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Legal Challenges to Health Insurance Giveaway bill

Tue, 11/10/2009 - 8:47pm — Valhalla

On a separate thread where folks are discussing possible legal challenges health care bill, I said I'd look around to see if there have been any challenges to Massachusetts mandatory coverage law and how they fared. This is by no means comprehensive:

Mass.
Against the Mass. law, I could find only one challenge and that was thrown out on what seem to be procedural grounds rather than on the merits. (I can't find the slip op. online to confirm).

Tea Party Challenges
The Christian Science Monitor had an analysis of the challenges the Tea Partiers were vowing to mount against whatever bill the FKDPs came up with. They included challenging Congress' right to mandate coverage as a violation of the Commerce Clause; the 16th Amendment's taxing power; and the Tenth Amendment (all powers not delegated to the feds are reserved to the states or "the people"). CS' legal expert casually blows away all three arguments:

Irvine School of Law professor Erwin Chemerinsky agrees. He disputes the commerce clause, states’ rights, and taxation arguments. He says an “unbroken line of precedents” going back 70 years has given Congress the power to regulate activities that cumulatively have an effect on interstate commerce, arguing that people not buying health insurance “unquestionably” has this effect, according to a Politico column.

Nor is there any basis for arguing that an insurance requirement violates individual liberties. No constitutionally protected freedom is infringed. There is no right to not have insurance. Most states now require automobile insurance as a condition for driving.

Since the 19th century, the Supreme Court has consistently held that a tax cannot be challenged as an impermissible take of private property for public use without just compensation. All taxes are a taking of private property for public use, but no tax has ever been invalidated on that basis.

Lest anyone think that an article in Politico is just crap as a reference, this is pretty much what I remember from law school. I think there hasn't been a successful challenge to Congress' power under the CC for like 100 years. Challenges based on the 10th Amendment seldom succeed ("the Tenth Amendment imposes practically no judicially enforceable limit on generally applicable federal legislation, and states must look to the political process for redress.") The only thing the 10th has really curbed is Congress' ability to make states enact and enforce specific laws. Which Congress gets around by simply threatening to pull all federal money from a state until it enacts whatever law it wants (eg, the 21-year-old drinking age).

For the Takings clause, the Supreme Court has allowed a government entity to condemn land for the purposes of a private corporate entity. So I think the argument that Congress is essentially fining or taxing people in order to benefit private parties probably won't fly. However, that opinion was a big surprise to many legal scholars, was a fairly close decision, and did require that the private entity be providing some sort of public benefit or general welfare benefit (eg, not solely making money for itself). Interestingly, it was the Court's conservatives dissenting on the case.

Challenges to Other State's Health Insurance Mandates
A couple of other cases showed up which challenge state laws which included mandates, but they involved ERISA, which would obviously not apply to laws passed by Congress.

All in all, I think it doesn't look good for constitutional challenges. Esp. since, with legislation of this length and magnitude, most courts would be reluctant to strike the entire law, as opposed to severing an offending part. So, for instance, if a successful challenge were made based on gender discrimination because routine male health care services are covered by female ones are not, a court might blow away the basic services section but not the funding mechanisms. Congress could just amend the basic services to make them more equal to remedy the discrimination and that would be that.

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Thanks for putting this together, valhalla

By lambert on Tue, 11/10/2009 - 10:12pm

Still, is there no other way to frame forcing us to do business with corporations than a taking? It seems insane they could do that. Why, that would be corporatism! I mean, what next? Forcing us to invest a monthly minimum with Golden Sacks?

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"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

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however did you guess?

By hipparchia on Tue, 11/10/2009 - 10:29pm

Forcing us to invest a monthly minimum with Golden Sacks?

yep. direct from the white house:

Strengthening Retirement

In addition to preserving Social Security, President Obama will make it easier for Americans to save for retirement and prepare for unforeseen expenses. Currently 75 million working Americans—about half the workforce—lack access to retirement plans through their employers. The President’s budget lays the foundation for all Americans to participate in retirement accounts at work, enacting simple rules and automatic enrollment that experts estimate will increase savings participation to 80 percent for low- and middle-income workers.

approved by nudgesters everywhere, including the heeritage foundation.

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"unforeseen expenses"

By lambert on Tue, 11/10/2009 - 11:17pm

Yeah, like the banksters needing another twenty two trillion.

The dishonesty of all these efforts can be easily seen in that increasing one's Social Security contribution is not on the table. I'm tellin ya, I'm ready to head off into the woods with the libertarians. This is nuts.

—

"First they ignore you, then they ridicule you, then they fight you, then you win." -- Mahatma Gandhi

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In general, I'm not quite ready to cede

By Valhalla on Tue, 11/10/2009 - 11:38pm

the whole Takings clause to the wingers, just because they abuse and propagate misinformation about its meaning. It's just that I don't think it's a profitable angle to pursue.

As I have been googling around the web looking for any analogous precedent, I'm just not coming up with much. The thing about the wingers is that yes, while their propaganda is batshit insane, there are some very, very good conservative lawyers who, I think, if there were solid constitutional grounds to challenge this legislation, would have come up with it already. That is not dispositive, but it is a bit discouraging. Even if the grounds were liberal-ish, they'd just push the law in court and spin what they were doing in public inside one of their winger frames. The fact that they're jumping on their golden oldies (the 10th and the 16th), with which they've had absolutely no success, says to me that there's not much to go on.

When folks point out that the car insurance analogy is flawed because you don't have to own a car, they're right that that is a distinction, but I just can't figure out how it is a distinction which has constitutional implications.

I'm going to keep poking around -- VG has some interesting links -- but I'm really hoping someone closer to con law weighs in so I can just cop off of them.

—

You don’t know me, son. So let me explain this to you once: If I ever kill you, you’ll be awake, you’ll be facing me, and you’ll be armed.
-Malcolm Reynolds, “Serenity”

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This all I got, and not Mass

By Valley Girl on Tue, 11/10/2009 - 10:42pm

I've been asking this from the get go. I offer all I know. The wingers and the non-wingers weigh in:

http://www.washingtonpost.com/wp-dyn/con...

I posted the above link on a college listserve (college of graduation) with the question "is the mandate constitutional?" and got this comment:

I note from his Wikipedia biography (see Wiki excerpt below) that the author of the Post article that you reference, David B. Rivkin, is a conservative legal commentator. I suspect that he has a particular legal perspective that predisposes him to conclude that an individual mandate is not constitutional. A different perspective and judicial philosophy would produce different reasoning and a different conclusion. I suspect that there were conservative legal commentators in the 1960s who said that the "public accomodations" requirements of civil rights legislation exceeded the regulatory authority of the federal government if applied to a motel in rural Georgia far from an interstate highway that predominantly served only the local population, but they turned out to be wrong.

Without having done the research, I was certainly not blown away by Rivkin's argument. For example, he asserts that the mandate is beyond the reach of the Commerce Clause because not being insured has nothing to do with the regulation of commerce, "The otherwise uninsured would be required to buy coverage, not because they were even tangentially engaged in the "production, distribution or consumption of commodities," but for no other reason than that people without health insurance exist. The federal government does not have the power to regulate Americans simply because they are there.

It is not only the "production, distribution or consumption of commodities" that is commerce. The provision of services, including health care services, is also commerce. It seems to me common sense that the provision of medical care through emergency rooms or charity care is very much a part of interstate commerce and the mandate for individual coverage is not regulation that is unrelated to commerce and it is not being imposed "for no other reason than that people without health insurance exist...". It is being imposed to rationalize the whole system of providing medical care and to assure that it does not collapse or is not advsersly impacted by massive shifts of the cost burdens of providing health care for the uninsured to hospitals, other medical providers and insurance ratepayers (the sale of insurance is also interstate commerce) resulting in a maldistribution of health care services and costs and unacceptable inefficiencies in the entire medical care industry.

I do not doubt that there will be a legal challenge to the individual mandate on constitutional grounds.

I 've been asking about this ever since when- my question, and some answers on an emptywheel thread:

http://emptywheel.firedoglake.com/2009/0...
http://emptywheel.firedoglake.com/2009/0...
http://emptywheel.firedoglake.com/2009/0...
http://emptywheel.firedoglake.com/2009/0...
http://emptywheel.firedoglake.com/2009/0...
http://emptywheel.firedoglake.com/2009/0...

etc. etc.

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Glorious in all virtue

By beowulf on Wed, 11/11/2009 - 2:16am

Whatever the Massachusetts courts decide wouldn't be relevant to a federal case. Here's the thing to remember, there is no federal common law. What powers the federal government has are only those that are enumerated in the Constitution. It was each state that assumed the King's general police power to regulate behavior to protect public health, safety and welfare; or as the Archbishop of Canterbury tells new monarchs: "With this sword do justice, stop the growth of iniquity, protect the holy Church of God, help and defend widows and orphans, restore the things that are gone to decay, maintain the things that are restored, punish and reform what is amiss, and confirm what is in good order: that doing these things you may be glorious in all virtue..."
http://www.rightsandwrong.com.au/html/qu...

Anyway, I don't think there is any question that a state can compel a citizen to buy insurance and impose a direct tax as a penalty for noncompliance as a legitimate exercise of its police power, therefore Mass.'s individual is unassailable on legal grounds. Auto insurance is a red herring. Driving on public roads ("the king's highway" back in the day) is a privilege that requires a state license. If the state chooses to revoke your license (say, because of legal blindness) or you choose not to apply for a license, then there is no need for insurance. In no state then is auto insurance mandatory, if you don't (or can't) drive, you don't need insurance.

Since the federal government lacks general police power and can't easily impose a direct tax (the income tax is a special case because of the 16th Amendment), it is very much is an open question whether a federal individual mandate is constitutional, the Rivkin Casey column linked above makes a strong case that it is not. The article also makes clear that Congress would have been on far safer ground constitutionally to have simply expanded the existing Medicare system instead of starting a new system from scratch.

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You seem to be making an

By Valhalla on Wed, 11/11/2009 - 9:20pm

You seem to be making an argument here that Rivkin is not.

Rivkin is arguing: 1) individual mandates would not fall within the definition of commerce under the Commerce Clause; and 2) Congress has no power to tax activities that do not fall under the Commerce Clause. Unfortunately, the cases he cites actually show the opposite of 1). His precedent-free argument rests on his assertion that the mandate is being imposed "for no other reason than that people without health insurance exist." Since VG's listserv has fairly well disposed of that argument, I won't repeat it here.

Your argument is that the feds can't easily impose a direct tax. But this assumes that the Court would characterize mandates as not just a tax, but a direct tax. It seems that until the final bill is produced and the actual mechanism is known, we won't know whether it falls under the 'direct tax' rubric:

The question then becomes whether it is a direct tax, an indirect “duty, tax, or impost,” or an income tax? HR 3200 imposes a tax on income, an approach presumably permitted by the 16th Amendment. The Senate bills impose, however, a flat amount unrelated to income. If this tax is indirect, it is permissible as long as it is uniform throughout the country....If the exaction is a direct tax, however, it is essentially unworkable because it would have to be apportioned among the states based on the census.

The above is from the O'Neill Institute for National and Global Health Law at Georgetown. After passage of the 16th Amendment, the only taxes which the Court has defined as a direct tax are capitation taxes and property taxes. (same source) There could be some argument that the mandate is a capitation tax, but then the twisty setup of the mandate kicks in:

Is the exaction in the Senate Finance bill direct or indirect? The Constitution does not define either, but only capitated taxes (identified in the Constitution to be direct), and property taxes, and, prior to the 16th Amendment, the income tax, have been identified by the Supreme Court as direct taxes. All other taxes that the Supreme Court has considered have been held to be indirect. The Court has stated that the terms “duties, imposts, and excises . . . were used comprehensively to cover customs and excise duties imposed on importation, consumption, manufacture, and sale of certain commodities, privileges, particular business transactions, vocations, occupations, and the like.” (citations omitted). It is nearly comprehensive. Indeed, the Supreme Court has not in over a century held a tax to be a direct tax.

Taxes on consumption are invariably held to be indirect, and the individual mandate tax is essentially a tax on consumption of insurance. Instead of taxing the purchase of insurance, however, it taxes the refusal to purchase insurance, recognizing that individuals who go without insurance impose a burden on society when the uninsured individual ends up receiving “uncompensated care” or being cared for at public expense. The exaction is not imposed on all individuals, like a capitation tax, but only on those who are not insured. The exaction is not a property tax. It is almost inconceivable that the Supreme Court would consider it to be a direct tax.

Going back to the strateregy discussion, it seems unlikely that Court would strike down this legislation on 16th amend. grounds. The benefit of challenging the law on constitutional grounds anyway would be, on the off chance of even preliminary success, it would give single-payer advocates (and others) a chance to build momentum for scrapping the whole thing and starting on real reform.

—

You don’t know me, son. So let me explain this to you once: If I ever kill you, you’ll be awake, you’ll be facing me, and you’ll be armed.
-Malcolm Reynolds, “Serenity”

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Public purpose

By nihil obstet on Wed, 11/11/2009 - 12:06pm

It would appear to me that any money the government requires me to pay to another private entity must meet a public purpose. That should throw open the running of the insurance companies to far more regulation that is contained in these bills. Would the following constitute failure of the public purpose of the insurance company?

1) The insurance company pays out only 75 cents on every dollar that it takes in. There should be tests to insure that the retained 25 cents meets a public purpose.
2) Compensation of executives and return to shareholders are extraordinary. Is this private enrichment a public purpose? Shouldn't private enrichment be strictly regulated in a legally-mandated market?
3) The insurance company makes use of insurance difficult and expensive enough to discourage claims, including discouraging policy-holders from obtaining needed medical care. This particularly affects customers without the time and expertise to fight through all the little ways that a company can shut you off.

It seems to me that the case against the current bill can be made on the public purpose issue. It wouldn't necessarily be that the government couldn't require residents to buy the product, but that the price and quality of the product must all reflect public purpose. If you find out, for example, that telephone lines for policyholders to discuss claims have an average 90-minute hold to talk to a human being, the mandate to keep paying that company should be voided.

Regulators cannot be counted on to enforce goody-goody sounding regulations on the insurance companies. I mean, think SEC and the stock market. I'm talking here about court cases to challenge a feudal taxation structure in which the state farms out taxation to lords who use it for their own benefit.

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