richmond, so the ruling should be appearing momentarily. Here are three things to watch for:

1. Obviously, the most important is where Judge Hudson comes down with respect to the minimum coverage requirement. Within that, though, it will be important to examine the rationale he employs. Does he hold, as he suggested in his prior ruling, that Congress is simply disempowered from regulating "inactivity," no matter its relationship to a broader regulatory scheme?

2. If Judge Hudson declares Section 1501(b) unconstitutional, what does he say with respect to the remedy? Does he schedule a separate hearing, or does he impose an immediate injunction? If the latter, how broad is the injunction? Does it apply to any provisions of the ACA that are currently being implemented?

3. What, if anything, does Judge Hudson say about Virginia's standing? As discussed here before, Judge Hudson's reasoning as to why Virginia has standing to challenge the individual mandate -- to defend the legality of its Health Care Freedom Act -- is, at least to some of us, questionable. And this makes the case potentially vulnerable to reversal on justiciability grounds on appeal. Does Judge Hudson say anything more about the matter here?

We should have answers very soon.

Judge Hudson to issue decision Monday

From Bloomberg:

"A federal judge’s ruling on Virginia’s challenge to the Obama administration’s health-care legislation will be released on Dec. 13, a courthouse aide said. The decision by U.S. District Judge Henry Hudson will be made public at midday, Judicial Assistant Robin Belcher said today in an e-mail from the court in Richmond, Virginia."

District court dismisses complaint in New Jersey Physicians v. Obama

Judge Susan D. Wigenton (United States District Court for the District of New Jersey) today issued her judgment dismissing the plaintiffs' complaint in New Jersey Physicians v. Obama on the ground that none of the plaintiffs have standing. You can find the opinion here.

Judge Wigenton concluded that, with respect to the private individual Doe--who claimed to be injured by the minimum coverage provision--it was purely speculative as to whether he would either lack health insurance or be liable for the penalty come January 2014. The judge distinguished the other district court opinions concluding that the plaintiffs had standing to challenge 1501(b) on the ground that, in those cases, the plaintiffs had alleged they were experiencing a current financial impact (in the form of advance planning). Here, the plaintiff made no such factual allegation. (Honestly, this seems like a rather trivial basis for distinction; the plaintiff could presumably now amend his complaint to include such an allegation.)

The court also concluded that a plaintiff doctor and the New Jersey Physicians Group (of which he is a member) also failed to demonstrate any injury stemming from the individual mandate, as (a) it was unclear how the individual mandate would harm the doctor in how he was paid (which he had alleged), and (b) he had made no factual allegations showing that he would be covered by the employer mandates.

Two district courts--this one and that for the Southern District of California in Baldwin v. Sebelius--have now concluded that the plaintiffs lacked standing to challenge the minimum coverage provision. This ruling is narrower than that in Baldwin, though, as it seems to turn on the precise facts alleged in the complaint, leaving open the possibility that, with a slight tweak, the outcome could have been different.

The plaintiffs have already filed their notice of appeal.

Articles in the Times and Post on two of the players

The New York Times and the Washington Post are currently running articles on two critical players in the ACA litigation. First, Kevin Sack of the Times has this profile of Ian Gershengorn, the attorney in the Department of Justice who manages the government team defending the ACA, and who has argued each of the cases thus far to reach a hearing. (He will be arguing in Pensacola next week.) Second, the Post's Rosalind Helderman has this profile of United States District Judge Henry Hudson, the presiding judge in Virginia v. Seblius. (Football fans may recall that Judge Hudson was also the one who sentenced Michael Vick.)

U.S. reply brief in Florida v. HHS

The United States has filed its reply brief in support of its motion for summary judgment in Florida v. HHS. You  can access that brief here. Briefing is now complete on the parties' motions for summary judgment, and the hearing before Judge Vinson (in Pensacola, Florida) is set for next Thursday, December 16.

An update on U.S. Citizens Ass'n v. Sebelius

You may recall that, on November 22, the United States District Court for the Northern District of Ohio denied  in part and granted in part the United States's motion to dismiss the plaintiffs' complaint. The one claim that survived Judge Dowd's order was the assertion that the minimum coverage requirement exceeds Congress's enumerated powers.

On Friday, the United States filed a motion in that case to stay the proceedings. Specifically, the federal government argued that "[b]ecause the court of appeals’ resolution of [Thomas More Law Center v. Obama] is virtually certain to control the outcome of this case, the defendants respectfully request a stay of proceedings in this case until the completion of appellate proceedings in Thomas More." The Thomas More case is currently pending in the Sixth Circuit, also the circuit in which the District Court for the Northern District of Ohio is situated. You can read the United States's stay motion in its entirety here.

The plaintiffs in United States Citizens oppose a stay, and they have until next Monday to file their memorandum in opposition. Incidentally, the brief for the appellant (Thomas More Law Center) in Thomas More Law Center v. Obama is due December 15.

The states' reply brief in Florida v. HHS

To day is the due date for the parties' reply briefs in Florida v. HHS. The states have filed their brief, and you can access it here (as well as in the column to the right). The United States has not yet filed its brief. I will post it here as soon as it is docketed on PACER.

Any day now in Richmond . . .

In the very near future, Judge Hudson of the United States District Court for the Eastern District of Virginia will issue his decision in Virginia v. Sebelius. The Commonwealth of Virginia and the United States have both filed motions for summary judgment, and the only real legal question is whether the ACA’s minimum coverage requirement (§1501(b)) falls within Congress’s enumerated powers. Given Judge Hudson’s ruling in August, which denied the United States’s motion to dismiss Virginia’s complaint—as well as the nature of the judge’s questioning at oral argument in October—it seems likely that he will hold that §1501(b) is unconstitutional. There is no certainty on this point, of course, but it seems more likely than not.

The critical question will then be, What next? What practical and legal impact will his ruling hold? Thinking about that question, I have sketched out an initial, rough list of items to keep our eyes on—in the opinion itself and in the days soon thereafter.

Liberty University v. Geithner: a quick primer

Yesterday, Judge Norman K. Moon (W.D. Va.) granted the United States’s motion to dismiss in Liberty University v. Geithner. Here is a brief summary of the decision’s essential points:

* Liberty University and two individual plaintiffs have standing to challenge the ACA because they currently need to make financial arrangements to comply with the requirements that the Act imposes on employers to provide minimally adequate coverage to their employees (in the case of Liberty) and on individuals to obtain such coverage (in the case of the two individuals).

* Their claims are ripe for essentially the same reason.

* The exactions imposed on employers for failing to provide employees with minimally adequate coverage, and on individuals for failing to obtain the same, are “regulatory penalties”—and not “taxes”—at least for purposes of the Ant-Injunction Act. Thus, the Ant-Injunction Act does not deprive the court of jurisdiction to hear the plaintiffs’ suit.

Western District of Virginia upholds minimum coverage provision

Judge Norman K. Moon of the United States District Court for the Western District of Virginia today issued an opinion granting the United States's motion to dismiss in Liberty University v. Geithner. You can access the opinion here.

Judge Moon found that the plaintiffs had standing to challenge the ACA (and that their claims were ripe). But he held that each failed to state a plausible claim under Federal Rule of Civil Procedure 12(b)(6).

In their complaint, the plaintiffs pressed several constitutional challenges, ranging from one grounded in the Free Exercise Clause to one that the ACA violated the Guarantee Clause. The one that really matters is their contention that the minimum coverage provision exceeds Congress's enumerated powers. Judge Moon addresses the claim at length, but here are two critical passages. First, Judge Moon concluded that an individual's decision whether to purchase health coverage is "economic in nature," and thus within Congress's commerce power under a straightforward application of Lopez:

"The conduct regulated by the individual coverage provision—individuals’ decisions to forego purchasing health insurance coverage—is economic in nature . . . . Nearly everyone will require health care services at some point in their lifetimes, and it is not always possible to predict when one will be afflicted by illness or injury and require care. The 'fundamental need for health care and the necessity of paying for such services received' creates the market in health care services, of which nearly everyone is a participant. Thomas More Law Ctr., 2010 U.S. Dist. LEXIS 107416, at *28. Regardless of whether one relies on an insurance policy, one’s savings, or the backstop of free or reduced-cost emergency room services, one has made a choice regarding the method of payment for the health care services one expects to receive. Far from 'inactivity,' by choosing to forgo insurance, Plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now, through the purchase of insurance." (Op. at p. 27)

Additionally, Judge Moon concluded that section 1501(b) is within Congress's commerce power under the logic of Raich and Wickard, as a necessary component of a larger regulatory scheme, which regulatory scheme plainly regulates interstate commerce (namely, the health insurance market):

"[I]t is rational to believe the failure to regulate the uninsured would undercut the Act’s larger regulatory scheme for the interstate health care market. The Act institutes a number of reforms of the interstate insurance market to increase the availability and affordability of health insurance, including the requirement that insurers guarantee coverage for all individuals, even those with preexisting medical conditions. As Congress stated in its findings, the individual coverage provision is “essential” to this larger regulatory scheme because without it, individuals would postpone health insurance until they need substantial care, at which point the Act would obligate insurers to cover them at the same cost as everyone else. This would increase the cost of health insurance and decrease the number of insured individuals—precisely the harms that Congress sought to address with the Act’s regulatory measures." (Op. at p. 29) (citations omitted).

The administration has much reason to worry about what Judge Hudson (Virginia v. Sebelius) and Judge Vinson (Florida v. HHS) are likely to say about the individual mandate in the coming months. But so far, the United States is two for two on courts that have reached the merits of whether ACA 1501(b) is a valid exercise of Congress's enumerated powers.

I will have some more analysis of the opinion tomorrow, once I have had a chance to go through it carefully.

Opening brief due today in the Ninth Circuit in Baldwin v. Sebelius

The plaintiffs' opening appellate brief in Baldwin v. Sebelius is due by the end of today at the Ninth Circuit. Although the plaintiffs have challenged the constitutionality of the minimum coverage requirement, that will not be at issue before the Ninth Circuit. Rather, the only issue will be one of justiciability, as the District Court held that the plaintiffs lacked standing (as their alleged injuries were not sufficiently imminent). To my knowledge, it will be the first brief filed in any of the courts of appeals in a case challenging the ACA's constitutionality. I will post a copy of the brief here as soon as it is docketed on PACER.

UPDATE: You can find the brief here. Despite the fact that the District Court never reached the merits, the brief does argue (at length) that the individual mandate exceeds Congress's enumerated powers. Interestingly, it also asserts that the very reason Congress specified that the individual mandate would not go into effect until January 1, 2014, was to attempt to deprive potential plaintiffs of Article III standing to challenge 1501(b). We have seen hundreds of contentions in these various cases, but I believe this one is genuinely new.

UPDATE 2: Because the appellants filed their brief on Wednesday, November 24, the United States's brief will now be due December 22.

N.Y. Times reports that the administration is "bracing for setbacks" in ACA litigation

In a story by Kevin Sack and Robert Pear, currently leading on the Times's web site, the paper reports that Obama administration officials are acknowledging that they may soon receive adverse rulings from the district courts. Here are a few critical passages:

"Although administration officials remain confident that it is constitutionally valid to compel people to obtain health insurance, they also acknowledge that Judge Hudson's preliminary opinions and comments could presage the first ruling against the law. 'He's asked a number of questions that express skepticism,' said one administration official who is examining whether a ruling against part of the law would raise questions about whether other provisions would automatically collapse. 'We have been trying to think through that set of questions,' said the official, who insisted on anonymity because he was not authorized to discuss the case freely."

Those paying close attention have known for weeks that this is a real possibility, if not a likelihood. But perhaps people have not been paying close attention, and the decision -- if it declares the minimum coverage requirement unconstitutional -- might significantly increase the uncertainty surrounding the ACA's implementation -- for insurers, consumers, and the government. Rationally, though, it should not matter, as these issues will be resolved by higher courts long before January 1, 2014. The impact of Judge Hudson's (or Judge Vinson's) decision will be purely in the realm of perception.

But perceptions can really matter, of course. A string of lower court decisions invalidating parts of the ACA will, if nothing else, serve to legitimize the states' legal arguments. And this, in turn, would create more political and doctrinal space for the Supreme Court -- if and when the case reaches the justices -- to strike down the ACA.

Documents added for New Jersey Physicians v. Obama

One ACA case in which we are likely to see a judicial decision relatively soon is New Jersey Physicians, Inc. v. Obama, currently pending before Judge Susan D. Wigenton, United States District Court for the District of New Jersey. The plaintiffs have raised four claims: (1) that the minimum coverage provision exceeds Congress's enumerated powers, (2) that the exaction imposed on those failing to obtain adequate coverage is an unapportioned "direct" tax, (3) that the ACA violates their rights to due process, and that (4) the ACA was not lawfully enacted. The United States has moved to dismiss, and responsive briefing on the motion was complete as of September 3. Judge Wigenton has stated that she will rule on the papers without a hearing. Thus, we should have a decision on the motion in the near future.

I have added a separate heading for the case in the column to the right, with links to all of the filings: the original and amended complaints, the United States's motion to dismiss, the plaintiffs' memo opposing the motion to dismiss, and the United States's reply brief.

U.S. memo in response to the states' motion for summary judgment

The United States's memorandum in response to the states' motion for summary judgment in Florida v. HHS has now been docketed, and you can find it here.

States' memo in response to U.S. motion for summary judgment in Florida v. HHS

You can find it here. The United States's response to the states' motion for summary judgment is not yet docketed on PACER.

Reply briefs in Florida v. HHS due tomorrow

One other quick note: the states' and the United States's reply briefs (responding to each others' motions for summary judgment) are due tomorrow in Florida v. HHS. I will post them here as soon as they become available on PACER.