Below is my column today in the Chicago Tribune on the rivaling rulings in the D.C. Circuit and the Fourth Circuit over a critical provision under the Patient Protection and Affordable Care Act (ACA). As an academic interesting in statutory interpretation and legisprudence, the opinions are fascinating and capture two different but well-argued views of the role of both courts and agencies in dealing with legislative language.
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Call it the “Tale of Two Circuits.” It was either the best of times or the worst of times yesterday for Obamacare.
Within hours of each other yesterday, two federal appellate courts looked at the Patient Protection and Affordable Care Act (ACA) on the same issue involving the same provision and came to diametrically opposite conclusions.
In Halbig v. Burwell, the D.C. Circuit ruled that the Obama Administration changed the meaning of the ACA and wrongly extended billions of tax credits to citizens without congressional authority. It was a stunning loss for the Administration. However, a couple hours later, the neighboring Fourth Circuit across the river ruled in King v. Burwell. That three-judge panel ruled that the Administration was perfectly within its rights to interpret the law in this fashion. Depending on which bank of the Potomac you stand on, Obamacare is either in robust health or on life support.
While the decisions have caused a whirlwind of political controversy, neither really turn on the question of national health care. Indeed, these two cases represent well reasoned but conflicting views of the role of court in statutory interpretation. The conclusion of these rivaling approaches hold the very viability of the ACA in the balance. That answer may have to wait for another appeal to the full courts of these respective circuits and ultimately an appeal to the United States Supreme Court.
In Halbig, Judge Thomas B. Griffith ruled that the statute is clearly worded on a key point of the law. At issue is the very thumping heart of the Obamacare: the system of state and federal “exchanges” through which citizens are required to purchase insurance. The law links the availability of tax credits to those states with exchanges “established by the state.” However, the Administration was caught by surprise when some 36 states opted not to create state exchanges. That represented a major threat to Obamacare. Without the credits, insurance would be “unaffordable” for millions of citizens who can then claim an exemption from the ACA. It would allow a mass exodus from the law – precisely what many citizens and critics have wanted.
To avoid that threat, the Obama Administration released a new interpretation that effectively read out “state” from the language – announcing that tax credits would be available to even states with only a federal exchange.
The D.C. Circuit ruled that the “interpretation” was really a re-writing of the federal law and that President Obama had over-reached his authority in violation of congressional power.
The Fourth Circuit came to the opposite conclusion. The court believed that the IRS was entitled to deference by the courts in what these laws mean in cases of ambiguity. The panel considered the law to be unclear and found that it was reasonable for the IRS to adopt an interpretation that guaranteed tax credits to all citizens.
At the heart of the conflict is a fundamentally different view of the role not just of federal courts but also of federal agencies. I have long been a critic of the rise of a type of fourth branch within our system. The Framers created a tripartite system based on three equal branches. The interrelation of the branches guarantees that no branch could govern alone and protects individual liberty by from the concentration of power in any one branch.
We now have a massive system of 15 departments, 69 agencies and 383 nonmilitary sub-agencies with almost three million employees. Citizens today are ten times more likely to be the subject of an agency court ruling than a federal court ruling. The vast majority of “laws” in this country are actually regulations promulgated by agencies, which tend to be practically insulated and removed from most citizens.
The Supreme Court ruled in 1984 in Chevron that agencies are entitled to heavy deference in their interpretations of laws. That decision has helped fuel the growth of the power of federal agencies in this fourth branch. The court went even further recently in Arlington v. FCC in giving deference to agencies even in defining their own jurisdiction. In dissent, Chief Justice John Roberts warned: “It would be a bit much to describe the result as ‘the very definition of tyranny,’ but the danger posed by the growing power of the administrative state cannot be dismissed.”
Regardless of the merits of the statutory debate over the ACA, the question comes down to who should make such decisions. For my part, I agree with the change but I disagree with the unilateral means that the President used to secure it. President Obama has pledged to “go it alone” in circumventing opposition in Congress. The Fourth Circuit decision will certainly help him fulfill that pledge. The result is that our model of governance is changing not by any vote of the public but by these insular acts of institutional acquiescence.
The court may call this merely deferring to an agency but it represents something far greater and, in my view, far more dangerous. It is the ascendance of a fourth branch in a constitutional system designed for only three.
Jonathan Turley is the Shapiro Professor of Public Interest Law and has testified before Congress on the constitutional implications of the health care cases.
((*_*)) lol Nick.
leej, No thanks needed. I’ll always have your back, even if you are a commie!!
I will try to accommodate the sensitivity of Mike’s attention span. For the record Elaine, I’m NOT claiming in special qualifications in my following analysis.
The ACA section 1311 states the following:
“(ii) STATE MUST ASSUME COST.—A State shall make payments to or on behalf of an individual eligible for the premium tax credit under section 36B of the Internal Revenue Code of 1986 and any cost-sharing reduction under section 1402 to defray the cost to the individual of any additional benefits described in clause (i) which are not eligible for such credit or reduction under section 36B(b)(3)(D) of such Code and section 1402(c)(4).”
The ACA section 1321 states the following:
“(c) FAILURE TO ESTABLISH EXCHANGE OR IMPLEMENT REQUIREMENTS.—
25 (1) IN GENERAL.—If—(A) a State is not an electing State under subsection (b); or (B) the Secretary determines, on or before January 1, 2013, that an electing State— (i) will not have any required Exchange operational by January 1, 2014; or (ii) has not taken the actions the Secretary determines necessary to implement— (I) the other requirements set forth in the standards under subsection (a); or (II) the requirements set forth in subtitles A and C and the amendments made by such subtitles; the Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements.
The IRS Section 36B(b)(3)(D) of the IRS code only references the ACA section 1311 and not the above paragraph from 1321.
What is clear to me is that the ACA provides:
– State established exchanges
– States provide IRS 36B tax credits (subsidies)
– IRS 36B ONLY references 1311 and the State provided tax credits
– Federally established exchange for qualified residents of those States opting out
– Nothing authorizing the Federal to replace the State in providing tax credits and it would appear the IRS believed that was the intent as well
So a major question for me so far is:
Would the ACA have become law if it was written that ALL taxpayers would pay for tax credits (subsidies) regardless of whether their own State opted in or not?
Oh Nick. Thank you and yes Nick and I are a good example of ‘we can disagree completely and yet retain and show respect for one another’.
Elaine, LOL! Rationalization is self destructive behavior, and those who abide it are enablers. I wonder how Obamacare would have played out if the Lion of the Senate died @ Cappaquidick. I always call him the Fredo of the Kennedy brothers.
Karen, Unfortunately some in group 2 are not merely ne’er do wells but fall into the wrong groups and their lives go on the wrong path because of their own screwed up upbringings. If they are lucky they can get out ot it (I had a friend, parents hard working folk, both kids had “self-esteem’ issues and dropped out of school, did drugs, stole the whole thing. What turned it around for the one was Job Corps, a government program that turned her around, as well as judges for both, that said next time you appear before me you go to jail There are folks who are leeches, no argument there but sometimes it takes the government in the form of programs, and the justice system to help get people pointed towards the right direction.
lot of folks on welfare for instance are single mothers. Where is the system, and people, getting the fathers to step up to the plate with financial support (may be asking way to much for social and emotional support as well)?
(Kind of goes to the popsters who say well if women have sex they have to pay the price. It is not the women who pay the most rice it is the children who then fall by the wayside.
Mespo,
“In this state every person has a natural right or liberty to do anything one thinks necessary for preserving one’s own life.”
Then we can at least agree your natural (unalienable) rights do not come to you by any means other than your existence; however you believe that existence came to be; that those rights exist in a state of war (nature), which precedes civil society or the social contract.
Jefferson takes this further respecting Locke’s view on the security of rights within a civil society:
“Where-ever therefore any number of men are so united into one society, as to quit every one his executive power of the law of nature, and to resign it to the public, there and there only is a political, or civil society. And this is done, where-ever any number of men, in the state of nature, enter into society to make one people, one body politic, under one supreme government; or else when any one joins himself to, and incorporates with any government already made: for hereby he authorizes the society, or which is all one, the legislative thereof, to make laws for him, as the public good of the society shall require; to the execution whereof, his own assistance (as to his own decrees) is due.” Two Treatises of Government; John Locke
Thank you for the link that explains why the ACA is such a poorly drafted statute, Elaine.
John:
While you share Mr. Jefferson’s view of unalienable rights, I do not. I’m more Hobbesian.
“during the time men live without a common power to keep them all in awe, they are in that condition which is called warre; and such a warre as is of every man against every man”. In this state every person has a natural right or liberty to do anything one thinks necessary for preserving one’s own life. It is a state of ” … continual fear and danger of violent death, and the life of man, solitary, poor, nasty, brutish, and short. (Leviathan, Chapters XIII–XIV).
You need only look to modern day Syria, Iraq, Egypt, the Balkans of the 90s and countless other examples for proof of Hobbes’ beliefs.
Don’t worry, the ruling against heath care subsidies is going to be reversed.
By Emily Bazelon
7/22/14
http://www.slate.com/articles/news_and_politics/jurisprudence/2014/07/obamacare_rulings_two_courts_differ_on_heath_insurance_subsidies_but_the.html
Excerpt:
Today’s twin cases, Halbig v. Burwell and King v. Burwell, pretty much hinge on one section of the ACA: 36B. In that section, Congress wrote that tax credits go to people who buy health insurance in exchanges “established by the State under section 1311.” OK, so let’s go to 1311. What does it say? Section 1311 provides that “each State shall” set up an exchange by the beginning of 2014. If not, we move to Section 1321, which says that the federal government will set up an exchange in the state’s stead. Does that mean Congress intended the same subsidies to go to people who sign up through federally run exchanges as through state-run ones? Yes, say a cadre of experts who know much more about this than I do. To quote one of them, Samuel Bagenstos: “Because Section 1321 provides that a federally-operated exchange will stand in the shoes of a state-operated exchange created by Section 1311, there is no basis for denying participants in federally-operated exchanges the same tax credits obtained by participants in state-operated exchanges.”
This is not the only possible meaning of 36B, because on its face it does say “established by the State.” As Judge Gregory acknowledges, writing for the Fourth Circuit, “the statute is ambiguous and subject to at least two different interpretations.” Why so confusing? Here’s what’s really to blame, as Yale law professor Abbe Gluck writes:
“The ACA is a very badly drafted statute. And it’s badly drafted for a simple reason that turns out to be important to understanding how the pending litigation should be resolved: Because Senator Ted Kennedy died in the middle of the legislative process and was replaced by Republican Scott Brown, the statute never went through the usual legislative process, including the usual legislative clean-up process. Instead, because the Democrats lost their 60th filibuster-preventing vote, the version that had passed the Senate before Brown took office, which everyone initially had thought would be a mere first salvo, had to effectively serve as the final version, unchangeable by the House, because nothing else could get through the Senate.”
Mike Appleton
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After reading the DC Circuit and 4th Circuit opinions, I think I’ve changed my mind. I’m not even convinced that the Chevron rule needs to come into play. I believe the 4th Circuit conclusion is correct, but I think it can be supported under traditional rules of statutory construction. If anyone would like to pursue that line of debate, I’m all ears (or eyes, I guess).
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You changed to the position I had from the onset after reading the DC Cir. opinion, which was the position of the dissent (Edwards, J.).
His analysis considered the purpose of the entire Act, and then giving that purpose precedent in determining if the clause the tow textualist judges focused on (and got mired down in) was contrary to the purpose of the ACA.
In his opinion, since Congress unambiguously directed that there be exchanges, whether set up by one of the Fifty States, or if not, then by the Federal State.
Further, Congress directed that either credits or tax penalties would be issued by IRS, depending on a taxpayer’s compliance, or not, by securing health care insurance from their exchange.
The myopic interpretation by the 2 judges on the DC Circuit would result in the whole act being gutted because they interpreted the word “state” in a minor clause (10 or so words out of thousands) in a manner that compels the notion that Congress wanted that clause to destroy the entire body of text.
That is an absurd conclusion, which violates the rule of interpretation that any interpretation which is absurd is not a proper interpretation.
If Congress had intended that states could gut the act by refraining from establishing an exchange, they would not have mandated that the federal agency (HHS) set one up if a state did not set one up.
Thus, the purpose of having everyone insured flows from exchanges within all 50 states and DC, no matter who sets up those exchanges.
The reward or penalty language (tax credits or tax penalties) based on compliance by taxpayers is determined by whether they get insurance from the exchange within their state boundaries or not.
That reward or penalty, administered by IRS, does not depend on who set the exchange up.
But, from the beginning I saw it the same as the dissent in the DC Cir. saw it.
I saw it the same as all the judges on the 4th. Cir panel saw it.
The result so far is 4-2 counting all six judges in the two panels (4 saying states can not gut the ACA, 2 saying states can gut the ACA).
Mike,
I thought you might find the following article interesting reading:
Bad Readers
The judges who ruled against Obamacare are following Scalia down a terrible path of interpretation.
By Richard L. Hasen
7/23/14
http://www.slate.com/articles/news_and_politics/jurisprudence/2014/07/d_c_circuit_and_4th_circuit_obamacare_rulings_the_perils_of_following_scalia.html
Excerpt:
Unless you are a lawyer or a glutton for punishment, you probably want to avoid reading the new D.C. Circuit and 4th Circuit opinions reaching conflicting results on the legality of key provisions of the Affordable Care Act—the parts that provide subsidies for Americans who sign up for health insurance through the exchanges the law created. The opinions are full of jargon parsing the intricacies of the mammoth health care law. But well within the weeds of these lawyerly discussions is a more fundamental question: Is it the courts’ job to make laws work for the people, or to treat laws as arid linguistic puzzles?
At the heart of the 2–1 D.C. Circuit ruling striking down subsidies for anyone getting their insurance from a federally run rather than state-run health care exchange is a theory for interpreting statutes called “textualism.” Modern textualists view the job of courts’ interpreting statutes as puzzle solving, using dictionaries and grammatical rules known as “canons of construction” such as the “last antecedent rule.” Strict textualists generally won’t look at legislative history—records of what members of Congress said on the floor or what is contained in House or Senate committee reports, for example—to figure out what Congress intended. Just the text.
Justice Antonin Scalia of the Supreme Court is the leading proponent of textualism, an approach he justifies as required by the Constitution and better than the alternative of using legislative history. He thinks judges unreliably cherry-pick legislative history, quoting the late Judge Harold Leventhal’s quip that it’s “the equivalent of entering a crowded cocktail party and looking over the heads of the guests for one’s friends.” Before Scalia, textualism was one tool among many for interpreting statutes. But now, thanks to his relentless campaigning for the textualist approach, for many strongly conservative judges, the text is the beginning and the end of the analysis when it comes to the meaning of a statute.
I just had an opportunity to read this thread. It certainly didn’t take long for the conversation to go off the rails. That’s a shame because the issues are both important and interesting. Mespo and a few others attempted to tackle the topic; Bob, Esq. fruitlessly attempted later on to redirect the thread back to the topic. But people apparently prefer to rant about wholly unrelated issues.
After reading the DC Circuit and 4th Circuit opinions, I think I’ve changed my mind. I’m not even convinced that the Chevron rule needs to come into play. I believe the 4th Circuit conclusion is correct, but I think it can be supported under traditional rules of statutory construction. If anyone would like to pursue that line of debate, I’m all ears (or eyes, I guess).
Squeeky:
“But medicare is more of a single payer and people there can go to any provider who takes medicare.”
Medicare is not a single payer. That means that only one entity pays, usually the government. There is one network. One payer. Medicare has premiums and copays paid by policy holders. And Medicare alone pays zero for hospital stays longer than a set number of days. No long term nursing. There are private gap insurance policies that make Medicare doable.
A certain element loudly criticizes the private gap policies, but without them no one could afford to depend on only Medicare.
A fiscal conservative, like me, objects to government spending $300 million on a new computer system that is still not working, with no launch date in sight, 6 years later. We hate waste and mismanagement.
Oh, look. Social Security blew $300 million on a new computer system 6 years ago that still isn’t working. Guess the Obamacare website isn’t an anomaly. But, of course, anyone with the most rudimentary knowledge of our procurement system knows this.
In a private company, that kind of mismanagement and waste just drives them out of business. An incompetent business does not survie long. Not so with government.
http://www.foxnews.com/politics/2014/07/23/social-security-spent-300m-on-it-boondoggle/?intcmp=latestnews
RTC:
“Karen: In order to have an honest discussion, you must first be honest. The VA is overwhelmed by the number of traumatically injured vets who survived as a result of improved battlefield medical care.”
Stop calling me a liar.
And there is zero excuse on this Earth for the VA scandal.
1. The VA was created to handle vets in times of peace and in times of war. And we tend to be at war at least every 10 years. 1 in 10 Americans was a vet after WWII, and yet they received care in the precursor to the VA.
2. The Budget for the VA has INCREASED every year for the past decade.
3. I don’t care how busy you are, you don’t use that as an excuse to purge patient records and document patient visits that never occurred, for political reasons, to meet a goal and give its employees bonuses.
4. Under Bush, an IG investigated from 2005 to 2007. He discovered, among other things, that the VA was lying about wait times. By the time Obama took office, Bush still had not implemented all of the IG’s recommendations. That is on Bush. Documents show that Obama was made aware that the VA was lying about wait times. Congressmen wrote him letters about it. There were meetings. But Obama lied (yet again) and claimed he’d just heard about the VA scandal, was really mad, but wouldn’t discuss it until yet ANOTHER IG report was done (after he’d left office.) That’s on Obama.
5. Now let’s discuss those long wait times. As usual, government bureaucracies are inefficient and impenetrable. It was discovered that 8 government cardiologists with the VA handled the caseload of a SINGLE private practice cardiologist. Because when the cardiologist owns his own business, he works harder, grows, etc. But how do many government employees work? Slowly. Very slowly.
Any attempts to blame the VA lying about patient wait times, destroying patient records to look good, and documenting fraudulent visits that never happened, on a war is a spurious argument. The VA has a mandate to care for vets in times of war. And their budget increases every year.
How about Obama starts owning his messes instead of pathetically blaming Bush every single solitary time?
Thank you Darren. Sorry for the redundancy.
It won’t take the 2nd paragraph here.
The 1st and 2nd truths are a reflection of who we are as human beings merely by our existence in the state of nature or within the social contract. The 3rd truth identifies the fundamental purpose for government. The constitution is the result of the 3rd truth and with great thanks to the anti-federalists, we get the first ten amendments. Those amendments do not “give” us rights; they identify in more detail what the 2nd truth represents. The 4th truth makes protection of the 2nd amendment significantly more important. If government is ever the last entity standing with the ability to defend itself then we as citizens will have effectively eliminated our ability to execute the 4th truth.
We hold these truths to be self-evident,
1.) that all men are created equal,
2) that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.—
3) That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, —
4) That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
John Oliver, I retrieved your comment at 11:16.