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I’ve posted to SSRN an article I have been working on for some time, which has become especially salient after the 2016 President election. Not content to set my sights low, I explain why a core tenet of then-Professor Elena Kagan’s award winning article, Presidential Administration, is wrong.  As the saying goes, when you shoot the Queen, don’t miss. To that end, I welcome comments on Presidential Maladministration, which I plan on submitting in the spring window .

Here is the abstract:

In Presidential Administration, then-Professor Elena Kagan re-envisioned administrative law through the lens of the President’s personal influence on the regulatory state. Rather than grounding Chevron deference on an agency’s “special expertise and experience,” Kagan would “take unapologetic account of the extent of presidential involvement in administrative decisions in determining the level of deference to which they are entitled.” The stronger the President’s fingerprints on the executive action, a practice she praises as “presidential administration,” the more courts should defer.

There is a flipside to Kagan’s theory: four species of high-level influence, which I describe as “presidential maladministration,” are increasingly problematic. First, where an incoming administration reverses a previous administration’s interpretation of statute, simply because a new sheriff is in town, courts should verify if the statute bears such a fluid construction. Second, where an administration discovers a heretofore unknown power in a statute that allows it to confer substantive rights, courts should raise a red flag, especially when the authority exercised was one Congress withheld. Third, where an administration declines to enforce a statute that Congress refuses to repeal, under the guise of prosecutorial discretion, courts should view the action with skepticism. Fourth, where evidence exists that the White House attempted to exert its influence, and intrude into the rulemaking process of independent agencies, courts should revisit the doctrine concerning altered regulatory positions.

As the Federal Register turns the page from Obama to Trump, this article provides a timely analysis of how courts react to unpresidented approaches to maladministration.

Once the D.C. Circuit granted the House of Representatives motion to hold their Obamacare suit in abeyance, over the administration’s objection, I had all-but-assumed the litigation would soon draw to a close. Andy Pincus and his colleagues at Mayer Brown had other ideas. Today, the firm filed a motion for leave to intervene on behalf of Gustavo Parker and La Trina Patton, two Californians who purchased Silver plans on the ACA exchanges.

What is their argument? They are afraid the House of Representatives and the Trump Administration will (gasp) settle the case!

An agreement between the new Administration and the House to al- low the District Court’s injunction to take effect—either by dismissing this appeal or by entering into a settlement providing that the injunction will take effect at some specified time in the future—will produce devastating consequences for the individuals who receive these reductions, as well as for the Nation’s health insurance and health care systems generally.

I’m old enough to remember when “Sue and Settle” was a favorite tool on the left–though this doesn’t quite fit into the mold.

What would the consequences be of such a settlement?  Mayer Brown explains:

Recipients of the cost-sharing reductions who purchased health care insurance policies for 2017 will likely face early termination of those policies, because the federal government permits insurers to leave the exchanges in the event cost-sharing reimbursement payments cease. (The laws of some States might prohibit insurers from leaving the exchanges or otherwise prohibit early termination of policies, but it is not at all clear how those laws would apply in a situation in which barring termination could risk insurer insolvency.) Even if the policies are not terminated, cost-sharing reduction recipients face significant injury, because insurers may not be able to afford to continue to pay health care providers in the absence of reimbursement by the federal government.

Whatever happens with respect to 2017 health insurance policies, elimination of the reimbursements means that insurers are highly likely to exit the market at the end of that year in order to avoid the obligation to pay un-reimbursed cost-sharing reductions. That would mean higher cost or unavailability of health insurance for future years.  Movants will be injured substantially if the district court judgment is permitted to enter into effect.

Specifically, the beneficiaries would stand to be injured if the payments are halted:

Movants are beneficiaries of the ACA marketplace exchanges and of the cost-sharing reductions provided pursuant to Section 1402. They sus- tained an injury-in-fact when the district court enjoined cost-sharing re- duction reimbursements under Section 1402 because the injunction, if en- forced, will increase Movants’ financial burdens—as well as subject Mo- vants to the likelihood that health insurance will not be available in future years as a result of the inevitable destabilization of the marketplace ex- changes. As the health insurance industry explained in its amicus brief in this Court, the cessation of cost-sharing reimbursement threatens “poten- tially massive disruption to both issuers and enrollees.” AHIP/BCBSA Amicus Br. 21.

That Movants will suffer cognizable harms is an incontestable eco- nomic fact. The only uncertainty is how they will be harmed—which de- pends in large part on when the cost-sharing reimbursements are termi- nated—but under any scenario, the harm will be severe.

Insurers may exit the exchanges early if the subsidies were cut off. (This was a special concession the insurers obtained when negotiating their 2017 rates).

Movants then could well have their 2017 health insurance policies terminated. The Center for Medicare and Medicaid Services, which re- quires exchange insurers to enter into an annual agreement, amended the 2017 agreement to acknowledge that insurers could seek to leave the ex- change mid-year should the House of Representatives prevail in this law- suit.6

6 See Qualified Health Plan Certification Agreement and Privacy and Se- curity Agreement Between Qualified Health Plan Issuer and the Centers for Medicare & Medicaid Services 6 (Sept. 1, 2016), available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/ Downloads/Plan-Year-2017-QHP-Issuer-Agreement.pdf.

The American Academy of Actuaries predicted insolvency in the event that the CSR payments are halted:

premiums will be too low to cover the costs of care. This creates the potential for insurer losses and solvency concerns. Due to contract provisions, insurers would be permitted to withdraw from the market if [cost-saving subsidy] reimbursements are not made. The prospect of losses and increased solvency risks could lead to insurers opting to withdraw, leading to severe market disruption and loss of coverage among individual mar- ket enrollees—both those receiving [cost-saving] and those not.

The brief asserts that the intervention is necessary in light of a presidential reversal–the change from Obama to Trump:

Until recently, Movants’ interests were aligned with the interests of the Executive Branch, which has advocated for a construction of Section 1324 that permits the continued payment of the cost-sharing reimbursements to insurers. But the statements in the House’s recent motion indicate that the Executive Branch could well change position after January 20, 2017, and enter into an agreement to dismiss the appeal or otherwise agree that the District Court’s injunction may take effect. Movants appear here to defend their interest in continued payment of the cost-sharing reimbursement and therefore respectfully re- quest that this Court permit them to intervene.

The motion affirmatively asserts that “Sue and Settle” cannot be used to resolve this case:

But the House and the new Administration may not accomplish that goal by simply agreeing to allow the district court’s injunction to take effect in the face of a motion to intervene by parties with standing to press the position currently advocated by the Executive Branch. That would allow the substantial interests of third parties to be affected adversely through judicial action as to which those third parties seek to be heard, rather than through the exercise by Congress and/or the Executive Branch of their own constitutional authority.

I’ve read the final sentence in that passage three times, and I still don’t understand what it means. Why can’t a new Congress and Executive Branch decide for itself what a statute means? This reversal is especially appropriate because the Obama Administration’s interpretation is, as Nick Bagley pointed out, indefensible.

At bottom, this motion to intervene is a last-ditch effort to force the D.C. Circuit to keep insurers solvent and the Obamacare exchanges open for business.

Josh Gerstein points out that “no corporate or organizational affiliation” was provided for either intervenor, and Pincus “said his firm is handling the matter pro bono.” I should note that Pincus and his colleague Brian Netter filed a brief on behalf of America’s Health Insurance Plans (AHIP) in King v. Burwell.

I imagine insurance companies have a strong interest in the outcome of this suit. Indeed, Footnote 4 teases out what would happen if the administration interpreted the ACA to preclude the payments of the cost sharing reimbursements:

The President could direct the relevant agencies to interpret Section 1324 not to provide a permanent appropriation for the cost-sharing reimbursement payments. That too would render this case moot, although it might give rise to another lawsuit challenging the new interpretation of Section 1324.

It “might” huh? This intervention is but a mere prelude to a future suit by AHIP, seeking a TRO to prevent the stoppage of the CSR payments.

The Mayer Brown brief even flags a point from AHIP’s brief, that requiring insurers to continue offering insurance policies, without a reimbursement, would give rise to a taking!

Alternatively, even if Movants’ coverage is not terminated, insurers likely would seek judicial relief from their obligation to continue advancing cost-sharing without reimbursement. The industry’s amicus brief observes that requiring continued payments by insurers “would foist upon issuers an unfunded mandate that amounts to an unconstitutional taking.” AHIP/BCBSA Amicus Br. 24; see also Linda J. Blumberg & Matthew Buettgens, The Implications of a Finding for the Plaintiffs in House v. Burwell 8 (Urban Inst. Jan. 2016) (“Implications”) (an immediate cessa- tion of the reimbursement payments to insurers would cause them “to choose among incurring significant near-term financial losses, abruptly leaving the Marketplaces, filing their own legal actions against the federal government, potentially violating notice requirements for exiting the Mar- ketplaces, and causing enormous disruption to their enrollees”), available at http://www.urban.org/research/publication/implications-finding- plaintiffs-house-v-burwell.

This cursory argument would make even Richard Epstein cringe:

Prudence counsels in favor of a similar approach here in light of the potential “destabiliz[ation]” of the Exchanges and the ramifications for the broader individual market. REALIZING HEALTH REFORM’S POTENTIAL 9, supra. That is particularly true given that affirmance of the district court’s ruling, in conjunction with a lack of annual appropriations, would foist upon issuers an unfunded mandate that amounts to an unconstitutional taking. See Student Loan Mktg. Ass’n v. Riley, 104 F.3d 397, 403 (D.C Cir. 1997) (explaining that it “would largely gut the takings clause” if persons “earlier” provided “forms of financial incentives” by the government “were to wake up and discover that the government could subject them to a special tax”); cf. Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 348 (1936) (Brandeis, J., concurring) (interpreting statutes to avoid constitutional difficulties).

One of the very first decisions the Trump Administration will have to make concerns House of Representatives v. Burwell and the CSR payments. As I understand it, the payments are made to insurance companies monthly. At some point soon, the DOJ will have to determine whether the payments are lawful (adopting the Obama Administration’s interpretation), or determine they are illegal (rejecting the Obama Administration’s position).  If the executive branch chooses the latter route, payments will have to stop within a month. Unless Congress takes quick action to appropriate funds for the CSR payments, indeed insurers may exit the exchanges, possibly for 2017, and more likely for 2018.  If Trump decides to continue making these illegal payments, I will be the first to scream shenanigans, and file a brief I thought I would no longer have to file.

If Congress simply repeals Section 1324 as part of the reconciliation package, all of this litigation goes away. As the intervenors note in FN 4:

Congress could enact and the President could sign a law expressly precluding such expenditures. That would render this case moot and require this Court to vacate the decision below and remand the case to enable the district court to dismiss the action as moot.

The chapters for Undone continue to write themselves.  I’m sure John Roberts will find a way to break my heart, yet again.

 

Recently, Professor Steven Gillers (NYU) posted on SSRN his forthcoming piece in the Georgetown Journal of Legal Ethics, titled, A Rule to Forbid Bias and Harassment in Law Practice: A Guide for State Courts Considering Model Rule 8.4(g). I had written before about Rule 8.4(g), including my rejected proposal for the AALS diversity conference. In short, this rule allows bar disciplinary committees to punish wide swaths of speech at “social events” “related to the practice of law.” Though well-intentioned, it serves to chill the freedom of expression. After reading Gillers article, I wrote a lengthy post explaining my thoughts on Rule 8.4(g), and incorporating a recent debate on the top at the recent Federalist Society National Lawyer’s Convention.

On a whim, I pitched the Georgetown Journal of Legal Ethics, and asked if they would accept a response to Gillers piece. The editors graciously afforded me such an opportunity with a tight window–about two weeks. I submitted a draft, and they accepted it. Now, my response will appear alongside Gillers’s article.

I’ve posted to SSRN the draft of Reply: A Pause for State Courts Considering Model Rule 8.4(G). The First Amendment and “Conduct Related to the Practice of Law. I welcome any comments you may have. This is an important topic as Rule 8.4(g) goes to the states, and I hope my article serves as a guide during that process.

Here is the abstract:

In August 2016, the American Bar Association approved Model Rule of Professional Conduct 8.4(g). The new provision provides that it is misconduct for an attorney to “engage in conduct that the lawyer knows or reasonably should know is harassment or discrimination on the basis of race, sex, religion, national origin, ethnicity, disability, age, sexual orientation, gender identity, marital status or socioeconomic status in conduct related to the practice of law.” Comment [4] explains that “conduct related to the practice of law . . . includes representing clients; interacting with witnesses, coworkers, court personnel, lawyers and others while engaged in the practice of law; operating or managing a law firm or law practice; and participating in bar association, business or social activities in connection with the practice of law.” The Model Rules are just that—models, that do not apply in any jurisdiction. Now the project goes to the states, as state courts consider whether to adopt Rule 8.4(g).

In this issue, Professor Steven Gillers offered an analysis of the new provision in an article titled, “A Rule to Forbid Bias and Harassment in Law Practice: A Guide for State Courts Considering Model Rule 8.4(g).” In this brief reply, I suggest a pause for state courts considering Rule 8.4(g), in light of its First Amendment implications.

Part I focuses on how Rule 8.4(g) extends its jurisdiction to “conduct related to the practice of law” for speech that can be deemed “harassment.” Lectures given at CLE events, or dinner-time conversation at a bar-association function, would now be subject to discipline if the speaker reasonably should know someone would find it “derogatory” on the basis of eleven protected classes. This risk of discipline will serve to chill public speech on matters of public concern. Neither the Rule nor the comments express any awareness of this novel intrusion into the private spheres of an attorney’s professional life.

Part II compares the operation of Rule 8.4(g) with previous ABA model rules, as well as state jurisdictions that have enacted anti-bias regimes. This provision is unprecedented, as it extends a disciplinary committee’s jurisdiction to conduct merely “related to the practice of law,” with only the most tenuous connection to representation of clients, a lawyer’s fitness, or the administration of justice.

Part III discusses the chilling effects of Rule 8.4(g). Though courts have given deference to bar associations to regulate speech that arises during the practice of law, as the expression becomes more attenuated from the bar association’s traditional goals, the state interest becomes far less compelling. In this sense, past precedents upholding disciplinary actions are largely unhelpful. Rule 8.4(g) sweeps in a vast amount of public speech on matters of public concern, and imposes an unlawful form of viewpoint discrimination. At bottom, the defenders of the rule can only urge us to trust the disciplinary committees. The First Amendment demands more.

This essay concludes by offering three simple tweaks to the comments accompanying Rule 8.4(g) that serve the drafter’s purposes, but provide ample protection for free speech.

 

One of my first joint-ventures with Ilya Shapiro was Keeping Pandora’s Box Sealed, which discussed the privileges or immunities clause in the context of McDonald v. City of Chicago. The Georgetown Journal of Law & Public Policy published the 90-page article on a super-fast schedule: from submission in November 2009 to publication on February 19, 2010, so it would be available before oral arguments on March 2, 2010.  At that point, it was too late to submit a new amicus brief based on our research (Cato had joined a brief penned by Pacific Legal Foundation, that cited the yet-unpublished SSRN version on p. 23).

So Ilya and I had a genius idea–we would hand-deliver offprints of our articles to the Court, for delivery to chambers of each of the nine Justices. (Well, Ilya’s intern hand-delivered them). Or at least it seemed like a genius idea. Seven Justices did not even acknowledge receipt. I’m sure the offprints found their way to the recycling bin. (Much to our chagrin, Justice Thomas’s concurring opinion did not offer a citation–oh well). Justice Alito’s secretary replied by email, thanking us for the submissions, and stating that the Justice looks forward to reading it. Then there was Justice Sotomayor. Her secretary returned the article, with a letter stating that she would not accept any writings about pending cases outside the regular amicus process.

I had largely forgotten about that episode early in my career until this past fall, when I mailed copies of Unraveled to each of the Justices. I received very nice letters from Justices Ginsburg, Alito and Kagan. Nothing from the Chief (shocker, huh) or Justices Kennedy, Thomas, or Breyer. And then there was Justice Sotomayor. Her chambers returned the book, with a note:

Justice Sotomayor is grateful to you for sending her a copy of your book, Unraveled: Obamacare, Religious Liberty, and Executive Power. While the Justice appreciates your kind gesture, unfortunately, she is unable to accept any materials that in any way relate to pending litigation that may come before the Supreme Court. For this reason, I am returning your book with this note. I hope you understand.

Not exactly what I was expecting when a big package from One First Street Arrives, but I do understand. I did mail her a copy of Unprecedented, which discussed litigation pending at the time (including the contraceptive mandate cases, the tax subsidies litigation, and the origination clause challenge). Unprecedented was not returned to sender–I even got a nice note signed by the Justice.

My hope is that once all of the ACA litigation discussed in Unraveled winds down (primarily the contraceptive mandate, but also ancillary suits involving executive action), I will mail Justice Sotomayor the book again.

In any event–note to scholars, do not mail Justice Sotomayor your articles if it may affect pending cases. Save yourself the postage, and the U.S. Government the return postage.

The inspiration for this post was this question posed by Andy Grewal on #AppellateTwitter

Wow…the 1st Circuit ended up citing a law review article that was sent directly to the court, outside amicus process. #appellatetwitter pic.twitter.com/Z3NXPAChWn

— Andy Grewal (@AndyGrewal) December 20, 2016

Apparently, the First Circuit does accept law review articles filed with the clerks office, and can even cite them, so long as all of the parties are notified. I am not sure if this is permitted under FRAP, or was it a idiosyncratic approach by the panel (Lynch, Selya, Burroughs).

On the latest stop on his extended farewell tour, President Obama sat down for an interview with NPR. Morning Edition’s host Steve Inskeep asked the President about his advice to President-Elect Trump with respect to executive power. His reply: do as I say, not as I do.

Should President-elect Trump, once he’s inaugurated, use his executive powers in the same way that you have?

I think that he is entirely within his lawful power to do so. Keep in mind though that my strong preference has always been to legislate when I can get legislation done. In my first two years, I wasn’t relying on executive powers, because I had big majorities in the Congress and we were able to get bills done, get bills passed. And even after we lost the majorities in Congress, I bent over backwards consistently to try to find compromise and a legislative solution to some of the big problems that we’ve got — a classic example being immigration reform, where I held off for years in taking some of the executive actions that I ultimately took in pursuit of a bipartisan solution — one that, by the way, did pass through the Senate on a bipartisan basis with our help.

I was very proud of that. I went out of my way to make sure our help was behind the scenes so that Republicans didn’t feel as if it was going to hurt them politically. At the end of the day, John Boehner and the House Republicans couldn’t pull the trigger on getting it done. And it was only then, after we had exhausted efforts for bipartisan reform that we took some additional steps on immigration executive actions. So my suggestion to the president-elect is, you know, going through the legislative process is always better, in part because it’s harder to undo.

And that doesn’t mean, though, that he is not going to come in and look at the various agencies and see the rules we’ve passed and if he wants to reverse some of those rules, that’s part of the democratic process. That’s, you know, why I tell people to vote because it turns out elections mean something.

This recounting of history is very selective. To the President’s account, he did everyone a favor by not taking any executive action until the Gang of Eight bill was dead. He failed to mention that during this time, he repeatedly insisted that taking executive action (like DAPA) would have been illegal. Only after congressional defeat did his administration discover the relevant power, that had been buried in the interstices of the U.S. Code and the Federal Register for decades. Oh, and leading that expedition was President Obama himself, who kept insisting his government go farther to protect more aliens. Stay tuned to my forthcoming article, Presidential Maladministration, which walks through this process in detail.

In an earlier time, more Democratic time, President Obama articulated a different perspective on executive power. As I recount in Unraveled:

During the final six years of his administration, President Obama was largely unable to advance his agenda through the legislative process. Faced with Republican opposition at every step, Obama increasingly turned to executive power to take action where Congress would not. By 2011, the mantra of his presidency became “We can’t wait.” Charlie Savage reported that the president coined this slogan at a meeting to “more aggressively use executive power to govern in the face of Congressional obstructionism.” 1 When Congress would not legislate to the president’s satisfaction, he would act alone. In a White House blog post fittingly titled “We Can’t Wait,” the administration listed all of the president’s executive actions, stressing that he “is not letting congressional gridlock slow our economic growth.” 2 By my count, Obama has repeated this phrase at least a dozen times to justify taking executive action where Congress would not pass the bill he wanted. 3 If “We Can’t Wait” was President Obama’s mantra, the “Pen and Phone” became his method. In 2014 a cabinet meeting he explained, “We’re not just going to be waiting for legislation in order to make sure that we’re providing Americans the kind of help they need. I’ve got a pen and I’ve got a phone.” 4 Specifically, he said, “I can use that pen to sign executive orders and take executive actions and administrative actions that move the ball forward” to “advance a mission that … unifies all Americans.” 5 To accomplish this mission, the president insisted that his cabinet “use all the tools available to us, not just legislation.” The president’s chief of staff John Podesta put it bluntly: “The upshot: Congressional gridlock does not mean the federal government stands still.” 6

Or, simply watch this SNL clip: