Monday, December 13, 2010

ObamaCare Struck Down? Not Quite

In case you didn’t hear, a federal judge in Virginia struck down a key portion of ObamaCare today. This ruling was made in response to a lawsuit brought by the Commonwealth of Virginia in defense of a new state law that prohibits the government from forcing state residents to buy health insurance. What does this ruling mean for ObamaCare? Well, don’t get excited. On a practical level, this ruling means nothing. Here’s what you need to know.

First, this ruling struck down the part of ObamaCare that allows the federal government to compel individuals to buy insurance. I’ve spoken before about why this will probably ultimately be found to be unconstitutional (click me).

Secondly, this ruling was issued by Federal District Court Judge Henry E. Hudson, a Republican appointee. He sits in Richmond, and thus, the scope of his reach is only Virginia. In other words, this ruling does not affect anyone in any other state. Moreover, other courts have already gone the other way on this provision, finding it constitutional, including courts in Michigan and Virginia.

So what does this mean? It means there is a conflict, and those need to be resolved, right? Actually, no. As strange as it may sound, conflicts are allowed under federal law, though they are not preferred. They are usually resolved by the appeals process, but not always. And when they aren’t resolved, different parts of the country will find themselves living under federal laws that have been interpreted differently -- you often see this in tax cases.

Still, as I said, conflicts are not preferred. And here is what is likely to happen.

The way the federal courts work, the District Court is the lowest level (excluding certain specialty courts). The scope of their power is the district within which they sit. Most states are broken into two districts. Thus, for example, you have the Eastern District of Virginia and the Western District of Virginia. These two districts can (and often will) conflict.

To fix the conflict, an appeal is made to a higher court -- the appellate courts. In the case of Virginia, the appellate court is the Fourth Circuit Court of Appeals. That court happens to sit in Richmond, but it oversees all of the District Courts in Virginia, West Virginia, Maryland and the Carolinas. When the Fourth Circuit issues a ruling, its ruling becomes the law in each of those states and any conflicts are erased.

But this doesn’t necessarily end the conflict because the country is broken into thirteen Circuit Courts, and they can conflict with each other. Thus, the Sixth Circuit in Ohio may disagree with the Fourth Circuit in Virginia or the Second Circuit in New York. When such a conflict exists, the only way to resolve it is to appeal to the Supreme Court. A Supreme Court ruling will become the law of the land and will apply to all Circuit Courts automatically, no matter which Circuit Court the appeal came from.

BUT appeals to the Supreme Court are not mandatory, nor are they guaranteed. In other words, the Supreme Court can refuse to hear an appeal, even when there is a conflict in the Circuits, and that will leave the conflict in place. That said however, it is unlike the Supreme Court will allow a significant conflict to continue. One Circuit striking down ObamaCare while another affirms it would be the kind of conflict the Supreme Court is unlikely to leave in place.

Since the Fourth Circuit is the most conservative Circuit Court in the country, and will likely affirm Judge Hudson's decision, and Circuits like the Sixth and Ninth will go the other way, a conflict is more likely now than before. Thus, the real meaning of today’s ruling is that this decision makes it more likely that the Supreme Court will hear this case. . . but that's it.

Also, as an aside, don't expect much to come from this ruling because the case everyone is watching is the lawsuit filed in Florida by the twenty state Attorney's General. So expect nothing to happen in the Supreme Court until that case makes it there.

All in all, today's ruling is nice and it makes it somewhat more likely that the Supreme Court will hear this case, but it doesn’t mean much more than that.


AndrewPrice said...

ACG, You're welcome. It really depends on how pressing the law is. If the law involved something like immediate life and death, the Court will move a lot quicker. But in most cases, you're looking at 2-5 years from trial to Supreme Court decision, and longer than that is not unheard of.

In this case, I would expect a ruling in mid-2013, before the provisions kick in in 2014, and giving the Republicans time to repeal it and make it a non-issue (the court loves to avoid issues if it can).

It's possible this could get on the calendar sooner (like next year), but I really doubt it.

Game Master Rob Adams said...

So you're saying that I need to make sure I have insurance or I'm going to go to jail? Great. I love the 'law'. Especially when it is used to control the people. INGSOC!

Tennessee Jed said...

I am buckling in for this one, Andrew. Do we have any idea when to expect a ruling on the 20 state a.g. cases?

AndrewPrice said...

ACG, Actually, the way the law is written, the only thing they can do to you is to fine you. And even then, they can't enforce the fine except by withholding tax refunds you're owed. So you're safe.

But in any event, I suspect you'll either see a ruling before that requirement kicks in or they will issue an injunction until the Supreme Court rules. It's really unlikely they would let that kick in, forcing millions of people to buy insurance, and then rule that it's unconstitutional.

The other requirements? That's a tougher question. Those will probably be allowed to start kicking in, unless someone decides there is a really good chance that the whole law will be struck down -- which is possible because of clerical error they made, by failing to include what's called a "severability clause". We'll see.

AndrewPrice said...

Jed, Excellent question. The case hasn't been fast-tracked and there are no speedy trial rights, so expect it to be like a normal civil case. That means 2 years. BUT you've got 20 parties, which will slow things down. In most litigation of that size, you're looking at 3-5 years. But there are the deadlines kicking in in 2013 and 2014, and they will need to leave time for an appeal, so I would expect some sort of trial/hearing next year with a decision set for early 2012.

StanH said...

Thanks for the info Andrew. One step, in the right direction.

Jed, Andrew: Over at Big Government, writer and attorney Karen Harned who represents NFIB (National Federation of Independent Business) with 20 states are having another hearing in front of District Court Judge Roger Vinson on 12/16/10 in Pensacola FL, and expects some kind of ruling?

AndrewPrice said...

Stan, It is a step in the right direction and it certainly proves the lie of those "legal experts" who claimed these suits were frivolous.

I haven't seen the Big Government article, so I'm not sure what kind of hearing. I'll check it out.

StanH said...

She said a ruling early 2011, sorry for correction. I went back and scanned the article.

AndrewPrice said...

Stan, That would be good (though I'll believe it when I see it -- no on ever keeps to a schedule in court). In any event, the sooner the better. Let's hope for the best!

Unknown said...

Andrew: As we know, this isn't even the end of the beginning. This is ultimately going to the Supreme Court on multiple state issues from different federal appellate courts, and I haven't even seen the issue of severability addressed adequately yet.

AndrewPrice said...

Lawhawk, True, we're barely even out of the procedural games, and nowhere near the substance yet. But it is getting closer and I'm glad to see one judge at least agree with us. I think there will be many more before this is over, and more importantly, there will be 5 Supreme Court justices.

Yeah, I haven't seen anything on the missing severability clause yet, at least nothing in any court. That one's going to be very interesting.

T_Rav said...

Aaarrghhh!! Why did you have to bring me down? Darn you lawyers and...and your lawyerly stuff.

AndrewPrice said...

T_Rav, Sorry about that. Forget I said anything and go celebrate! :-)

LL said...

In the end it needs to go to the Supreme Court and I think that just about everybody agrees. No matter how they decide to deal with it, people will be unhappy.

It can be repealed legislatively once Obama is no longer sitting in the White House with his veto.

AndrewPrice said...

LL, If this is to be resolved judicially, then it will have to get to the Supreme Court... no doubt.

But the Supreme Court never jumps at these things. They wait for everyone to fight it out in the lower courts so that everyone gets a chance to make all the argument that could be made. That gives the Court a full picture of what the issues are, which is why appellate courts often send cases back for further proceedings rather than deciding the issues.

Also, the Court will often wait to see if an issue goes away. In this case, if the Republicans get the White House and both houses of Congress in 2012, then they may repeal the whole thing and then there will be no law for the Court to review. The Court would consider that an ideal solution and would just dismiss the case at that point for lack of standing (meaning, there is no one whose rights will be affected by a decision, so there is no reason to make the decision).

That said, this court has been very quick to cut to the chase and they may do it again. It would be surprising, but not out of the realm of possibilities.

CrispyRice said...

It's funny - I heard this touted all day long as THE BIGGEST MOST IMPORTANT VICTORY EVER!!!!!! And I kept thinking, but doesn't this just mean it keeps winding through the courts and hopefully gets to the Supremes sometime anytime? I mean, we needed a ruling on our side, but I didn't think it really changed much.

Thanks for the great article and insight, Andrew!

CrispyRice said...

And OMG, LOL! I kid you not, the Word Verification for my last past was:


LOLOLOLOLOL!!! How fitting for a topic like Obamacare!

AndrewPrice said...

You're welcome Crispy! I've heard a lot of that too -- lot of people saying, "ObamaCare has been overturned!" Even the articles on this aren't very good at grasping what this really means. It's a nice ruling, but relatively meaningless. And getting worked up about it and calling it the end of ObamaCare is just ridiculous.

Nice word -- works very well for an article about ObamaCare! LOL!

Ed said...

That's disappointing, but I figured it wasn't what everyone kept saying. I guess this will need to go to the Supreme Court before it gets resolved. Any thoughts on the Supreme Court?

AndrewPrice said...

Ed, I think there is no doubt this well end up in front of the Supreme Court, barring something truly unusual or a total Republican victory.

Individualist said...


Thanks for dissecting the ruling. As I understand it the ruling has little effect as it is limited to the Judge's bailiwick (coloquial use applied) which is part of Virginia.

I have heard two other things that you could possibly explain. One is that the mandate to buy the insurance is not severable from the bill (by design of the dems as this is the only way to pay for it) meaning if it is struck down the entire bill goes.

The other thing is that the Virginia governor is already setting up the boards and other things required by the law now as it will take that long to be ready by 2014. How could this "conflict" be allowed in this case as it seems it would play "hell" with the budget trying to enforce two sets of rules. ?????

The more this goes on the more of a nightmare it really seems to be.

AndrewPrice said...

Indi, You're welcome.

Right, this ruling only affects the part of Virginia that is covered by this judge's district.

In terms of the Virginia governor: wasted government spending is rarely a reason the Supreme Court will accept to speed up the process. If average people are forced to re-arrange their lives, then the Court would probably be willing to hear it quickly. But wasted effort by a state won't sway them. And yes, the longer this goes on the bigger the nightmare it will become.

In terms of the severability issue, this is really very interesting. In most cases, the court will only strike down the portion of a law that is unconstitutional and will leave the rest intact. There are two exceptions to this.

The first exception is what you mention, when the part that is struck down is so important to the rest of the bill, that striking it down will make the rest of the bill unmanageable. In that case, the court will usually strike down the whole bill. That's not the case here because large parts of the bill can take effect with or without that portion in place.

The second is when the Congress fails to include a provision called a severability provision, which says that if any part of the bill is found to be unconstitutional, the rest will go into effect regardless. Apparently, they forgot to insert that provision -- a major screw up! When this was raised to them as a problem, they opted not to try to insert it because that would have required another vote. Thus, the Court should see the exclusion of this clause as a conscious decision and therefore... if it finds any piece of the law to be unconstitutional, then it should strike down the whole law, not just the one part.

Of course, that assumes the Supreme Court does what it's always done -- which it should.

Individualist said...

Wow Andrew

I hope the bill is struck down....

and when the commensurate whining from the left reaches it crescendo our response should be only this...

" well, that's what happens when you don't take time to read the bill"

AndrewPrice said...

Individualist, I agree. That would be a great moment. . . "a teachable moment" ... for our unpleasant friends on the left!

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