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Supreme Court to Review PPACA

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WASHINGTON—The Supreme Court today agreed to decide whether requiring Americans to buy health insurance is constitutional.

Oral arguments will be held in March, and a decision is expected by June, just as the critical electioneering for the next President, the entire House and one-third of the Senate begins.

However, in a sweeping decision, the court also agreed to decide a procedural question that could allow it to postpone dealing with the core issue for several years.

It did so by agreeing to review whether the insurance-mandate penalties included in the Patient Protection and Affordable Care Act are a type of tax that can only be challenged after it is collected, rather than before.

If the court determines that it is premature to deal with the core issue, the court would not have the legal power to consider such a challenge until people are required to pay that tax starting in January 2014, legal scholars say.

Lower courts ruled for the Obama administration on this issue, especially the Fourth U.S. Circuit Court of Appeals, which ruled 2-1 that it did not have jurisdiction to decide the constitutionality of the law because the Anti-Injunction Act requires the person to pay the tax first, seek a refund, and in later proceedings raise the constitutional issue. This court sidestepped dealing with the mandate issue, saying it was premature.

Opponents of the legislation and who believe the mandate to buy insurance is unconstitutional have voiced concern that the High Court could sidestep the critical mandate this year by supporting the 4th Circuit on the procedural issue.

Challengers, including 26 states and most conservatives, view the insurance requirement as an unprecedented intrusion on individual liberty. They contend that Congress cannot use its interstate commerce powers to regulate citizens who choose not to participate in the health insurance market.

The core constitutional issue revolves around the Commerce Clause of the constitution.

The court also agreed to hear the challenge of 26 states of the health law’s expansion of Medicaid, the combined federal/state program that subsidizes health care for low-income Americans.

George T. Patton, Jr. a partner at Bose McKinney & Evans LLP in Indianapolis and Washington and an expert in appellate law said, “In my view, it is no surprise that the U.S. Supreme Court granted review given that a federal appellate court (the Eleventh Circuit) struck down an act of Congress as unconstitutional, other federal appellate courts (the D.C. Circuit and Sixth Circuit) upheld the law as constitutional, and yet another federal appellate court (the Fourth Circuit) found that there were jurisdictional problems with deciding the constitutionality now.”

Patton also said that the U.S. Supreme Court granted the petitions for Writ of Certiorari from the Eleventh Circuit’s 2-1 decision striking down the law as unconstitutional. The Court did not act on Petitions from other circuits.  Generally, Patton said, by historical percentages of 70-80%, the Court takes cases to do something different than the federal court of appeals.

He said the five and half hours of oral argument granted by the U.S. Supreme Court will allow for a full airing of the legal issues. “This amount of oral argument is much more than the regular hour per case usually set,” Patton said. 

Then again, Patton noted, the Court granted three petitions. “It will be interesting to see what order the Court sets the cases for oral argument,” he said.

He cited comments by Lyle Denniston, a reporter and non-lawyer who has been covering the Supreme Court for 52 years, that, “The allotment of five-and-a-half hours for oral argument appeared to be a modern record; the most recent lengthy hearing came in a major constitutional dispute over campaign finance law in 2003, but that was only for four hours.”   

Patton cited the amount of time the Court has allotted to the various issues, perhaps implying the order and logic tree of the oral arguments:

  • Two hours of argument on the constitutionality of the individual mandate;
  • One and half hours on severability of the individual mandate from the rest of the law;
  • One hour on jurisdiction given the Anti-Injunction Act; and
  • One hour on constitutionality of the expansion of Medicaid for the poor and disabled.

In another note of caution, Beth Mantz Steindecker of Washington Analysis, who advises institutional investors and hedge funds, said last week in an investment note dealing with the Decision of the Court of Appeals for D.C. Circuit upholding the mandate that the Supreme Court is likely to uphold the constitutionality of the individual mandate by the end of June 2012 .

However, she said, “Irrespective of what the Supreme Court ultimately does, we believe that the bigger game-changer for this law is the outcome of next November’s elections.

Specifically, she said, a GOP-controlled Congress may work with President Obama on deficit-reducing modifications and design changes, such as an alternative to the individual mandate. 

“If there is a Republican sweep, however, they are expected to pursue a ‘repeal and replace’ strategy while keeping some of the more “popular” provisions, Mantz-Steindecker said. 

“No matter what, it seems that the health reform law is likely to look different than originally designed by the potential date of implementation,” she concluded.