Court action could prolong health care fight

WASHINGTON -- Next month's challenge to the Obama-sponsored health care law could affect the care available to most Americans, alter the balance of power between Washington and the states and remain a flash point through this presidential campaign.

Yet there is a path the Supreme Court could take when it hears the case that could delay for years any resolution of a main point of contention.

The core of the law is a requirement that most people buy health insurance by 2014 or face a tax penalty. But looming over the case is a federal policy that restricts the timing of lawsuits connected to the assessment and collection of "any tax."

On the first day of their historic session March 26-28, the justices will consider that policy and address whether people who challenge the insurance requirement must first pay the disputed tax and seek a refund before bringing a lawsuit. If the answer is yes, the legal fight over a key part of the law could be delayed, possibly until 2015.

None of the main parties to the litigation is arguing for that option, which would prolong confusion over the law's constitutionality. Yet the high court could find that the law demands it. Further, the nine justices are deeply divided ideologically, and the option might be a way to avoid deepening the fault lines and edge the court out of the spotlight this election year.

"For the justices, particularly Chief Justice John Roberts, this could become an attractive way to resolve the dispute," says Georgetown University law professor Michael Seidman. "It could lead to a more united front" among the justices.

But, Seidman and other legal analysts say, such a ruling would keep a cloud over the centerpiece of President Obama's domestic agenda.

It is difficult to predict how the justices would respond to the claim that the legality of the mandate requirement must be put off. They have taken the question seriously enough, however, to appoint a special lawyer to argue March 26 that the case must wait until someone seeks a refund.

When the law was passed in March 2010, President Obama and other supporters avoided calling the penalty a "tax." But it is contained in the Tax Code and would be collected by the Internal Revenue Service.

In the litigation, the position has won few lower court judges' votes. Still, it was adopted by one federal appeals court, the Richmond-based 4th Circuit, in a majority decision, and by one influential conservative judge, in a dissent on the Washington-based U.S. appeals court. "The Tax Code is never a walk in the park," D.C. Circuit appeals court Judge Brett Kavanaugh wrote in his dissent. "But the statutory analysis here leads to a firm conclusion that the (Tax) Anti-Injunction Act bars this suit."

Kavanaugh, a prominent conservative named to the D.C. Circuit in 2006, is a former law clerk to Justice Anthony Kennedy, a key vote on the high court. Kavanaugh did suggest that Congress could pass a law that allows an immediate challenge to the individual mandate, removing it from the tax code rule.

A tax or a penalty?

In earlier court hearings, Obama administration lawyers argued that claims against the individual insurance mandate had to wait until after someone sought a refund on the 2014 tax penalty, which under the 2010 law would be assessed and collected by the IRS. The administration abandoned that stance when it began losing in lower courts and the political imperative for a resolution on the merits kept building.

Robert Long, the lawyer appointed to make the argument, stresses in his brief to the high court that Congress could have written into the law an exemption from tax policy that would have allowed immediate judicial review of the constitutionality of the minimum coverage provision. "But it has not done so in this case," he said, contending that the court should not decide the case prematurely because of the general rule that judges avoid deciding constitutional issues unless necessary.

Lawyers for those challenging the health care law, 26 states, the National Federation of Independent Business and individuals, say the tax law timing restriction should not apply.

"The individual mandate is a free-standing legal requirement obligating virtually every American to obtain health insurance," lawyer Michael Carvin, representing the NFIB, told the court. He says Long wrongly argues that the "penalty" for not buying insurance can be characterized as a "tax."

Paul Clement, representing the state challengers, similarly argues that the court should address the constitutional merits of the mandate. The Anti-Injunction Act does not apply "for the most basic reason of all," he told the court, "The challenge here is to the mandate, and not the penalty that enforces it."

The Obama administration asserts that because payment under the individual-insurance provision is termed a "penalty," rather than a tax, the Anti-Injunction Act doesn't bar the lawsuit. Yet the administration does not go as far as the challengers. It says that if the justices deem the payment a tax, they cannot separately review the constitutional merits of the requirement to buy insurance.

"The two provisions are inextricably intertwined," U.S. Solicitor General Donald Verrilli told the justices. "The only consequence of failing to maintain minimum coverage is payment of a penalty."

Main questions

The challenge to the health care law, known as the Affordable Care Act, raises four key issues, beginning with the tax-policy issue:

•Whether the Tax Anti-Injunction Act prevents individuals from challenging the mandate until after they pay the tax and seek a refund.

•Whether Congress had the authority, under its power to regulate interstate commerce, to require most Americans to buy insurance or face a penalty.

•Whether Congress improperly put new burdens on states when it expanded eligibility under Medicaid, the federal-state medical program for the poor to those people with incomes up to 133% of the poverty rate.

•Whether, if one part of the law is declared unconstitutional, it can be separated from the rest of the law or dooms it entirely.

Only one of the four U.S. appeals courts that have heard the litigation said the challenge to the mandate could not go forward because of the tax law provision. When the U.S. Court of Appeals for the Fourth Circuit ruled on the case, Judge Diana Gribbon Motz wrote that the Anti-Injunction Act strips courts of jurisdiction. "The Affordable Care Act uses the Internal Revenue Code's existing tax collection system to implement the penalty," she wrote. "Only a 'taxpayer' is subject to the penalty, and the Code defines a 'taxpayer' as 'any person subject to any internal revenue tax.'"

Alan Morrison, who submitted a brief on behalf of two lawyers who were IRS commissioners, says the tax law provides substantive reason not to reach the merits yet. For a court that wants to avoid a polarized ruling on the law, the tax rule is a good option, he says. "If the court decides that postponement is the better part of discretion," he says, "it could rely upon this long-standing and very forceful tax law to say that Congress has told us when we can intervene and when we can't."