Judge Voids Key Part of Health Care Law

Published: December 13, 2010 - New York Times

A federal district judge in Virginia ruled on Monday that the keystone provision in the Obama health care law is unconstitutional, becoming the first court in the country to invalidate any part of the sprawling act and ensuring that appellate courts will receive contradictory opinions from below.

Judge Henry E. Hudson, who was appointed to the bench by President George W. Bush, declined the plaintiff’s request to freeze implementation of the law pending appeal, meaning that there should be no immediate effect on the ongoing rollout of the law. But the ruling is likely to create confusion among the public and further destabilize political support for legislation that is under fierce attack from Republicans in Congress and in many statehouses.

In a 42-page opinion issued in Richmond, Va., Judge Hudson wrote that the law’s central requirement that most Americans obtain health insurance exceeds the regulatory authority granted to Congress under the Commerce Clause of the Constitution. The insurance mandate is central to the law’s mission of covering more than 30 million uninsured because insurers argue that only by requiring healthy people to have policies can they afford to treat those with expensive chronic conditions.

The judge wrote that his survey of case law “yielded no reported decisions from any federal appellate courts extending the Commerce Clause or General Welfare Clause to encompass regulation of a person’s decision not to purchase a product, not withstanding its effect on interstate commerce or role in a global regulatory scheme.”

Judge Hudson is the third district court judge to reach a determination on the merits in one of the two dozen lawsuits filed against the health care law. The others — in Detroit and Lynchburg, Va. — have upheld the law. Lawyers on both sides said the appellate process could last another two years before the Supreme Court settles the dispute.

The opinion by Judge Hudson, who has a long history in Republican politics in northern Virginia, continued a partisan pattern in the health care cases. Thus far, judges appointed by Republican presidents have ruled consistently against the Obama administration while Democratic appointees have found for it.

That has reinforced the notion — fueled by the White House — that the lawsuits are as much a political assault as a constitutional one. The Richmond case was filed by Virginia’s attorney general, Kenneth T. Cuccinelli II, a Republican, and all but one of the 20 attorneys general and governors who filed a similar case in Pensacola, Fla., are Republicans. Other lawsuits have been filed by conservative law firms and interest groups.

The two cases previously decided by district courts are already before the midlevel courts of appeal, with the Detroit case in the Sixth Circuit in Cincinnati and the Lynchburg case in the Fourth Circuit in Richmond.

The Justice Department, which is defending the statute, is also considering whether to appeal Judge Hudson’s ruling to the Fourth Circuit, which hears cases from Virginia and four other states. That would leave that court to consider opposite rulings handed down over two weeks in courthouses situated only 116 miles apart.

The Richmond ruling is the latest in a string of recent setbacks for the Obama administration, following the Democrats’ loss of the House in the midterm elections and last week’s intraparty mutiny over Mr. Obama’s agreement to extend the Bush era tax cuts.

But administration officials, who have been bracing for an adverse ruling, emphasized that Judge Hudson’s opinion was just one among several. They said they maintained high confidence that the law eventually would be upheld, and expressed frustration that negative rulings were attracting more attention than affirming ones.

The officials stressed that the judge’s decision to not enjoin the law would defer any actual impact for years. They noted that the insurance requirement does not even take effect until 2014, when the Supreme Court presumably will have ruled.

The administration has said that if that provision eventually falls, related insurance reforms would necessarily collapse with it, most notably the ban on insurer exclusions of applicants with pre-existing health conditions. But officials said other innovations, including a vast expansion of Medicaid eligibility and the sale of subsidized insurance policies through state-based exchanges, would withstand even a Supreme Court ruling against the insurance mandate.

“It’s our strongly held view that those provisions survive” in judicial decisions invalidating the insurance requirement, one administration official said, speaking anonymously because he was not authorized to discuss the case publicly.

However, even state officials who support the new law said Monday’s ruling would reinforce calls by many Republican governors and lawmakers to slow down its implementation.

“I think you might see some air taken out of the balloon nationwide,” said Jason A. Helgerson, the Medicaid director in Wisconsin, which is about to transition from Democratic to Republican control of the executive and legislative branches.

Mr. Helgerson said states still ignore looming federal deadlines at their peril. For instance, if states do not make adequate progress toward setting up their insurance exchanges by January 2013, the federal government can take control.

Judge Hudson, who previously was best known for sentencing the N.F.L. quarterback Michael Vick to 23 months for dog fighting, had telegraphed his leanings in a series of hearings and preliminary opinions. But the ruling was nonetheless striking given that only nine months ago, prominent law professors were dismissing the constitutional claims as just north of frivolous.

The case centers on whether Congress has authority under the Commerce Clause to compel citizens to buy a commercial product – namely health insurance – in the name of regulating an interstate economic market. Plaintiffs in the lawsuits argue there effectively would be no limits on federal power, and that the government could force people to buy American cars or, as Judge Hudson remarked at one hearing, “to eat asparagus.”

The Supreme Court’s position on the Commerce Clause has evolved through four signature cases over the last 68 years, with three decided since 1995. Two of the opinions established broad powers to regulate even personal commercial decisions that may influence a broader economic scheme. But other cases have limited regulation to “activities that have a substantial effect on interstate commerce.”

A major question, therefore, has been whether the income tax penalties levied against those who do not obtain health insurance are designed to regulate “activity” or, as Virginia’s solicitor general, E. Duncan Getchell Jr., has argued, “inactivity” that is beyond Congress’ reach.

Justice Department lawyers have responded that individuals cannot opt out of the medical market, and that the act of not obtaining insurance is an active decision to pay for health care out of pocket. They say that such decisions, taken in the aggregate, shift billions of dollars in uncompensated care costs to governments, hospitals and the privately insured.

The ruling is a political score for Mr. Cuccinelli, who filed the lawsuit on his own rather than join the Pensacola case. It upstages a major hearing in Pensacola, Fla., scheduled for Thursday before Judge Roger Vinson of Federal District Court, who is expected to rule early next year. Like Judge Hudson, Judge Vinson has expressed reservations about the insurance mandate.

Mr. Cuccinelli, who was elected in 2009, has said he filed on his own because Virginia passed a law this year aimed at nullifying the federal insurance requirement, giving the commonwealth a distinct constitutional claim. Others attribute the strategy to political ambition, suggesting that Mr. Cuccinelli did not want to share the spotlight and knew he could exploit the accelerated pace of judging in Richmond’s “rocket docket” to raise his profile.

Mr. Cuccinelli filed the lawsuit minutes after President Obama signed the law on March 23, and has been discussing the case since on cable television shows and before research groups. He follows each hearing and ruling with a news conference.

Even before Monday’s ruling, Mr. Cuccinelli and Gov. Robert F. McDonnell of Virginia, also a Republican, were seeking an agreement with the Justice Department to bypass the Court of Appeals and file for expedited review by the Supreme Court. That would have the effect of further marginalizing the Pensacola case, and the politicians bringing it. The Supreme Court rarely takes such requests, and the Justice Department has not publicly expressed an opinion.