Nfib V Kathleen Sebelius

| NATIONAL FEDERATION OF INDEPENDENT BUSINESS et. al, Appellant v. KATHLEEN SEBELIUS et. al, RespondentTHE SUPREME ULTIMATE OMNIPOTENT HANSON COURTJUDGES: Authored by Joseph Sims and Thomas Shellum with whom Chief Justice Jim Hanson concurs.March 1, 2012, FiledPRIOR HISTORY: Appeal from the United States Court of Appeals for the Eleventh District Nos: 11-393 &11-400. Date filed: August 12, 2011COUNSEL: For Appellant(s): Zachary Johnston, Salem Law Services, Salem, ORFor Respondent(s): Mitchell S. Dunn, Damascus Legal Ltd., Damascus, ORDISPOSITION: Affirmed in part, Denied in part. |
Shrishti Trivedi (1083039)
Facts
On March 23, 2010, two days after the U.S. House passed it by a narrow vote, President Barack Obama signed the Patient Protection and Affordable Care Act into law. PPACA more commonly came to be called ObamaCare. Congress enacted this act in order to increase the number of Americans covered by health insurance and decrease the cost of health care.
One key provision is the individual mandate, which requires most Americans to maintain “minimum essential” health insurance coverage. Beginning in 2014, those who do not comply with the mandate must make a “shared responsibility payment” to the federal government. The Act provides that this “penalty” will be paid to the Internal Revenue Service with an individual’s taxes and “shall be assessed and collected in the same manner” as tax penalties.
Second, the ACA significantly expands the Medicaid program by providing health coverage to new classes of people that previously were not eligible, including adults without children and families with higher incomes. The Congressional Budget Office has estimated the cost of the expansion at approximately $100 billion per year, approximately 40% above current levels. The ACA will provide new funds to States that agree to participate in the expansion. Under the existing Medicaid Act, the Secretary of Health and Human Services has the discretion to withdraw all Medicaid funding from any State that does not comply with Medicaid's coverage requirements, which include the new requirements contained in the expansion.
The Anti-Injunction Act (AIA) generally prevents taxpayers from challenging a tax in court before it becomes operative. Because the individual mandate and requirement to pay a penalty to the Internal Revenue Service if one fails to obtain insurance do not become operative until 2014, the challenge to that provision was arguably premature.
On May 14, 2010, National Federation of Independent Business, America’s leading small‐business association, announced they would join the 26 states in a lawsuit in Federal District Court challenging the constitutionality of the individual mandate and Medicaid expansion. On November 14, the Supreme Court combined these hearings into National Federation of Independent Businesses v. Sibelius and issued a writ of certiorari. | Procedural HistoryThe states’ suit, Florida v. U.S. Department of Health and Human Services, was first heard in the U.S. District Court of Northern Florida. The court ruled the individual mandate, and thus the Affordable Care Act, unconstitutional. The 11th Circuit Court affirmed the unconstitutionality of the individual mandate, but ruled that the individual mandate portion of the act could be severed and the rest preserved. The businesses’ suit, National Federation of Independent Businesses v. Sibelius, was first heard in the U.S. District Court of Eastern Virginia. As in Florida v. U.S. Department of Health and Human Services, the court ruled the Affordable Care Act unconstitutional. The 4th Circuit Court reversed the decision. In September 2001, the Department of Justice filed for the Supreme Court to hear the case. On November 14, the Supreme Court combined these hearings into National Federation of Independent Businesses v. Sibelius and issued a writ of certiorari. | | Issues(1) Whether the Anti-Injunction Act prohibited the Court from reviewing the case?(2) Whether Congressional law that requires states to choose between complying with the Patient Protection and Affordable Care Act or loss of federal funding for Medicaid is constitutionally valid; and (3) Whether, Congressional law requiring all citizens to obtain health insurance or pay a penalty is unconstitutional? | Holding:SUPREME COURT DECISION MAJORITY OPINION (1)As a preliminary matter, the Court addressed whether the Anti-Injunction Act prohibited the Court from reviewing the case, and held that the Anti-Injunction Act did not limit the Court’s authority to hear the case. The Anti-Injunction Act typically bars plaintiffs from challenging the validity of taxes before the tax is actually paid. For purposes of the Anti-Injunction Act, the Court found that Congress did not intend for the penalty for non-compliance with the individual mandate to be treated as a tax because Congress labeled the exaction a penalty (not a tax), and throughout American law penalties have been treated differently from taxes. “The Anti-Injunction Act bars litigation to enjoin or otherwise obstruct the collection of taxes. Because of the Anti-Injunction Act, taxes can ordinarily be challenged only after they are paid, by suing for a refund…Congress, however, chose to describe the ‘shared responsibility payment’ imposed on those who forgo health insurance not as a ‘tax,’ but as a ‘penalty.’ There is no immediate reason to think that a statute applying to ‘any tax’ would apply to a ‘penalty.’ Congress’s decision to label this exaction a ‘penalty’ rather than a ‘tax’ is significant because the Affordable Care Act describes many other exactions it creates as ‘taxes.’” The Court stated that: “The Anti-Injunction Act and the Affordable Care Act … are creatures of Congress’s own creation. How they relate to each other is up to Congress, and the best evidence of Congress’s intent is the statutory text.” This demonstrated that Congress clearly knew how to distinguish between a penalty and tax, and that it characterized the payment as a penalty for specific reasons. (Held: 5-4, Anti Injunction Act Does Not Apply) | | |
(2) In enacting the ACA, Congress had added the Medicaid expansion as a condition of the states’ federal funding for the entire Medicaid program. Congress’s power to grant federal funds is generally authorized by the spending clause of the U.S. Constitution, which provides the power “to pay the Debts and provide for the … general Welfare of the United States.”. The Court also recognized that Congress may attach conditions to federal funds to “ensure the funds are used by the States to ‘provide for the … general Welfare’ in the manner that Congress intended.” However, the Court stated that while such a mechanism is unconstitutional, the correct solution for the court is to redact such a penalty, thereby giving states a choice as to whether they want to create the exchange without the threat of Medicaid funding being lost. The court held that the grant withholding provision was unconstitutionally coercive. He wrote that the threat of withdraw of 10% of funds which make up a state’s budget represents a “gun to head” scenario for states.
(Held: 7-2, Medicaid Expansion is Limited in Scope)
(3) The Court, while acknowledging Congress’s broad authority to regulate commerce under the Commerce Clause, observed that such a law cannot be sustained under a clause authorizing Congress to ‘regulate Commerce.’ The Court also held that the individual mandate could not be sustained under the Necessary and Proper Clause of the U.S. Constitution.
The Court went on to analyze the constitutionality of the individual mandate under Congress’s taxing power, stating that “it is well established that if a statute has two possible meanings, one of which violates the Constitution, courts should adopt the meaning that does not do so.” The Court cited precedent which held that “exactions not labeled taxes nonetheless were authorized by Congress’s power to tax.” Having found that the taxing power enabled Congress to impose a “tax” on not obtaining health insurance, the Court analyzed the structure of the payment and found it to comply with other Constitutional requirements relating to taxation.
(Held: 5-4, Individual Mandate is Constitutional)
Concurrence and Dissent
Accompanying the Supreme Court’s decision was a separate opinion, concurring in part and dissenting in part, by Justice Ginsburg joined by Justice Sotomayor, with Justices Breyer and Kagan joining in part. In the main opinion, Justice Ginsburg had joined with the majority to uphold the individual mandate as an exercise of Congress’s taxing power. However, Justice Ginsburg argued that the mandate also should be upheld under the Commerce Clause, noting that the large number of U.S. residents without insurance leads to cost shifting within the national health insurance industry, and Congress has “the power to regulate economic activities ‘that substantially affect interstate commerce.’”
Additionally, in the dissenting portion of her opinion, Justice Ginsburg, joined by Justice Sotomayor, defends the Medicaid expansion, stating it should have been left intact. In Justice Ginsburg’s view, the ACA’s modification of the Medicaid Act was not coercive because it could have been accomplished by repealing and reenacting the Medicaid Act as a whole. However, given the majority’s conclusion to the contrary, Justice Ginsburg agreed with the majority that existing Medicaid funding cannot be withheld from a state that does not implement the Medicaid expansion.
Dissent
Also accompanying the Supreme Court’s decision was a joint dissent from Justices Scalia, Kennedy, Thomas, and Alito. The dissenters disapproved of the majority’s treatment of the mandate as a tax, arguing instead that it is a penalty and that the distinction is meaningful. In treating the mandate as a tax, the majority did not just interpret the statute but rewrote it, according to the dissenters. The dissenters also faulted the individual mandate because it violated the principle of limited federal power. Likewise, Congress’s attempt to compel adoption of the Medicaid expansion violated the appropriate balance between federal and state governments, they argued. As a result, the dissenters stated they would invalidate the provisions of the ACA containing both the individual mandate and the Medicaid expansion. Because these are essential components of the legislation, the dissenters would have gone on to invalidate the ACA in its entirety.

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[ 1 ]. NFIB. v. Sebelius, 132 S. Ct. 2566, 2580 (2012)
[ 2 ]. NFIB, 132 S. Ct. at 2580 (quoting 26 U.S.C. § 5000A (Supp. IV 2010)).
[ 3 ]. P.P.A.C.A. §5000A(b)(1)
[ 4 ]. P.P.A.C.A. § 5000A(c), (g)(1)
[ 5 ]. Paul .W Heiring, “Supreme Court Decides National Federation of Independent Business v. Sebelius”, Faegre Baker Daniels, 28-June-2012
[Accessed 15Feb 2013]

[ 6 ]. 42 U.S.C. § 1396c.
[ 7 ]. 26 U.S.C. §7421(a)
[ 8 ]. National Federation of Independent Business v Sebelius, 567 U.S. ,p.12, 2012
[ 9 ]. Id p.13
[ 10 ]. Art. I, s. 8, cl. 1; Slip Op., Roberts, C.J., p. 46
[ 11 ]. National Federation of Independent Business v Sebelius, 567 U.S. ,p.31, 2012
[ 12 ]. Id p. 34
[ 13 ]. Id p. 16
[ 14 ]. Id. P. 9
[ 15 ]. Id. P. 37