Health Care Reform Ruled Unconstitutional; Florida Judge’s Decision Up Next

In the judicial derby over federal health care reform, it’s now Obama 2, opponents 1: A federal district court judge in Virginia on Monday ruled unconstitutional the provision of the Obama administration’s health care reform law requiring every American to be insured. It is the first time a federal judge has found the law unconstitutional. Two other federal court rulings – one in Michigan on Oct. 7, another one in Virginia on Nov. 30—ruled it constitutional. Judges have dismissed challenges to the law in 12 other filings. More challenges to the law are pending, including one by 19  Republican attorneys general and one Democrat, filed in Florida.

None of the rulings, including today’s in Virginia, stop the clock on the law’s implementation.  Even if an eventual ruling were to do so, it would not have an effect on the central requirement that every American carry health insurance, which does not kick in before 2014. By then, the U.S. Supreme Court will have certainly ruled on the law, settling the issue between competing lower courts. (The Michigan and first Virginia rulings are already before the appellate courts in those circuits.)

So far, the filing of the lawsuits and the ensuing rulings have followed a politically predictable outcome. Suits judged by liberal judges have dismissed challenges to the law. The one suit decided by a conservative judge ruled it unconstitutional. Today’s ruling was issued by Judge Henry E. Hudson of the U.S. District Court for the Eastern District of Virginia. Hudson was nominated to the bench by George W. Bush and confirmed in August 2002. From 2003 to 2008, Hudson was a part owner and received dividends from Campaign Solutions Inc., a Republican campaign consulting firm. Hudson is also the judge who convicted NFL quarterback Michael Vick to 21 months in prison for dog fighting.

Hudson’s ruling on Monday was not unexpected for other reasons. In August, in a related ruling that denied the Justice Department’s attempt to dismiss the lawsuit, Hudson wrote: “Unquestionably, this regulation radically changes the landscape of health insurance coverage in America.” The Virginia General Assembly earlier this year passed legislation that exempts Virginia residents from the federal mandate (1.2 million uninsured Virginians would gain coverage under the federal law). Last week in Florida, a state Senate panel approved placing a proposed constitutional amendment on the 2012 ballot to do the same thing—exempt Floridians from the federal mandate. A quarter of Florida’s residents are uninsured, and 3.5 million, or one in five, live in poverty.

In Florida, Judge Roger Vinson is expected to hand down his ruling in the near future. He was appointed to the bench by Ronald Reagan in 1983. He is expected to declare the federal mandate, specifically called the Minimum Essential Coverage Provision, unconstitutional.

In his 42-page ruling Monday, Judge Hudson wrote that the federal mandate exceeds Congress’ power under the Commerce Clause of the Constitution. “Despite the laudable intentions of Congress in enacting a comprehensive and transformative health care regime,” Hudson wrote, “the legislative process must still operate within constitutional bounds. Salutatory goals”—(he meant salutary)—“and creative drafting have never been sufficient to offset an absence of enumerated powers.”

He then wrote: “In surveying the legal landscape, several operative elements are commonly encountered in Commerce Clause decisions. First, to survive a constitutional challenge the subject matter must be economic in nature and affect interstate commerce, and second, it must involve activity. Every applicant of Commerce Clause power found to be constitutionally sound by the Supreme Court involved some form of action, transaction or deed placed in motion by an individual or legal entity. The constitutional viability of the Minimum Essential Coverage Provision in this case turns on whether or not a person’s decision to refuse to purchase health care insurance is such an activity.”

Judging that “the scope of congressional power under review is without modern counterpart,” Hudson disagreed that the health mandate was a tax and therefore a form of economic activity Congress could regulate, and wryly attacked Congress for “simply dock[ing] the provision in a convenient harbor” under the IRS code. The requirement, if not complied with, amounts to a penalty, not a tax, the judge ruled.

He then concluded: “A thorough survey of pertinent constitutional case law has yielded no reported decisions from any federal appellate courts extending the Commerce Clause or General Welfare Clause to encompass regulation of a person’s decision not to purchase a product, notwithstanding its effect on interstate commerce or role in a global regulatory scheme. The unchecked expansion of congressional power to the limits suggested by the Minimum Essential Coverage Provision would invite unbridled exercise of federal police powers. At its core, this dispute is not simply about regulating the business of

insurance—or crafting a scheme of universal health insurance coverage—it’s about an individual’s right to choose to participate.”

In his October ruling on the same clause, Judge George C. Steeh of Federal District Court in Detroit (a Clinton appointee) wrote: “Far from “inactivity,” by choosing to forgo insurance plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now through the purchase of insurance, collectively shifting billions of dollars, $43 billion in 2008, onto other market participants. […] While plaintiffs describe the Commerce Clause power as reaching economic activity, the government’s characterization of the Commerce Clause reaching economic decisions is more accurate.”

Virginia’s Judge Norman K. Moon took a slightly different approach in his ruling less than two weeks ago: “The conduct regulated by the individual coverage provision is also within the scope of Congress’ powers under the Commerce Clause because it is rational to believe the failure to regulate the uninsured would undercut the Act’s larger regulatory scheme for the interstate health care market,” he wrote. “The Act institutes a number of reforms of the interstate  insurance market to increase the availability and affordability of health insurance, including the requirement that insurers guarantee coverage for all individuals, even those with preexisting medical conditions. As Congress stated in its findings, the individual coverage provision is “essential” to this larger regulatory scheme because without it, individuals would postpone health insurance until they need substantial care, at which point the Act would obligate insurers to cover them at the same cost as everyone else. This would increase the cost of health insurance and decrease the number of insured individuals—precisely the harms that Congress sought to address with the Act’s regulatory measures.”

in mid-afternoon Monday, the White House released a statement on the Virginia ruling: “History and the facts are on our side,” it read. ” Similar legal challenges to major new laws — including the Social Security Act, the Civil Rights Act, and the Voting Rights Act — were all filed and all failed.  Contrary to what opponents argue the new law falls well within Congress’s power to regulate economic activity under the Commerce Clause, the Necessary and Proper Clause, and the General Welfare Clause. Opponents of reform claim that the individual responsibility requirement – the requirement that all Americans carry a minimum level insurance by 2014 –exceeds Congress’ power to regulate interstate commerce because it penalizes economic “inactivity.”   Make no mistake — individuals who choose to go without health insurance are actively engaged in economic decision making – the decision to pay for health care out-of-pocket or to seek uncompensated care.  Every year millions of those who have chosen to go without health insurance actively seek medical care, which is evident in the billions of dollars spent on uncompensated care every year.”

Even though the Obama administration is ahead with rulings in sits favor, today’s ruling by Judge Henry Hudson adds to the sense that the administration has been on a losing streak, with Democrats losing their large Congressional majorities in the November election and Obama being forced to compromise with Republicans and extend all the Bush tax cuts for two more years, even though he’d vowed to repeal them for the very rich. The administration is warning that if the courts do end up rejecting the minimum-requirement mandate, other mandates will be dismissed, too, including the requirement that insurers cover people with pre-existing conditions or the ban on insurers ceasing coverage for clients they find too expensive.

Virginia’s attorney general, Kenneth T. Cuccinelli II, a Republican, filed the lawsuit that Hudson ruled on just moments after Obama signed the measure into law. Cuccinelli is among the 19 GOP attorneys general in the lawsuit against the law filed in Florida. The importance of that case diminishes with every other federal ruling being added to the record, as it becomes clearer that appeals will move swiftly toward the U.S. Supreme Court regardless of what happens in Florida.