Virginia's Health Care Reform Lawsuit Goes Forward: What's Behind Judge's Ruling U.S. District Court Judge Henry E. Hudson ruled Monday that Virginia's lawsuit against the health care reform law can proceed to a hearing on the merits. He has, in effect, agreed to rule on the constitutionality of health care reform.

To make that decision, Judge Hudson found that yes, Virginia has a right to sue ("standing") to invalidate the law; and yes, the issues are fully developed in the case (the are "ripe"), and are ready for a hearing on the merits and decision even though much of the law, including the key issue, the individual mandate, hasn't yet taken effect. As a result, the judge concluded he could hear the case if Virginia's complaint did indeed state a claim. And then he ruled yes, Virginia's claims that the law is unconstitutional are legitimate and deserving of a full hearing on their merits.

How Judge Hudson reached those conclusions is interesting, in part because the path he took is unavailable to the states in the multistate lawsuit against health care reform. Virginia gained standing and its claims ripeness because Virginia had passed a statute that conflicts with health care reform, and would fall before the federal law, unless the court finds the federal law unconstitutional. As a result, it doesn't matter that the provision of the law at the heart of the case won't take effect until 2014. In short, it's only because Virginia is defending its own statute against a federal law that it asserts is unconstitutional that the judge is able to look at the law's constitutionality. The multistate lawsuit does not involve an analogous situation: Those states will have to persuade a judge they have standing and their claims are ripe by some other path.

After Judge Hudson decided that he could consider Virginia's claims, he looked at both sides' arguments regarding the source of Congress's power to enact health care reform, particularly Congress's power to require people to buy health insurance or pay a penalty. From a legal standpoint, the judge defined the issue as:
"whether or not Congress has the power to regulate -- and tax -- a citizen's decision not to participate in interstate commerce [by choosing not to buy health insurance.]"
The federal government claims that Congress gets the power from the Commerce Clause, the Necessary and Proper Clause, and the taxing power of the General Welfare Clause. Virginia disputes that any of these apply.

The Commerce Clause Argument


Congress has the right to regulate "interstate commerce." Over our country's history, the courts have had to figure out what precisely that is. The Supreme Court has found virtually every economic activity sufficiently "interstate," including one farmer's wheat-growing or one medial marijuana patient's cultivation of pot plants for personal consumption. Virginia contends that a decision not to purchase something is not engaging in economic activity and thus cannot be regulated under the Commerce Clause, even if, as the federal government contends, that decision has an impact on interstate commerce. The federal government disagrees that the uninsured are economically inactive, asserting that at some point everyone seeks medical attention and receiving health care services without paying for them -- as many uninsured people do -- is economic activity.

"Never before has the Commerce Clause and the associated Necessary and Proper Clause been extended so far" as the individual mandate would take it, wrote Judge Hudson in finding that Virginia had made "a plausible claim with an arguable legal basis" with regard to the Commerce Clause.

The Taxing Power Argument


Congress has the power to levy taxes for the general welfare, and that power, as the judge put it, is "less bridled" than the Commerce Clause. The federal government makes its tax argument by noting that the individual mandate's "penalty" is part of the tax code. Because the taxing power is so broad, the judge thought it harder for Virginia to survive dismissal on this ground, but nonetheless found it had managed.

Virginia rejects the idea that the individual mandate is a tax, saying instead it is a mere penalty. As a penalty, Congress's power is more limited, and if the Commerce Clause doesn't confer enough power, the penalty fails. So if the mandate is a penalty, the question returns to the Commerce Clause question.

As a tax, Virginia argues, the individual mandate would still fail because Congress can tax what it can't regulate (think the estate tax, for example) but it can't regulate via a tax those areas which it can't otherwise regulate. As the federal government countered, however, just because a tax has a regulatory effect that encourages, discourages, or even deters conduct, it is not invalid (think cigarette taxes.) Here the judge seemed to decide that the question again refers back to the Commerce Clause question.

As for the Necessary and Proper Clause, which allows Congress to pass necessary and proper laws, it helps the federal government only if the law supports one of Congress's powers. So if the taxing power argument reduces to the Commerce Clause question, then the Necessary and Proper Clause is no independent help to the federal government.

From here, the case will go forward, with a summary judgment hearing scheduled Oct. 18, after which Judge Hudson will issue a decision, which, regardless of whom it favors, is certain to be appealed.

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QBC

This is a very important case that must be followed. There is a serious argument to be made by Congress forcing individuals to buy Health Insurance. Despite with the White house is saying, this is a tax.

On the other hand, Health Care Reform will not work without an individual mandate. Insurance companies need the revenue stream from healthy individuals to subsidize their responsibility to cover individuals that otherwise could not obtain medical coverage due to poor health or serious pre-existing conditions.

Watch for other states to follow by filing their own law suits against the federal government.

Health Care Reform doesn't fully kick into gear until 2013-2014. Meanwhile shop online for affordable health insurance quotes at www.quotebroker.com

August 04 2010 at 3:22 AM Report abuse rate up rate down Reply
Jen

Good for Virgina.

August 02 2010 at 8:48 PM Report abuse +1 rate up rate down Reply
tjj1030

MIght be time to fire those tar pots up and shoot some geese for the feathers. Might be a long season ahead.

August 02 2010 at 7:16 PM Report abuse rate up rate down Reply
BUFFALO

It would seem that the fact that Virginia challenge to the health care reform is on it's constitutionality will open the door to any state who wants to sue.
We all know that this law is not popular and that only elected officals
wanted to pass this law not the people that should of been good enough to stop it but here we go to court and that is bad I do not care what side of this thing your on. Its a bad law it was done against the will of the people and now its in court. We elect officals to represent us not to rule us.

August 02 2010 at 5:54 PM Report abuse +3 rate up rate down Reply
jerrym930

I am glad to see the conservatives using the liberal method of getting things settled using the court system. It is time to turn the tables on the liberals that use the judicial system to make laws. They do not have the support to get things done legislatively, and we need to take the judicial branch out of the equasion. Judges are suppose to make rulings based on existing laws, not take existing laws and modify them through their rulings. A law's interpretation is given to it when it is written, not when it comes before a particular Judge. The Health Care Law was given its interpretation in the same way, but the Democrats are now saying that they meant something else. What was identified as being a fine is now being called a tax. Liberals will always change their stories to ensure they get to their final goal. Instead of admitting they were wrong, then going back and re-addressing a problem, they just change the story. I truly hope that Virginia wins this suit, but I am affraid that the liberal Judges will seal our fate. One of these days the majority of Americans will finally wake up to the fact that even the Judicial Branch's true powers are IN Law, not to interpret law.

August 02 2010 at 5:47 PM Report abuse +3 rate up rate down Reply