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Appeals court zaps PPACA challenge

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A federal court wants to kill a suit challenging the constitutionality of the Patient Protection and Affordable Care Act (PPACA) tax provisions — and a lower-court ruling holding that those provisions started out in the U.S. House of Representatives.

A three-judge panel at the 5th U.S. Circuit Court of Appeals had a chance to weigh in on the origins of the PPACA tax provisions in a ruling on Hotze et al. vs. Burwell et al. (Case Number 14-20039). Instead, the panel ruled that the court that first heard the case should dismiss the case due to lack of a good reason to consider the case, rather than due to any weaknesses in the plaintiffs’ arguments.

E. Grady Jolly, the circuit judge who wrote the opinion explaining ruling, says the court looked at the case from scratch.

A judge in the U.S. District Court for the Southern District of Texas originally dismissed the case base on the merits.

“We never reach the merits,” Jolly writes in the opinion. 

The district court never should have looked at the merits of the suit, because one of the plaintiffs, Steven Hotze, M.D., failed to allege any injury from the PPACA individual mandate that gave him standing to challenge the mandate, Jolly writes.

The other plaintiff, Hotze’s employer, Braidwood Management Inc., cannot sue over the PPACA employer mandate tax, because that suit is clearly barred by the federal Anti-Injunction Act, which protects new taxes against lawsuits seeking to keep the taxes from taking effect, Jolly says.

“Accordingly,” Jolly says, “we vacate the district court’s judgment and remand this case with instructions to dismiss for lack of subject-matter jurisdiction.”

Hotze and Braidwood wanted to challenge PPACA individual and employer mandate penalties on the basis that the mandate penalties really originated in the U.S. Senate, as proposed Amendment Number 2786 to H.R. 3590. The Senate “amendment” was more than 2,000 pages long, and it replaced the original language of H.R. 3590, which started out as a short Service Members Home Ownership Tax Act of 2009 bill.

Hotze and Braidwood say the process used to draft and pass PPACA violated the Origination Clause of the U.S. Constitution, which requires new taxes to originate in the House.

The district court judge dismissed the case, arguing that the bill was not mainly a bill for raising revenue, and that the bill had originated in the House. 

Jolly says the federal courts must avoid deciding a constitutional issue if they can find another ground they can use to dispose of a case.

Hotze himself already had the kind of minimum essential coverage (MEC) that PPACA requires and was not going to have to pay a penalty for lacking MEC, Jolly says. Jolly says any other mandate-related injuries that Hotze says he suffered or might suffer are either vague or speculative.

“Thus, although we do not doubt that many have suffered an injury in fact at the hands of the individual mandate, the plaintiffs’ complaint does not allege that Dr. Hotze is among them,” Jolly writes.

Representatives from Dr. Hotze’s practice and Sylvia Burwell, the secretary of the U.S. Department of Health and Human Services (HHS), were not immediately available to comment on the ruling.


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