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Health-Care Law Addresses ‘Failure to Pay,’ U.S. Tells Court

Health-Care Law Must Stand, Obama Administration Tells Third
Free health checkups are provided at a mobile clinic in Denver, Colorado. Photograph by John Moore/Getty Images

Lawyers for the Obama administration asked a third federal appeals court to uphold a 2010 health-care law in what may be the final legal battle over the statute before it reaches the U.S. Supreme Court.

In oral arguments today, the government asked a three-judge panel of the U.S. Court of Appeals in Atlanta to reverse a lower-court ruling that struck down President Barack Obama’s health-care legislation. Similar panels in Richmond, Virginia, and Cincinnati heard challenges to the law over the past five weeks as lawsuits work their way through federal courts.

At issue is a provision of the Patient Protection and Affordable Care Act that requires most Americans to have health insurance starting in 2014. Opponents argue Congress exceeded its power to regulate interstate commerce in mandating that consumers enter the health-care marketplace. The Atlanta appeals court is the first to review a ruling that discarded the entire act due to the coverage mandate.

“The most difficult issue in the case is the individual mandate,” Chief Judge Joel Dubina said at the beginning of today’s session.

A suit filed last year by Bill McCollum when he was Florida attorney general was joined by 25 states. The suit, along with a separate case by Virginia Attorney General Kenneth Cuccinelli, like McCollum a Republican, was filed March 23, 2010, the same day Obama, a Democrat, signed the measure into law.

‘Consuming the Goods’

“The question you have before you is that everyone is consuming the goods, it’s about failure to pay,” Acting U.S. Solicitor General Neal Katyal told the panel today.

“The Commerce Clause only gives Congress the power to regulate, not to compel,” states’ attorney Paul D. Clement, a solicitor general under President George W. Bush, told the court later.

The solicitor general is the Justice Department’s top courtroom attorney. Before today’s arguments, Katyal and Clement greeted each other with hugs in the courtroom.

Katyal told judges Dubina, Frank M. Hull and Stanley Marcus that no previous case addressed the questions before the court. Asked by the panel whether there were any limits on Congress’s power to regulate commerce under the U.S. Constitution, he said there were, without specifying.

Decisions by the lower courts have broken entirely along party lines, with federal judges appointed by Republican presidents ruling against the law and those appointed by Democrats upholding it.

Presidential Appointments

Of the two appeals panels that have heard challenges to the law so far, the Cincinnati-based court had two Republican appointees and one Democratic appointee, and the Richmond-based panel had three judges appointed by Democrats.

The Atlanta court’s Dubina was nominated to the federal bench by President Ronald Reagan in 1986. Hull is a 1994 nominee of President Bill Clinton, and Marcus was named by Reagan in 1985.

The health-care act bars insurers from denying coverage to people who are sick and from imposing lifetime limits on costs. It requires almost all Americans 18 and over to obtain coverage.

The U.S. has called the mandatory-coverage provision the linchpin of the statute because it will add younger and healthier people to the pool of the insured population, making the program viable for insurers.

In the case argued today, U.S. District Judge C. Roger Vinson in Pensacola, Florida, on Jan. 31 found that provision was unconstitutional. Saying the mandate was integral to the remainder of the legislation, he invalidated the entire act.

Bound by Constitution

“Regardless of how laudable its attempts may have been to accomplish these goals in passing the act, Congress must operate within the bounds established by the Constitution,” wrote Vinson, 71, who was appointed by Reagan in 1983.

Immediately after Vinson’s ruling, officials from some states involved in the litigation, including Wisconsin and Alaska, said the act was inoperative in their states, which are outside Vinson’s jurisdiction.

Vinson on March 3 delayed enforcement of his ruling, saying “the sooner this issue is finally decided by the Supreme Court, the better off the entire nation will be.”

If the act is deemed invalid in some parts of the U.S. and not others, “that’s quite a bit of conflict,” said Miles Zaremski, a Northbrook, Illinois-based health-care industry attorney. “The Supreme Court will probably want to jump in and take that case.”


Zaremski is a former chairman of an American Bar Association Special Committee on Professional Medical Liability and a past president of the American College of Legal Medicine.

The Supreme Court, while favoring appeals on issues where the regional appeals courts reach different results, might decide to hear the case even if the intermediate panels agree with one another.

“The mandate is the heart of the legislation,” said Zaremski, who isn’t involved in the litigation. “If you excise the heart, the body doesn’t live.”

He added: “The Supreme Court would want to take the case and make a decision, a final decision, so that we can go forward.”

The judges today questioned Katyal about the government’s legal position and frequently interrupted Clement’s argument as well.

“Are there any limits” on Congress’s power to compel people to act? Dubina asked the Justice Department’s lawyer.

Economic Activity

“Absolutely,” Katyal replied. “We are not saying that Congress can force somebody to buy something and that failure to do so is economic activity.”

“People are seeking that good already,” he said of health care. The acting solicitor general said $43 billion is spent annually on care for the uninsured. “That’s quintessentially economic,” he said.

Clement told the court the issue boils down to whether the federal government can regulate the individual.

“For 220 years, Congress never saw fit to exercise that power,” he said, adding later, “The whole reason we do this is to protect individual liberty.”

Clement said the Commerce Clause was created to regulate people engaged in commercial activity, not to force them to engage.

Katyal argued that the states’ lawyers were “looking at the wrong side” of the transaction.

Someone Pays

“Someone else picks up the tab when you don’t have insurance,” the government lawyer said, “that’s why it’s activity.”

A. Christopher Bryant, a University of Cincinnati law professor, said the sweep of Vinson’s decision makes it vulnerable to reversal.

“This is such a huge act, and there are so many pieces to it,” he said. “To bring it all down is a dramatic judicial intervention into politics.”

The U.S. Court of Appeals in Richmond on May 10 heard the Obama administration’s challenge to a lower court ruling that sided with Cuccinelli, the Virginia attorney general. The judge struck down the individual mandate as unconstitutional while leaving the rest of the act standing.

The Richmond panel also heard an appeal by Lynchburg, Virginia-based Liberty University, which sought to reverse another judge’s dismissal of its challenge to the law.

Cincinnati Panel

A three-judge panel in Cincinnati last week heard arguments on a bid by the Ann Arbor, Michigan-based Thomas More Law Center to reverse a lower-court decision upholding the health-care act.

Neither the Cincinnati nor the Richmond appellate court has ruled.

“The mandate is so integrally related to the funding of the entire mechanism,” said Zaremski, the health-care industry lawyer, because it makes it more possible for health insurers to be able to afford to insure any applicant, as they must do under the act.

“If the mandate is unconstitutional, the rest of the act can’t survive,” he said. “Without the mandate, the insurance industry would say, ‘We can’t afford to do this.’”

The case is State of Florida v. U.S. Department of Health and Human Services, 11-11021, U.S. Circuit Court of Appeals for the 11th Circuit (Atlanta).

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