Top federal appeals court nixes insurance subsidies....
Tuesday the U.S. Court of Appeals decided Halbig v. Burwell (No. 14-5018). (Defendant Sylvia Burwell was then acting HHS secretary, and now is HHS secretary.) The Court overturned a Jan. 15, 2014 ruling by Judge Paul Friedman (1994 Clinton appointee to the U.S. District Court for D.C.). Judge Friedman sided with an IRS "interpretation" of a statutory provision of the Affordable Care Act (ACA). The law's language expressly limits payment of health insurance subsidies--paid out as insurance premium tax credits--for health insurance plans delivered via "state" exchanges. The IRS decided that the feds could offer subsidies through federally-run exchanges nonetheless. The word "federal" is not found in the provision governing subsidies to health exchanges.
Another federal appeals court, U.S. Court of Appeals, 4th Circuit, issued King v. Burwell (Case No. 14-1158), unanimously upholding the same subsidies. Though officially equal in rank to the D.C. Circuit Court, in cases involving interpretation of administrative agencies implementing federal statutes, the D.C. Circuit has the best-developed body of caselaw in this area. It thus is primus inter pares ("first among equals") vis-a-vis the other circuits.
The key question raised in both rulings was whether the federal government could subsidize ObamaCare purchases in 36 states which had not established state health exchanges. The 4th Circuit said the feds could, while the D.C. Circuit said the feds could not.
The issue both cases turned on was summed up by the 4th Circuit's opinion (some citations omitted):
Turning to the merits, “we review questions of statutory construction de novo.” Because this case concerns a challenge to an agency’s construction of a statute, we apply the familiar two- step analytic framework set forth in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.. At Chevron’s first step, a court looks to the “plain meaning” of the statute to determine if the regulation responds to it. If it does, that is the end of the inquiry and the regulation stands. However, if the statute is susceptible to multiple interpretations, the court then moves to Chevron’s second step and defers to the agency’s interpretation so long as it is based on a permissible construction of the statute.
The two courts differed on how to deal with the statute's problems, with the administration's position being taken in the 4th Circuit case--that a flawed statute should be construed in a manner that saves the legislation, i.e., prevents the statutory scheme from blowing up. The D.C. Circuit cited legal precedent that courts do not rewrite statutes to rescue Congress from inadvertent errors in drafting.
The D.C. Circuit Court decision was partly presaged by the March 25 oral argument, an assessment of which found a 2-1 split emerging: Judge Harry T. Edwards (1980 Carter appointee), for upholding the IRS position; Judge A. Raymond Randolph (1990 G.H.W Bush appointee), for striking down the IRS rule; and Judge Thomas B. Griffith (2005 G.W. Bush appointee), a swing vote but leaning against the administration.
At that session Judge Edwards challenged plaintiff's lead counsel, ace appellate litigator Michael Carvin, asking him to admit (Carvin did) that his client wanted O-Care overturned. While true, that fact is of no legal significance whatsoever. It may fairly be inferred, however, that Judge Edwards considered it a factor in deciding to side with the administration.
Team Obama may well ask the Court for an en banc (in bench) panel (all the Court's active judges), but such appeals rarely succeed. In fact, in the decade 2000 - 2010 the Court granted an en banc request in only 2 out of 1,000 cases. But last November Sen. Harry Reid invoked the "nuclear option" (the hitherto unprecedented step of bypassing a judicial nomination filibuster by majority vote) to put three hyper-lefty Obama appointees on the D.C. appeals Court, creating a 7-4 edge of lefty over righty jurists, supplanting the previous 4-4 split. This was done despite a record low D.C. Circuit caseload.
Regarding the issue of deference to legislative judgment, NRO editors note that while judges are unelected, so are unelected bureaucrats at the IRS who write rules purporting to "interpret" federal laws.
Eventually, as Jennifer Rubin explains succinctly, it may well go to the Supremes. WSJ pundit Dan Henninger sees a possible fast appeal from the 4th Circuit case, bypassing Harry Reid's D.C. mousetrap.
In the end that may matter less than one might think. Government fraud inspectors posed as applicants and filed fraudulent papers seeking to qualify for subsidies. In almost every case they succeeded. This administration clearly aims to shovel out at much money as it can, without regard to proper screening. By doing so it can create a captive base of recipients with inflated expectations of their benefit entitlement. This can make politically harder any GOP effort to repeal ObamaCare.
But Team Obama is far from home. A new CNN poll shows 18 percent better off under O-Care, 35 percent worse off & 46 percent about even. Health policy maven Betsy McCaughey presents HHS numbers showing that without subsidies premiums would quadruple; a whopping 87 percent of O-Care plan customers qualify for subsidies.
Bottom Line. Circuit conflict usually triggers Supreme Court review. It will likely do so here, unless Harry Reid's stacking the D.C. appeals court pays off in reversal of its 2-1 decision against ObamaCare.
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