Obama Health-Care Law Ruled Constitutional by Appeals Court

President Barack Obama’s health-care legislation requiring almost all Americans to have medical insurance beginning in 2014 is constitutional, a U.S. appeals court ruled.

The U.S. Court of Appeals in Washington today upheld the measure Obama signed into law in March 2010 by a 2-1 vote. It was the third appellate court to rule on the constitutionality of the statute, and the second to reject a challenge to its insurance mandate by opponents who argue the government has no right to force an individual purchase a service or product.

“Broad regulation is an inherent feature of Congress’s constitutional authority in this area; to regulate complex, nationwide economic problems is to necessarily deal in generalities,” wrote Judge Laurence Silberman, who has a reputation as one of the court’s most conservative judges.

“Congress reasonably determined that as a class, the uninsured create market failures,” Silberman said. “Thus, the lack of harm attributable to any particular uninsured individual, like their lack of overt participation in a market, is of no consequence.”

The Washington appeals court may be the last to rule on the law before the U.S. Supreme Court takes it up. The Obama administration asked the high court to review an Aug. 12 ruling by the appeals court in Atlanta, which found the insurance mandate is unconstitutional.

Lost Challenges

The Thomas More Law Center, a self-described Christian organization that lost challenges to the legislation in a Detroit federal court and at a U.S. appeals court in Cincinnati, also asked the Supreme Court to review its case.

The high court justices will consider whether to take the cases at their conference on Nov. 10.

A U.S. Court of Appeals panel in Richmond, Virginia, addressing two cases in a pair of Sept. 8 rulings, concluded it was blocked from ruling on the merits of the law by a statute that generally bars challenging taxes before they’re collected or assessed.

The law provides for a tax penalty to be levied on almost any American who fails obtain health coverage.

“The ruling is yet another victory for millions of Americans who are already benefitting from the law,” said Stephanie Cutter, assistant to the president and deputy senior adviser, in a White House blog post.

No Decision

Attorney Edward L. White III of Ann Arbor, Michigan, who argued the case for the challengers, said in an interview that no decision has been made on whether to seek review by the full circuit court or make an appeal to the Supreme Court.

Republican Senator John Barrasso of Wyoming, an orthopedic surgeon, said he wasn’t discouraged by today’s ruling.

The Supreme Court will find the law unconstitutional because “Congress doesn’t have the right to come into your home and tell you to buy a product,” Barrasso said in an interview.

House Minority Leader Nancy Pelosi said in an e-mailed statement, “we are confident that the Supreme Court will affirm and uphold today’s ruling.”

Government lawyers have called the mandatory coverage provision the linchpin of the health-care law because it would bring younger and healthier people into the insurance pool. While expanding the number of people paying premiums, the law bars insurers from rejecting anyone due to pre-existing conditions.

Tax Penalties

The five people who filed the lawsuit in Washington in June 2010 claim that they and their families could face combined tax penalties of more than $27,000 if they fail to obtain insurance. One of the plaintiffs has since been dropped from the case.

In February, U.S. District Judge Gladys Kessler ruled the mandate was lawful and dismissed their suit.

Silberman, an appointee of Republican President Ronald Reagan, was joined in upholding the Patient Protection and Affordable Care Act by Judge Harry Edwards, an appointee of Democrat Jimmy Carter.

“Silberman has been one of the leading conservative thinkers in the country for the past three decades,” said Ian Millhiser, a policy analyst at the Center for American Progress, a liberal research group in Washington.

Nixon, Reagan

Silberman held positions in the presidential administrations of Richard Nixon, Gerald Ford and Reagan. In 1990, he was in the majority on an appeals panel that overturned the conviction of Oliver North for obstructing a congressional inquiry related to the Iran-Contra investigation.

He wrote the appellate opinion that struck down a District of Columbia law banning residents from keeping handguns in their homes on Second Amendment grounds. Silberman received the Medal of Freedom from President George W. Bush in 2008.

Today’s ruling “puts to rest the notion that perceived judicial ideologies directly controlled the decisions” on constitutionality of the law, said Kevin Walsh, a law professor at the University of Richmond and a former clerk to U.S. Supreme Court Justice Antonin Scalia, in an interview.

Agreeing with government lawyers, Silberman said the health-care market is unique in that “virtually everyone will enter or affect it and because the uninsured inflict a disproportionate harm on the rest of the market,” when they require care.

No Jurisdiction

U.S. Circuit Judge Brett Kavanaugh, a nominee of George W. Bush, said in a dissent that he doesn’t think the courts have jurisdiction to hear the case.

Kavanaugh found the penalty for failure to obtain coverage, which will first be imposed in 2015, tantamount to a tax because it’s to be paid when filing federal tax return.

In his 65-page dissent, he said the Anti-Injunction Act bars courts from considering pre-enforcement lawsuits challenging the collection of taxes.

“The tax penalty is the only sanction for failing to have health insurance,” he wrote. “And the IRS -- and only the IRS -- may assess, collect, and enforce the tax penalty.”

Silberman said the law barring such suits restrains only the IRS’s assessment and collection of taxes.

“It has never been applied to bar suits brought to enjoin regulatory requirements that bear no relation to tax revenues or enforcement,” Silberman wrote.

Walsh said Kavanaugh’s dissent shows the jurisdictional issue is still “a live one” and might spur the Supreme Court to seek argument on the Anti-Injunction Act. Both the U.S. and the law’s opponents seeking review said the courts have the authority to decide its constitutionality.

The case is Seven-Sky v. Holder, 11-5047, U.S. Court of Appeals for the District of Columbia (Washington).

To contact the reporters on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net; Andrew Harris in Chicago at aharris16@bloomberg.net.

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

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