Tex. v. United States

• Decision Date: 14 December 2018
• Docket Number: Civil Action No. 4:18-cv-00167-O
• Citation: 340 F.Supp.3d 579
• Parties: TEXAS, et al., Plaintiffs, v. UNITED STATES of America, et al., Defendants, California, et al., Intervenors-Defendants.
• Court: U.S. District Court — Northern District of Texas

340 F.Supp.3d 579

TEXAS, et al., Plaintiffs,

v. UNITED STATES of America, et al., Defendants,California, et al., Intervenors-Defendants.

Civil Action No. 4:18-cv-00167-O

United States District Court, N.D. Texas, Fort Worth Division.

Signed December 14, 2018

Darren L. McCarty, Austin Nimocks, Office of the Attorney General, Robert Earl Henneke, Jonathan F. Mitchell, Austin, TX, Kevin Michael LeRoy, Misha Tseytlin, Pro Hac Vice, Wisconsin Department of Justice, Madison, WI, for Plaintiffs.

Brett Shumate, Daniel Duane Mauler, Eric Beckenhauer, Joel McElvain, US Department of Justice, Rebecca Kopplin, Washington, DC, for Defendants.

Kathleen M. Boergers, Pro Hac Vice, Office of the Attorney General of California, Oakland, CA, Neli Nima Palma, Pro Hac Vice, Attorney General of California, Sacramento, CA, Nimrod Pitsker Elias, Pro Hac Vice, Attorney General of California, San Francisco, CA, Joseph Rubin, Pro Hac Vice, Connecticut Office of the Attorney General, Hartford, CT, Valerie M. Nannery, Pro Hac Vice, Robyn Renee Bender, Office of the Attorney General for the District of Columbia, Washington, DC, Jessica Willey, David J. Lyons, Pro Hac Vice, Delaware Department of Justice, Wimington, DE, Andrea Suzuki, Heidi Marguerita Rian, Pro Hac Vice, Department of the Attorney General, Honolulu, HI, David F. Buysse, Pro Hac Vice, Attorney General of Illinois, Chicago, IL, Taylor Allen Payne, Pro Hac Vice, Office of the Attorney General, Frankfort, KY, Stephen B. Vogel, Pro Hac Vice, Office of the Massachusetts Attorney General, Boston, MA, Jeremy Feigenbaum, Pro Hac Vice, Office of the New Jersey Attorney General, Trenton, NJ, Elizabeth R. Chesler, Pro Hac Vice, New York State Office of the Attorney General, New York, NY, Scott Kaplan, Henry Kantor, Pro Hac Vice, Oregon Department of Justice, Portland, OR, Maria Lenz, Pro Hac Vice, Rhode Island Department of Attorney General, Providence, RI, Benjamin Battles, Pro Hac Vice, Vermont Attorney General's Office, Montpelier, VT, Matthew Robert McGuire, Pro Hac Vice, Office of the Attorney General, Richmond, VA, Jeffrey T. Sprung, Pro Hac Vice, Hagens Berman Sobol Shapiro LLP, Seattle, WA, Scott Ikeda, Pro Hac Vice, Minnesota Attorney General's Office, St. Paul, MN, for Intervenors-Defendants.

MEMORANDUM OPINION AND ORDER

Reed O'Connor, United States District JudgeThe United States healthcare system touches millions of lives in a daily and deeply personal way. Health-insurance policy is therefore a politically charged affair—inflaming emotions and testing civility. But Article III courts, the Supreme Court has confirmed, are not tasked with, nor are they suited to, policymaking.¹ Instead, courts resolve discrete cases and controversies. And sometimes, a court must determine whether the Constitution grants Congress the power it asserts and what results if it does not. If a party shows that a policymaker exceeded the authority granted it by the Constitution, the fruit of that unauthorized action cannot stand.

Here, the Plaintiffs allege that, following passage of the Tax Cuts and Jobs Act of 2017 (TCJA), the Individual Mandate in the Patient Protection and Affordable Care Act (ACA) is unconstitutional. They say it is no longer fairly readable as an exercise of Congress's Tax Power and continues to be unsustainable under the Interstate Commerce Clause. They further urge that, if they are correct, the balance of the ACA is untenable as inseverable from the Invalid Mandate.

Resolution of these claims rests at the intersection of the ACA, the Supreme Court's decision in NFIB , and the TCJA. In NFIB , the Supreme Court held the Individual Mandate was unconstitutional under the Interstate Commerce Clause but could fairly be read as an exercise of Congress's Tax Power because it triggered a tax. The TCJA eliminated that tax. The Supreme Court's reasoning in NFIB —buttressed by other binding precedent and plain text—thus compels the conclusion that the Individual Mandate may no longer be upheld under the Tax Power. And because the Individual Mandate continues to mandate the purchase of health insurance, it remains unsustainable under the Interstate Commerce Clause—as the Supreme Court already held.

Finally, Congress stated many times unequivocally—through enacted text signed by the President—that the Individual Mandate is "essential" to the ACA. And this essentiality, the ACA's text makes clear, means the mandate must work "together with the other provisions" for the Act to function as intended. All nine Justices to review the ACA acknowledged this text and Congress's manifest intent to establish the Individual Mandate as the ACA's "essential" provision. The current and previous Administrations have recognized that, too. Because rewriting the ACA without its "essential" feature is beyond the power of an Article III court, the Court thus adheres to Congress's textually expressed intent and binding Supreme Court precedent to find the Individual Mandate is inseverable from the ACA's remaining provisions.

Construing the Plaintiffs' Application for Preliminary Injunction, (ECF No. 39), as a motion for partial summary judgment, the Court therefore DENIES Plaintiffs' request for an injunction but GRANTS summary judgment on Count I of the Amended Complaint. See FED. R. CIV. P. 56(f); July 16, 2018 Order, ECF No. 176.

I. BACKGROUND

More than any factual developments, the background to this case involves the nuances of the ACA, NFIB , and the TCJA, which the Court traces below.

A. The ACA

The ACA became law on March 23, 2010. See Patient Protection and Affordable Care Act, Pub. L. 111-148, 124 Stat. 119- 1045 (2010). Congress intended the ACA to achieve "near-universal" health-insurance coverage and to "lower health insurance premiums" through the "creation of effective health insurance markets" and new statutory requirements for individuals and insurance companies. See, e.g. , 42 U.S.C. §§ 18091(2)(D), (2)(F), and (2)(I). It pursued these goals through a carefully balanced restructuring of the Nation's health-insurance ecosystem.

For starters, the ACA established a "[r]equirement to maintain minimum essential coverage"—commonly known as the "Individual Mandate." 26 U.S.C. § 5000A(a). To compel compliance with the Individual Mandate, Congress imposed a tax penalty on individuals who were subject to the requirement but chose to disobey it. Id. § 5000A(b). The ACA labeled this penalty the "[s]hared responsibility payment." It was originally to be assessed at either $695.00 or a 2.5 percent share of a family's household income—whichever was greater. Id. § 5000A(c).

From the start, Congress exempted some individuals from Individual Mandate. For example: those qualifying for a "[r]eligious exemption[ ]," id. § 5000A(d)(2)(A) ; "member[s] of a health care sharing ministry," id. § 5000(d)(2)(B); individuals who are "not ... citizen[s] or national[s] of the United States ... or alien[s] lawfully present in the United States," id. § 5000A(d)(3) ; and "[i]ncarcerated individuals," id. § 5000A(d)(4). At the same time, Congress exempted five categories of individuals from the shared-responsibility payment but not the Individual Mandate. See id. § 5000A(e). This means several classes of individuals are obligated by § 5000A(a) to obtain minimum-essential coverage but are not subject to the tax penalty for failure to do so.²

Congress also wanted to ensure affordable health insurance for those with pre-existing conditions. See 42 U.S.C. § 18091(2)(I) ("By significantly increasing health insurance coverage, the [Individual Mandate], together with the other provisions of this Act, will minimize ... adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums ... [and] creat[e] effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold."). Congress therefore required insurers to cover high-risk individuals via the "guaranteed-issue" and "community-rating" provisions. The guaranteed-issue provision requires insurers to "accept every employer and individual in the State that applies for ... coverage." Id. § 300gg-1. The community-rating provision prohibits insurers from charging higher rates to individuals based on age, sex, health status, or other factors. Id. § 300gg-4.

The ACA includes many other integral regulations and taxes as well. These include, among other things, an excise tax on high-cost insurance plans, 26 U.S.C. § 4980I ; the elimination of coverage limits, 42 U.S.C. § 300gg-11 ; and a provision allowing dependent children to remain on their parents' insurance until age 26, id. § 300gg-14(a). The ACA also implemented an employer mandate and an employer-responsibility assessment. These provisions require employers with at least fifty full-time employees to pay the federal government a penalty if they fail to provide their employees with ACA-compliant health-plan options. See 26 U.S.C. § 4980H.

But just as Congress funneled nearly all Americans into health-insurance coverage on the one hand—through the Individual Mandate and employer mandate, e.g.—it also significantly reduced reimbursements to hospitals by more than $200 billion over ten years on the other. 42 U.S.C. §§ 1395ww(b)(3)(B)(xi)–(xii), 1395ww(q), 1395ww(r), and 1396r-4(f)(7).

Notably, several ACA provisions are tied to another signature reform—the creation and subsidization of health-insurance exchanges. See id. §§ 18031–44. Through these and other provisions, the ACA allocated billions of federal dollars to subsidize the purchase of health insurance through government-run exchanges. Plus, the ACA expanded the scope of Medicaid, adding millions of people to the eligibility roster. See id. § 1396a(a)(10)(A)(i)(VIII).

The ACA also lays out hundreds of minor provisions, spanning the Act's 900-plus pages of legislative text, that complement the above-mentioned major provisions...