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DC Circuit Upholds the ACA's Individual Mandate
Practical Law Legal Update 1-511-5849 (Approx. 4 pages)
DC Circuit Upholds the ACA's Individual Mandate
by PLC Employee Benefits & Executive Compensation
| Published on 09 Nov 2011 • USA (National/Federal) |
The District of Columbia Circuit ruled that the individual mandate provision under the Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA) (collectively, the Affordable Care Act (ACA)) is constitutional.
Key Litigated Issues
On November 8, 2011, the US Court of Appeals for the District of Columbia issued an opinion in Seven-Sky v. Holder. The court held that the individual mandate provision in the Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the Affordable Care Act (ACA)), is constitutional. Under the individual mandate, most individuals must either purchase and maintain health insurance from private insurers or pay an individual penalty.
Background
After PPACA was signed on March 23, 2010, four individuals brought an action in the US District Court for the District of Columbia challenging its constitutionality, alleging that the individual mandate exceeds Congress' authority under the Commerce Clause and substantially burdens the plaintiffs' religious exercise in violation of the Religious Freedom Restoration Act. The district court granted the government's motion to dismiss.
Outcome
The plaintiffs appealed the district court's ruling to the DC Circuit, which affirmed the district court's ruling that the individual mandate is constitutional.
The DC Circuit considered whether the provision exceeded Congress' authority under the Commerce Clause. Comparing the provisions of the individual mandate to the facts in Wickard v. Filburn, the court reasoned that a law does not violate the Commerce Clause so long as it would likely induce some action by an unspecified number of individuals. Additionally, the court reasoned that health care and health insurance are not traditional state concerns and that the plaintiffs did not demonstrate that the individual mandate is a burden to their religious exercise.
The court, in independently assessing whether it had jurisdiction, also rejected the argument advanced in the Fourth Circuit's holdings that no court has jurisdiction until the individual mandate comes into effect in 2014, concluding that:
- The penalty imposed by the individual mandate for not obtaining health insurance is not a tax.
- The action is about the mandate's constitutionality, which is broader than an assessment about the penalty.
Practical Impact
The DC Circuit is the fourth federal appellate court to rule on challenges to the ACA, adding to earlier decisions by the:
- Fourth Circuit in Commonwealth of Virginia v. Sebelius and Liberty University v. Geithner, which dismissed the case for lack of jurisdiction.
- Eleventh Circuit in Florida v. United States Department of Health & Human Services, which held that the individual mandate is unconstitutional.
- Sixth Circuit in Thomas More Law Center v. Obama, which upheld the individual mandate.
On November 14, 2011, the Supreme Court announced that it will hear arguments on the ACA litigation in 2012, with a decision expected in the case by June 2012 (for more information, see Supreme Court to Hear ACA Case). For now, the Act includes an extensive number of requirements with which employers must comply, including:
- Internal claims and appeals (see Practice Note, Internal Claims and Appeals under the ACA).
- Lifetime and annual limits (see Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA).
- Coverage of preventive services (see Practice Note, Coverage of Preventive Health Services Under the ACA).