Obama Health-Care Law Fight Reaches the First of Three U.S. Appeals Courts

Three judges appointed to the bench by Democratic presidents will hear the first appellate arguments on whether requiring Americans to buy health insurance is, as a lower court judge ruled, the same as ordering them to buy broccoli or a Cadillac.

So far, trial court decisions on the law have broken along party lines, with judges appointed by Republican presidents ruling against the law and Democratic-appointed judges ruling in favor of it.

The U.S. appeals judges in Virginia assigned to review the cases are Diana Gribbon Motz, Andre Davis and James Wynn Jr. Davis and Wynn were appointed to the appeals court in Richmond, Virginia by President Barack Obama. Motz was appointed by President Bill Clinton.

The Justice Department will seek today to persuade the judges that Obama’s health-care overhaul, which mandates most Americans obtain insurance, is constitutional. In back-to-back arguments, the panel will review two rulings -- one upholding the law and the other striking down part of it.

“The fact that the government is sending the solicitor general of the United States to argue the case does reflect how important the government considers this case to be,” said Lisa Blatt, an appeals lawyer at Arnold & Porter LLP in Washington. The U.S. solicitor general usually argues cases before the U.S. Supreme Court.

Market Will Wither

The U.S. calls the insurance mandate the linchpin of the Patient Protection and Affordable Care Act, claiming that, without expanding the pool of younger, healthier customers, the insurance industry won’t be able to meet its obligations for coverage under the law. Absent the mandate, the health-insurance market will wither, the government said in court papers.

The arguments before the U.S. Court of Appeals in Richmond may preview two other cases to be heard early next month in federal appeals courts in Cincinnati and Atlanta. Decisions by the three panels, especially if their rulings differ, may set the stage for “the ultimate argument” before the Supreme Court, said Michael Gerhardt, a constitutional law professor at University of North Carolina School of Law in Chapel Hill.

Christian University

The Virginia appeals stem from a challenge to the law by the state of Virginia and another by Liberty University, a Christian school founded in Lynchburg, Virginia, by the late Reverend Jerry Falwell.

The cases were assigned randomly to the three judges, whose identities were made public this morning.

Motz, a graduate of Vassar College and the University of Virginia law school, started in private practice in Baltimore in 1968 and has served as an assistant state attorney general and associate appeals judge in Maryland. She was confirmed for the 4th Circuit seat in 1994, according to biographical information on the court website.

Davis graduated from the University of Pennsylvania in 1971 and the University of Maryland school of law in 1978. He has worked as a law professor at Maryland and served as a Baltimore city judge, assistant U.S. attorney in Maryland and a civil rights attorney for the U.S. Justice Department. He was also a U.S. District Court judge and was commissioned to the 4th Circuit in 2009.

Wynn, a 1975 graduate of the University of North Carolina at Chapel Hill, earned degrees at Marquette University Law School and the University of Virginia Law School. He served as a lawyer in the U.S. Navy, was an assistant appellate defender in North Carolina and an associate justice of the Supreme Court of North Carolina. He joined the 4th Circuit last year.

Nov. 30 Ruling

The appeal of the Nov. 30 ruling by U.S. District Judge Norman Moon, in Lynchburg, who upheld the act, will be heard first. Liberty University argued the mandatory health-insurance provision is unconstitutional and claims the law doesn’t protect against insurance payments funding abortions.

In a 54-page opinion, Moon compared the provision to laws mandating a minimum wage.

U.S. District Judge Henry Hudson of Richmond reached the opposite conclusion on Dec. 13, finding the mandate beyond Congress’s power to regulate interstate commerce.

Virginia claimed Congress has only the power to tax, not to force participation in a market. In its lawsuit, the state defended its Health Care Freedom Act, which barred compelling Virginians to buy health insurance.

‘Unchecked Expansion’

In his 42-page opinion, Hudson said the “unchecked expansion” of congressional power represented by the insurance requirement “would invite unbridled exercise of federal police powers.” No Supreme Court decision authorized Congress to “compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market,” he wrote.

Hudson’s decision was the first loss by the government in challenges mounted in Virginia, Michigan, Oklahoma, the District of Columbia and Florida, where 26 states joined an effort to have the statute thrown out.

Hudson limited his ruling to the mandatory insurance provision.

E. Duncan Getchell Jr., Virginia’s solicitor general, will argue for the state today in Richmond. Mathew Staver, dean of Liberty University School of Law, will argue the university’s case. Acting U.S. Solicitor General Neal Katyal will represent the Obama administration.

Democrat Majority

The U.S. Court of Appeals in Richmond shifted to a majority of Democratic appointees after Obama, a Democrat, filled four seats left open by former President George W. Bush, a Republican.

Three U.S. District Court judges appointed by Democrats, including Moon, have upheld the statute. Hudson, appointed to the bench by Bush, and U.S. District Judge Roger Vinson, an appointee of Republican President Ronald Reagan, ruled against it.

Vinson, in Pensacola, Florida, found on Jan. 31 that the insurance mandate was essential to the legislative scheme, making the entire act unconstitutional.

Under the logic of the mandate, Congress could force people to buy broccoli because it’s healthy, or require anyone above a certain income level to purchase General Motors cars because that would help a taxpayer-subsidized business, he said.

Justice Department lawyers in court papers said the individual mandate and expansions of Medicaid and employer-based coverage will provide about 32 million more people with coverage by 2019, citing the Congressional Budget Office.

Interstate Commerce

The mandate falls under Congress’s power to regulate interstate commerce as $43 billion in unpaid medical bills are absorbed by the market each year, the Justice Department said.

“People do not confront unexpected life-or-death needs for a Cadillac, and they do not carry insurance to finance future purchases of cars or prohibitively expensive vegetables,” the department lawyers wrote in the government’s appellate brief. “And whereas patients are effectively guaranteed expensive health-care services in times of need regardless of their means, drivers must pay for their cars in order to drive them off the lot.”

The cases are Liberty University v. Geithner, 10-02347, and Commonwealth of Virginia v. Sebelius, 11-01057 and 11-01058, 4th U.S. Circuit Court of Appeals (Richmond).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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