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Health-Care Reform ‘Without Prior Precedent,’ U.S. Judge Says

Oct. 14 (Bloomberg) -- A legal challenge to President Barack Obama’s health-care overhaul can proceed, a federal judge ruled, finding the government’s expansion of powers is “simply without prior precedent.”

U.S. District Judge Roger Vinson in Pensacola, Florida, today allowed portions of the claims by 20 states to go forward, as he forecast he would after a day of oral arguments last month. The requirement to purchase health insurance is “not even a close call,” Vinson wrote.

“People have no choice and there is no way to avoid it,” Vinson wrote in a 65-page decision. “Those who fall under the individual mandate either comply with it, or they are penalized.”

Vinson previously scheduled arguments for Dec. 16 on whether the law signed by Obama in March is constitutional. He also allowed Florida to proceed on its claim that Medicaid would be expanded drastically and the states cannot realistically opt out.

“There is a line somewhere between mere pressure and impermissible coercion” and the states’ claim could be plausible,” he wrote.

The judge threw out Florida’s claims that the law interferes with the state’s sovereignty as an employer and that the mandate for individuals to get coverage violates the right to due process of law.

Merits of Claims

“While we are disappointed that the court did not dismiss the entire case, we welcome the judge’s decision to reject most of the claims,” said Tracy Schmaler, a Justice Department spokeswoman. “The judge saved for another day the decision on the merits of two claims, and we remain confident that the law ultimately will be upheld.”

Vinson also found the case was ripe for review, as provisions would go into effect soon and nothing would be gained by postponing a decision.

The focus of efforts to undo what the administration considers a key legislative achievement now shifts to Richmond, Virginia, where a similar lawsuit by the state survived a bid for dismissal in August. A judge there scheduled an Oct. 18 hearing on the law’s constitutionality.

The states have contended that the requirement for all Americans to buy health insurance exceeds the constitutional power of Congress.

Interstate Commerce

The government counters that the mandate is supported by its authority to regulate interstate commerce as billions of dollars a year in unpaid medical bills are absorbed by the market.

A U.S. judge in Michigan on Oct. 7 upheld the constitutionality of the health-care overhaul, rejecting an argument by a self-described Christian law center in the first court victory for the new law. The ruling denied the Thomas More Law Center’s request for an injunction and said the group failed to prove the statute is unconstitutional under the Commerce Clause.

Joining Florida in the suit were Alabama, Alaska, Arizona, Colorado, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington. The National Federation of Independent Business, a small-business lobbying group, also joined.

The Florida and Virginia suits were filed within minutes of Obama’s signing the legislation.

Individual Mandate

“Congress has no constitutional authority to force the individual mandate and its penalty on Americans who cannot afford or do not wish to have health insurance,” Bill McCollum, Florida’s attorney general, said in a statement today. “Regardless of whether the Obama Administration argues it is a tax or regulation, it is an unjust burden on the American public.”

Besides its effect on individuals, the legislation puts an unconstitutional burden on state budgets by expanding Medicaid, the federal-state program that provides health care for the poor, the states say.

In a Sept. 14 hearing, Vinson questioned whether people who don’t buy something -- health insurance -- can be considered actively participating in commerce and taxed for it. The U.S. previously claimed that the possibility of being injured and unable to pay medical bills is enough to draw a link between commerce and taxation.

‘Economic Activity’

“They are attempting to take inactivity and are making it activity,” said Randy Barnett, a constitutional-law professor at the Georgetown University Law Center, said in an interview before the ruling. “The question of whether something is activity, and you don’t make inactivity into activity by saying is has an effect.”

Ian Gershengorn, an attorney for the U.S., said in arguments that choosing not to buy health insurance is an active decision.

‘This is economic activity,” he said. “It is the purchase of health-care services without paying for them.”

Many of the changes enacted by the bill, including requirements for most people to have health insurance and for employers to provide coverage, won’t go into effect for at least two years.

Part of the courtroom debates hinge on whether the health-care law falls within the government’s power to tax. Opponents of the law claim its purpose is to ensure people buy health insurance and not to raise revenue, so the plan can’t be viewed as a tax.

The health-care overhaul will extend Medicaid coverage to 16 million more Americans, according to the nonpartisan Congressional Budget Office. The legislation will cost the states billions of dollars to administer, the attorneys general claim.

The case is State of Florida v. U.S. Department of Health and Human Services, 10-cv-00091, U.S. District Court, Northern District of Florida (Pensacola).

To contact the reporter on this story: William McQuillen in Washington at bmcquillen@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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