Jul 28, 2014

House Report: Insurers Underpriced Exchange Plans In Expectation of “Bailout” from Risk Corridors

The House Oversight Committee has released a lengthy report on the Affordable Care Act’s risk corridors, which have the effect of providing additional payments to insurance companies that suffer losses under the law. One of the more interesting findings is that several insurance companies deliberately underpriced plans in the expectation of receiving a “bailout” under the risk corridors. If the risk corridors were not fully funded, the “carriers will have to increase rates substantially.”

Here is a letter Chet Burrell, the President and CEO of CareFirst Blue Cross Blue Shield sent to  White House adviser Valerie Jarrett:

Very recently, this position appears to have been reversed under a rule issued by HHS that requires “budget neutrality” – possibly meaning that if the amounts paid in by “winning carriers” turn out to be insufficient to cover the cost of the “losing” carriers, the Federal government would not step in.

If this is indeed the policy, then carriers will have to price premiums as if the Risk Corridor features is not fully available. While this is a highly technical matter that few understand, the impacts are real and immediate. That is, if the transitional protection is not there, carriers will have to increase rates substantially (i.e., as much as 20% or more beyond what they would otherwise file) to make sure that premiums adequately reflect expected costs – because there would be little protection if they do not.

Here is the urgency: Premium rate filings for January 1, 2015, are due on May 1, 2014, and all carriers are not making rate-filing decisions. There is great concern among carriers about the intent behind the recent change in rule. Uncertainty or confusion will equate to higher rates. This could confront the Administration with a sea of far larger premiums increases than expected. Once the filings are made, they will likely quickly become public.

Immediate action to clarify the administration’s position is needed to avert this. The most effective action would be assurance that the original HHS interpretation of the ACA (which conforms best to a plain language reading of the ACA) still stands and that carriers could count on federal funding for risk corridors during the transition years (2014-2016)

The Report concludes that this memo effectively told the President that he can either fund their losses, or deal with higher-than-expected premiums:

Mr. Burrell’s memo is further evidence that insurers generally expect to receive payments through the Risk Corridor program. It also shows that this expectation of receiving payments allowed insurers to keep exchange plan premiums significantly cheaper than they would have been without taxpayers being on the hook for a bailout. Mr. Burrell’s memo essentially presents the Administration with a choice: face significantly higher premium increases in 2015 for exchange plans or make taxpayers bail out insurance companies. 

Jarret replied that “the policy team is aggressively pursuing options.” The Administration issued a revised policy, insisting on budget neutrality, that did not address Burrell’s concerns. He wrote back to Jarrett, noting that the Administration will have to deal with rate increases:

This confirms the very policy we were concerned about and that I wrote you about. I think the WH has to be prepared for large premium rate increases in many parts of the country because a key stabilizer (risk corridors) can now not be counted on.

AHIP and BCBSA are analyzing the impact and will issue their joint assessment soon so I certainly do not speak for the industry. I offer only my opinion here.

Until last month, all in the industry assumed there would be no budget neutrality given the way ACA is written, so this is seen as a key change very late in the implementation process. It will adversely impact premium rates in 2015, I am sorry to say.

Putting aside the merits of this matter, it is jarring how rent-seeking works in reality. The president of a large corporation sends an email to the White House, practically threatening the Administration to not give them rents–if they don’t they’ll jack up rates. Of course, this would limit the number of people who sign up for Obamacare.

Jarret wrote back, surprised that this didn’t do the trick. “Jeanne [Lambrew] really thought this would help. We will regroup next week.” After some consultation, Jarret replied again:

“After speaking at length today with Jeanne and our other policy folks, I do not think I have any more to add. They seem to have given you 80 percent of what you requested and I am not in a position to second guess there [sic] analysis.”

Burrell still wasn’t happy.

Thanks, Valerie for all your efforts and follow through. I am appreciative of the discussion I had with Jeanne, Al and Julian and all you did to arrange it. My view remains the same – substantial rate increases are coming but it seems it can’t be helped.

After the insurance lobby continued to state that premiums would increase if risk corridors stuck to risk neutrality, the Administration “reversed course.”

After receiving warnings of substantially higher premiums if the Administration implemented the Risk Corridor program in a budget neutral manner, the Administration reversed course and indicated that it would not implement the program in a budget neutral manner. On May 16, 2014, CMS finalized a rule that addressed changes to the Risk Corridor program for plans in 2015.105 In this rule, HHS wrote “In the unlikely event of a shortfall for the 2015 program year, HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers. In that event, HHS will use other sources of funding for the risk corridors payments, subject to the availability of appropriations.”

What those “other sources” are, who knows. If you want to dive deep into the weeds, search for the testimony of my friend Seth Chandler. I saw Seth light up the Committee hearing room in person, and he brought his expertise to the discussion. In short, it is almost impossible for the government to assert that the risk corridors will be risk neutral. Further, to the extent they are not budget neutral, the Secretary lacks the authority to make these payments. Seth raised the point that tinkering with the funding of the statute, without congressional authorization, threatens the separation of powers.

According to Professor Chandler, the Administration’s transitional policy not only raised major questions about separation of powers, but it also increased the likelihood and cost of a taxpayer bailout of insurance companies:

[T]he Obama Administration’s sabotage of its own delicate mechanisms for adverse selection containment by what it calls a transitional policy … violat[es] the law [Congress] passed and permit[s] insurers in many States to sell policies that fail to provide essential health benefits and that otherwise violate the ACA. That action increased the cost of risk corridors substantially, even as it challenged separation of powers.

It is simply remarkable how callously the rule of law, and billions of taxpayer dollars are whisked around, in the face of no congressional authorization, when policy decisions are being made.

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Jul 28, 2014

D.C. Seeks Stay of 2nd Amendment Decision

As I noted in my earlier post, the District has formally petitioned for a stay of the ruling invalidating its ban on concealed carry. In its motion, the District stressed the chaos that would result by its scramble to accommodate the decision:

“The public interest is not served by rushed legislation on a foundational public-safety issue or by allowing any and all ‘dangerous or deadly’ concealable weapons to be carried in public, without reasonable restrictions being imposed, during the pendency of any appeal and/or new legislation,” 

Alan Gura seems amenable to a ninety-day satay.

Lawyers for the city say the gun rights activists who brought the case “do not oppose an immediate stay for 90 days.” If Scullin won’t grant a stay, the city could and likely will ask the U.S. Court of Appeals for the D.C. Circuit to put the ruling on hold.

Really though. What is it with district judges not staying rulings after invalidating laws. At least give the government a chance to file the appeal, and don’t force them to scramble over a weekend with this new regime. I say this as someone who agrees with the court’s ruling here.

Perhaps it would be good litigation technique for all governments, when seeking to dismiss constitutional challenges, to request in advance that the district court stay any adverse judgments. This bit Utah in its same-sex marriage litigation, and burned the United States when Judge Vinson found the Affordable Care Act was unconstitutional. At least if you ask for it in advance, you eliminate one risk that a judge will make the ruling go into effect immediately.

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Jul 28, 2014

Does New EEOC Enforcement Guidance Moot Young v. UPS, Pregnancy Disability Case?

In October, the Supreme Court called for the Solicitor General’s response in the case of Young v. United Parcel Service, which considered whether employers should treat pregnancy-related limitations similarly to other non-pregnancy conditions. In its brief, the United States opposed the cert grant, in part because the EEOC was considering “new enforcement guidelines”:

Finally, as noted at p. 8, supra, the EEOC is currently considering the adoption of new enforcement guidance on pregnancy discrimination that would address a range of issues related to pregnancy under the PDA and the ADA. The publication of such guid- ance should clarify the Commission’s interpretation of those statutes with respect to policies like the one at issue in this case, thus diminishing the need for this Court’s review of the question presented at this time.

The WSJ reported that the EEOC has issued such new “enforcement guidance”:

The Americans with Disabilities Act, passed in 1990, has always had the potential to morph into a legal monster for employers. In 2008 Congress amended and expanded the act substantially, arguing that the Supreme Court’s interpretations of “disability” were too narrow. Then the Obama Administration arrived, and you know what that means: Who needs Congress?

On a straight 3-2 party-line vote July 14, the Equal Employment Opportunity Commission voted new “enforcement guidance” rules, which define pregnancy as a workplace disability.

Even after the 2008 amendments, the ADA at no point defines pregnancy as a “disability.” To end-run this fact, the agency discovers pregnancy’s “impairments.” The EEOC’s guidelines argue, “Although pregnancy itself is not a disability, impairments related to pregnancy can be disabilities if they substantially limit one or more major life activities.” Morning sickness, for example, would become a qualifying impairment under the ADA.

The WSJ notes the history:

 In May, Solicitor General Donald Verrilli counseled the Supreme Court not to accept certiorari on Young v. United Parcel Service, a case that addresses the rights of a pregnant woman who couldn’t perform her job functions and asked the shipping company for special treatment. Mr. Verrilli told the Justices that the EEOC was working on “new enforcement guidance” and so the Justices should wait until the bureaucrats weigh in.

On July 1, the Supreme Court took the case. Two weeks later, the Obama EEOC issued its pregnancy guidelines. Effectively, the Obama Administration is using the EEOC to deliver marching orders to the High Court.

These strategies don’t just happen. On July 20 foremost Obama White House adviser Valerie Jarrett published a piece on CNN’s website promoting the EEOC’s pregnancy guidelines.

This could moot the Court’s cert in grant in Young. Stay tuned for a possible DIG.

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Jul 28, 2014

Failure to Grant a Stay in D.C. Second Amendment Case

Yesterday I blogged about the long-awaited decision in Palmer v. District of Columbia, where after 5 (!) years a federal district court invalidated the District’s total ban on carrying a firearm outside the home. In something of a surprise, the court did not stay its ruling pending appeal. It immediately enjoined the District from enforcing the law.

Scullin, a senior U.S. District Court judge who normally sits in the Northern District of New York, wrote in his ruling that he was stopping enforcement of the law “unless and until” the city adopted a constitutionally valid licensing mechanism.

“The decision is in effect, unless and until the court stays its decision,” said Alan Gura, the lawyer who represents the group challenging the ban.

“This is now a decision that the city is required to follow — the idea that the city can prohibit absolutely the exercise of a constitutional right for all people at all times, that was struck down. That’s just not going to fly.”

As you may imagine, this ruling came out of left (right?) field, and took the District by utter surprise, on a Saturday no less. As a result, the District scrambled, and will seek a stay:

The District’s attorney general’s office was “studying the ruling and considering our options,” spokesman Ted Gest said. In the meantime, city attorneys will seek to block the ruling from taking immediate effect.

“The District of Columbia will seek a stay of the judge’s order regarding the D.C. gun-carrying law pending a potential appeal,” Mr. Gest said in a statement.

But, until a stay is obtained, the District was not able to enforce its own law. Until a stay is granted, the District was forced to allow people to carry firearms outside the home. In a memo obtained by Alan Gura, the Metropolitan Police Department issued this interim guidance. In short, it seems that any pistol that was registered in the District of Columbia can now be carried outside the home. There is no permitting or licensing process in place.

WaPo reports:

In an order approved by Police Chief Cathy L. Lanier, police were told that District residents are permitted to carry pistols if the weapons are registered. Those who had not registered their handguns could be charged on that ground, the instruction said.

The number of registered pistols is thought to be low.

Lanier’s instructions to police also said that residents of other jurisdictions without felony records would not be charged under the ban on carrying pistols.

Meanwhile, Ted Gest, the spokesman for the D.C. attorney general’s office, which defended the handgun ban in court, said it will “be seeking a stay shortly,” so the order by U.S. District Judge Frederick J. Scullin Jr. may not be in effect for long.

“Its time of effectiveness could be very short,” Gest said.

For a short period, the District will have one of the most liberal carry laws in the country! But not really. Registering a firearm in the first place is a Herculean task, that requires countless background checks and hurdles to jump. So anyone fortunate enough to have their license granted would probably meet any more draconian standard for carrying. And no, this ruling does not apply to carrying long-guns, so there will be no back-strapped AR-15s at Target.

I’d like to bring this topic back to my many posts on the failure of judges to stay rulings following the invalidation of bans of same-sex marriage. In the interregnum between the decision, and the stay from a higher court, many clerks began issuing marriage licenses of dubious provenance. Here, until the district court, or the D.C. Circuit steps in, people will be able to carry their guns outside their homes.

In both cases, a fundamental constitutional right was found to be violated, and the court was not willing to wait to give the government a chance to defend its law.

It may surprise you that I think the district court should have at least stayed the ruling to let the government appeal the ruling–especially after a five-year wait. This would avoid the chaos and scrambling of having to issue interim policies at the last minute. I say this as a supporter of the decision, and more broadly of a constitutional right to bear arms outside the home. But the rule of law demands more. When finding a law unconstitutional, the court should act to sustain the ex ante status quo.

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Jul 28, 2014

Chesterfield County Abandons Practice of Limiting Legislative Prayers to Monothesitic Religions

After Town of Greece was decided, I was surprised that Chesterfield County, Virginia was sticking with their policy of only inviting members of monotheistic religions to offer legislative prayers. In a series of back-and-forths with Kevin Walsh, I came to the conclusion that Town of Greece imposes something of a non-discrimination principle, whereby governments cannot pick and choose the religions that offer prayers.

Via Kevin, I see that Chesterfield has abandoned this policy. Instead, the Supervisors of the County Board will not offer invocations themselves, or preside over a moment of silence.

The Board of Supervisors has changed its legislative prayer policy. Starting next year, the supervisors will rotate among themselves in delivering an invocation or presiding over a moment of silence. This is a shift away from a practice of inviting ordained clergy of monotheistic religions, which some contended was unconstitutional under a perceived non-discrimination requirement in the Supreme Court’s decision in Town of Greece v. Galloway.

The shift is prudent even if not constitutionally required, and it may be that the supervisors were closer in thinking to Josh Blackman’s assessment of Town of Greece than to mine. The decision may also reflect the reality that the County would be on the hook for plaintiffs’ attorneys’ fees and costs if the County litigated and lost, but the County could not recover it own fees and costs if the County litigated and won.

It would seem that the supervisors will now be acting as the Chaplain did in Marsh v. Chambers. Though this policy would be okay under Greece’s non-discrimination policy, I suppose there is an open question if the supervisors only offer overtly-Christian prayers. This may run afoul of Town of Greece. Recall the chaplain in Marsh offered ecumenical prayers, though the relevance of this fact is somewhat unclear in Justice Kennedy’s majority opinion.

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Jul 28, 2014

4th Circuit Invalidates Virginia’s Same-Sex Marriage Ban, Does Not Stay Ruling

In a split 2-1 opinion, the 4th Circuit affirmed the District Court’s determination that the Old Dominion state’s ban on same-sex marriage was unconstitutional. In a pithy footnote on the penultimate page of the majority’s opinion, the court declined to stay its ruling.

Because we are able to resolve the merits of the Opponents’ claims, we need not consider their alternative request for a preliminary injunction. We assume that the district court’s decision to enjoin enforcement of the Virginia Marriage Laws encompassed a permanent injunction, which the Plaintiffs requested in connection with their motion for summary judgment.

There was no discussion of the Supreme Court’s ruling two weeks ago in the Utah case, or any other precedent. The Virginia Attorney General has declined to defend the law, so there will not be a cert petition forthcoming from the Commonwealth. Even if the Supreme Court grants certiorari on the Utah petition, same-sex marriages can commence in Virginia.

Update: Josh Block at the ACLU informed me that the Virginia AG stated that he would file a cert petition. As well, the clerk is a named defendant, subject to the injunction, so he would also be able to appeal. This is different from the clerks in Oregon and Pennsylvania, who were unable to sue.

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Jul 28, 2014

Is the $2,448 Obamacare Tax An Unconstitutional Penalty?

The IRS announced that the maximum “tax penalty” (I refuse to use that term without mock-quotes) for the Affordable Care Act will be $2,448.

The IRS said Thursday that the maximum penalty individuals could face for failing to obtain health insurance this year will be $2,448, while families with five or more members could face fines up to $12,240.

The maximum penalty would only hit individuals without insurance whose income is above $244,800. For families of five or more, the maximum penalty would affect people making a combined yearly income of $1.2 million.

“The only people who could potentially be impacted by this guidance are the nation’s highest earners — those who make more than about a quarter of a million dollars a year but choose to go without health insurance,” said a Treasury Department representative.

“Only a small number of the highest earners would pay this maximum fee.“

Believe it or not, the Chief Justice’s saving construction in NFIB was not limitless. The penalty was only “deemed” a tax to save it, subject to certain conditions identified by the Chief. One of those conditions was that cost of the “tax” was less than the cost of insurance, a person has a legitimate choice, and there is no coercion:

The same analysis here suggests that the shared responsibility payment may for constitutional purposes be considered a tax, not a penalty: First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. FN It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the “prohibitory” financial punishment in Drexel Furniture. 259 U. S., at 37.

FN In 2016, for example, individuals making $35,000 a year are expected to owe the IRS about $60 for any month in which they do not have health insurance. Someone with an annual income of $100,000 a year would likely owe about $200. The price of a qualifying insurance policy is projected to be around $400 per month. See D. Newman, CRS Report for Congress, Individual Mandate and Related Information Re-quirements Under PPACA 7, and n. 25 (2011).

Though it is not entirely correct that the “tax” can never be more than the cost of insurance.

The relevant statute is (our favorite) 26 U.S. Code § 5000A. The penalty starts at $95 a month, and will increase to $325 in 2015,  $695 in 2016, and will grow with inflation after that. It’s expected to hit $800 a month by 2023.   For wealthier Americans, the penalty (when fully phased in) will be even greater, between 1% and 2.5% of income.

(B) Percentage of income

An amount equal to the following percentage of the excess of the taxpayer’s household income for the taxable year over the amount of gross income specified in section 6012 (a)(1) with respect to the taxpayer for the taxable year:
(i) 1.0 percent for taxable years beginning in 2014.
(ii) 2.0 percent for taxable years beginning in 2015.
(iii) 2.5 percent for taxable years beginning after 2015.

Though, this penalty is capped by statute.

The amount of the penalty imposed by this section on any taxpayer for any taxable year with respect to failures described in subsection (b)(1) shall be . . .  amount equal to the national average premium for qualified health plans which have a bronze level of coverage, provide coverage for the applicable family size involved, and are offered through Exchanges for plan years beginning in the calendar year with or within which the taxable year ends.

In plain English, this says that the amount of the penalty (not “tax” in case anyone bothered to read the law Congress passed) will not exceed the “national average premium for qualified health plans which have a bronze level of coverage.” So the Chief is wrong to say that the amount will always be less. Why? Because the cost of bronze plans varies by states. In some states it may be more expensive than other. Due to the very nature of an average, in some states it will be above the average, and in some states it will be below the average. In no way can the prices be the same nationwide.

Now it may be true for “most Americans” (those above the average) but not for all Americans (below the average). In fact, the wealthiest Americans, who live in states with the lowest bronze-priced plans, will almost certainly be faced with a false choice–the “tax” will be more expensive than the cost of insurance. 2% of their income will almost certainly be more than the cost of the cheapest bronze plan.

Let’s do some math.  CBO projects that the average national bronze plan will be $5,000 a year in 2016. Therefore, if the penalty would be capped at $5,000 a year, who would pay a $5,000 penalty? An individual earning $200,000 a year (200,000 * .025 = 5,000). But what if the cheapest available plan that qualifies under the Affordable Care Act in that person’s state is less than $5,000 a year? Say the cheapest bronze plan is $4,000 a year.  Because the statute pegs the penalty to the national average, rather than a local average–and it is impossible to buy across state lines–for some wealthier individuals, there is no meaningful choice.

By it’s very terms, this would seem to run headlong into the Chief Justice’s saving construction, which misstated the nature of the statutory cap. At this point, it would no longer be a “constitutional tax” but an “unconstitutional penalty.”

More likely than not, the $2,448 penalty will be less than the cheapest bronze plan, so it will still be cheaper for people to pay the penalty than pay for insurance. I’ll update this post each year.

 

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Jul 28, 2014

PA Supreme Court: No Duty For Sellers To Disclose Murder-Suicide in House

In Property law, sellers generally have no affirmative duty to disclose defects in a home, unless they are “material.” Lying is always a no-no, but unless a defect is material, the seller can remain silent. One of the cases we use to teach this doctrine is Stambovsky v. Ackley, where a court (wrongly in my opinion) held that a house reported to be haunted suffered from a material defect, which the seller had a duty to disclose. Thankfully, this remains the minority rule.

The Pennsylvania Supreme Court considered a similar case, and held that a seller has no duty to disclose that a home was the site of a murder suicide. Philly.com has the writeup:

Home sellers in Pennsylvania are under no obligation to disclose if a house was the site of a murder, a suicide, or even satanic rituals, according to the Supreme Court of Pennsylvania.

“The varieties of traumatizing events that could occur on a property are endless,” wrote Justice J. Michael Eakin in the court’s July 21 opinion. “Efforts to define those that would warrant mandatory disclosure would be a Sisyphean task.”

The ruling was in response to a suit filed by a Delaware County woman who had claimed the McMansion she bought in Thornton had an undisclosed “material defect,” because the seller had not told her that at a murder/suicide had been committed in the home.

The ruling dismissed the woman’s argument that the home’s history resulted in a reduction in its value.

The court said that such events could not be quantified, and went on to ask if a death by poisoning would be “a less significant defect” than a bloody stabbing or shooting.

“What if the killings were elsewhere, but the sadistic serial killer lived there? What if satanic rituals were performed in the house?” Justice Eakin wrote.

The court also noted the 2006 tragedy had been well-publicized, news that could have been discovered easily in print or online.

This ruling is exactly right. And in the age of Google, it is inexcusable not to Google an address and see what pops up.

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Jul 27, 2014

Constitutional Faces: The Origin of Halbig

While Halbig is not really a constitutional case (I think there is a non-trivial Article II take care issue at play in all of the Obamacare rewrites), it’s origin makes for a fascinating story. The Wall Street Journal has a detailed profile of Thomas Christina, a South Carolina lawyer who discovered that the text of the Affordable Care Act limited tax credits to exchanges “established by the states.”

The lawyer, who is not seeking the limelight, recalled that discovery was a “gradual process.”

“It wasn’t like lightning struck,” said Mr. Christina, 59, a shareholder at the labor and employment law firm Ogletree Deakins. “It was a gradual process. But I knew this was a significant enough issue that it would end up in the courts.”

Mr. Christina is reluctant to discuss his reasons for scouring the law. “It’s not really that I was looking for anything in particular,” he said. “My role at the firm was to be the person keeping up with the statute.”

Soon Christina got in touch with the American Enteprise Institute:

“He’s the person who came up with this,” said Thomas Miller, a resident fellow at the conservative American Enterprise Institute. “He deserves full credit.”

In December 2010, Mr. Christina presented his findings at the American Enterprise Institute. AEI’s Mr. Miller was intrigued. He saw the seed of a potential legal challenge to the health law.

And Jon Adler and Michael (not Mike) Cannon found out about it:

The issue gained steam in 2011 when Jonathan Adler, a law professor at Cleveland’s Case Western Reserve University, began looking at the language of the statute, he said, and did a Google search where he found information on Mr. Christina’s work. Mr. Adler emailed Michael Cannon, an acquaintance and the director of health policy studies at the libertarian Cato Institute, about the statute’s language. “When I got this email, my jaw dropped,” said Mr. Cannon, a vocal opponent of the law. In May 2012, the IRS issued a final rule allowing subsidies to be distributed to people who buy health coverage on the federal exchange. To Mr. Adler and Mr. Cannon, that ran afoul of the statutory language of the law.

Then CEI got involved, and retained Jones Day to bring the suit:

In June 2012, the Supreme Court handed opponents of the law a defeat by upholding the individual mandate. That day, Mr. Miller jumped on a conference call with Mr. Christina and others to discuss moving ahead with a lawsuit on the law’s language.
He drew on Sam Kazman, general counsel at the Competitive Enterprise Institute, a libertarian think tank. They coordinated the lawsuits and funded the effort. The institute reached out to Michael Carvin, a lawyer at Jones Day who brought the two cases the courts ruled on Tuesday. The first lawsuit raising the claim was filed in September 2012 and there are currently four cases in the courts.

Imagine if no one had ever discovered this flaw, and the government started paying out the tax credits in violation of the statute, without the benefit of the promulgated rules?

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Jul 27, 2014

I am Quoted in Bloomberg BNA about Halbig and Timing of Appeals

Kimberly Robinson and her colleagues at Bloomberg BNA put together a detailed piece about Halbig. I am quoted at some length:

But in an e-mail to Bloomberg BNA July 23, Josh Blackman, a professor at South Texas College of Law, Houston, said that the plaintiffs challenging the rule in the Fourth Circuit case will, in all likelihood, ‘‘immediately’’ file a petition requesting Supreme Court review.

This creates ‘‘a race for the Court house,’’ Blackman, who teaches constitutional law and focuses on the Supreme Court, wrote on his blog.

The plaintiffs challenging the law in the D.C. Circuit could then ask the court to delay its en banc proceedings until after the Supreme Court decides whether to take the Fourth Circuit case, Blackman said.

This would effectively prevent a circuit-split-killing reversal, he said.

Blackman added that the plaintiffs in the Fourth Circuit case likely have their certiorari petition ‘‘ready to roll,’’ and that the petition could be filed in time for the justices’ fall conference.

And, here is my line that Rick Hasen labeled “quote of the day”:

But Blackman noted, ‘‘John Roberts wasn’t willing to kill Obamacare in 2012 when no one was relying on it. Why would he do so in 2015 when millions are relying on it?’’

Since I gave that quote, I was taken by Kevin Walsh’s post about why Halbig will be different than NFIB for Chief Justice Roberts. In any event, the voxtimidation has commenced.

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Jul 27, 2014

Obamacare Deja Vu: The Full Court Press of Chief Justice Roberts Has Already Started

Shortly after Halbig was decided, I perceived this Marquez-esque sense of deja vu. We’ve been here before. The argumentation process is almost second-nature at this point.

In particular, I observed that soon there would be attempts to intimidate the Chief Justice to rule the right (left?) way:

“Soon enough, the full-court press on Chief Justice Roberts will commence. As I said, deja vu.”

Little did I know that within hours of the D.C. Circuit’s decision, Ezra Klein voxsplained how the Chief Justice would not rule in Halbig’s favor because horrible things would happen. Or did Ezra voxtimidate the Chief Justice Justice not to rule in Halbig’s favor because horrible things would happen.

For Halbig to unwind Obamacare the Supreme Court would ultimately have to rule in the plaintiff’s favor. And they’re not going to do that. By the time SCOTUS even could rule on Halbig the law will have been in place for years. The Court simply isn’t going to rip insurance from tens of millions of people due to an uncharitable interpretation of congressional grammar.

For five unelected, Republican-appointed judges to cause that much disruption and pain would put the Court at the center of national politics in 2015 and beyond. It would be a disaster for the institution. Imagine when the first articles come out recounting the story of someone who lost their insurance due to the SCOTUS ruling and then died because they couldn’t afford their diabetes or cancer treatment. Imagine when every single Democrat who had any hand at all in authoring the law says the Court is completely wrong about what the law meant. Imagine when every single Democrat runs against the Court.

Chief Justice John Roberts realized that in 2012 when he ruled the individual mandate constitutional. All evidence suggests he didn’t want to rule the mandate constitutional. But he thought it would harm the Court to do otherwise. Deciding for the plaintiffs in Halbig would do far more damage to the law than striking down the mandate and it would do so when the law is actually providing insurance to people. It’s not going to happen.

There is a blurred line between voxsplaining and voxtimidating, that pundits walked delicately in the runup to NFIB v. Sebelius. Now, it is a well-worn path. And there is one key difference. We know the Chief blinked in 2012. Why should we think he will act any differently in 2015. Whether the full court press on the Chief  worked in 2012, it is certainly worth a shot again.

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Jul 27, 2014

At Long, Long Last, D.C.’s Ban on Bearing Firearms Falls

After five years, two mandamus petitions, two different federal district judges, and an intervention by Chief Justice Roberts, at long, long last, the District of Columbia’s blanket ban on bearing arms outside the home has fallen.

The procedural posture of this case redefines “tortured.” This case was first filed on August 6, 2009. Summary judgment was filed on August 26, 2009. There was a hearing on 1/22/10, and the matter was taken under advisement. Then, on July 18, 2011, eighteen months later (!), Chief Justice John Roberts reassigned the case from Judge Henry. H. Kennedy to Judge Frederick J. Scullin, Jr. of the Northern District of New York. Why? Because of the delay!? There was a status conference on July 22, 2011. There was a motion hearing scheduled for 8/29/2012 , which was then rescheduled for 10/1/12 (a full year later?!). Matters were taken under advisement. A motion to expedite was filed on 8/9/13 (another year later?!). On October 21, 2013, Gura sought mandamus in the D.C. Circuit. On December 16, 2013, Mandamus was denied by the D.C. Circuit. Gura sought mandamus again in March 2014, which was pending when Judge Scullin finally got around to ruling on it.

In my last post from December, I commented ” I hope this is the magnum opus of Second Amendment opinions, because with all this time to work on it, it better be.”

Well, it’s not that. It is 19 pages long, and effectively parrots the 9th Circuit’s decision in Peruta. Putting aside the merits–which I agree with–it is totally inexcusable for a constitutional right to remain void for 5 years.

In any event, congratulations to Alan Gura, my co-author, on his dedication to this case. To the nuclear D.C. Circuit we go.

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Jul 25, 2014

Chemerinsky’s “Case Against the Supreme Court” cites Decisions of the Roberts Court including Bush v. Gore and United Citizens

Dean Chemerinsky needs to fix the blurb of his new book, “The Case Against the Supreme Court,” which lists decisions of the Robert’s Court, including Bush v. Gore (2000) and United Citizens (no such case):

Most Americans share the perception that the Supreme Court is objective, but Erwin Chemerinsky, one of the country’s leading constitutional lawyers, shows that this is nonsense and always has been. The Court is made up of fallible individuals who base decisions on their own biases. Today, the Roberts Court is promoting a conservative agenda under the guise of following a neutral methodology, but notorious decisions, such as Bush vs. Gore and United Citizens, are hardly recent exceptions. This devastating book details, case by case, how the Court has largely failed throughout American history at its most important tasks and at the most important times.

Only someone of Chemerinsky’s stature and breadth of knowledge could take on this controversial topic. Powerfully arguing for term limits for justices and a reassessment of the institution as a whole, The Case Against the Supreme Court is a timely and important book that will be widely read and cited for decades to come.

 

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Jul 24, 2014

What do you call it when a federal court stays a case while a Catholic priest’s canon law proceeding continues?

Abstinence Abstention.

I kid. But this actually kinda happened. A priest asked a federal bankruptcy court to hold off on a ruling”premised upon an anticipated ruling in a Canonical action.”

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Jul 23, 2014

Colorado District Judge Puts Head In Stand, Refuses To Grant Stay in Same-Sex Marriage Ruling

I lost count of how many district court judges read Lawrence and Windsors as unmistakeable evidence that the Supreme Court wanted lower courts to invalidate bans on same-sex marriage. Even though both decisions specifically went out of their way not to address that issue. I don’t think those were unreasonable conclusions. In fact, I think that was a reasonable conclusion, especialyl in light of Justice Scalia’s sky-is-falling dissents (which were cited with glee by the lower courts). District judges often have to follow the lead set by the Supreme Court, and make inferences on how they would decide similar issues. Sometimes it isn’t clear, but that’s why judges get paid the big bucks. That’s the way things work.

But not when it comes to something as mundane as a stay to maintain the ex ante status quo. A federal district judge in Colorado has invalidated Colorado’s ban on same-sex marriage. But, he refused to grant a stay of his ruling, and only put the judgment on hold till the Court of Appeals rules on it.

I’m not sure if the Judge is knowingly putting his head in the sand, or wishes instead to flaunt some Article III chutzpah, but I’m not buying what Lyle charitably referred to as a “gentle chiding of the Supreme Court”:

Based on the most recent stay [in Evans v. Herbert], it appears to the Court that it may well be that a message is being sent by the Supreme Court. But this Court is not some modern day haruspex skilled in the art of divination. This Court cannot – and, more importantly, it will not – tell the people of Colorado that the access to this or any other fundamental right will be delayed because it “thinks” or “perceives” the subtle – or not so subtle – content of a message not directed to this case. The rule of law demands more.

Let me deconstruct this line by line. First, the Court’s stay in Evans v. Herbert is about as clear as the Supreme Court could have done under the circumstances (It wasn’t going to weigh in on the merits of the issue). At the time, I thought it abundantly clear that lower courts should stay all rulings. Second, it doesn’t take a “haruspex” (someone who reads the future in animal entrails) to know that the Court wants to minimize the disorder caused by not staying the rulings. The Justices will resolve this case definitively sooner rather than later. Third, the message is not “subtle.” In two high-profile cases, almost immediately, the Court has instructed the lower court what to do. Fourth, this is a bizarre notion of the “rule of law,” where district judges usurp the direction of the Supreme Court.

Let’s hope the 10th Circuit has enough sense to grant a stay.

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Jul 23, 2014

The Winners and Losers of Obamacare. July 2014 Edition.

In a column I wrote in October 2013, shortly after the launch of Obamacare, I offered an attempt to understand the winners and losers of the new law. Without a doubt, there would be those who benefit from the law. Healthcare was now more affordable for some, due to the Medicaid expansion (in some states), cost controls, and generous tax subsidies. Without a doubt, the uninsured rate would decrease. People who never had insurance before would now be able to afford insurance. A study by the New England Journal of Medicine found that 10.3 million new people have health insurance, decreasing the number of uninsured people from 21% in September 2013 to 16.3% in April 2014. These are all great things. But, as we learned with Halbig, context is everything.

What are the costs of this law on the other millions of Americans? Who are the forgotten men (and women) of Obamacare:

At the forefront of all social welfare programs are the people being helped — the poor, the sick, the disadvantaged. The beneficiaries of such laws are obvious. Who are really forgotten are those who are being harmed by the law. And those harmed by the law are not merely the super wealthy, or those paying higher taxes. In the case of Obamacare, the harm will be felt most severely, not by the wealthy, but by those forgotten men and women squeezed in the middle.

First, there are also those who were covered by their employers’ plans, but were dropped, and forced onto the insurance exchanges. Second, and even more pernicious, are those who are dropped from full-time employment to part-time employment because their employer cannot afford to pay for Obamacare’s more expensive plans. Obamacare perversely creates incentives for employers to do both of these things.

Third, there are those who had individual plans, which their insurers cancelled. Obamacare rendered many cheaper plans with less coverage illegal, so insurers simply stopped offering them. Fourth, those who live in states where insurers exit the markets will have less choice, and higher prices. This flight is especially prominent in rural areas where low populations do not justify the costs of participating in the exchanges. Insurers shrugged.

Fifth, there are those who will have to pay higher premiums, and more out-of-pocket costs, to cover the cost of insuring the poor and sick. The director of Covered California admits as much. “People could have kept their cheaper, bad coverage, and those people wouldn’t have been part of the common risk pool. We are better off all being in this together.” Obamacare helps the winners (makes their health care more affordable), by penalizing the losers (makes their health care less affordable).

Now, we are beginning to realize the costs of the law, beyond those who have gained insurance. A new CNN poll suggests that barely 1 in 5 are better off under Obamacare, and many more are worse off.

Eighteen percent of Americans, or fewer than one in five, say they or someone in their family is better off because of the Affordable Care Act, according to a new poll by CNN. Nearly twice that number, 35 percent, say they or someone in their family is worse off. A larger group, 46 percent, say they are about the same after Obamacare as before.

In nearly all demographic categories — age, income, education, etc. — more people say they are worse off because of Obamacare than say they are better off.

For example, one might expect respondents with incomes below $50,000 to be somewhat likely to say Obamacare has helped them. And that is the case: 21 percent say they are better off because of the Affordable Care Act. But 35 percent say they are worse off. (Forty-four percent are the same.)

Likewise, one might expect young respondents to report benefits from Obamacare. And they do: 23 percent say they’re better off. But 33 percent say they’re worse off. (Forty-three percent are the same.)

In other categories, the gap between better off and worse off is larger. In just one demographic group, nonwhites, is the group of those who say they are better off, 29 percent, bigger than the group who say they are worse off, 17 percent. (Fifty-four percent say they are the same.)

The “worse off” numbers will continue to grow, as millions of Americans are thrown off their employer plans and put onto the Obamacare exchanges. Remember, within a decade, nearly 80% of Americans will be on the exchanges. Plus, the unpopularity rate of the law holds steady at 59%.

We cannot lose sight of the fact that this law was sold on a series of dangerous lies about how this would affect people. “If you like your plan, you can keep your plan.” As I noted back in October, if the Administration had been forthright about the impact of this law, it would have never passed.

Maybe our collective empathy for the plight of those helped by the law should reduce our concerns for the middle-class. Perhaps that would have been an important national debate to have had in 2010, or during the 2008 election. But Americans never had the conversation that would sanction such a radical transformation of our society. Arguably, we had the conversation in the early 1990s with HillaryCare, and the American people spoke decisively against it.

Obamacare was sold to the American people with the promise of helping both groups. In addition to promising that the poor and sick would be helped, everyone else was promised that they could keep their doctors. They were promised that health care costs would go down. They were promised that there would be no new taxes (the administration reversed this position as soon as the litigation began to defend Obamacare’s constitutionality). None of these things proved to be true.

Had the full picture of this law been understood back in 2010 — the impact on both the winners and losers — rather than the sugarcoated version rammed through Congress on a straight party-line vote, it is doubtful the law would have ever been passed.

But now, we are stuck with Obamacare, and its 2010 veneer is quickly decaying into its 2014 reality.

One of the main accusations of supporters of the ACA is that challenges to the law are “mean-spirited,” and are aimed at depriving millions of health insurance. Perhaps another way of looking at this dynamic is that challengers of the law recognize that the ACA is a boondoggle that will make things worse of in the long run for countless more Americans, and this is a last-ditch effort to avert disaster.

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Jul 23, 2014

Will Halbig be different than NFIB for the Chief Justice?

On my book tour, I frequently am asked the same question: will the Court take the opportunity to strike down the mandate in Halbig? My answer usually goes something like this. Chief Justice Roberts could have invalidated the entirety of the Affordable Care Act in 2012, before anyone relied on it. He didn’t. Why would he do so in 2015, when millions are relying on it. (Though it is far from clear whether there are more winners than losers under the law).

Kevin Walsh has an astute post that challenges some of my own thinking. First, he notes that unlike NFIB, which involved serious doctrinal developments, Halbig is a fairly straightforward application of statutory interpretation, that will not change any constitutional doctrine (other than the fact that the Administration can’t arbitrarily rewrite the law).

First, a ruling for the individual mandate challengers required the development of constitutional doctrine in a way that a ruling for the ACA subsidies challengers would not. The political branches have long been on fair notice that text of enacted law controls, whereas they may have been lulled into complacency by the Court’s own latitudinarian constructions of the scope of congressional authority under Article I over time. Second, there is no statutory inseverability issue in the ACA subsidies challenge. The decision in NFIB v. Sebelius was made under the shadow of potential statutory inseverability, such that a newly formulated limitation on congressional power could be used to take down the entire ACA in one judicial ruling. While the practical effects of invalidating the IRS regulation in the ACA subsidies could be severe, the legal ruling would itself be much narrower by comparison

Kevin’s latter rationale, focusing on the rule of law, is much more persuasive in my mind.

Nor can one discount the possibility that, over time, Chief Justice Roberts has come to view President Obama’s commitment the rule of law in a manner similar to how Chief Justice Marshall understood President Jefferson’s commitment to the same.

This is exactly right.

Since 2012, a lot has changed.  The President has unilaterally rewritten the law nearly 40 times (by my rough count). He sees no bounds to his ability to change the law, and has even taunted Congress to “sue me.” So here we are, in Court. To the extent that these issues present close issues, the government should not receive its normal presumption of constitutionality. To the contrary, the reckless and lawless manner with which this law has been drafted, enacted, and implemented, should deprive the government of this benefit of the doubt. Specifically, with respect to Halbig, the United States notified the D.C. Circuit in a letter brief that they would effectively not comply with an invalidation of the IRS rule.While the Chief may have thought a saving construction was warranted in NFIB, a similar favor may no longer be warranted.

For some time, I have toyed with the idea of filing a brief in one of the Obamacare cases focusing on the rule of law. This may present the right opportunity.

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Jul 23, 2014

Obamacare Deja Vu: Frivolous Arguments Now On The Wall, and Parade of Horribles

There is an odd sense of deja vu with the current Obamacare litigation.

In the early days of the individual mandate debate, a common ploy was to label arguments about the individual mandate’s constitutionality as “frivolous.” Then, when courts began to invalidate the mandate, the arguments, in the words of Jack Balkin went from “off the wall” to “on the wall.” Then, supporters of the ACA had to develop sophisticated legal arguments as to why these arguments were wrong. At this point, there was a serious legal debate. But, this effort was augmented by the standard parade of horribles, which I document at some length in my book.  If the Court strikes down the President’s signature piece of legislation of a 5-4 vote in an election year it will delegitimize the Court. If the Court strikes down the mandate, millions will lose their health insurance. The supporters of the law were playing games with people’s lives. And so on.

Let’s review the Halbig litigation, which has followed an eerily similar pattern. For nearly two years, virtually all scholars argued that the argument advanced by Jon Adler and Mike Cannon was “frivolous.” Yet, by my count, 5 out of 6 Judges (including 3 Democratic-appointed Judges) agreed that the government can’t win at Chevron Step 1. 5 out of 6!  Only one judge, Judge Davis, found that this case was open and shut at Chevron step 1.

I should remind you that Judge Davis was on the 4th Circuit panel in Liberty v. Geithner, and was the only judge who reached the commerce clause issue–the other two judges on the panel resolved it at the taxing power. He basically reached the issue, even though he agreed with the taxing power analysis. So much for judicial restraint.

Only by applying the uber-deferential Chevron Step two did 4 out of the 6 judges find that the IRS’s position was reasonable. The government being forced to win by the graces of Chevron Step 2 means this position is not frivolous. This is even less impressive than beating the rational basis test. Now, as Rick Hasen noted, this argument is now “on the wall.”

There is another parallel with Obamacare. I could not find a *single* person who argued in 2009 and 2010 that the Affordable Care Act imposed a tax on those who do not have insurance. No one. One government lawyer I interviewed for Unprecedented assured me this was how the Administration viewed it. But I could not find any contemporaneous evidence to substantiate this. Ditto for the legislative history of the issue in Halbig. As Adler and Cannon note in their WSJ Op-Ed:

If that were Congress’s intent, certainly one should be able to find some statutory language to that effect. Or contemporaneous quotes from the law’s authors explaining that they intended the Affordable Care Act to authorize subsidies in federal exchanges. The president’s supporters have had three years to find such evidence supporting their theory of congressional intent. They have come up empty.

Again, 5 out of 6 Justices agreed on this point. I suppose this is what happens when you ram a 3,000 page law through the process without any meaningful reconciliation or conferences. This was necessary because of Scott Brown’s election, as Megan McCardle recalls. They passed the law. And now, we found out what is in it.

Now that the argument is on the wall, debates are raging between textualism, purposivism, contextualism, and so many other -isms. The canons of construction are firing away at full blast. All this argumentation is evidence that the argument is not, nor has ever been “frivolous.”

And, following the pattern we saw with Obamacare I, the parade of horribles has commenced. For those of you on the ConLaw Prof list-serve, the barbs were charged at a very high level yesterday, with accusations of mean-spiritedness being thrown around vividly. Andy Koppelman, in a post titled “Halbig and hurting the innocent as a political tactic,” asks:

Q. What’s the difference between a Ukrainian rebel with a rocket launcher and a lawyer challenging the Obamacare subsidies?

A. The Ukrainian doesn’t intend to hurt innocent people.

Too soon? Koppelman piles on in a piece in TNR titled “Obamacare Opponents Are Hurting 4.5 Million Workers to Win a Political War.” Beyond the legal merits of the case, people will lose their insurance if the challengers win.

But merits aside, the case raises important questions about the ethics of political warfare. When is it acceptable to deliberately aim to harm huge numbers of people in order to score a symbolic point? The point here is to discredit Obamacare; the casualties are simply a means to that end….

If the argument is ultimately accepted by the Supreme Court, then about 4.5 million low- and middle-income workers in those states who are already receiving assistance from Obamacare will abruptly lose their benefits—not because they did anything wrong, but because this destruction furthers the political war. Their personal disasters are not unintended side effects of the litigation, but the very goal that the challengers are seeking.

The opponents of Obamacare have from the beginning found themselves driven by the logic of their position to make arguments that are increasingly morally repulsive. This was on display in the Supreme Court argument in March 2012. The government argued that the state legitimately could compel Americans to purchase health insurance, because the country is obligated to pay for the uninsured when they get sick. Justice Antonin Scalia responded: “Well, don’t obligate yourself to that.”

Echoing that charge is Tim Jost, who in the early days called both the mandate argument, as well as the Halbig frivolous.

Should the plaintiffs ultimately win, millions of Americans will lose their premium assistance and probably their health insurance. The individual health insurance markets may collapse in several states. This is mean-spirited litigation, intended to deny health insurance to those who Congress intended to help. It is to be hoped that in the end the courts will interpret the law as it was meant to be interpreted, and uphold the IRS rule.

Soon enough, the full-court press on Chief Justice Roberts will commence. As I said, deja vu.

Before this week, I was weighing against writing another book on the Affordable Care Act. Now, I am leaning towards continuing my work on “Unraveled,” focusing more broadly on executive power in the age of Obama. Hobby Lobby, Boehner, Halbig, Immigration, Libya, Bergdahl, etc. There’s more than enough important facts to chronicle for the ages. My article, “Congressional Intransigence and Executive Power” provides the basis of my theories.

 

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Jul 23, 2014

The 4 NFIB Dissenters, and Not the En Banc D.C. Circuit, Will Decide What Happens Next

Yesterday I wrote two posts concerning the timing of the appeals in Halbig (CADC) and King (CA4). I then engaged with an extended twitter dialogue with Steve Vladeck and Ian Millhiser (that cost me way too much cruise wifi money). Here, let me add some additional thoughts.

The plaintiffs in both Halbig and King are represented by Mike Carvin at Jones Day (who represented NFIB in NFIB v. Sebelius). It would behoove Carvin to file, as soon as possible, a cert petition. The United States will be filing, not quite as soon, a petition for rehearing en banc in the D.C. Circuit. The United States will certainly oppose the cert petition, and ask the Court to let the Circuit split ripen. (Translation, let the nuclear panel eliminate the Circuit split).

Under normal circumstances, this would be the prudent course of action. Let the full En Banc D.C. Circuit take a stab at it, and then review that cert petition.

But we aren’t in normal circumstances. This is Obamacare. Four justices were very, very bitter that the Chief upheld the mandate in NFIB. Four justices now have the opportunity to strike down–effectively–the mandate in 36 states. Four votes are all you need for certiorari. Plus, even if the United States requests a extension, this case would still be argued during OT 14. If en banc goes forward, the decision would come OT 15, right before another presidential election.

In fact, I had this odd premonition that if the Court grants cert on King before Halbig en banc proceedings, there may even be a dissent from the grant of certiorari (Sotomayor), arguing that this case should be allowed to ripen. (Remember Justice Breyer did something like that two years ago in a campaign finance case from Montana).

Gerard Magliocca offers similar thoughts at Balkin:

First, I think that there are four Justices who will be waiting on the front steps of the Court for the certiorari petition from the Fourth Circuit (which ruled in favor of the Administration on the same issue yesterday).  Thus, the question of whether the DC Circuit will go en banc in Halbig is, to my mind, largely beside the point.  In an ordinary case, one would expect the Justices to wait and see if a circuit split could be healed before acting, but this is not an ordinary case.  The Justices who lost in 2012 on the individual mandate challenge would love to get another at-bat.

All this talk about the nuclear option is besides the point. The 4 NFIB dissenters will hold the key to when this case reaches the Supreme Court.

Update: Harry Reid continues to extoll the benefits of the nuclear option:

Asked by reporters if his decision to employ the nuclear option to fill the circuit was vindicated, Reid said based on “simple math, you bet.”

Senate Majority Whip Richard J. Durbin, D-Ill., said he wouldn’t be surprised if the full court ruled in the White House’s favor.

“There was a strong conservative Republican majority on the D.C. Circuit until we filled the vacancies,” Durbin said. “Now it’s a balanced circuit, so since one of the Republicans of the three who ruled was on our side I wouldn’t give up on a…ruling coming our way, toward the administration.”

 

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Jul 23, 2014

Explaining Halbig at Sea

Obamacare has become a burden, even of vacation. While on a snorkeling trip, I mentioned to my parents something about the Halbig decision yesterday, and said Affordable Care Act. Someone on the boat works at CMS, and asked what happened. While bathing in the warm, coral waters of Bermuda, I gave a brief discussion of Halbig and King. No, I didn’t pitch my book. For what its worth, she was glad Secretary Burwell was easily confirmed.

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