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One of my longest-standing pet peeves is when litigants and courts consider evidence on appeal, that was not present in the trial court. In Ross v. Blake, Justice Thomas warns against this practice, and says the lower court should decide if the record can be supplemented:

I join the Court’s opinion except for the discussion of Maryland’s prison-grievance procedures, ante, at 11–14, which needlessly wades into respondent Shaidon Blake’s questionable lodgings of new documents in this Court. Those documents are not part of the appellate record. See Fed. Rule App. Proc. 10(a). We have “consistently con- demned” attempts to influence our decisions by submitting “additional or different evidence that is not part of the certified record.” S. Shapiro, K. Geller, T. Bishop, E. Hartnett, & D. Himmelfarb, Supreme Court Practice §13.11(k), p. 743 (10th ed. 2013). Perhaps Blake’s new- found documents are subject to judicial notice as public records. See Fed. Rule Evid. 201. But I would not take such notice for the first time in this Court. It appears that Blake had a chance to submit many of his documents to the lower courts and failed to do so. Taking notice of the documents encourages gamesmanship and frustrates our review. I would let the Court of Appeals decide on remand whether to supplement the record, see Fed. Rule App. Proc. 10(e), or take notice of Blake’s lodgings.

Agreed.

The Boston Globe reports that Senate Minority Leader Harry Reid is researching ways to keep Massachusetts’s Senate seat filled by a Democrat in the event that Elizabeth Warren runs as VP. The goal is to prevent GOP Governor Charlie Baker from appointing a temporary replacement Senator–even for a few months. There is a long history of Massachusetts futzing with its laws to keep the Senate seats out of the hands of Republicans–first when Mitt Romney could have appointed John Kerry’s successor and then again when Devall Patrick had to appoint Ted Kennedy’s successor. I include this discussion in Unraveled:

Senator Kennedy, who for decades championed universal health coverage, died in August 2009. Months earlier, as the ailing Kennedy was losing the battle against a cancerous brain tumor, and the Senate’s sixtieth vote was in jeopardy, the “legislative technician” took precautionary measures. Massachusetts law provided that Kennedy’s seat would remain vacant until a special election was held a few months later. The Nevadan urged Massachusetts Governor Deval Patrick, a Democrat, to change it. [1] Reid explained that unless Kennedy’s seat was filled immediately by a gubernatorial appointment, it would deny the Democrats a filibuster-proof majority. Kennedy personally made a similar request to the governor in a letter shortly before his death.[2] In September 2009, the Massachusetts legislature approved a bill to allow Gov. Patrick to appoint a temporary successor for Kennedy, with a special election to be held 160 days later.

Ironically, five years earlier, the Democratic-controlled legislature had changed the law to block then-Governor Mitt Romney, a Republican, from potentially appointing a replacement for then-presidential-candidate Senator John Kerry, a Democrat. Politifact gave the Bay State a “resounding full flop,” as both actions only served to advance the “Democratic Party’s interest.”[3] Even more ironically, Kennedy himself supported the now-repealed special election bill in 2004 to hamstring Romney.[4] All politics, even national politics, is local. With the new law, Gov. Patrick promptly appointed Democrat Paul G. Kirk, Jr. as interim senator, with a special election to be held on January 19, 2010. Kirk would be the sixtieth Democrat to vote for the ACA on Christmas Eve, 2009.

Now, once again, the situation is reversed. So what is the canard this time? Well, they can’t change the law because the Governor would likely veto it. Instead, they will play games with timing the special election to prevent the Republican Governor from making the appointment.

In the event of a Senate or House vacancy, Massachusetts currently requires a special election to be held within 145 to 160 days. In the interim, the governor has the authority to appoint a successor. But Reid’s team has identified a portion of the law that allows an officeholder to start the special election clock by filing a resignation letter, but also announcing an intention to vacate the seat at a later date.

In theory, Warren could file such a letter 145 days before the Jan. 20, 2017 inauguration and successfully block Baker from picking any temporary replacement. But that would expose Warren to a potentially awkward position. If Clinton lost the November election and Warren wanted to keep her Senate seat, she would have to make the politically difficult decision of rescinding her planned resignation — or run for an open seat that she created.

A more likely scenario would be that Warren would start the clock ticking for a special Massachusetts ballot only if Clinton won, with an intent-to-resign letter dated the day after the Nov. 8 national election.

That would give Baker’s temporary appointee less than three months to serve between Inauguration Day and the special election. While that might prevent a Democratic majority from taking over in January, the damage, from a Democatic perspective, might be limited to a short period of time until Massachusetts’s Democrat-leaning electorate went to the polls to elect a senator in a special election.

Say what you will about the 17th Amendment, but these sorts of backroom deals were probably a lot more common back then.

On Friday, The New York Times and the Associated Press ran articles discussing how right-of-center law professors are taking a stand against a Trump Presidency. I am quoted, as well as Randy Barnett, Ilya Somin, Richard Epstein, John Yoo, John McGinnis, Jonathan Adler, Michael McConnell, and Ilya Shapiro (not a Professor, but close enough). Today, Eugene Volokh also blogged about Trump. I am very proud of my colleagues who are speaking out against this looming threat, even at the potential risk of imperiling their own future prospects.

Frankly, I am not surprised. All of the people I mentioned above are people I have gotten to know very well in my years as an academic, and are people that I deeply respect for their principle and commitment to the rule of law. This is the same sort of fortitude that allowed these academics to buck the consensus and argue that the individual mandate was unconstitutional, that the Second Amendment protects an individual right to keep and bear arms, or that the federal government cannot regulate locally grown marijuana. We live our lives in an arena that is often inhospitable, and we have to articulate our ideas against extremely strong headwinds. This is why I’m not surprised that my colleagues have taken the position they did.

I also hope (sincerely) that these statements will provide credibility for the future, when we take other legal positions that are outside the mainstream. We aren’t right-wing hacks (as we are often called), but thoughtful academics with a commitment to the law.

I appreciated Rick Hasen’s tweet on Thursday, which I think reflects how others ought to view the positions we are taking.

I savor this moment. I will probably never agree more with Josh Blackman than during this election. https://t.co/MhsWELapsK

— Rick Hasen (@rickhasen) June 3, 2016

Today, Blue Cross and Blue Shield of North Carolina sued the Obama administration, claiming that they were owed $130 million through Obamacare’s so-called “risk corridors.” The government would only pay 12.6% of the money the insurer claimed.  Highmark brought a similar suit last month, claiming it only received $27 million out of the $223 million it was owed. Both suits make virtually identical allegations, and were filed by the same lawyers from Reed Smith in the Court of Federal Claims. Health Republic Insurance filed a similar complaint in February, seeking class action status. It were represented by Quinn Emanuel.

Since their inception, the “risk corridors,” known as “insurance company bailouts” have been extremely unpopular. In 2014 and 2015, Congress blocked HHS from paying these funds from CMS’s permanent appropriation. (President Obama signed that budget into law). As a result, HHS lacked the funds to pay the insurance companies their full amount due. According to one of the complaints, in 2014 there were only $2.9 billion in losses, and only $.4 billion was actually paid.

If the Court of Federal Claims (an Article I court) rules in favor of the insurance companies, and awards them the hundreds of millions of dollars they seek, those amounts would come out of the judgment fund. This is a permanently appropriated fund that, for all intents and purposes, is unlimited. In other words, even if Congress expressly deprives the Executive of funding for the risk corridors, if the insurance companies receive a favorable court ruling, the government can pay out that amount through the judgment fund.

DOJ’s response to the the Health Republic Insurance case is due on June 24. I am paying very close attention to what DOJ does here, because I fear this may be an instance of “sue and settle”–or more precisely, “sue and pay.”

“Sue and settle,” roughly stated, is a practice whereby a regulated entity sues a federal agency, knowing full well that the agency agrees with the nature of the suit. As a result, the parties “settle,” and reach favorable terms behind their closed doors. The court then approves the consent decree, which often contains terms that are not authorized by the agency’s underlying statutory authority. With a final court decree in hand, the agency then has a new source of authority. For example, in recent years environmental groups have sued the EPA, and they reached settlements that required the issuance of new environmental  regulations. There is no real adversarial nature to the suit. The Chamber of Commerce released a report analyzing this practice, as did the Senate Environmental Works Committee.

If the Obama administration agrees that the insurance companies deserve the money they seek, they may not challenge the complaint. The Obama administration has every interest in the insurance companies being compensated for the losses they suffered under Obamacare, to prevent them from leaving the market. This way, they can reach a settlement, which the court can approve. With a consent decree in hand, the insurance companies can be paid out of the permanently-appropriated judgment fund. In this sense, through some non-adversarial litigation, the Obama administration can bypass the fact that Congress deliberately did not appropriate funds for the risk corridors.

I haven’t studied this closely, but the House may seek to intervene in the Court of Federal claims to defend their institutional prerogatives over the power of the purse. If Congress does not appropriate a budget for an item, that item cannot be funded. The judgment fund should not be used as a backdoor to bypass this constraint.

Future Congress should amend 31 U.S.C. § 1304, which creates the judgment act, to exclude these sorts of cases where a regulated entity seeks payments that were not appropriated by Congress. That is, if Congress creates a statutory obligation to pay a certain amount of money, and then decides not to fund that request, the regulated entity should not be able to obtain the money from the permanently-appropriated judgment fund. The funding for such a suit should come from another source, that has tighter appropriation controls. If they do not follow this path, and the “Sue and pay” approach gains traction, I can see future administrations using this process to further undercut the constraints imposed by the appropriations clause.

 

Donald Verrilli was one of the most consequential Solicitors General of all time. I’ve had the opportunity to cover his work very carefully over the course of four Obamacare decisions in five years (NFIB, Hobby Lobby, Little Sisters, and Zubik). I offer some quotes about Verrilli in Modern Healthcare.

I wrote a chapter about the outgoing Solicitor General in my forthcoming book, Unraveled: Obamacare, Religious Liberty, and Executive Power. Here is a sample:

Verrilli holds a unique place of regard and trust within the Obama administration, and among the Justices. He began his government service in the White House Counsel’s office. It was not the most glamorous job for someone who had argued thirteen cases before the Supreme Court, but one that allowed him to get to know the president and to earn his trust. In 2010, when Solicitor General Elena Kagan was elevated to the Supreme Court, Verrilli was asked to interview to become the government’s top advocate. Verrilli recalled that “it took me about a nanosecond to say yes.” He was selected by the president over then-Principal Deputy Solicitor General Neal Katyal, who ran the office for a year after Kagan’s nomination. Katyal submitted his resignation letter the day after Verrilli was sworn into office.

Early during his tenure, Verrilli received criticisms from other progressives for his reserved demeanor. They wanted more fire and brimstone, I learned. But Verrilli made the decision that this was not the right thing to carry out the responsibilities of the office. While in charge, Verrilli has preached that the right way to do the job is to take the temperature down as much as possible, and always operate in a manner that demonstrates profound respect for the members of the Court as an institution and for the legitimacy of process. This is especially true during a time where there is such a stark conflict between the Supreme Court, the executive branch, and Congress. The solicitor general personally tried to do everything he could by word and deed to send the message that this is not a political process, this is a judicial process. And over the previous four years, that message has resonated and calmed down more people on the left. Further, Verrilli communicated to his office that as a pragmatic matter, the fire and brimstone approach was a very poor way to pick up the fifth vote in cases. As a result, the Office believes that it has steadfastly built up some credibility with the Court by following this approach.

At an American Bar Association discussion with other Solicitors General, Verrilli side the White House has given him breathing room.“[T]hey’ve left me alone, and I’ve taken advantage of that.” He would always, however, identify two or three cases of the term where his position might surprise the administration, so he would call the White House and say, “This is what I’m doing.” He was not to asking for permission, but rather giving them a heads-up.

The solicitor general recognized that he arrived at the office at a momentous time. In remarks in his hometown of Wilton, CT, Verrilli acknowledged that he had a higher profile than did his predecessors. “We’re in a very unusual place in history,” he said. “It is not usual for so many high-profile cases to come before the Supreme Court in a short span of time.” He would argue four Obamacare cases in the span of five years. Verrilli added, “We’re at a time when a majority of the Supreme Court has a strong ideological perspective different from the president. Aside from the New Deal, this is probably the greatest amount of friction between the executive and judicial branches.” He viewed it as his personal “responsibility to lead the representation of the United States in these matters of real historical importance.”

On June 11, former Attorney General Eric Holder spoke to the American Constitution Society, a group of progressive legal scholars, at the Capitol Hilton. (Coincidentally that evening, one mile away, the Competitive Enterprise Institute held their annual gala, where they toasted to success in King v. Burwell.) During his remarks, Holder praised Verrilli. He said that usually, “Solicitors general are extremely guarded in their independence within the Department [of Justice], but he’s not necessarily that guy.” Rather, Verrilli was “a very collaborative person” within the Obama administration, and would always share with others, “This is the way I think we want to go with this argument.” Holder added that he “bounces things off of people. He is a good friend and a progressive.” The former attorney general concluded with a smile, “I think he is going to be seen as an extremely consequential Solicitor General, I think one of our greatest Solicitors General.”