Mccollum v. United States Dep't Of Health

Decision Date14 October 2010
Docket NumberCase No. 3:10-cv-91 RV/EMT.
Citation716 F.Supp.2d 1120
PartiesState of FLORIDA, by and through Bill McCOLLUM, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.
CourtU.S. District Court — Northern District of Florida






Bill McCollum, Attorney General of Florida, Blaine H. Winship, Assistant Attorney General, Joseph W. Jacquot, Deputy Attorney General, Scott D. Makar, Solicitor General, Louis F. Hubener, Timothy D. Osterhaus, Deputy Solicitor Generals, Office of the Attorney General of Florida, Tallahassee, FL, for Plaintiff States.

David B. Rivkin, Lee A. Casey, Baker & Hostetler LLP, Washington, DC, for Plaintiff States, National Federation of Independent

Business, Mary Brown, and Kaj Ahlburg.

Katherine J. Spohn, Special Counsel to the Attorney General, Office of the Attorney General of Nebraska, Lincoln, NE, for Plaintiff the State of Nebraska.

William J. Cobb III, Special Assistant and Senior Counsel to the Attorney General, Office of the Attorney General of Texas, Austin, TX, for Plaintiff the State of Texas.

Karen R. Harned, Executive Director, National Federation of Independent Business, Washington, DC, of cousel for Plaintiff National Federation of Independent Business.

Brian G. Kennedy, Eric B. Beckenhauer, U.S. Department of Justice, Washington, DC, Keith Scott Dubanevich, Oregon Dept. of Justice, Salem, OR, Aleksas Andrius Barauskas, Johnson Pope Bokor Etc., Tampa, FL, for Defendants.


ROGER VINSON, Senior District Judge.

Now pending is the defendants' motion to dismiss (doc. 55). This motion seeks dismissal of Counts One, Two, Three, and Six of the plaintiffs' amended complaint for lack of subject matter jurisdiction (pursuant to Rule 12(b)(1), Fed.R.Civ.P.), and dismissal of all counts in the amended complaint for failure to state a claim upon which relief can be granted (pursuant to Rule 12(b)(6), Fed.R.Civ.P.). The plaintiffs have filed a response in opposition, and the defendants have filed a reply to that response. A hearing was held in this matter on September 14, 2010.


This litigation---one of many filed throughout the country---raises a facial Constitutional challenge to the federal healthcare reform law, Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010) (the Act). It has been filed by sixteen state Attorneys General and four state Governors (the “state plaintiffs); 1 two private citizens, Mary Brown and Kaj Ahlburg (the “individual plaintiffs); and the National Federation of Independent Business (“NFIB”) (together, the plaintiffs). The defendants are the United States Department of Health and Human Services, Department of Treasury, Department of Labor, and their respective secretaries (together, the defendants).

Before addressing the plaintiffs' allegations, and the arguments in support of the defendants' motion to dismiss, I will take a moment to emphasize preliminarily what this case is, and is not, about.

The Act is a controversial and polarizing law about which reasonable and intelligent people can disagree in good faith. There are some who believe it will expand access to medical treatment, reduce costs, lead to improved care, have a positive effect on the national economy, and reduce the annual federal budgetary deficit, while others expect that it will do exactly the opposite. Some say it was the product of an open and honest process between lawmakers sufficiently acquainted with its myriad provisions, while others contend that it was drafted behind closed doors and pushed through Congress by parliamentary tricks, late night weekend votes, and last minute deals among members of Congress who did not read or otherwise know what was in it. There are some who believe the Act is designed to strengthen the private insurance market and build upon free market principles, and others who believe it will greatly expand the size and reach of the federal government and is intended to create a socialized government healthcare system.

While these competing arguments would make for an interesting debate and discussion, it is not my task or duty to wade into the thicket of conflicting opinion on any of these points of disagreement. For purposes of this case, it matters not whether the Act is wise or unwise, or whether it will positively or negatively impact healthcare and the economy. Nor (except to the limited extent noted in Part III.A(7) infra ) am I concerned with the manner in which it was passed into law. My review of the statute is not to question or second guess the wisdom, motives, or methods of Congress. I am only charged with deciding if the Act is Constitutional. If it is, the legislation must be upheld---even if it is a bad law. United States v. Butler, 297 U.S. 1, 79, 56 S.Ct. 312, 80 L.Ed. 477 (1936) (“For the removal of unwise laws from the statute books appeal lies, not to the courts, but to the ballot and to the processes of democratic government”) (Stone, J., dissenting). Conversely, if it is unconstitutional, the legislation must be struck down---even if it is a good law. Bailey v. Drexel Furniture Co. (Child Labor Tax Case), 259 U.S. 20, 37, 42 S.Ct. 449, 66 L.Ed. 817 (1922) (reviewing court must strike down unconstitutional law even though that law is “designed to promote the highest good. The good sought in unconstitutional legislation is an insidious feature, because it leads citizens and legislators of good purpose to promote it, without thought of the serious breach it will make in the ark of our covenant, or the harm which will come from breaking down recognized standards.”).

At this stage in the case, however, my job is much simpler and more narrow than that. In ruling on the defendants' motion to dismiss, I must only decide if this court has jurisdiction to consider some of the plaintiffs' claims, and whether each of the counts of the amended complaint states a plausible claim for relief.


As Congress has recognized: “By most measures, we have the best medical care system in the world.” H.R.Rep. No. 111-443, pt. 1, U.S.Code Cong. & Admin.News 2010, p. 123. However, at the same time, no one can deny that there are significant and serious problems. Costs are high and millions do not have insurance. Lack of health insurance can preclude the uninsured from accessing preventative care. If and when the uninsured are injured or become ill, they receive treatment, as the defendants acknowledge, because in this country medical care is generally not denied due to lack of insurance coverage or inability to pay. However, the costs that are incurred to treat the uninsured are sometimes left unpaid---to the tune of $43 billion in 2008 (which is less than 2% of all national healthcare expenditures for that year). The costs of uncompensated care are passed along to market participants in the form of higher costs and raised premiums, which, in turn, can help perpetuate the cycle (or the “premium spiral,” as the defendants call it) and add to the number of uninsured. It was against this backdrop that Congress passed the Act.

A. The Legislative Scheme

At nearly 2,700 pages, the Act is very lengthy and includes many provisions, only a few of which are specifically at issue in this litigation. Chief among them is Section 1501, which, beginning in 2014, will require that all citizens (with stated exceptions) obtain federally-approved health insurance, or pay a monetary penalty (the “individual mandate”). This provision is necessary, according to Congress and the defendants, to lower premiums (by spreading risks across a much larger pool) and to meet “a core objective of the Act,” which is to expand insurance coverage to the uninsured by precluding the insurance companies from refusing to cover (or charging exorbitant rates to) people with pre-existing medical conditions. Without the individual mandate and penalty in place, the argument goes, people would simply “game the system” by waiting until they get sick or injured and only then purchase health insurance (that insurers must by law now provide), which would result in increased costs for the insurance companies. This is known as “the moral hazard.” The increased costs would ultimately be passed along to consumers in the form of raised premiums, thereby creating market pressures that would (arguably) inevitably drive the health insurance industry into extinction. The plaintiffs allege that regardless of whether the individual mandate is well-meaning and essential to the Act, it is unconstitutional and will have both a “profound and injurious impact” on the states, individuals, and businesses.

The plaintiffs object to several interrelated portions of the Act as well. First, the Act significantly alters and expands the Medicaid program. Created in 1965, Medicaid is a cooperative federal-state program that provides for federal financial assistance (in the form of matching funds) to states that elect to provide medical care to needy persons. The Act will add millions of new enrollees to the states' Medicaid rolls by expanding the program to include all individuals under the age of 65 with incomes up to 133% of the federal poverty line. Second, the Act provides for creation of “health benefit exchanges” designed to allow individuals and small businesses to leverage their buying power to obtain competitive prices. The Act contemplates that these exchanges will be set up and operated by the states, or by the federal government if the states elect not to do so. And lastly, the Act requires that the states (along with other “large employers”) provide their employees with a prescribed minimum level of health insurance coverage (the “employer mandate”). The...

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