Did Hudson Err? You Be the Judge

-Submitted by David Drumm (Nal), Guest Blogger

Orin S. Kerr
Kurt T. Lash

That would be Judge Henry Hudson who recently struck down the Minimum Essential Coverage Provision of the Affordable Care Act that requiring all citizens obtain health care coverage, here. In one corner we have Orin S. Kerr, professor of law at The George Washington University Law School. In the other corner we have Kurt T. Lash professor of law at The University of Illinois College of Law.

It is Necessary and Proper that you read on.

Referential information:

Judge Hudson’s opinion (non-searchable pdf).

The Commerce Clause:

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

The Necessary and Proper Clause:

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

McCulloch v. Maryland.

Justice Marshall, in McCulloch v. Maryland, saw the Necessary and Proper Clause as requiring a right fit between means and ends, and established the doctrine of implied powers:

Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consistent with the letter and spirit of the constitution, are constitutional.

CHAPTER 48 MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE.

Orin Kerr’s critique:

According to Professor Kerr the critical line is from page 19 of Judge Hudson’s opinion:

If a person’s decision not to purchase health insurance at a particular point in time does not constitute the type of economic activity subject to regulation under the Commerce Clause, then logically an attempt to enforce such provision under the Necessary and Proper Clause is equally offensive to the Constitution.

Professor Kerr’s reading of the critical line is that Judge Hudson assume that the Necessary and Proper Clause does not extend Congress’s power beyond Commerce Clause. The whole point of the Necessary and Proper Clause is it provides Congress with power beyond the powers enumerated in Article I, which includes the Commerce Clause.

As Professor Kerr says, “If you say, as a matter of “logic” or otherwise, that the Necessary and Proper Clause only permits Congress to regulate using means that are themselves covered by the Commerce Clause, then the Necessary and Proper Clause is rendered a nullity.”

Kurt Lash’s rebuttal:

Kurt Lash argues context in his assertion that Judge Hudson did not dismiss the concept of implied Congressional power.

According to Professor Lash the critical portion is from page 24:

Because an individual’s personal decision to purchase–or decline to purchase–health insurance from a private provider is beyond the historical reach of the Commerce Clause, the Necessary and Proper Clause does not provide a safe sanctuary. This clause grants Congress broad authority to pass laws in furtherance of its constitutionally-enumerated powers. This authority may only be constitutionally deployed when tethered to a lawful exercise of an enumerated power. As Chief Justice Marshall noted in McCulloch, it must be within ‘the letter and spirit of the constitution.’ The Minimum Essential Coverage Provision is neither within the letter nor the spirit of the Constitution. Therefore, the Necessary and Proper Clause may not be employed to implement this affirmative duty to engage in private commerce.

Professor Lash contends that Judge Hudson clearly embraces the standard understanding of the Necessary and Proper Clause when Judge Hudson wrote: “[a]lthough the Necessary and Proper Clause vests Congress with broad authority to exercise means, which are not themselves an enumerated power, to implement legislation, it is not without limitation.”

This is the key idea behind Hudson’s ruling, that upholding the mandate for individual insurance would require an interpretation of federal power that removes any limitation on that power. Such power would fall outside John Marshall’s declaration in McCulloch that all claims of federal power must fall “within the letter and spirit of the Constitution.”

29 thoughts on “Did Hudson Err? You Be the Judge”

  1. mespo,

    ‘“The letter and spirit of the constitution” – Justice Marshall explained it quite well. I’m sure he knew “letters” are easy to read; “spirits” are very hard to find and often seen by only a few, if they exist at all.’

    ===========================================================

    I hear them all the time but they speak in tongues …

  2. But not right now. I’m beat after a day of shopping and packing. Meh. It’s about time for a beer and a movie.

  3. James M. and Bob,

    Thanks for saving me the homework. Now I’ll have to think about it having been refreshed on Wickard.

  4. sorry should say
    I don’t know very much about the Commerce Clause but I spent a lot of time tracing insurance company records and I have a lot of records of insurance companies doing business and / or advertising to do business where I was unable to find records of them being regulated in the state in which they were at least attempting to do business.

    For instance
    Date: Sun, Nov 21, 2010 10:09 am
    From: kaysieverding
    To: john.suthers ; attorney.general ; barbara.kelley ; marcy.morrison ; todd.larson ; john.walsh ; laura.duffy ; robert.oneill ; paul.fishman ; melinda.sherman

    Dear regulators and law enforcers

    Please confirm receipt of this email.

    http://www.abanet.org/legalservices/lpl/directory/carriers/lloyd.html ;

    Here is another advertisement for another lloyds unit selling insurance in Colorado.

    Lloyd’s of London – Attorney Select
    Highest Available Limits of Liability:
    $30 Million each claim/aggregate

    I attached searches of the Colorado division of insurance showing they have no record of this firm. They also have no record of “sharei”, who is listed as the contact person.

    I attached a State of California division of insurance showing the license for Rochanne Sharei is for sales of fire and casualty insurance not for lawyers’ professional liability insurance.

    I searched the State of California Division of Insurance for “Attorney Select” and “lloyds” but found no listings for Lloyds of London Attorney Select or anything similar.

    The National Association of Insurance Commissioners lists requirements for Lloyds

    http://www.naic.org/committees_c_surplus_lines_iid_plan.htm

    Lloyd’s Syndicate Annual Filings
    Information to be completed by Lloyd’s syndicates in order to satisfy the annual IID filing in 2010 for the December 31, 2009 year-end.
    Filing Instructions Word
    IID Financial Filing Format Excel
    IID Interrogatories Word
    Jurat Word
    Loss Reserve Certification Form Word
    IID Plan of Operation Word
    TRIA Schedule Excel
    Lloyd’s Syndicate Applications
    Information to be completed by Lloyd’s syndicates which intend to apply for listing on the Quarterly Listing of Alien Insurers.
    Biographical Affidavit Form Word
    Business Plan Form Word
    Filing Instructions Word
    IID Application Form Word
    IID Financial Filing Format Excel
    IID Interrogatories Word
    Jurat Word
    Loss Reserve Certification Form Word
    IID Plan of Operation Word
    TRIA Schedule Excel
    I attached a search for the term “attorney select” on the NAIC data base and the phrase from the insurance name is not used in any NAIC record.

  5. I don’t know very much about the Commerce Clause but I spent a lot of time tracing insurance company records and I have a lot of records of insurance companies doing business and / or advertising to do business where I was unable to find records of they’re being regulated in the state in which they were at least attempting to do business.

  6. I’m with Mike S. to a point, but the shape of the Commerce Clause matters, regardless of the merits of any given law.

  7. I agree w Mike Spindell that we should have a single payer system with at least basic and preventative medical services.

    Even so McCarran Ferguson needs to be revisited.

  8. Single payer National Health Insurance cures all. All we got was a highly imperfect/flawed bill and I could care less either way about its constitutionality.

  9. It seems to me that if the feds are going to force individuals to buy health insurance then they are going to have to have federal regulation of insurance companies.

    I found many violations or potential violations of McCarran Ferguson where companies were advertising insurance on the Internet but didn’t have NAIC numbers and /or hadn’t filed complete documentation with the states where they were selling insurance.

    One example regarding health insurance is TIG Insurance. I found them listed on the State of Colorado Division of Insurance database as authorized to sell health insurance. However the address listed shows on Google maps as a residence and the only phone number listed when I last checked was a residential cell phone. When I called, the man said that TIG Insurance was no longer in business and he did not offer to sell me insurance. But he could have. There was nothing to stop him from taking my credit card or asking me to authorize a monthly debit from my checking account for some sort of insurance policy he could simply have made up.

    The worst case scenario is that Americans pay for insurance and then don’t get benefits because of money laundering or a Ponzi scheme. That is worse than not paying and not getting benefits.

    The McCarran Ferguson Act was pre Internet and doesn’t reflect the realities of insurance Internet sales.

  10. Buddha,

    I didn’t mean to give you a homework assignment. I’ve glanced through the judge’s opinion and didn’t see him address Wickard at all.

    The short summary of the case is that Filburn was a farmer growing wheat for personal use in excess of the federal production limit (introduced to stabilize prices during the Great Depression). The Court unanimously held that growing wheat for personal use did have an effect on interstate commerce because it meant the farmer was personally using wheat that would have otherwise impacted the price on the open market, and that while the individual farmer’s impact was negligible, the impact of all farmers taken in total was substantial; as a result the federal government could impose a production limit, even on growing wheat for personal use.

    It’s not so much directly on point as indicative of a different philosophy regarding the Commerce Clause. The analogy would be that while one person choosing not to have health insurance has an negligible impact, taken in total the impact on our system is substantial. (The problem with the analogy would likely be that health care is much less of an interstate commodity than wheat.)

  11. Buddha: “I’ll have to say either I haven’t read Wickard or it was so long ago that I don’t recall it.”

    You read it in Con Law while studying the commerce clause. WWII case that ruled that the even the wheat being produced for private use (intrastate) falls under the commerce clause.

  12. From the layman’s standpoint, I see that governments of all kinds require us to buy permits and pay certain fees and taxes as a part of civil existence, including what would otherwise be a poll tax that requires effort and expense to get ID to vote.
    And then there’s the conflicts of interest on both directions on one side that should require recusal of both the complainant and judge. Am I missing something?

  13. James M.,

    I’ll have to say either I haven’t read Wickard or it was so long ago that I don’t recall it. I’ll take a look at it later today if I get the chance in between holiday and pre-moving chores.

  14. Buddha,

    I haven’t read the opinion yet, but do you know how Wickard v. Filburn, 317 U.S. 11 (1942) (Wheat for personal use) is distinguished? It seems like Wickard stands for the proposition that a tenuous, but real, effect to commerce is all that is required.

  15. Got to go with Lash. Hudson’s ruling is sound. There is a huge difference between mandating what individuals have to purchase (this instance) and past expansions of the Commerce Clause as seen in Heart of Atlanta Motel Inc. v. United States, 379 U.S. 241 (1964) where the Commerce Clause and its direct relation to interstate commerce were permissibly used to prevent businesses from discriminating. Regulating businesses in such a manner is well within the power. Mandating that individual citizens purchase a product or be penalized is not. If one uses Kerr’s logic, government can mandate that citizens buy X or face penalty and that truly is an offensive overreach of governmental authority.

  16. Fascinating article Nal.

    Bottom line is that the Commerce Clause/Necessary and Proper Clause interplay:
    1. means what the SCOTUS says its means within the historical context of the decision;
    2. Judge Hudson’s opinion with the Fourth Circuit chiming in at some point insures they’ll get the chance to tell us;
    3. ideology as well as national economic necessity will play a role in the decision.

    How it works out is anybody’s guess given the strength of arguments on both sides.

    “The letter and spirit of the constitution” – Justice Marshall explained it quite well. I’m sure he knew “letters” are easy to read; “spirits” are very hard to find and often seen by only a few, if they exist at all.

  17. What I want to know is how Cuccinelli, et al were found to have standing to sue over this law in the first place, and how the issue could possibly be considered ripe for review…

    The individual mandate was not set to take effect for a few years, so if there is in fact any injury that would result from the provision, it has not occurred yet and is not imminent. We don’t know how or even if the individual mandate will be enforced (I believe the next presidential election comes before the individual mandate goes into effect), so how can the matter be properly and narrowly decided?

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