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From Health Law Daily, September 10, 2015

Standing arguments can’t bring down the House in ACA appropriations lawsuit

By Bryant Storm, J.D.

A district court held the House of Representatives can proceed with a lawsuit challenging the Obama Administration’s implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The court held that the House had standing to challenge the manner in which Secretary Sylvia Mathews Burwell and Treasury Secretary Jacob J. Lew (the Secretaries) paid for subsidies under the health care law because the Secretaries funded the program without receiving appropriation from Congress. On a separate issue, the court held that the House lacked standing to challenge Secretary Lew’s delay of the ACA’s employer mandate because, unlike the spending issue, the employer mandate challenge was a statutory argument and was not premised on constitutional grounds. The court did not reach the merits of the case, explaining that they would “await another day” (United States House of Representatives v. Burwell, September 9, 2015, Collyer, R.).

Subsidies. Two types of subsidies under the ACA gave rise to the House challenge: (1) premium tax credits under Section 1401 of the ACA, which assist beneficiaries with annual household incomes from 100% to 400% of the federal poverty level, and (2) “cost sharing reductions,” under Section 1402, which require insurers to reduce the cost of insurance for certain eligible beneficiaries. Under the cost sharing provision, insurance companies that offer qualified health plans through the ACA must reduce out-of-pocket costs for eligible beneficiaries. The federal government then offsets those added costs to insurance companies by reimbursing them with funds from the Treasury.

Funding. According to the House, the two types of subsidies are differently funded. The premium tax credits are funded by a permanent appropriation in the Internal Revenue Code. In contrast, the cost sharing offsets “must be funded and re-funded by annual, current appropriations.” More important, the House contended that "Congress has not, and never has, appropriated any funds (whether through temporary appropriations or permanent appropriations) to make any Section 1402 Offset Program payments to Insurers." Although the Obama Administration requested funding for the Section 1402 cost sharing in an April 2013 budget request, Congress did not make appropriations for the cost sharing reduction offsets in any of its subsequent appropriation legislation.

Employer mandate. Under Section 1513 of the ACA, the Internal Revenue Code was amended to include the tax that has come to be known as the “employer mandate.” For purposes of the House challenge, the court characterized that mandate as one that requires “any applicable large employer to offer its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan or else to pay the tax.”

Spending and delay. The House alleged that despite the Congressional refusal to appropriate funds for the cost sharing reductions, beginning in 2014, the Secretaries withdrew public monies and spent them on that program. The House also alleged that, in effect, Secretary Lew unilaterally made legislative changes to the employer mandate under Section 1513 “both by delaying the employer mandate beyond December 31, 2013 and by altering the percentage of employees that must be offered coverage.”

Lawsuit. On July 30, 2014, the House adopted House Resolution 676, authorizing the Speaker of the House to file a lawsuit asserting that the unappropriated spending amounted to a violation of U.S. Const. art. I, § 9, which mandates that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” Additionally, the House asserted that Secretary Lew’s amendment of the employer mandate constituted a usurpation of the Article I legislative authority that is uniquely held by Congress. The House argued that by altering the mandate, Secretary Lew “nullified” the law. The Secretaries moved to dismiss the case on the grounds that the House lacked standing to challenge the executive actions at issue.

Standing. While holding that it was forced to proceed “without the benefit of fully-applicable precedent,” the court rejected the proposition that Congress could not “assert its institutional interests in court.” However, because the court held that the appropriations challenge was an allegation that “the Executive was unfaithful to the Constitution,” whereas, the employer mandate argument was an allegation that “the Executive was unfaithful to a statute.” the court held that the House only had standing to sue on the appropriations theory.

Appropriations. The Secretaries argued that the “House lacks standing to sue and stop expenditures for which no annual appropriation was enacted.” The House disagreed and asserted that it had standing because it was “divested utterly and completely of its most defining constitutional function." The court agreed with the House calling the Secretaries’ use of unappropriated funds a “constitutional trespass” that could “inflict a concrete, particular harm upon the House.”

Implementation. The court rejected the Secretaries’ positon that the issue was the extent of the Obama Administration’s authority to “implement” the ACA. The court held that the issue was one of constitutional authority and one that caused a direct injury to the House. The court reasoned that if the executive were permitted to direct monies without approval from Congress, the “constitutional structure would collapse, and the role of the House would be meaningless.” The court clarified that the House had standing to sue because it was “not suing to police implementation of the ACA, but rather to redress an alleged violation of the Constitution.” The court rejected the Secretaries’ assertion that the House had means to resolve the appropriations issue outside of court. The court explained that the House could not remedy its injury through "the elimination of funding," because, the court held, that was “exactly what the House tried to do.”

Employer mandate theory. The court explained that the employer mandate theory stood “on very different footing” from the appropriation theory because it was a statutory—as opposed to constitutional—argument. The House asserted that as the sole legislative authority laws could not be adopted without its approval, and, therefore, “any member of the Executive who exceeds his statutory authority is unconstitutionally Legislating.” The court rejected that position and held that if such an argument were accepted, every instance of an “extra-statutory action” by an executive could lead to a cognizable constitutional violation. Accordingly, without a constitutional basis for the challenge, the court held that the House lacked standing on employer mandate theory.

Justiciability. After determining that it had jurisdiction to hear the appropriations case, the court asked whether the case was justiciable, or whether there was any “reason it should not hear the case.” Specifically, the court asked “(1) whether the claim presented and the relief sought are of the type which admit of judicial resolution; and (2) whether the structure of the federal government renders the issue presented a political question." The court answered the first question affirmatively, noting that the case involved pure questions of constitutional interpretation. As to the second question, the court held that a finding of justiciability would not upset the balance of powers, explaining that the case was not rendered a “political dispute” merely because the plaintiff was the House of Representatives.

Committees. Following the decision, Rep. Pete Sessions (R-Texas), chairman of the House Rules Committee, said, “The President’s unilateral changes to ObamaCare were unwise, unlawful and unconstitutional, and I am glad to see that today the judicial branch played its role in engaging with the requirements of the Constitution by allowing this lawsuit to go forward.” Sessions further critiqued the executive, commenting that “The President’s failure to uphold his constitutional oath dangerously shifts the balance of power that our Founders drafted in our Constitution, and his actions undermined the rule of law that lies at the foundation of our society.”

Committee on House Administration Chairman Candice Miller (R-Mich) echoed the sentiment, adding, “The President failed to faithfully execute the laws of our nation, and I thank the Court for today’s ruling allowing the House’s lawsuit to move forward.” House Speaker John Boehner (R-Ohio) responded to the court’s decision by saying, “I am grateful to the Court for ruling that this historic overreach can be challenged by the coequal branch of government with the sole power to create or change the law. The House will continue our effort to ensure the separation of powers in our democratic system remains clear, as the Framers intended.”

The case is No. 14-1967 (RMC).

Attorneys: Eleni Maria Roumel, U.S. House of Representatives, for U.S. House of Representatives. Joel L. McElvain, U.S. Department of Justice, for Sylvia M. Burwell, U.S. Department of Health and Human Services, Jacob J. Lew, and U.S. Department of the Treasury.

Companies: U.S. Department of Health and Human Services; U.S. Department of the Treasury

MainStory: TopStory HealthReformNews CMSNews DistrictofColumbiaNews

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