Affordable Care Act Lawsuits

The Patient Protection and Affordable Care Act (PPACA), also referred to as ObamaCare, has been the target of many legal actions since being signed into law on March 23, 2010. This law, created and implemented during the two-term presidency of Democrat Barack Obama, has received continual scrutiny from conservative Republicans nationwide, and even a few liberals in the process.

However, charges brought against the PPACA have been mostly from red states with heated Governors or business owners who refuse to comply with this administration’s reform. Whether under the guise of protecting religious values, a business, or state funds, each case has sought to bring down not just one provision, but the entire multifaceted law.

A main point of contention from the conservative angle is the increasing availability of contraceptives, and covering them as a free benefit to the insured. Since August 2012, an onslaught of employers and institutions claiming religious opposition to the contraceptive mandate have filed lawsuits against the federal government.

These 2012 cases were begun with hopes of not just being exempt from that provision for religious reasons, but that perhaps their concern would be so grave as to call the entire law unconstitutional. After the close of the Supreme Court case on June 28, 2012, in which the law was disputed by representatives from 26 different states, the ACA was deemed constitutional, and ever since, more questioning and legal battles have arisen.

The Supreme Court decision ended about thirty lawsuits before the law was fully in place questioning the legality of the individual mandate and other provisions which have been upheld. Several of the cases would not disappear so easily, including another claim that the law is unconstitutional.

Before the law’s complete implementation in 2014, many attempted to stop ObamaCare in its tracks.


Pacific Legal Foundation & The Origination Clause

The Pacific Legal Foundation, the first and oldest conservative and libertarian public interest law firm in the nation, alleged that the ACA is unconstitutional due to where it was written, a new addition to the slew of attacks on the law’s specific rules.

This lawsuit was the only case to threaten the law’s existence, as the whole law, not just one rule, would be wiped out. The Foundation noted that the bill originated in the Senate, rather than the House, which they claimed violates the Origination Clause of the Constitution as all bills increasing revenue must begin in the House.

Once the ACA was defined as a federal tax, the Pacific Legal Foundation realized they could save the country by applying the Origination Clause. Foundation attorney Timothy Sandfeur noted, “The court there quite explicitly says, ‘This is not a law passed under the Commerce Clause; this is just a tax.’ Well, then the Origination Clause ought to apply. The courts should not be out there carving in new exceptions to the Origination Clause.”

In response, the Justice Department filed a motion in November 2012, asserting that the Supreme Court has rarely dealt with violation of the Origination Clause, and it has never nullified an act of Congress on those terms.

Additionally, the Justice Department defends that the bill was started as House Resolution 3590, then named the Services Members Home Ownership Act. Following passage in the House, the bill went through a gut-and-amend process and was exchanged for the components of what evolved into the PPACA. Therefore, there is support behind the PPACA’s origination in the House with H.R. 3590 as a framework.

The Foundation remained unsatisfied with this response, claiming “Unlike in the prior cases, the Senate’s gut-and-amend procedure made H.R. 3590 for the first time into a bill for raising revenue. The precedents the government cites are therefore inapplicable.”


Contraceptives As A Covered Benefit

Under the preventive services mandate, the ACA provision requiring insurers and employers to cover a list of preventive services in full for plan members, birth control pills and other forms of pregnancy prevention are included. In response, more than sixty lawsuits have been filed to uphold that contraception is a sin, and the requirement to cover such services is a violation of beliefs, according to religious citizens and organizations nationwide.

According to professor of law at Washington and Lee University and health reform authority Timothy Jost, the contraception lawsuits fall into three categories, as they are not all the same but must each be addressed ultimately by the Supreme Court.


1. Catholic Organizations

The first category of cases against mandatory contraceptive coverage consists of certain Catholic institutions who are “not covered by the religious employer safe harbor,” Jost says. Catholic hospitals and universities have not been considered religious employers as a place of worship would, therefore not exempt from the contraceptive mandate. These organizations refused to pay for contraceptives as they view their use as highly sinful.


2. Protestant Organizations

While not all contraceptives are frowned upon by the institutions starting these cases, covering and therefore promoting use of the “morning-after pill” is the main issue among these groups. Such organizations and businesses refer to these medications as abortifacients.


3. Secular Businesses With Religious Owners

A variety of business owners object to paying for contraceptives or the morning-after pill through their group insurance. Regardless of the non-religious nature of the company itself, executives and owners are uninterested in paying for their employees to receive these services.


The issue was whether the plaintiffs were required to comply with the preventive services mandate, which applies to individual and employer health plans. While neither the individual nor employer mandates are in question with these lawsuits, once they are effective in 2014, businesses will be asked to cover essential health benefits.

EHBs must include preventive care, likely to include contraceptives. The law does not require plans to cover abortifacient medications, however. Another issue arises as when the individual and employer mandates are in place, individuals and small groups may be required to buy a health plan that pays for contraceptives.

The contraceptive cases were mainly falling back on the Religious Freedom Restoration Act, and the First Amendment’s clause regarding free exercise, as well. The RFRA prevents the federal government from thwarting the right to practice religion freely unless it indicates that a requirement “is in furtherance of a compelling governmental interest” and “is the least restrictive means of furthering” that interest.

As a result, various District Courts and Circuit Courts made decisions by the end of 2012 regarding these cases, either temporarily staying or refusing to stay enforcement of the rule. Two similar cases reached the Supreme Court, in which business owners from the Oklahoma-based Hobby Lobby arts-and-crafts chain and a Mennonite woodworking company from Pennsylvania refused to cover birth control pills for workers.

The Supreme Court has granted a temporary  It is highly unlikely that any court would remove the law as a whole based on limitations of contraceptive coverage.


Subsidies In Federally-Run Exchanges

Originally filed in January 2011 by the Attorney General of Oklahoma, Pruitt v. Sebelius first set out to disprove the constitutionality of the individual mandate. As the Supreme Court upheld the requirement for individuals to purchase health insurance or pay a penalty as a tax, this aspect of Pruitt’s case was made obsolete.

He therefore found a new plan of action to bring down the law by questioning the legality of federally operated insurance exchanges offering subsidized premiums and cost-sharing reduction payments. Pruitt contends that an Internal Revenue Service rule to facilitate federal exchanges goes against ACA principles, and the government has disputed the state’s right to bring the case to court.

In a January 25, 2013 court filing, the state of Oklahoma stated its intention to continue with the lawsuit, asserting that the IRS rule would fine large businesses for millions of dollars in tax penalties. In addition to the Pacific Legal Foundation’s case, this suit was a major threat to the Affordable Care Act. As 27 states have defaulted to a federal exchange, if Oklahoma wins, a significant piece of the ACA will be altered.

Several Oklahoma businesses, including a local restaurant chain, have joined the case as private-sector plaintiffs who would be impacted by the employer taxes precipitated by the Premium Assistance Tax Credits available through the state’s federally-run exchange.

The case gained momentum after attention from the CATO Institute, a libertarian advocacy group, took an interest. Two representatives of the organization, Michael Cannon and Jonathan Adler, a law professor at Case Western Reserve University, stated an “Internal Revenue Service (IRS) rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority. The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges.”

When the IRS drafted its advance premium subsidy rules, they took other ACA rules and the whole text into account, as well as the law’s structure and history, determining that federally operated exchanges have the ability to issue tax credits to reduce premium costs. Additionally, employers will not be taxed for their state having a federally run exchange on top of the employer mandate tax.

These Oklahoma businesses can only be taxed under the ACA if they refuse to offer their employees adequate or reasonably priced health insurance. If the IRS rule is refuted, this will leave the 400,000 Oklahomans, and millions of others around the nation without coverage.

In addition to Pruitt v. Sebelius, Virginia attempted to sue based on the based on the individual and employer mandates, doubting the constitutionality of the ACA. In response, the Department of Justice stated:

“We welcome the dismissal of these two challenges to the Affordable Care Act. We also continue to appreciate the rulings of other courts on the merits upholding the constitutionality of the Act. Throughout history, there have been similar challenges to other landmark legislation such as the Social Security Act, the Civil Rights Act, and the Voting Rights Act, and all of those challenges failed as well. We will continue to vigorously defend the health care reform statute in any litigation challenging it, and we believe we will prevail.”

As IRS penalties to employers cannot be assessed until 2015 when filing taxes, cases brought forth by businesses remain on hold until then.


Employer Mandate Cases

Hotze v. Sebelius

Many businesses have stepped forward to fight the ACA, claiming they will lose money whether they comply with the law and purchase coverage for employees or pay a penalty tax. In May 2013, a suit was filed by Steve Hotze, president of the Conservative Republicans of Texas and physician, challenging two aspects of the law.

Primarily, it followed on the tails of the Pacific Legal Foundation, arguing that the ACA violates the Origination Clause. Hotze’s case also claimed the law violates the Fifth Amendment of the Constitution in requiring employers to pay private insurers for coverage which basically requires citizens to pay money to other citizens, according to his argument.

Texas officials were supportive of Hotze, as an predominantly anti-ACA state, especially as it had the potential to bring down the entire law, yet the state decided not to be involved with furthering or funding the case.

Dr. Hotze’s business has over 50 employees, therefore he is required under the employer mandate to offer coverage or pay a $2,000 penalty for each of his full-time workers over a 30-employee threshold. He maintained that “It is imperative that Texas challenge this unwarranted federal overreach and ensure that Texans maintain the most innovative and economically viable health care system in the country,” he wrote in a statement.


Liberty University v. Geithner

Liberty University, represented by Liberty Counsel, a religious legal firm, also returned after its first attempt to stop the ACA from progressing, being initially dismissed from the Fourth Circuit as the Anti-Injunction Act (AIA) prevented the institution from questioning a tax before it was implemented and collected.

The Supreme Court held that the individual mandate tax was not a tax for AIA purposes, but for ruling purposes, when addressing the challenges brought forth by the states and NFIB. After Liberty University’s petition for review was denied following the June 2012 decision, they succeeded in obtaining reconsideration of their dismissal, obtaining a remand to the Fourth Circuit Court of Appeals in Richmond, Virginia to question a federal district court’s rejection of their case.

As of January 2013, the court of appeals requested additional briefing on three issues from Liberty:

  1. Whether the AIA applies to a dispute over the employer mandate, after the Supreme Court NFIB ruling on the individual mandate
  2. If the employer mandate “exceeds Congress’ powers under the Commerce, Necessary and Proper, and taxing and Spending Clauses” of the Constitution
  3. Any new developments impacting the individual and employer mandates’ compliance with the Equal Protection, Free Exercise, and Establishment Clauses of the Constitution

The Liberty case faced the appellate court on May 16, 2013, and was fighting each of the aforementioned issues regarding the healthcare law, including what they referred to as the abortion mandate for religious employers and individuals.


Liberty Counsel asserted that ObamaCare provides “the largest funding of abortion in American history,” on their site, gathering religious support, while “also [challenging] the entirety of the employer mandate for all employers – secular and religious,” said Mat Staver, Founder and Chairman of Liberty Counsel.


The Future of Health Reform In Court

With the evidence we have seen thus far, it is safe to say more lawsuits will continue to arise as long as the Affordable Care Act is in place. Since its inception and until it is deemed unconstitutional, there will be opponents to the law and the freedoms it provides.

Many individuals and businesses contend that the law is reducing their personal rights and liberties, as well as costing their state and businesses more money — although each of these claims has been made prior to the implementation of the individual and employer mandates and exchanges. Undoubtedly, the law will be fought by conservatives opposing the reforms of the Obama administration even after the president is no longer in office.

Until one of these cases disproves the constitutionality of the ACA, it will remain in place, and those in opposition will continue searching for ways to remove it. In the meantime, Jost recommends that Congress consider an increase in the Department of Justice budget in order to relieve taxpayers of the burden caused by the expenses of this litigation.