This latest development in the Halbig litigation is frankly stunning. In a 28(J) letter submitted in the Halbig litigation, the government has taken the position that because the case is not a class action, only the “named plaintiffs” can receive  relief. In other words, even if the court finds that the government acted improperly in awarding subsidies outside the scope of the law, the court lacks jurisdiction to strike down the rule as applied to everyone. Stated simply, under the government’s theory, the court can’t strike down the rule at issue. Too many people benefit from Obamacare. Even if the government is acting illegally, those policies should remain in place. Read the 28(j) for yourself:

We respectfully submit a supplemental authority that bears on plaintiffs’ assertion, made for the first time in reply, that “[i]t does not matter that this ‘is not a class action’” and that the Court could extinguish the tax-credit claims of individuals who live in “states like Texas.” Pl. Reply 26. In Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), and prior decisions, the Supreme Court held that the protections for non-parties are grounded in Due Process. Even when (unlike here) a suit is a class action, “before an absent class member’s right of action [is] extinguishable due process require[s] that the member ‘receive notice plus an opportunity to be heard and participate in the litigation’” and “‘an opportunity to remove himself from the class.’” Id. at 848 (quoting Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985)). Moreover, there is a “constitutional requirement” that a “‘named plaintiff at all times adequately represent the interests of the absent class members.’” Id. at 848 n.24 (quoting Shutts, 472 U.S. at 812). Plaintiffs did not seek to represent a class, and their suit could not satisfy these constitutional requirements. For millions of people across the country, premium tax credits are not burdens to be avoided but federal benefits that they need to afford health insurance.

Counsel for Halbig shot back with a motion to strike, rejecting this surreal approach to standing, raised only for the first one weeks before oral arguments! A ruling that a regulation is invalid must apply “nationwide” for “plaintiffs and non-parties alike.”

This Court plainly can and should invalidate regulations that affect non- parties, without implicating Due Process concerns. The APA directs this Court to “set aside” unlawful agency action. 5 U.S.C. § 706(2)(A). See also Comcast Corp. v. FCC, 579 F.3d 1, 10 (D.C. Cir. 2009) (Randolph, J., concurring). And this Court has made clear that when it invalidates a regulation under the APA, such a ruling has “nationwide” effect, for “plaintiffs and non-parties alike.” Nat’l Mining Ass’n v. U.S. Army Corps of Eng’rs, 145 F.3d 1399, 1408-10 (D.C. Cir. 1998); see also Harmon v. Thornburgh, 878 F.2d 484, 495 n.21 (D.C. Cir. 1989) (“When a reviewing court determines that agency regulations are unlawful, the ordinary result is that the rules are vacated—not that their application to the individual petitioners is proscribed.”).

Further, Halbig was very, very skeptical that the government only just now discovered this “stale” precedent from 1999. They argue, outright, that the government is prepared to ignore the ruling, if the court were to find that the IRS rule is invalid.

Since it is inconceivable that the Government submitted this stale, irrelevant “supplemental” authority to shore up its argument about the justiciability of the employer plaintiffs’ claims (particularly given plaintiff Klemencic’s clear standing), the Government appears to be laying the groundwork to openly flout any decision by this Court invalidating the IRS Rule. Its view, apparently, is that even if this Court vacates the IRS Rule as contrary to the ACA, the Government may nonetheless freely continue to subsidize coverage for the “millions of people across the country” not parties to this litigation. (Notice at 1.) Indeed, because the Government contends that the Due Process Clause would be violated if non-parties were deprived of subsidies, it may believe that it is constitutionally required to continue to offer subsidies in the face of this Court’s invalidation of the IRS Rule.

Consequently, it is incumbent on the Government to now inform the Court and Appellants whether it will abide by this Court’s decision or, for the first time in history, continue to pursue an agency policy after this Court has ruled that the policy is unlawful and set it aside as ultra vires. Indeed, unless the Government affirmatively disavows its apparent intention to lawlessly flout this Court’s binding order invalidating the IRS Rule, the ordinary remedy of vacatur will not suffice, and injunctive relief will be required to enjoin the IRS from making available the subsidies ruled unlawful.

You get it? Even if the court finds that the government acted illegally, they will continue to act illegally.  And the government seems to imply (but doesn’t say outright) that it would violate due process (!?) to suspend the subsidies to those receiving it!

Contrary to the Government’s last-minute contention, this standard APA practice obviously does not violate the Due Process Clause. If this Court vacates the IRS Rule as contrary to the ACA’s text, that eliminates the only legal basis for the IRS to distribute U.S. Treasury funds to subsidize those who purchase coverage on federally established Exchanges. Thus, vacating the IRS Rule precludes the Government from committing the ultra vires act of distributing Treasury funds that have not been authorized by Congress. So precluding lawless subsidies to those purchasing coverage on federal Exchanges obviously means those people cannot receive those subsidies, but it does not in any way bind them or deny them Due Process rights. Were it otherwise, the APA’s requirement to set aside regulations would be unconstitutional every time the rule affects non-parties (which is almost always true).

…

First, if the Government inexplicably believes that it has the authority (or, more absurdly, a constitutional duty) to continue to disburse subsidies for federal Exchanges in the face of this Court’s order vacating the IRS Rule, this means that invalidating the IRS Rule will not disable the Government from making subsidies available to anybody, including even Klemencic. Thus, mere vacatur of the IRS Rule would not remedy Klemencic’s injury, because so long as a subsidy is “allowable” to Klemencic, he is not exempt from the individual mandate penalty. 26 U.S.C. § 5000A(e)(1)(B)(ii). (See App. Br. 9-11.) An injunction clearly forbidding the Government from subsidizing coverage on HHS-established Exchanges would therefore be necessary to remedy Klemencic’s injury.

I can’t even. The due process clause immunizes the government acting illegally? Did they seriously make this argument? I see this as a basis that there is a constitutional right to Obamacare, and any ruling that would wtihdraw benefits would violate Due Process. Is this some sort of Golderg v. Kelley-esque argument? They may want to check Matthews v. Edridge. This furthers my belief that in due time, Obamacare will be viewed as a constitutional super-statute. This is the new “baseline” in the “Post-ACA world.”

This vaguely reminds me of the episode where Judge Vinson in Florida found that the individual mandate was unconstitutional, and could not be severed from the rest of the Affordable Care Act. The opinion was clear as day. Yet, the government filed this bizarre motion for clarification, asking if he “really” meant it. When I spoke to government lawyers while researching the book, they told me that the government actually could not stop the implementation of the ACA. They couldn’t stop it! (They must have been working on the web site or something). Judge Vinson was convinced the government was prepared to ignore the order–and he was right. They asked for an extension because it wasn’t practical to stop it. The bureaucratic Leviathan of giving away unconstitutional benefits trumps the separation of powers.

Here is the section from Unprecedented for your reading pleasure:

Two weeks after Judge Vinson’s opinion striking down the entire ACA, the United States remained confused.

On February 17, 2011, the government filed what is known as a “motion for clarification,” asking the court to explain whether the United States could continue to take steps to implement Obamacare while the case was appealed, even though Vinson had struck down the entire law.

Some in the Florida Attorney General’s office speculated that this may have been a strategic tactic to delay the litigation. One attorney in that office said that the government’s motion to clarify could be interpreted as “stalling, and dragging their feet.” Another involved in the case concurred, describing the motion as an “exercise in futility” and insisting that the government was trying to “delay things.”

The government wasn’t stalling. A former DOJ attorney explained that Vinson’s order “was framed with such breadth that it would be incredibly disruptive with regard to the portions of the Act that were already in force.” The government would not even have been able to comply with the order. The lawyer speculated that Vinson “did not appreciate the full consequences of his order,” and the motion to clar- ify “was able to call the disruption to the court’s attention.” In any event, Judge Vinson was none too pleased with this request and saw it as a pointless delay.

Vinson ruled that, since his opinion, the government has “contin- ued to move forward and implement the Act.” Somewhat skeptically, Vinson mused, “While I believe that my order was as clear and un- ambiguous as it could be, it is possible that the defendants may have perhaps been confused or misunderstood its import.”

Seemingly insulted, Vinson had not expected that the government “would effectively ignore the order.” He implied that the motion for clarification was a stalling method. “The sooner this issue is finally decided by the Supreme Court, the better off the entire nation will be. And yet, it has been more than one month from the entry of my order and judgment and still the defendants have not filed their no- tice of appeal [to the Court of Appeals].”