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March Madness and Supreme Surprises

Posted by John McDonough  March 1, 2012 10:30 PM

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Welcome to March, 2012. This year, March will see more than college basketball attracting bets. Beginning on March 26th, the Supreme Court of the United States (SCOTUS) will begin six hours of oral arguments on four matters related to the constitutionality of the Affordable Care Act (ACA/ObamaCare).

The Court will spend one hour hearing arguments on the legality of the expansions in Medicaid in Title II of the law. They will spend two hours on arguments relating to the constitutionality of the so-called "individual mandate" in Title I. They will spend an hour hearing arguments about something called "severability" -- whether other parts of the law must be repealed if the individual mandate is struck down, primarily provisions eliminating the ability of insurance companies to impose pre-existing condition exclusions.

And then there's the AIA, the Anti-Injunction Act. When SCOTUS originally set the time limits for debate last year, they set aside one hour for the AIA; last week, they expanded the total ACA hearing time from 5½ to 6 hours, adding 30 minutes for the AIA.

What the heck is the AIA?

It is a federal tax law first passed in 1867, yes 1867, part of Title 26 of the code of federal laws. Section 7421 is the relevant AIA section which states that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed."

Shorthand -- if the AIA applies, no suit against the individual mandate is ripe until the penalty begins being collected, meaning no suit is ripe until the spring of 2015.  See ya later, nullificator. 

But is the individual mandate a tax? Therein lies the essential issue for SCOTUS to decide. Consider this: the ACA calls the mandate the individual responsibility "penalty." It is enforced by the Internal Revenue Service under the jurisdiction of the Department of the Treasury. One's liability for the penalty is determined in one's tax filing each spring. And, importantly, the AIA interprets the word "tax" broadly.  (The U.S. Constitution, by the way, uses three words for tax: tax, impost, and duty.)

When the anti-ACA lawsuits were first filed in the spring of 2010, the Obama Administration opposed all of them invoking the AIA, arguing that the AIA applies to any "penalty" if "assessed and collected in the same manner" as other tax penalties. The ACA's individual mandate is to be collected by the IRS in the same manner as any other tax penalty.

Every federal District Court rejected the Obama Administration's assertions, convincing the Obama team to drop the argument. When the suits moved to the Appeals Court level, the Administration switched, arguing that the AIA did not apply to the ACA's individual mandate.

And then, surprise, the 4th Circuit Appeals Court rejected its ACA suits as not ripe because of the AIA. Then the DC Court of Appeals upheld the individual mandate, though respected conservative Judge Brent M. Kavanaugh dissented, arguing that the AIA applied.

Still, three Courts of Appeals had rejected the AIA's relevance, and only one had ruled that it applied. So no one would have been surprised if SCOTUS had chosen to ignore the AIA's applicability. But at least four Supreme Court Justices believe the AIA issue deserves a hearing, and the full Court agreed to set aside 60 minutes at the start of the ACA hearing to consider the AIA's applicability, and expanded last week to 90 minutes. Because the Obama Administration and the plaintiffs all rejected the AIA's applicability, SCOTUS has brought on special counsel to argue in favor of AIA pre-emption, Washington Attorney Robert A. Long.

OK, I'm not a lawyer, and I don't even play one on TV. So don't rely on me. But I'm drawn to the logic of the arguments in favor of AIA preemption.

And here's another wrinkle: if SCOTUS were to accept the AIA argument, they are also embracing, however tentatively, the logic that the individual mandate is a tax. And if the mandate is a tax in the eyes of the court, then there is no constitutional issue about it. In other words, see you in 2015, maybe, and don't hold your breath.

So March, as all basketball fans know, is a gambling month. Me?  I'm putting my money on the Anti-Injunction Act as this spring's Supreme surprise.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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About the author

John E. McDonough is a professor of practice at the Harvard School of Public Health. He is the author of the book “Inside National Health Reform”, published in 2011 by More »


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