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St. Luke’s Dr. David Pate on the most important health law case of the year: surprises, predictions and what could happen

By Dr. David C. Pate, News and Community
July 16, 2019

I have written about State of Texas, et al v. United States of America, et al on four prior occasions – that is how important this case is. You can read the background here.

The lower court ruled that the individual mandate (the requirement to purchase ACA-compliant health care) is unconstitutional after Congress zeroed out the penalty in the Tax Cuts and Jobs Act of 2017 such that it could no longer be considered a tax and Congress’ only power to enact a mandate like this was under its taxing power.

Further, the court determined that the individual mandate was so integral to the working of the ACA that the entire law must therefore be struck down as unconstitutional.

The case is on appeal and last week, a three-judge panel (two judges appointed to the court by Republican presidents and one judge appointed by a Democrat) of the 5th U.S. Circuit Court of Appeals heard oral arguments.

The court created some drama just before the oral arguments when it asked the parties in the lawsuit to answer three questions:

  1. Does the court have jurisdiction to hear the appeal?
  2. Do the Democratic attorney generals and the U.S. House of Representatives have standing to intervene in the case?
  3. If the answers to either or both of the above questions are no, what does this mean to the appeal?

Some legal scholars who are hoping that the 5th Circuit will overturn the lower court’s opinion were alarmed by the questions.

First, if a court does not have jurisdiction, it may not decide the matter. A finding that the court does not have jurisdiction would mean that the 5th Circuit would either allow the lower court decision to stand (this would be the worst possible outcome for the intervenor Democratic states) or vacate (set it aside as if there never was a decision) the lower court’s opinion, which would be the worst possible outcome for the plaintiffs in this case.

The reason that this was even a question is that the Department of Justice (DOJ), representing the federal government, changed its position following the lower court trial and indicated that it in large part agreed with plaintiffs’ position and the court’s decision.

The problem is that courts are limited in their jurisdiction by the U.S. Constitution to only hear “cases and controversies.” If the parties to a case agree with each other, then a court generally will not have jurisdiction to hear the case. The question caused some to worry that the court was considering that there might not be a case or controversy and it might not be able to hear the case.

The second question was perhaps the most interesting. Even if the DOJ was not defending the lawsuit, the intervenors could defend the suit and challenge the decision on appeal, but only if they have standing.

Standing is a legal principle that limits who can bring lawsuits. For example, I might read a story in the newspaper about a drunk driver hitting another car and killing a child. This would upset me and make me very angry with the drunk driver, but that would not be sufficient injury for me to file a lawsuit against the drunk driver. The standard to meet for standing is demonstrating that you have or will suffer an injury (this does not have to be physical – it can be a financial loss, harm to reputation, an infringement on your property rights and many other types of injury) that is fairly traceable to a defendant’s actions – or in this case, the impact from a law that is likely to be redressed by a decision of the court favorable to the plaintiff, or in this case, the intervenors.

If the intervenors did not have standing, this would be problematic because if the court were to determine there was no case or controversy between the plaintiffs and the government, there could still be a case or controversy between the plaintiffs and the intervenors. Additionally, even if the 5th Circuit determined there was jurisdiction to hear the appeal but determined that the intervenors did not have standing, then the challenge to the lower court’s decision by the DOJ might be weak, hard to follow and far less compelling that the defense of the lower court decision that would be made by plaintiffs/appellees. In my opinion, the DOJ’s performance at the oral arguments was exactly as described above.

I was not overly concerned about the court’s questions to the parties just before the oral arguments. Because this is an important case that the judges must realize is very likely to land before the U.S. Supreme Court, and because there have been many unusual twists and turns in this case, it’s logical that the 5th Circuit wants to be sure the jurisdictional and standing requirements are satisfied.

It did surprise me that the judges asked many questions about the intervenors’ standing, suggesting to me that they may not have been persuaded by the briefs submitted and that they still thought this was an open question. To me, the intervenors’ standing has seemed pretty straightforward. I have thought the far more interesting and challenging question was whether the individual plaintiffs had standing, yet the judges asked very few questions about this.

The reason for me thinking that the standing issue for the individual plaintiffs is more interesting is that with the elimination of the penalty for non-compliance with the individual mandate, there is certainly a question as to how the individual plaintiffs are harmed by the individual mandate. They make a reasonable argument that they are law-abiding citizens and therefore feel compelled to comply with the law even though there is no penalty, and as a result they have to purchase ACA-compliant insurance coverage, which is more expensive than the plans they would otherwise purchase.

They make some other arguments that I have not found very compelling, but the Supreme Court has stated that you cannot create standing through “self-inflicted” harm, and therefore the question seems worth pursuing as to whether the individual plaintiffs have standing when they made a choice to purchase insurance coverage, when not doing so would not have resulted in a penalty. The individual plaintiffs counter that they had no choice, that the individual mandate requires them to do so.

The second thing that was interesting to me is that Judge Carolyn Dineen King, the only judge appointed to the court by a Democratic president, did not ask any questions.

This is not unheard of. Justice Clarence Thomas on the U.S. Supreme Court is well-known for almost never asking a question at oral arguments. But, given the complexity and the importance of this case, I was a bit surprised that Judge King did not jump into the fray.

Counsel for all parties did a very good job, I think, other than the DOJ. I understand that the current administration wants to get rid of the ACA, and while the DOJ generally is supposed to defend the laws of the land, the political realities and the direction given by the attorney general no doubt make the job of these career attorneys challenging.

But after the lower court opinion, the DOJ gave us two surprises, first in siding with plaintiffs’ position and the lower court’s opinion (though still making weak arguments that the entire ACA should not be struck down) and then most recently, by taking the position that the lower court’s opinion should only apply to the 18 plaintiff states and the two individual plaintiffs.

That is a change in position from that taken during the lower court proceedings. The surprise (to me, at least) at the oral arguments is that the DOJ presented little coherent reasoning for its position and was not able to articulate an answer to a question it must have known was going to be asked – how would the federal government possibly implement the ACA in some states and not others.

So, where do things go from here?

Though the judges’ questions seemed to be more favorable to the plaintiffs/appellees and perhaps more antagonistic to the intervenors, I learned long ago not to read too much into judges’ questions at oral arguments.

Sometimes those questions do point you in the direction that the judge is going to take in an opinion, but a judge may just be firming up the position they have already taken by asking the parties the questions that they have wrestled with or felt are the strongest arguments against their position to help buttress that position.

My predictions regarding the outcome still stand. I think the most likely outcome is that the 5th Circuit panel will uphold the ruling of the lower court that the individual mandate is now unconstitutional but will overturn the decision of the lower court that the individual mandate is not severable and that the entire ACA must be struck down.

If I am correct, I think that the plaintiffs will ask for a hearing en banc (for the entire 5th Circuit to hear the case and render a decision). I think they will take that approach because the 5th Circuit as a whole is more conservative than the three judges that are on this panel, and therefore plaintiffs may believe it would be more likely to uphold all of the lower court decision.

If I am mistaken and plaintiffs request review by the U.S. Supreme Court, my guess is that the Supreme Court might very well deny the request and allow the 5th Circuit opinion to stand.

If I am mistaken and the 5th Circuit upholds the lower court decision in its entirety, I believe the intervenors will appeal the case directly to the U.S. Supreme Court, and I believe the court would agree to hear the case.

The makeup of the court has changed since it last reviewed the constitutionality of the ACA, and it has become more conservative. The question then would be: Will Chief Justice John Roberts be able to save the ACA once again?

About The Author

David C. Pate, M.D., J.D., previously served as president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009 and retired in 2020. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.