Still Under Attack: Key Provision of Health Care Reform

    The Commonwealth of Virginia's constitutional challenge to the so-called "individual mandate," a key provision of the health care reform bill enacted by Congress earlier this year, has survived a Rule 12(b)(1) and 12(b)(6) motion to dismiss for lack of subject-matter jurisdiction and failure to state a claim upon which relief can be granted.  U.S. District Judge Henry E. Hudson of the Eastern District of Virginia yesterday overruled the Government's motion to dismiss the facial challenge to the constitutionality of Section 1501 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), requiring persons (with several specific exceptions) to obtain a minimum amount of health insurance coverage or pay a penalty for failing to do so.  The Commonwealth's federal court complaint for declaratory and injunctive relief alleges that Section 1501 exceeds congressional power under the Commerce, Tax and Spending and General Welfare clauses of Article I, section 8, of the United States Constitution, and violates Virginia's recently-enacted Health Care Freedom Act.

    Following extensive briefing, including an unusually high number of amici briefs on both sides of the issue, and oral argument on July 1, Judge Hudson's 32-page opinion denying the Justice Department's motion to dismiss the complaint concluded with the following observation:

While this case raises a host of complex constitutional issues, all seem to distill to the single question of whether or not Congress has the power to regulate -- and tax -- a citizen's decision not to participate in interstate commerce.  Neither the U.S. Supreme Court nor any circuit court of appeals has squarely addressed this issue.  No reported case from any federal appellate court has extended the Commerce Clause or the Tax Clause to include the regulation of a person's decision not to purchase a product, notwithstanding its effect on interstate commerce.  Given the presence of some authority arguably supporting the theory underlying each side's position, this Court cannot conclude at this stage that the Complaint fails to state a cause of action.

The Court has scheduled a summary judgment hearing on October 18, 2010 in Richmond.

    While it is difficult to read legal opinions as tea leaves, it is worth noting that the Court's characterization of the issue as whether Congress has the power under the Commerce Clause or the Tax and Spend Clause "to regulate and tax a citizen's decision not to participate in interstate commerce" may bode ill for the Justice Department's position.  Judge Hudson's understanding of the issue did not focus on the fact that Section 1501 is rationally related to Congress' regulation of a $2.5 billion health insurance market throughout the United States, and thus would clearly fall under its Commerce Clause powers, but rather on an individual's decision "not to participate in interstate commerce" by not purchasing the minimum health insurance coverage mandated by the Act.  That characterization of the issue would certainly favor the Commonwealth's position and is the emphasis on which it undoubtedly wishes the Court to concentrate.

    Judge Hudson served as United States Attorney for the Eastern District of Virginia under Presidents Reagan and Bush I, and was appointed by President George W. Bush to the federal bench in 2002.

    A second constitutional challenge to health care reform, brought by the attorneys general of 12 other states, remains pending in the Northern District of Florida.

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