AG Cuccinelli's take on Healthcare debate in SCOTUS

[allingeneral]

March 24, 2012 (DAY 1)

Dear Fellow Virginians,

Today was the first day of the three-day healthcare hearing in the U.S. Supreme Court, and as promised, I wanted to offer you my reflections on today's hearing.
Today the Court heard 90 minutes of argument on the Anti-Injunction Act ("AIA"). The AIA was enacted in 1867 to require any lawsuits challenging tax statutes to happen only after the taxes are paid; i.e., pay first, then sue. The rationale is that it's important to keep the tax revenues flowing without nuisance lawsuits getting in the way, and the national government can pay back any necessary taxes and interest on those relatively rare occasions when it loses such a suit.

Two years ago, the federal government was arguing that the AIA barred the lawsuits challenging the federal healthcare bill, but they have since changed position to agree with the states that the AIA should not apply to bar this case.

Even if the AIA applied and the case was dismissed, it would not be a judgment on the merits of the lawsuit - i.e., it wouldn't be a judgment about whether the individual mandate is constitutional or not. So, we'd all be back in three years after folks refused to pay the penalty.

Can you imagine the destruction that would be caused by three more years of uncertainty about whether or not the federal healthcare law is constitutional? I'd rather not contemplate it.

It's always a bit dicey to read too much into oral argument, but the tone and focus of the justices' questions and comments gave me the strong impression that they will not throw the case out without reaching the merits.

The moment the case began, Justice Kennedy was immediately on the front edge of his seat, but Justice Scalia got the first question in... followed closely by Justice Kennedy. Pretty soon all of the justices were firing away (except Justice Thomas, as he famously does not ask questions during oral argument).

Some of the most interesting exchanges came from some unexpected directions. And there was some spill-forward into tomorrow's hearing regarding the individual mandate as it relates to the feds' tax argument.

Today also saw a lawyer appointed by the Supreme Court itself arguing that the AIA bars the case from going forward.

It is fairly common for the Court to appoint a lawyer to argue a position that no party in the case is advancing, but I cannot remember a case in which the Court appointed two such lawyers. The second Supreme Court appointed lawyer will argue on Wednesday regarding the severability of the individual mandate (more on that Wednesday night).

Justice Breyer was the first to ask a tax question that clearly will tie in to tomorrow's arguments. Quite simply, as it relates to the penalty you have to pay if you don't buy the government-mandated health insurance, Justice Breyer asked simply "why is this a tax?"
While addressing the U.S. Solicitor General, Justice Alito noted words to the effect that 'today you are arguing the penalty is not a tax, so the AIA shouldn't come into play, but tomorrow you'll be here arguing that the penalty is a tax.' He clearly had a problem with that set of arguments, and he wasn't alone.

Justice Sotomayor noted a series of exceptions or exemptions from the AIA, and wanted to know if there was ever a case where something was found to be a tax for constitutional purposes, but not for purposes of the AIA. No such case was cited.

This is consistent with the federal government's inconsistency (did you follow that?). In this particular case, both the states and the feds agree the AIA should not apply, and today's discussion seemed to suggest the Court is headed in that direction. However, the states and the feds come to their conclusions differently, and once again, the feds rely on words meaning one thing here, and another thing there.

Wouldn't it be nice if words meant the same thing every time? Words like "tax," "penalty," and "economic activity." To you and me maybe, but not the federal government.
Regarding the tax question, Justice Ginsberg noted that the penalty was to induce compliance with the mandate, not to raise revenue (generally, to be a tax, an act must be intended to raise revenue generally). Justice Ginsberg went on to note that because the penalty was to back up the compulsion to buy insurance, it wasn't a tax.

I'll finish today's walk-through with what I thought was the most interesting exchange of the day, and it was between Justice Kagan and the SG. Justice Kagan posed the following scenario and question: "If someone didn't buy the mandated insurance, and paid the penalty, then later was answering a question about whether they had ever violated a federal law, what would the answer be?" The SG, in a decidedly unconfident manner answered "No."
Think about that. The feds mandate you have to buy insurance, but if you don't obey that mandate, you have not broken the law? Again, this illustrates the incredible inconsistencies undertaken by the feds.

Assuming that the AIA does not bar the case - an outcome I expect - then they will reach the question of the constitutionality of the mandate itself... and that is what will be argued for two hours tomorrow.

This really is the heart of the case, and it goes to the outer limits of already-expansive federal power.

If the federal government can order you to buy health insurance, then there's nothing to stop them from ordering you to buy a car, asparagus, or a gym membership (the very examples used by the district court judge in Virginia's case). That's why I say this case is not about health care or health insurance, it's about liberty.

On a separate note, it's worth recognizing that today's subject matter - the AIA - is in many ways the most confusing subject in the case. After you read my analysis of all three days, I think you'll see what I mean.

If you'd like to hear the audio briefing I gave to Virginia media today, click here.
Tomorrow I will again be in the courtroom taking notes to share with you tomorrow night in The Compass. And while all three days are important, tomorrow is the biggest of them all, so stay tuned tomorrow night!

Also - please make sure to share this with your friends! If you can - please forward this on!

Sincerely,

Ken Cuccinelli, II
Attorney General of Virginia

[allingeneral]

DAY 2

Dear My Fellow Virginians,
Today was the second day of the three-day healthcare hearing in the U.S. Supreme Court, and as promised, I wanted to offer you my reflections on today's hearing.

Today the Court heard two hours of argument on the individual mandate - the heart of the federal health care law. It was exciting and modestly encouraging today in the courtroom.
Let me note at the outset that I am a litigator, and any good litigator will tell you their own stories of having been in court and having the feeling that things were going their way, only to see the court rule against them in the final order. So, while today went well for the limited government side, it always comes with the foregoing caveat born of experience.
The federal government went first in the person of Solicitor General Verelli. He was up for almost an hour, followed by Paul Clement for half an hour on behalf of the states, and Mike Carvin for half an hour on behalf of the NFIB.

Previous Compass readers will recall that this argument has two parts: the most important is the argument whether or not the mandate is permissible under Congress' power to regulate interstate commerce; the federal government's fallback argument is that the penalty you have to pay if you don't buy the government-mandated insurance is a tax for constitutional purposes (a position that Justice Scalia quietly called "extraordinary" at the end of the SG's argument).

Justice Kennedy spoke early and asked the SG if the federal government could order people into commerce in order to regulate them. And thus began more quasi-answers (like yesterday) by the federal government, as the SG said "that's not what's happening here."
Gradually the SG was directly confronted with the main challenge the feds had in court today, namely, to identify some limiting constitutional principle regarding federal power if the mandate was in fact constitutional.

The SG identified two circumstances that he said demonstrated the uniqueness of the health care (I'm going to say "HC" for short) market that would restrict 'mandates' from spreading to the other areas of the economy. First, he said that HC was unique because big, unaffordable costs could hit someone without insurance unexpectedly; and Second, those costs would be shifted to others if the person couldn't afford to pay those costs.
Somewhat amusingly, Justice Alito noted that burial costs were expensive and could hit one unexpectedly as well. He further noted that if he was too poor to pay his own costs and hadn't prepared for his burial, he would still certainly be buried, and those costs would in turn be shifted to others either by raising everyone else's burial costs if the buriers had to absorb those costs, or we'd all pay higher taxes if the government bore those costs.
The Chief Justice had his own examples handy.

The SG more or less simply insisted that HC was unique.

The old standbys of the fed's being able to order you to buy a car or broccoli came up too.
My strong sense is that the federal government failed to overcome its main hurdle of the day, namely, to articulate some limitation to federal power if the mandate was constitutional.

Justice Kennedy noted that the mandate was unique in light of its affirmative requirement of a citizen to purchase something, and that would appear to alter the relationship between the government and individuals in a "fundamental way." This is a powerful and deeply philosophical statement that I take great comfort in.

It is a point that we have been making repeatedly, and it goes deeper than just this piece of legislation. It is akin to my consistent comment that this case is not about HC, it's about liberty. And I believe the fundamental change Justice Kennedy was speaking of was one that dramatically reduces citizens' liberty.

At several points, Justice Kagan threw the SG what I thought were 'lifelines.' She seemed to advance the notion strongly that this is just ordinary regulation of a national market, and it's just a question of timing - of 'when' the feds apply regulation. Justice Kagan seemed to base her assertion on the notion that we are all in, or will be in, the HC market.
Justice Scalia roughly hammered on what market was actually being regulated. He noted to the SG that 'you are talking about HC, but you're regulating insurance.'

The Chief Justice played off that discussion a bit by noting that the feds were trying to solve the problems in the HC market by regulating insurance. Thus, even if the HC market were unique, what's to stop the feds from coming back later with some other mandate that was not related to insurance but that was rationalized as helping out with the HC problem?
The Chief Justice also noted wryly that if the Court allows the mandate, 'you'll just be back with something else that's unique' later.

Justice Breyer referred to the opinion of former Scalia clerk and now 6th Circuit Judge Sutton who ruled the mandate constitutional, and noted his two pages of alleged government compulsions. To which Mike Carvin simply said 'none of them apply.'
Never before has the federal government ordered us to buy a product under the guise of regulating commerce.

Justice Breyer also played off one of Justice Kennedy's exchanges with the SG, and pressed the SG to concede that if they could compel this under the commerce clause, then the feds could compel other purchases too. This revealed one of the numerous difficulties of the federal position. Justice Breyer's tone strongly suggested he thought the SG's position should be that the feds could order us all to make government-directed purchases under the commerce power, but the SG knew that would be a deep hole with many of the Justices and he wouldn't go there.

The SG's problem is that Justice Breyer was actually pushing him toward a much more consistent position. And it was the logical position for the SG, but it didn't suit his more limited goals in this case - goals that have left him desperately trying to find some way to treat insurance for health care as totally unique from everything else on earth.
He simply did not pull it off, and while Justice Breyer may vote his way, I don't think Justice Breyer will agree with the SG's argument re the mandate.

The Justices also heard argument about whether the the penalty you have to pay if you don't buy the government-mandated health care was a tax. There was much less discussion of this, frankly, because I think it is seen as a far-fetched argument... I would call it radical.

If all the feds have to do to bring a directive under the taxing power is fine you if you fail to do it, then they can order you to do anything that doesn't conflict with some other constitutional protection.

That argument is going nowhere.

As a final sign that the tax argument is going nowhere, Justice Ginsberg reiterated her statement from yesterday that taxes are designed to raise revenues, but penalties are to compel behavior, and if the penalty works perfectly (i.e., everyone buys the health insurance), the penalty will raise no revenue at all. I.e., there's no way it's a tax.
No Justice gave any particular indication that they were ready to defend the penalty=tax position.

Thus my conclusion that it's going nowhere.

I left court today happier than when I arrived.

Tomorrow morning, the Court will hear argument on the severability of the individual mandate (i.e., the remedy if the mandate is found unconstitutional); and tomorrow afternoon they will hear the 4th and final argument regarding whether the massive medicaid burdens foisted on the states under the health care law are so onerous as to amount to unconstitutional coercion by the feds of the states under the spending power.
Unconstitutional coercion of the states using the spending power has never been found to exist by the Court, but if this isn't the case for it, I don't know what is.

You can hear my audio summary of the day by clicking here.

And please encourage others to sign up for The Compass. We are trying to get over 5,000 new subscribers this week, and we're well on our way, but we need your help. So, please forward this on to others and encourage them to go to http://www.Cuccinelli.com to sign up for themselves!

Thanks so much!


Sincerely,

Ken Cuccinelli, II
Attorney General of Virginia

[allingeneral]

DAY 3

Dear Fellow Virginians and Friends,

Today was the third and final day of the three-day healthcare hearing in the U.S. Supreme Court, and as promised, I wanted to offer you my reflections on today's hearing.

Today's arguments were divided into two separate sessions. The Court heard arguments regarding severability first. In a separate session, the Court heard the States' claim that PPACA's Medicaid expansion represented unconstitutional coercion of the States under the spending power of the constitution. I will address each session in turn.

SEVERABILITY

As those of you who have been following the various challenges know, the severability issue will only come into play if the Court finds a portion of the law unconstitutional. If the Court finds that the individual mandate is unconstitutional, it will strike that portion of the law. When it does so, the Court must also determine if the remainder of the law (or at least certain pieces of it) must also be struck down. To the extent that the Court allows other portions of the law to stand, they are said to have "severed" the unconstitutional portion of the law from what it lets stand as law.

Interestingly, as it did regarding the AIA on Monday, the Court did not just hear from lawyers representing the States and the federal government. The Court appointed a lawyer to argue that if the individual mandate is struck down the rest of the law should be allowed to continue in full force and effect.

The appointment of a lawyer to make this argument was necessary because the federal government has made a significant concession regarding severability. The federal government conceded in the all of the cases prior to the Supreme Court that, if the mandate were held unconstitutional, PPACA's provisions regarding community rating and guaranteed issue (essentially that the insurance companies have to insure someone no matter what problems they have or what risks they face) must also fall because they cannot work without the individual mandate. Interestingly, the first time the federal government made this concession was in our case here in Virginia.

So there were three basic positions argued. The States argued that individual mandate is so central to the law that the whole law must be struck down if the mandate is unconstitutional. The federal government argued that, if the mandate is unconstitutional, the mandate and the community rating and guaranteed issue provisions must be struck down, but the rest of the law may stand. Finally, Mr. Farr, the lawyer appointed by the Court, argued that, if the mandate is unconstitutional, only the mandate should be struck down.

Monday's argument about the Anti-Injunction Act was about legal procedure. Tuesday was about constitutional theory and the relationship between citizens and the federal government. Today's arguments regarding severability were all about practical, real world effects. If the Court finds the individual mandate unconstitutional, what happens next? What's the proper remedy?

From the beginning, it was clear that the justices were interested in the practical effect of striking down the mandate.

The best example of a justice being concerned with the practical effect of a ruling may have been Justice Kagan, who noted that if the mandate is found unconstitutional, but the community rating and guaranteed issue provisions are left in place, that creates a large problem. She said: "Once you say that the insurance companies have to cover all of the sick people and all of the old people, the rates climb. More and more young people and healthy people say, why should we participate, we can just get it later when we get sick. So they leave the market, the rates go up further, more people leave the market, and the whole system crashes and burns, becomes unsustainable."

While it's always dicey to try and guess the outcome from questions at oral argument, all of the justices who asked questions seemed to have this same basic concern over just striking the mandate and leaving the rest of the law in place. However, there seemed to be a difference of opinion as to whether that meant that, in addition to the mandate, just the community rating and guaranteed issue provisions should be struck down or whether the whole law should be struck down.
In asking their questions about severability, all of the justices agreed that the Court must respect Congressional prerogatives, but their questions suggested two very different views of how best to do that.

Some of the justices, particularly Justices Sotomayor and Ginsburg, seemed to suggest that the best way to show respect to Congress was to only strike limited portions of PPACA and nothing else.

Others suggested that, to truly show deference to Congress, the Court would need to strike the entire law because, to do otherwise, would be to leave Congress with a law they never passed or even intended to pass. Justice Kennedy said that if the Court struck down the mandate, but left the rest of the law standing, "we would have a new regime that Congress did not provide for, did not consider. That, it seems to me can be argued at least to be a more extreme exercise of judicial power than . . . striking the whole."

Justice Scalia seemed to echo this view, stating that "My approach would say if you take the heart out of the statute, the statute's gone. That enables Congress. . . . to do what it wants . . . . It seems to me it reduces our options the most and increases Congress's the most."

Justice Scalia also pointed out that the severability issue in this case was unlike any case that had come before the Court previously. He noted that the previous severability cases did not deal with the primary purposes of a statute, but generally, dealt with ancillary issues. However, he said that there is no case where the Court has found the "heart" of a law unconstitutional and left the remainder standing, stating: "This is really a case of first impression. I don't know another case where we have been confronted . . . with this decision."
I caution everyone not to read too much into the questions that justices asked about severability in trying to predict whether or not the Court is likely to find the individual mandate unconstitutional. In its opinion, the Court will only reach the issue of severability if some portion of the law is held to be unconstitutional. Thus, all of the questions about severability necessarily assumed that some provision of the law will be found unconstitutional. So, you can't assume that a justice is leaning towards striking down the law simply because of the way he or she asked a question about severability.

MEDICAID COERCION

Today's second session dealt with the States' Medicaid coercion argument. The argument is that because States are so heavily invested in the Medicaid program they are forced or "coerced" to accept the Medicaid expansion in PPACA because, if they do not, Secretary Sebelius could stop them from receiving any Medicaid funds from the federal government, causing financial ruin for the States.

The coercion theory is grounded in a few Supreme Court cases, most recently South Dakota v. Dole, which was decided in the 1980s. The issue in that case was the federal government conditioning the States receiving a small portion (7 percent) of the federal highway dollars that they would otherwise receive on States raising their legal drinking age to 21. The Court held that this was a proper use of Congress's spending power because the States could keep their drinking age at 18 if they were willing to forego the federal money.

However, in issuing its decision, the Court noted that seven percent of the federal highway money was a relatively small amount. The Court, relying on cases dating back to the 1930s, noted that there might be a situation where the amount of money involved was so large that the States would be forced into accepting the conditions. If such a situation ever arose, the Court indicated that the law might constitute unconstitutional coercion of the States.

While the theory of unconstitutional coercion is well known, the modern Court has never found a situation where it actually existed. Today's argument was really about whether such a case could ever exist or is the theory of unconstitutional coercion an academic theory that will never have practical effect.

The questions from the justices pretty much covered all of the possibilities. Some of the justices clearly suggested that so long as the States have the right to refuse the federal money, they are not being coerced. Others seemed to suggest with their questions that, given how much States have come to depend on federal Medicaid dollars, we may have finally found a case where the coercion threshold had been met.

Justice Scalia asked the Solicitor General if the federal government could identify even a hypothetical example of what would constitute unconstitutional coercion. Citing a 1911 case about the location of Oklahoma's state capital, the Solicitor General indicated that Congress could not condition the receipt of federal funds on a State moving its capital. Wow.

Chief Justice Roberts also pressed the federal government on the coercion question, seeking examples of what would go too far. However, he was also critical of the States' position, noting that, to some extent, the States reliance on Medicaid is a problem of their own making. Justice Roberts said: "Well, why isn't that a consequence of how willing [the States] have been since the New Deal to take the Federal government's money? And it seems to me that [the States] have compromised their status as independent sovereigns because they are so dependent on what the Federal government has done, they should not be surprised that the Federal government having . . . tied the strings, they shouldn't be surprised if the Federal government isn't going to start pulling them." Again, wow. But this one hurts in part because of the truth in it.

For me, one of the most significant comments on the Medicaid issue came from Justice Alito. As those of you who have followed our efforts from the beginning know, I have repeatedly said that this case is not about health care, it's about liberty. The decision in this case will determine whether federalism - a bulwark of liberty - survives as a tool to preserve our liberty. While noting that the federal government might be correct in its argument, Justice Alito said that, if Congress can condition the receipt of all federal funds on accepting all federal strings no matter what those strings are, "then there is nothing left of federalism."

As I have said before, it is risky to try and guess the outcome based on the questions asked at oral argument (even three days worth of oral argument). The three days of argument have generated lots of things to think about, and I will be reflecting on all of it over the next few days. Once I have chewed on these last three days, I will probably write another Compass giving you my impressions of the whole week taken together.

While I still make no predictions on what the Court is likely to do, I have been cautiously optimistic since we filed the first challenge to PPACA. This week has left me more encouraged about our prospects then I have been to date. I still believe that the positions we have taken, and that our sister States have taken, are consistent with the Constitution and the foundational principles of this great nation.

You can hear my audio summary of today's hearings by clicking here.

I'll write on this subject again, but now we have three months to wait until we see the final order.

Finally, please, once again, encourage others to sign up for The Compass. We are trying to get over 5,000 new subscribers this week, and we're well on our way, but we need your help. So, please forward this on to others and encourage them to go to http://www.Cuccinelli.com to sign up for themselves!
Thanks so much!

Sincerely,

Ken Cuccinelli, II
Attorney General of Virginia

[SilentServiceVet]

Thanks for posting that shipmate -- good read.

[Diomed]

The AIA was enacted in 1867 to require any lawsuits challenging tax statutes to happen only after the taxes are paid; i.e., pay first, then sue. The rationale is that it's important to keep the tax revenues flowing without nuisance lawsuits getting in the way, and the national government can pay back any necessary taxes and interest on those relatively rare occasions when it loses such a suit.

Thus proving that this country went off-course a long, long time ago.

[Kreutz]

I hope he's not planning on a day by day account until the decision is read; that's early summer.

[ratherfish]

beats medical transcription.

[joeshmo]

[mamabearCali]

And now we wait...elevator music.......

[ Post made via Mobile Device ]

[ratherfish]

The "ignore" feature is good, but an "ignorant" feature would be better!



Sorry, couldn't resist!

Who knows... maybe the New York AG actually is going to wake up one morning and defend liberty like ours does...

Then we could all refrain from crappy little yankee smart azzed comments.

[ratherfish]

Thank you AIG for posting information so relevant to us Virginians!