Originally published on Forbes.com Sept 30th, 2014
Opponents of the Patient Protection and Affordable Care Act (ObamaCare) have rung up a win in the United States District Court for the Eastern District of Oklahoma in the case titled Pruitt V Burwell. (Scott Pruitt is the Attorney General of Oklahoma and Sylvia Matthews Burwell is the United States Secretary of Health and Human Services) The decision concerns the propriety of an IRS ruling that allows federal subsidies in the form of tax credits to taxpayers in states that have not established exchanges. The credits tie into the employer mandate portion of ACA since the employer mandate is triggered by the payment or allowance of an “applicable premium tax credit”.
If a state chose to not set up an exchange, as was the case with Oklahoma, among many others, HHS stepped in and set up one for them. The IRS ruled that for purposes of the credit it did not matter whether the exchange was run by a state or HHS. The language in the statute, however, reads that the credit applies when someone is “enrolled … through an exchange established by the State”. Following that logic taxpayers in states with HHS exchanges do not qualify for the credit and hence there is no employer mandate.
This argument recently lost in the Seventh Circuit, but there the plaintiffs had been knocked out on standing. The Fourth Circuit and the DC Circuit both got to the merits of the issue according to this story reaching opposite conclusions. Apparently the full panel of the DC Circuit will be taking another look. I don’t know about you, but I’m having trouble keeping score. Oklahoma is in the Tenth Circuit, by the way.
The Decision
I don’t have much sympathy for the “Obamacare is the work of Satan crowd” and really wish that people who want to tear it down would propose something else to replace it first, so I’m not exactly cheering about his decision and rooting for it to be sustained. On the other hand, I have an intellectual appreciation for it. Reilly’s first law of tax planning is “It is what it is. Deal with it.” and that is the essence of this decision. Here are some of the good bits. (Citations not included)
Of course, a proper legal decision is not a matter of the court “helping” one side or the other. A lawsuit challenging a federal regulation is a commonplace occurence in the country, not an affront to judicial dignity. A higher-profile case results in greater scrutiny of the decision which is understandable and appropriate. …
This is a case of statutory interpretation. The text is what it is no matter which side benefits. Such a case does not “gut” or “destroy” anything. On the contrary, the court is upholding the Act as written. Congress is free to amend the ACA to provide for tax credits in both state and federal exchanges, if that is the legislative will. …
It is a core administrative-law principle that an agency may not rewrite clear statutory terms to suits its own sense of how the statute operates. …
The role of this Court is to apply the statute as it is written – even if we think some other approach might accord with good policy….
The Court has no roving license, in even in ordinary cases of statutory interpretation, to disregard clear language simply on the view that Congress must have intended something broader. …
Courts, out of respect for their limited role in tripartite government, should not try to rewrite legislative compromises to create a more coherent, more rational statute. …
But If You Are Not A Constitutional Purist?
I have to wonder what I would think if I lived in Oklahoma and otherwise qualified for a credit and realized my Attorney General was going to federal court to prevent me from getting one. It does seem just a little odd. I guess they’ve got that waving wheat that can sure smell sweet, and don’t need any stinking federal health care credits.
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