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Non-Health Cases at High Court May Inform Obamacare Fate

Jan. 24, 2020, 10:35 AM

The U.S. Supreme Court is slated to hear two cases that could help decide the fate of Obamacare, and they have nothing to do with health care.

The cases, which challenge the validity of a federal financial agency and a decades-old robocall law, focus on a central question at the heart of the Obamacare challenge— whether an entire law must be tossed out if one provision is found to be unconstitutional.

The legal theory, which largely relies on congressional intent, is known as severability and is a doctrine Justice Clarence Thomas has previously urged his colleagues to revisit. He called the doctrine dubious because it “requires courts to make a nebulous inquiry into hypothetical congressional intent” in a 2018 concurring opinion when the court let states legalize sports betting.

The two cases before the Supreme Court could set new standards for severability and inform future court rulings on the constitutionality of the Affordable Care Act, some attorneys say.

“These two cases will probably be decided before the Affordable Care Act case is decided, so depending on how the court decides to decide them, it could very likely have an effect on the Affordable Care Act case,” said Timothy Jost, a professor of law emeritus at Washington and Lee University School of Law.

The high court is being asked to review a U.S. Court of Appeals for the Fifth Circuit ruling that a provision of the ACA requiring people to buy health insurance is unconstitutional. The Fifth Circuit dodged the question of whether that makes the rest of the law unconstitutional and sent the case back to a federal judge in Texas who had previously struck down the entire law.

Meanwhile, the justices are set to hear arguments March 3 in a constitutional challenge to the structure of the Consumer Financial Protection Bureau. The justices are weighing, in Seila Law LLC v. CFPB, whether a provision that protects the agency’s director from being removed by the president at will can be cut from the rest of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the law that created the agency.

The Supreme Court Jan. 10 agreed to review the constitutionality of an amendment to the Telephone Consumer Protection Act that exempts calls to collect government-owed debt. If the exemption violates the First Amendment, the justices are being asked in Barr v. American Association of Political Consultants Inc. whether the proper fix is to sever the 2015 amendment from the 1991 telemarketing law.

The court in either one of those cases could issue a ruling in an attempt to redo how severability works, said Mark Regan, legal director of Disability Law Center of Alaska, who tracked the severability issue when the high court heard a challenge to the ACA in 2012.

Severability Redo

In the 2012 Obamacare case, the Supreme Court found the mandate to buy insurance constitutional under Congress’s taxing powers and therefore didn’t have to decide if the law could survive without it. But Congress dropped that tax penalty to $0 in 2017, which led to the most recent dispute before the court.

Judge Reed O’Connor, of the U.S. District Court for the Northern District of Texas, in December 2018 ruled the mandate unconstitutional without a penalty and invalidated the entire law. No other provision could survive without the mandate, he said.

The Fifth Circuit agreed the mandate was unconstitutional, but sent the case back to O’Connor to take another look at whether any part of the law could be salvaged. The House and a coalition of mostly Democratic states appealed in early January and asked the Supreme Court to fast-track its consideration of the case. The justices denied that request on Jan. 21.

The CFPB and robocall cases before the high court may not compel the justices to set out an entire new way of thinking on severability, Regan said. But they could help O’Connor decide the issue in the context of Obamacare if the high court ultimately declines to take that case, he said.

The Fifth Circuit directed O’Connor to go back with a “finer-toothed comb” and “conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate.”

But Regan said the appeals court missed its chance to “set out its own view of what severability analysis ought to be about.”

Reason for Refusal?

Some attorneys say the high court might have denied the request to speed up its consideration of the Obamacare challenge so that it could first resolve the two other severability cases.

Denying the petitioners’ bids to expedite consideration in the Obamacare case allows “the opportunity for its soon-to-be decided severability cases to be addressed and applied at the lower courts,” said Robert Henneke, general counsel and litigation director for the Texas Public Policy Foundation. Henneke is representing the two citizens who challenged the ACA along with 18 mostly Republican states.

But some attorneys doubt the rulings in the two cases will have an influence on Obamacare.

“Severability is a particularized question that goes to the particular statutory scheme,” said Steven Schwinn, a law professor at the University of Illinois at Chicago’s John Marshall Law School. “The court is going to be asking similar but different enough questions. I don’t necessarily see that one is going to impact the other.”

Others say if the court rules for severability in the two cases, it could push the court toward a similar ruling in the Obamacare case.

Neither of the laws at issue in the CFPB and robocall cases is as complex and varied as the ACA, Jost said.

“If the court rules for severability in these cases, it should provide even a stronger argument for severability in the Affordable Care Act case,” he said.

To contact the reporter on this story: Lydia Wheeler in Washington at lwheeler@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com

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