House Obamacare Dispute Wrongly Decided, HHS Says, Health Care Policy Report (BNA)

BNA's Health Care Policy Report

October 31, 2016

Health System Reform

House Obamacare Dispute Wrongly Decided, HHS Says

BNA Snapshot
Obamacare program worth billions to insurers comes before appeals court
Administration says court can't wade into political dispute
Congress made permanent appropriation for cost-sharing program, brief says

By Mary Anne Pazanowski

Oct. 25 A political dispute between two branches of government doesn't belong in a federal
court, an Oct. 24 administration brief told an appeals court ( U.S. House of Representatives v.
Burwell , D.C. Cir., No. 16-5202, brief filed10/24/16).
The Obama administration is trying to overturn a decision holding that the Health and Human
Services Department and the Treasury Department unlawfully paid insurers cost-sharing
subsidies under the Affordable Care Act (24 HCPR 702, 5/16/16).
The subsidies were intended to compensate insurers for reducing amounts low-income insured individuals normally would
pay, like copays and coinsurance, so the plans would be more affordable.
If upheld, the lower court's decision would end insurers receipt of billions of U.S. dollars. An appellate ruling in the House of
Representatives favor could lead to more insurer failures and premium increases. Litigation, however, is a lengthy process,
and political realities could turn the case around.
Election's Effect
The upcoming November election could figure largely in the dispute's resolution. The lawsuit is over if the Democrats win a
majority in the House, according to Josh Blackman, an associate professor at South Texas College of Law in Houston and an
adjunct scholar at the Libertarian Cato Institute in Washington.
Blackman told Bloomberg BNA the House's response brief is due around Thanksgiving, which means oral arguments wouldn't
be scheduled until January or February. By then, a Democratic House could have voted to end the litigation.
After House Democrats end the suit, the House could either do nothing, and allow the HHS and Treasury to continue making
cost-sharing payments to insurers, or pass a specific appropriation for the funds, he said. In either event, the lawsuit would be
finished.
Blackman is the author of the recently published Unraveled: Obamacare, Religious Liberty and Executive Power, in which he
discusses the case in detail.
Good Chance of Succeeding
The defendants, HHS Secretary Sylvia M. Burwell and Treasury Secretary Jacob J. Lew, have a good chance of succeeding
on appeal, Timothy S. Jost, a leading health policy expert and emeritus professor at Washington and Lee Law School in
Lexington, Va., told Bloomberg BNA.

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House Obamacare Dispute Wrongly Decided, HHS Says, Health Care Policy Report (BNA)

The administration's brief focuses heavily on the jurisdictional, standing and separation of powers issues, he said.
That is, the brief argued the House may not invoke a federal court's jurisdiction to challenge an executive agency's
interpretation of a federal statute. Congress can propose new legislation if it disagrees with the executive branch's
implementation of a law, the brief said.
Disagreements between the branch that makes the laws and the branch that executes them are routine, the brief said.
Those disputes, however, usually are resolved through the political process, not by resort to the third branch of government.
Congress hadn't taken any legislative action prior to this lawsuit to restrict the departments payments to insurers. The
payments have been ongoing since January 2014, the brief said. The district court's injunction blocking those
paymentswhich the court stayed pending appealmeddled with the legislative process, interfered with the executive's role
and unmoor[ed] the judiciary from its traditional role, it said.
Judge Rosemary M. Collyer, who decided the case in the U.S. District Court for the District of Columbia, ignored a substantial
body of precedent when she rejected similar arguments made in the court below, Jost said.
The House may not run to a court whenever it disagrees with the executive's action, he said. There is a constitutional
process the legislators must follow.
This lawsuit was an abuse of the courts and an improper intrusion into the executive's prerogative, Jost said.
Collyer made serious mistakes when she denied the administration's motion to dismiss the House's lawsuit and rejected its
request to certify an appeal before final judgment, he said.
Merits Argument Persuasive
Jost also predicted the appeals court will find the administration's merits arguments persuasive. The refund law appropriated
federal funds to pay for both tax credits available to eligible taxpayers when they buy insurance and the cost-sharing
incentives supplied by insurers, he said.
The brief argued the ACA's Section 1324 provides a permanent appropriation for all refunds due from a list of provisions,
including 26 U.S.C. 36B. Section 36B describes the conditions required to qualify for cost-sharing reductions, as well as for
ACA premium tax credits.
The text, structure, design, and legislative history of the ACA demonstrate that both components of the subsidy programtax
credits and cost-sharing reductionsare refunds due ... from Section 36B because they are inter-related compensatory
payments made available through the application of Section 36B, the brief said.
Thus, when Congress amended Section 1324, it appropriated funds for both components of the ACA's program of insurance
subsidies.
Dangerous Ruling Possible
Blackman agreed with Jost that the administration likely will prevail in the D.C. Circuit, even if the Republicans still control the
House come January. The HHS's arguments mainly are the same as those it made in the district court, but the appeals court
is a more favorable venue, Blackman said.
President Barack Obama appointed four judges to the D.C. Circuit, radically changing the court's composition. Obama
stacked the court exactly for cases like this one, Blackman said.
It would be easy for the circuit court to duck this case, Blackman added. The Supreme Court has never ruled on whether the
House has standing to sue the administration over an executive action, and the appeals court could say it doesn't want to be
the first court to do so.
That said, Blackman thinks the House's arguments have a lot of merit. He hopes the appeals court will look closely at the
facts. A ruling for the administration on these facts would be dangerous, he said.
The HHS made a request for the money. Congress denied the request, and the HHS went ahead and spent the money
anyway, Blackman said. The HHS wasn't expecting a lawsuit, but it got caught, he said.
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House Obamacare Dispute Wrongly Decided, HHS Says, Health Care Policy Report (BNA)

Supreme Court Review Unlikely

The likelihood the Supreme Court would review an appeals court decision for the administration is relatively low, depending
on the court's composition, Blackman told Bloomberg BNA. The odds that a court with a new Democrat-appointed justice
would agree to hear the case aren't good.
The decision's impact, however, may be very limited, Blackman said. Obamacare won't implode over this issue, he said.
Oral arguments haven't yet been scheduled.
Benjamin C. Mizer, Channing D. Phillips, Mark B. Stern, Alisa B. Klein and Carleen M. Zubrzycki of the Department of Justice
in Washington are representing the administration. Thomas G. Hungar, Isaac Benjamin Rosenberg, Eleni M. Roumel and
Todd B. Tatelman of the House General Counsel's Office in Washington represent the House.
To contact the reporter on this story: Mary Anne Pazanowski in Washington at mpazanowski@bna.com
To contact the editor responsible for this story: Peyton M. Sturges at PSturges@bna.com
For More Information
The brief is at http://src.bna.com/jBs.

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