Originally published on Forbes.com.
Doctor Larry Kawa, a Florida orthodontist, was gearing up for the employer mandate under the Patient Protection and Affordable Care Act (ACA), also known as Obamacare. In an interview he indicated that his company had spent around five grand in legal fees. Then the administration kicked the can down the road delaying implementation. So he sued, which is where it gets just a little bit confusing to me.
Kicking The Can Down The Road
When I read the Eleventh Circuit’s decision in Kawa Orthodontics LLP v US Department of Treasury et. al., it struck me as kind of frivolous. I can’t tell you how many times I’ve gotten geared up for a change only to have it deferred, so the grievance stated at the opening of the decision struck me as rather odd.
The “employer mandate” provisions of the Patient Protection and Affordable Care Act (ACA) require certain employers to offer their employees health insurance that meets statutorily-specified minimum requirements. The ACA imposes reporting obligations on those employers and provides for the assessment of a tax penalty if an employer fails to provide adequate insurance.
Between early 2013 and the end of June 2013, Kawa Orthodontics, LLP (Kawa) expended time and money to determine how to comply with the employer mandate. After Kawa incurred these expenses, on July 2, 2013, the U.S. Department of the Treasury (Treasury) announced it would not enforce the mandate for a transition period of one year—until the end of 2014. Treasury later extended the transition relief for certain employers, including Kawa, for a second year.
If I were Doctor Kawa I would have been annoyed at the lawyer I spent five grand on, since it really does not cost that much to tell somebody to wait and see. So I figured there must be more to the story. There is.
Judicial Watch
It turns out the lawsuit was being backed by a group called Judicial Watch and their concern is more with constitutional issues than Doctor Kawa’s annoyance at being punished for being proactive. Judicial Watch is a pretty substantial 501(c)(3) organization. According to its 2012 From 990, it grossed over $20 million. Its mission is:
To promote integrity, transparency and accountability in government and fidelity to the rule of law through public advocacy, litigation and monitoring and investigating federal, state and local government entities and officials, among other activities.
In the program service accomplishments section of the 990, it states:
Since its inception in 1994, Judicial Watch has prosecuted or defended hundreds of lawsuits in furtherance of its public interest mission and obtained many noteworthy successes.
Judicial Watch and Doctor Kawa explained why they were suing in a press conference in October 2013.
“We obviously object to the employer mandate and the entire Obamacare law, but we understand that, under the U.S. Constitution, the law can only be changed by legislation passed by Congress and signed by the president. President Obama would delay the damage of his health care scheme until after the 2014 congressional elections. But politics do not trump the Constitution or the rule of law,” stated Judicial Watch President Tom Fitton. “And to paraphrase Ulysses S. Grant, the best way to ensure the repeal of a bad law is to enforce it vigorously.”
“I am tired of Washington, DC, picking winners and losers and giving preferential treatment to those inside the Beltway. This is just more of DC career politicians protecting their own,” said Dr. Larry Kawa of Kawa Orthodontics.
To establish Article III standing, a plaintiff must show “(1) an injury in fact that is concrete, particularized, and either actual or imminent; (2) a causal connection between the injury and the conduct complained of; and (3) a likelihood that a favorable judicial decision will redress the injury.
Orthodontics Under The Sea
Doctor Kawa has become something of an activist. In January 2014 he gave his own State of the Union speech in which he passionately argues against executive overreach.
In case your wondering about the background in that speech, patients at Kawa Orthodontics have the stress of treatment eased by an undersea theme that includes eleven aquariums. He was even featured on a reality show called Fish Tank Kings.
Standing
So this was one of those “It’s the principle the of thing” type of cases. It bears comparison with the Freedom From Religion Foundations recent unsuccessful assault on the parsonage exclusion which allows the mega pastors of mega churches to exclude hundreds of thousands of housing allowance dollars from their taxable income. The thing is cases like that don’t do too well, because that is not what courts are for. There is pretty lawyerly concept known as standing, which is what this case got knocked out on.
To establish Article III standing, a plaintiff must show “(1) an injury in fact that is concrete, particularized, and either actual or imminent; (2) a causal connection between the injury and the conduct complained of; and (3) a likelihood that a favorable judicial decision will redress the injury.
In other words if the President does something unconstitutional you might not be able to get a judge interested unless he did it to you and there is something the judge could order that would make it better.
The Court did not see how it was that Doctor Kawa had been harmed.
Therefore, as set out in its complaint, Kawa’s bare allegation that it has lost the “value of the time and resources it expended in 2013” sets out an injury that is too abstract and indefinite to confer Article III standing, particularly because the substantive requirements for complying with the employer mandate remain unchanged and Kawa is still subject to them.
A dissenting judge had pointed out that Doctor Kawa was out the interest he could have earned on the five grand over two years. I guess that might have amounted to something back when money still earned interest. That had not been mentioned in the claim. And really, you shouldn’t be in court over something that could be settled with maybe a steak dinner.
And even if he had been harmed, the Court did not see how the order he was requesting to prevent the administration from kicking the can down the road would make him any better off.
The consequence of granting the requested relief would be to simply subject Kawa and other employers to the employer mandate tax penalties and reporting requirements. Kawa has not explained how Treasury’s enforcement of tax penalties and reporting requirements would put Kawa in any different position than Kawa is currently in now, or how the requested relief will or could increase the value of the resources Kawa expended.
What’s Next?
I was going to try to score how Judicial Watch has been doing on Obamacare litigation, but from looking at their website,that would be quite a project. It seems that non-partisan Judicial Watch tends to find more nefarious things being done by Democrats than by Republicans, but that is not that unusual. I’m not sure that they really wanted to win this case. Rather it was more to make a point.
As for Doctor Kawa, it looks to me like he really knows how to run a dental practice, and as the last person to become a partner in Joseph B. Cohan and associates in Worcester Mass, I have a feel about such things. Our dental accounting practice spun out of a successor firm, but it is still going strong as Rosen & Associates in Westborough, Mass. The media coverage on Doctor Kawa makes me think that he may be moving more and more from dentistry into a political career. If he were to head for Congress, he would not be its first dentist, Mike Simpson of Idaho was first elected in 1988 and he’ll be joined by Brian Babin of Texas and Paul Gosar of Arizona in January. He might be the first orthodontist, but confirming that is a project for another day.