Posted on March 20, 2012 at 12:06 am by Lyle Denniston
On Monday, March 26, the Supreme Court begins three days of hearings on constitutional issues surrounding the new federal health care law. This is the first of four articles that will appear on the blog this week, previewing the issues that the Court has agreed to review. These articles will be in the order that the Court is to hear the issues. Monday’s argument, on whether federal law bars any challenge to the individual mandate and its attached penalty, will start at 10 a.m. and continue for 90 minutes. The Court-appointed amicus on this issue, Robert A. Long, Jr., of the Washington office of Covington & Burling, will argue first, with 40 minutes of time. U.S. Solicitor General Donald B. Verrilli, Jr., will have 30 minutes of time, and Gregory G. Katsas of the Washington office of Jones Day will have 20 minutes for the challengers. (NOTE: This blog provides a full array of background materials on the health care case, at this site.)
One issue unites both the challengers and defenders of the new Affordable Care Act: they would like to have the Supreme Court decide, before summer, the constitutionality of the new Act’s mandate requiring virtually all Americans to obtain health insurance by 2014, or pay a penalty with their tax returns until they do. By the end of the first 90 minutes of argument in the Court next week, there is a chance that everyone could have a fairly good idea whether that is going to happen. The timetable for a ruling depends upon how the Justices interpret a 145-year-old federal law, the Anti-Injunction Act, that defines courts’ authority, and Monday’s argument may provide some strong clues of their reaction.
Although this may be the most complex issue, legally, that the Court will be considering next week, and it is the one that has drawn the least public interest, this question is of major importance: it draws the Court to the core issue of whether anyone had a legal right to file a lawsuit to challenge the insurance-purchase mandate before it actually goes into effect (now scheduled for January 1, 2014). If lawsuits turn out to have been barred, the mandate may not be challenged probably until 2015 at the earliest. The answer actually depends upon answers to two separate issues: is the Anti-Injunction Act the kind of law that defines a federal court’s authority – that is, does a court have jurisdiction to decide the case at all — and, if it is jurisdictional, does that bar a court challenge to a specific law written as the insurance mandate is written?
The Court agreed to answer those questions even though no one who had filed an appeal with the Justices thought that the Anti-Injunction Act barred the challenges to it. The Justices’ willingness to rule on the scope of that Act makes this a serious matter. In considering it, the Court is confronted with three basic choices:
First, attorney Long — named to argue the point because no one else in the case would — contends that the 1867 law is jurisdictional, so no one could challenge the mandate in this or any other case, until it was actually enforced against a specific individual.
Second, the Obama Administration (the Solicitor General, to be specific) argues that the 1867 Act is jurisdictional, but that it does not apply to the mandate and its penalty because they do not fit within its specific terms.
Third, the challengers (26 states, the National Federation of Independent Business, and four individuals) argue that it is not jurisdictional, so it was not a barrier to these or other challenges.
What is the Anti-Injunction Act? It says simply: “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” (The law has several exceptions, but none of them is at issue in this case.) Not long after Congress passed that law in 1867, the Supreme Court remarked that the lawsuit ban was designed to attack “the evils to be feared if courts of justice could, in any case, interfere with the process of collecting the taxes on which the government depends for its continued existence.”
The Act, though, has had a somewhat checkered history in the Supreme Court previously. In the 1920s and 1930s, for example, the Court sometimes backed away from its earlier view than the Act imposed a flat ban on any tax lawsuit before a tax provision had actually been enforced. In a few cases, the government did not object, and the Court allowed, some tax challenges to go forward in court. But the Court returned to a strict interpretation of the ban in 1962, in the case of Enochs v. Williams Packing and Navigation Co., and has not deviated from that view since. Still, that history only provides a starting point for the controversy between those involved in the new health care case, as they sought to persuade the Court that the history supports their view for or against the idea that the Act is jurisdictional.
In recent years, the Court has spent considerable energy trying to sort out whether a federal law that controls how courts are to react to a legal issue does, in fact, impose a jurisdictional bar, completely closing the courthouse door to a case, or as simply a “claim-processing” rule, letting the case into federal court but limiting what the court can do with it. In several decisions, the Court has said flatly that, unless Congress says explicitly that it wants to shut the courthouse door to a given kind of case, it must say so clearly. If it does not do so, the Court has concluded that a limiting law is non-jurisdictional, and can go forward.
When the new ACA lawsuits began flowing into the federal courts after President Obama signed it in March 2010, the Justice Department tried to head off the challenges with a number of procedural arguments, including claims that the lawsuits were filed too early since the mandate would not take effect for nearly four more years. It also added an argument that the challenges were barred by the Anti-Injunction Act. It was a somewhat tricky argument, because government officials — from President Obama on down — did not want to call the mandate and its penalty a “tax,” as such, because the idea of imposing new taxes has become politically toxic. But the government went ahead with the argument anyway, saying that the challengers were trying to block a provision written into the tax code. The strategy, of course, was to keep the challengers at bay.
That particular argument, though, did not fare well with District Court judges, who were regularly agreeing that the Act did not block the lawsuits against the individual mandate. In the first test case, filed in federal District Court in Pensacola, Fla., Senior District Judge Roger Vinson ruled that Congress had separated the collection of the penalty from the usual methods of collecting taxes, and the 1867 law did not apply to penalties that were designed to punish violators of a law other than a tax measure. Judge Vinson proceeded to rule, striking down the mandate, and all of the remainder of the ACA with it.
Faced with those rejections, the Justice Department abandoned the argument as the cases moved up on appeals to the Circuit Courts. In one of those appeals courts, the Fourth Circuit Court, the three-judge panel held a hearing on the case, but, afterward, told the lawyers to come back with new briefs on the Anti-Injunction Act and its impact on the controversy. The Justice Department told that court that it had reconsidered, and no longer wanted the challenges turned aside, and now wanted the dispute settled on the merits. The Fourth Circuit Court did not accept that view, and ruled that the challenge — by the state of Virginia, in that case — could not proceed further. In the Florida case, when that case was appealed, the Eleventh Circuit Court did not even discuss the question. But the Sixth Circuit Court in another case did turn aside the Anti-Injunction Act as a bar.
It was clear, then, that there was a split in the Circuit Courts as the cases moved on up to the Supreme Court, and that is usually enough to persuade the Justices to take on an issue. However, no one involved in the Florida case — which by then appeared to be shaping up as the lead case before the Justices – was taking the position that the Anti-Injunction Act barred the challenges. Still, the Justice Department, in its own appeal from its loss on the mandate issue in the Eleventh Circuit, suggested that the Court, on accepting review of that case, should direct the lawyers to file briefs on the issue, and appoint an outside lawyer, independent of the parties, to make the argument that the Act should be interpreted as a barrier to the Justices’ review of the mandate’s constitutionality. (The issue had been raised in other petitions in other cases, but ultimately those were not granted by the Court.)
When the Court agreed on November 14 to review the Florida case, it accepted the Justice Department suggestion, and soon named Washington attorney Robert A. Long, Jr., to brief and argue that the lawsuits were, indeed, barred. It does not often happen that an issue in a case does not produce a dispute between the parties, but when it does happen, the Court is inclined to bring in an outsider so that that question, too, gets the full treatment of review, along with the questions that the parties wanted it to decide. That brings a prestigious assignment, and lawyers are eager to accept.
It thus was no surprise when the Court added that issue to its review. Still, everyone understood the potential implications: if the old law were interpreted to bar the lawsuits, Judge Vinson, the Eleventh Circuit, and the Supreme Court would have had no authority — period — to rule on the constitutionality of the individual insurance-purchase mandate, and the Eleventh Circuit’s decision striking down that mandate would have to be vacated — that is, treated as if it had never happened. Indeed, when attorney Long filed his written arguments, this was his bottom line: “The decision of the court of appeals should be vacated and remanded for dismissal of the Respondents’ challenge to [the mandate] for lack of jurisdiction.”
What that would mean, in real-world terms, was that the mandate would remain in the ACA (unless Congress later opted to repeal it), and it could be challenged in court only after some individual failed to obtain health insurance, and then was ordered by the Internal Revenue Service to pay — along with the next annual tax return — a financial penalty for every month that the individual did not have a health policy.
Briefs on the Merits
Attorney Long started the merits briefing on the Anti-Injunction Act issue in early January, opening with a string of Supreme Court precedents that supposedly established that the Act is a jurisdictional law: if a lawsuit comes under that Act, it cannot be pursued in federal court. Long’s brief is a combination of that history, a dissection of when a tax law is really about taxes, an analysis of the mandate and its penalty seeking to show that they are a form of tax even if the assessment for not having insurance is formally labeled a “penalty,” an argument that the states are no freer than anyone else is to file an anti-tax lawsuit, and, finally, a plea for the Court to follow its customary practice of not deciding a constitutional issue before it has no choice but to do so.
Within that array of points, Long appears to be appealing to what he deems to be several characteristics of the current Court’s approach to decisions. There is an appeal to the Justices to pay most attention to what the actual language of a law says rather than what someone may say about its scope, an appeal to judicial modesty so that a court does not write something into a new law that is not clearly already there, an appeal to separation-of-powers principles that would leave it to Congress to change the Anti-Injunction if it wishes to do so, and an appeal to the “minimalist” instinct of letting a constitutional question wait until it absolutely must be answered. Each of those notions is familiar to the ”Roberts Court,” and each poses a challenge to Long’s adversaries who want, with some passion, for the Court to go forward now to settle the constitutionality of the mandate.
The appointed lawyer does not say it directly in his brief, but his arguments would give the Court a way to decide the case without making a constitutional decision that, no matter which way it went, would become a direct issue in this year’s presidential campaign, and, in fact, it would be a decision coming out in the very midst of that campaign next June. Besides backing the Court out of the midst of the campaign, with perhaps some benefit to its institutional reputation, a ruling as Long would have it would postpone the constitutional issue at least until after the elections, and those elections might change the political landscape sufficiently that the entire Affordable Care Act might be subject to wholesale revision or maybe even repeal.
Long has a very significant ally in that part of his approach, and he makes a studied effort to rely upon that ally: Circuit Judge Brett M. Kavanaugh, one of the bright young conservative “stars” in the federal judiciary, and himself frequently mentioned as a future Supreme Court nominee (he is also a former clerk to Justice Anthony M. Kennedy, the Court’s most frequent “swing” Justice). In a dissenting opinion in another of the health care cases, issued just six days before the Court granted review of some of the other cases, Kavanaugh argued that the constitutional issue should wait.
“Waiting to decide,” the judge wrote, “might mean never having to decide, a prospect that supports adherence to the Anti-Injunction Act….What appears to be obviously correct now can look quite different just a few years down the road….Between now and 2015, Congress might keep the mandate as is and the President may enforce it as is. If that happens, the federal courts would resolve the resulting constitutional case by our best lights and would not shy away from a necessary constitutional decision. But history tells us to cross that bridge only if and when we need to….I would adhere to the text of the Anti-Injunction Act and leave these momentous constitutional issues for another day — a day that may never come.”
Those sentiments are echoed in the final three pages of Long’s brief, as he urged the Court to avoid the constitutional issue, and then added the argument that, if Congress really thought that it was vital to have the constitutionality resolved swiftly, it has the authority to amend the Anti-Injunction Act to clear the way for “immediate review” in the courts. (Even if Congress were to do that, getting beyond uncertain partisan complications, new court review would not in fact be immediate; the processing of a new case or cases would almost certainly put the issue beyond November’s election. The Justices very likely would leave it to lower courts to react first to such a change in the law governing their authority.)
Although Long’s merits brief is multi-faceted, it is a model of simplicity compared to the merits brief filed by the Solicitor General for the federal government. The government, because of the long-term potential for a serious threat to federal tax revenues if pre-collection tax lawsuits become more common, has a strong interest in limiting any significant erosion of the Anti-Injunction Act’s lawsuit bar. But, after switching position on that Act in the health care cases, it now also has a keen interest in having the constitutionality of the mandate resolved, and soon. And, while it wants the mandate and its penalty to be treated not as taxes for purposes of the Anti-Injunction Act, it does want the Court to consider upholding those provisions under Congress’s power to pass tax laws. Further, it wants the Act to be treated as a jurisdictional bar — but not for this case.
If those positions are not actually contradictory, they at least cannot be advanced with simple argument, and the Solicitor General’s brief does not try to do so. The complexity of the government’s overall approach is evident in the heading of the first major argument section of its brief: “Where It Applies, The Anti-Injunction Act Imposes a Jurisdictional Limitation On The Courts’ Adjudicatory Authority.” (italics added) The defense of the jurisdictional character of the Act, as the government sees it, depends on history, precedent, statutory language, and logic. That, of course, echoes what the government’s argument used to be in these cases. One of the key subtexts in that portion of the argument is that the government itself cannot waive the jurisdictional bar, in order to get a tax law question answered by the courts when it would like an answer.
From there, however, the brief goes on to the more difficult part of the government’s plea — explaining why, from its view, the lawsuit bar does not apply in this case. It should be noted, to be sure, that the government is not arguing that it has the authority to waive the bar; the Anti-Injunction Act would not be truly jurisdictional if that were allowed. The argument, rather, is that the Act simply does not apply to the ACA’s mandate and its attached penalty.
There are two points to this argument that rely on the language of tax laws and of the ACA: first, the word “penalty” (not “tax”) is what Congress chose to call the consequence of not obtaining health insurance, and this “penalty” is not enforced under the ACA in the same way that an actual tax would be, and that becomes clear when one cross-references a variety of provisions within the tax code; and, second, within the ACA itself, a comparison of various provisions shows that Congress did not intend “the full panoply of rules relating to ’taxes,’ including the AIA,” to apply to the penalty. (These points are considerably more complex than this summary may suggest.)
Responding directly to attorney Long, the government brief finds an opportunity to make its argument about why the mandate and penalty are not a tax, yet were enacted within Congress’s power to tax. It agrees with Long that the Anti-Injunction Act does not define what is a tax, and that an appropriate dictionary definition of “tax” treats it as so broad that it includes “almost every species of imposition on persons or property for supplying the public treasury, as tolls, tribute, subsidy, excise, impost, or customs.”
That broad view of “tax,” the government brief argued, “reinforces the conclusion that the [mandate] is a valid exercise of Congress’s Article I taxing powers as a constitutional matter because it underscores that the provision can, and therefore must, be construed as an exercise of that power.” (italics in the brief) But, the brief then said, “it is…out of place in the context of construing the specific statutory terms in a highly reticulated scheme like the Internal Revenue Code, in which distinctions between different kinds of ‘sums of money assessed’ carry important substantive and procedural statutory consequences.”
Going beyond the intricacies of the tax code and of the mandate provisions themselves, the government argued that the fact that Congress chose a delayed beginning date for the mandate showed that Congress wanted any constitutional issues resolved before the federal agencies, and private industry, had gone to considerable effort to devise ways to implement the new measure. Congress, it argued, knew there would be constitutional challenges, and it thus wanted them resolved up-front, so as not to disturb the functioning of the IRS or the Treasury in collecting tax revenues.
Although the mandate law says that the penalty is to be collected as if it were a tax, the Solicitor General contended that this command is not a jurisdictional instruction to the courts, but rather is only a procedural order to the IRS. And, seeking to head off too sharp a cutback on AIA’s lawsuit bar, the government filing suggested that the Court treat the mandate and its penalty as a statute with unique wording.
The government brief wound up with arguments for the Court to consider if it decided that the Anti-Injunction Act does apply: that the challengers could not justify their lawsuit on the theory that it was only a challenge to the mandate and not to the penalty attached to it, since the mandate and penalty are so closely intertwined; that the states should not be allowed to make any challenge to the mandate because they are not affected by it, so they lack “standing” to sue over it, and that, if the states do have “standing,” the Anti-Injunction Act applies to them as fully as to anyone else.
There are two sets of challengers involved in the case — 26 states as a group, and the National Federation of Independent Business and four of its individual members — but the Court is allowing them to have only one lawyer for the argument on the Anti-Injunction Act. They have filed separate merits briefs, however. Although there is some overlap in their arguments on the Anti-Injunction Act issue, there are some differences and, moreover, the Court and its staff will be examining their briefs separately. Although the challengers, like the federal government, do want the Court to decide now on the constitutionality of the mandate, and thus argue that the Anti-Injunction Act is no bar to a challenge, they do have explicit arguments in response to the Court’s grant of review on that question of court authority.
The 26 states contended in their merits brief that the Anti-Injunction Act simply is not jurisdictional, so, once the Court reached that conclusion, it need not consider how the Act would apply to the mandate or to the states’ challenge to it. The Act, according to the states, is only a “claims-processing” law, aimed at “the rights and obligations” of those who seek to sue, not at the authority of the courts. Noting that the Court has recently grown skeptical about claims that a law dealing with court procedures is jurisdictional, the states asserted that there is no clear sign from Congress that it intended the Act to be jurisdictional. There are exceptions to it written into the law, and others that were created by courts, the brief said.
The states have a somewhat complex argument about why they must be allowed to sue to challenge the mandate, even if the AIA is a jurisdictional law. The mandate, their brief asserted, will force millions of individuals to sign up for Medicaid, boosting states’ costs at the risk to their budgets, so they need a way to challenge that effect of the mandate — even though the mandate itself and its penalty do not impose any direct duties on states, as states. If they can’t sue to challenge the mandate, the brief went on, they have no remedy for their grievance about the effect on their Medicaid rolls. But the states also contended that, since the AIA only restricts “persons” from suing, and states are not persons, that Act does not bar them from suing against a tax measure.
As the government had anticipated, the states also argued that they are challenging the mandate, not the penalty, and that, too, makes the AIA inapplicable to them. Despite the government’s claims of the close link between the mandate and the penalty, the states’ brief argued that the two are quite distinct; many individuals who must obey the mandate need not pay the penalty if they don’t. Finally, the states contended that the penalty is not a tax, but rather is an enforcement mechanism for a mandate, which is also not a tax. Congress, the brief said, “lacked the political support to impose a tax,” so it set up a legal duty and then chose a regulatory penalty to enforce it.
The Business Federation and its four members filed a merits brief that began with a point the states also made: they are suing to challenge the mandate, not the penalty attached to it. So their purpose in suing was not an attempt to stop tax collections, and that is the only kind of lawsuit that the Anti-Injunction Act blocks from court, according to this brief. That mandate “is a substantive legal requirement” that actually exists independently of the penalty, the brief said. The trade group and its members actually have no legal complaint about the penalty itself, they said, but only against the “antecedent duty” to obtain health insurance. If the AIA does apply, private individuals will either have to obtain insurance if they want to be law-abiding citizens, or they will have to disobey the law in order to be able to have a penalty imposed upon them so that they could then challenge the mandate. That is a “perverse” way to write a law, the brief suggested.
These challengers also argued that the mandate clearly fits the definition of a penalty that is imposed to punish someone for an illegal act or an illegal failure to act. Nothing about it, then, makes it into a tax. It makes no difference legally, this brief insisted, that Congress assigned the IRS the duty to collect the penalty. That is not an argument for treating it as a “tax” under the AIA, the brief claimed.
And, like the states, the trade group and its members contended that the AIA is a restriction that the courts have allowed the government to waive when it had reason to do so, and is no more than a “claims-processing” restriction. They urged the Court to accept the Solicitor General’s “concession” that the AIA should not apply here, and treating that as the same kind of waiver, whether or not AIA is found to be jurisdictional.
It could take as long as four years, if this case is thwarted, for the constitutional issue to work its way back up to the Court after the mandate went into effect in 2014, those challengers argued. “There is an urgent national need for a prompt determination” on whether the mandate is invalid, that filing concluded.
Unlike the constitutional controversy over the mandate itself, which has generated scores of amici filings, the Anti-Injunction Act has attracted very little interest beyond the parties who had no choice but to respond to the Court’s interest in that issue.
There are two amicus briefs urging the Court to turn aside the challenges to the mandate: one by a group of tax law professors, and one by two long-time tax lawyers, both of whom served as IRS commissioners: Mortimer Caplin and Sheldon Cohen. Theirs may be the more significant for the Court. Like Long, Caplin and Cohen argued that the AIA is jurisdictional, and that the Court should be reluctant to decide the constitutionality of the mandate before it must do so. As former leaders of the government’s tax-collecting agency. these two lawyers sought to persuade the Court that much more is at stake for tax collection than merely the mandate and penalty attacked in the health care cases. If the AIA were read to create an exception here, they argued, it would not only permit this particular constitutional challenge, but a whole range of challenges that might arise as the new health law is implemented in the future — including, for example, any lawsuit protesting the amount of penalty assessed for not having obtained health insurance.
Since there may be as many as 34 million individuals who won’t have health insurance even after 2014 has arrived, the tax lawyers’ brief asserted, there could be a “flood of litigation” over the government’s attempts to collect the estimated $4 billion-plus in revenue that the mandate is calculated potentially to generate.
There are four amicus briefs in support of the challengers, including business, conservative and libertarian advocacy groups that are primarily interested in having the Court strike down the mandate and its penalty, and thus they urge the Court not to let the Anti-Injunction Act stand in the way of that potential goal.
As the Justices prepare for the opening argument next Monday on the health care law, they may well be asking themselves two fundamental questions: first, how important is it for us to resolve, right away, the constitutional dispute over the individual insurance mandate, and, second, even if that is really important, can we? The first is a policy question, the second is legal, but the questions – like so much of the Affordable Care Act’s myriad provisions — are interrelated. And, while the Court generally does not pay a lot of attention to the political consequences of what it does, it almost certainly moves into the constitutional controversy over health care with the full realization that it will be ruling in the very midst of a nationwide political debate over the role of the federal government, with health care at the center. Will that realization shape the answer to either of the core questions?
The Obama Administration has actually turned the policy argument for a prompt ruling into a part of its legal argument: Congress knew that there would be constitutional challenges to the mandate, and so it stretched out the implementation timetable in order to give the courts the time to resolve those challenges. But the Court-appointed lawyer arguing the Anti-Injunction Act point has done the same thing, only in reverse: it is premature to take on the constitutional issues, and tradition counsels against doing so.
While those opposing contentions would seem to give the Court a clear-cut choice — rule now because Congress meant for it to do so, or wait because that is the judicious thing to do — neither one bears directly on the question of whether the Court’s institutional reputation requires it to find a way to steer around the potential political consequences. The Court knows, from its own recent internal discussions about campaign finance, that it is itself an issue in this presidential and congressional campaign over its decision two years ago in Citizens United v. Federal Election Commission, turning loose hundreds of millions in political spending. There may well be risks in stirring up another grievance in the political realm, especially when it is avoidable.
The Anti-Injunction Act issue could give the Court a way to lower its profile this summer. Attorney Long, with some notable support from a respected conservative judge and two respected ex-IRS commissioners, has offered the Court an entirely respectable way to put off the searing constitutional controversy over the individual mandate. To do so would not be merely an act of political squeamishness: in the process, the Court would be deciding an issue of importance to federal judicial power by writing some clarity into an old law in a way that would aid the government in its collection of taxes. And that, of course, is the way a final opinion applying the lawsuit bar might read.
The pragmatic effect, of course, would be that the mandate would stay in effect for a time, but the nationwide debate that it has generated would become — at least for the remainder of the campaign season — a topic for the politicians and the voters. Both sides in this national contest of partisan conflict know well what is at stake on health care, and, at a deeper level, what is at stake in the more general question of dividing up power between national and state governments. The Court might well be content to leave the matter there, for the time being.
If the Justices do put all of this aside, to reach a decision on the Anti-Injunction Act purely on its own merits, that may not be easy. None of the three choices laid before the Court by experienced, and imaginative, lawyers is a self-evident option. All of the points of disagreement — history, precedent, logic, public policy — can be read either way, and have been in this very case.
The dueling arguments on this point are, of course, driven by conflicting preferred outcomes. The government and the challengers want the Court to decide the merits, and each is interested — for differing reasons — in getting a ruling that would be basically good for this case alone. Attorney Long, by contrast, was invited by the Court to pursue only one, very specific agenda: to defend the orphaned argument that the Anti-Injunction Act bars this lawsuit, and he has met his assignment.
The widest gap between these arguments is probably over the threshold issue: is this old law a jurisdictional bar, or only a claims-processing statute? The Court now has considerable practice in solving that riddle, as it has sought repeatedly in recent years to put more rationality into judging when a law is truly jurisdictional. It will need that detached judgment in this case.