Health Care Law Ruled Unconstitutional

On January 31, 2011, a federal district judge for the Northern District of Florida struck down the entire new health care reform law – including the Indian Health Care Improvement Act Amendments. State of Florida, et al., v. HHS (3:10-cv-91) (N.D.Fla. Jan. 31, 2010). Judge Vinson held that the individual mandate – the requirement in the Patient Protection and Affordable Care Act (ACA) that all Americans acquire some form of health insurance or be assessed a penalty for noncompliance – was unconstitutional. He then ruled that because the individual mandate was unlawful, the entire law must be struck down as well. This case will be appealed by the United States.

By invalidating the entire ACA, Judge Vinson’s decision would invalidate the amendments to the Indian Health Care Improvement Act, which were enacted as section 10221 of the ACA. If this decision were to be affirmed on appeal to the Circuit Court and the Supreme Court, the IHCIA would continue in force, but only with the content of that law as it existed prior to the 2010 amendments. It would also invalidate other Indian-specific provisions of the law that are of critical importance to tribes and tribal organizations throughout the country.

The case was brought by 26 states, and Judge Vinson’s ruling has resulted in some uncertainty as to whether the law remains in effect in those states pending appeal. We understand that the United States will likely immediately appeal the case to the Eleventh Circuit Court of Appeals and seek a stay of Judge Vinson’s opinion pending appeal.

The Florida case evens the score on the new health care reform law. Two federal courts have now ruled that the individual mandate is constitutional, and two have ruled that it is unconstitutional. The Eastern District of Michigan and the Western District of Virginia have upheld the law, while the Florida decision joins the Eastern District of Virginia in striking it down. The Florida decision is the first to strike the law down in its entirety, however. The Virginia court only struck down the individual mandate, and left the rest of the law standing.

Judge Vinson’s opinion is significant because it held that the entire law – including the amendments to the Indian Health Care Improvement Act – is unlawful. Plaintiffs argued – as they had in the other three cases – that Congress lacked authority under the Commerce Clause of the U.S. Constitution to mandate that individuals acquire insurance or be faced with a penalty. Plaintiffs argued that the decision not to purchase insurance is “inactivity,” and not a form of activity that can be regulated by Congress using its Commerce Clause power. The United States argued that the decision not to purchase health insurance is economic activity that has a direct effect on interstate commerce. It argued that paying for health care out-of-pocket drives up insurance costs, and that when the uninsured are unable to pay for their own health care, hospitals are required to provide care and then pass the costs of doing so on to everyone else, which results in higher health insurance premiums and costs to the government and taxpayers.

Judge Vinson ruled that although the United States would be within its rights to regulate the uninsured at the time they sought free health care, it could not mandate that they buy insurance because there is no guarantee that they would seek free health care. As a result, he held that the individual mandate could not be sustained under the Commerce Clause.

Judge Vinson then ruled that because the individual mandate to purchase health insurance was unconstitutional, the entire law was unlawful. Normally, when a portion of a law is declared unconstitutional, that portion of the law is “severed” from the law, and the rest remains in effect. That is what occurred in the Virginia case, where the judge found that the individual mandate was unconstitutional, but held that the remainder of the law could stand.

Judge Vinson, however, found that the individual mandate was so central to the law that it could not properly function without it, and that Congress would not have enacted the law without it. Although he recognized that “some (perhaps even most)” of the remaining provisions in the bill could “stand alone and function independently of the individual mandate,” he said that it would be too difficult for him to determine which provisions could stand and which must fall. As a result, he invalidated the entire law.

Many other cases challenging the constitutionality of the ACA are pending in several other federal courts. All observers expect that the final decision on the constitutionality of the ACA will be made by the Supreme Court.