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Justice Department to Appeal Decision Invalidating Core Provision In Health-Care Overhaul

Source: WSJ

Posted on 15 Dec 2010

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After a federal district judge in Richmond, Virginia ruled that Congress lacked authority to compel individuals to carry health coverage, the Justice Department on Tuesday said it would appeal this decision, which invalidates a core provision of the federal health-care overhaul.

Should the ruling be ultimately upheld, the decision would undercut a core feature of the national insurance market envisioned by the Patient Protection and Affordable Care Act.

The Obama administration is also bracing for a possible setback in Pensacola, Florida, as a federal district judge there is set to hear a challenge to the law brought by a group of mostly Republican state attorneys general and governors. Arguments in that case are set for Thursday.

The government has prevailed in other cases challenging the act. Plaintiffs opposed to the law who lost at federal district courts in Detroit, Lynchburg, Virginia., and elsewhere already have filed their own appeals.

While some lawsuits come on stronger ground than others—many have been dismissed because judges said the plaintiffs lacked legal standing to sue—the cases likely will bring the most serious judicial review of the congressional power to regulate commerce since federal civil-rights laws based on that authority were challenged in the 1960s.

The coming appellate decisions will tee up the issues for the Supreme Court—where, to the extent it can be handicapped, the pivotal votes likely belong to Chief Justice John Roberts and Justice Anthony Kennedy.

Although the lawsuits raise a variety of issues, the cases boil down to a dispute over congressional power to regulate interstate commerce.

Supreme Court precedents dating to the 1930s and '40s have held that the Constitution envisions federal management of the national economy, and that complex regulatory schemes—such as production quotas that prop up commodity prices by limiting what farmers can grow—fall within congressional discretion.

The Constitution limits federal power to specific areas, but the Supreme Court has interpreted the Commerce Clause broadly, and Congress has relied on the court's precedents to enact laws that prohibit racial discrimination in hotels and restaurants, protect endangered species and provide employees family and medical leave.

Challengers say the Affordable Care Act mandate to carry health coverage or pay a penalty expands the commerce power to encompass the antithesis of commerce—the refusal to buy a product, in this case insurance.

The government asserts that its power to regulate the insurance market extends to regulation necessary to keep the industry viable—and that means establishing a risk pool with near-universal participation.

Today, as was true during the New Deal era, Democrats generally have supported federal economic regulation while Republicans have opposed it. On the Supreme Court, that has translated to a liberal wing that has upheld virtually every expression of Congress's commerce power and conservatives who have sought in some instances to pare it back.

But earlier this year, Chief Justice Roberts joined the court's liberals in an expansive reading of congressional authority under the constitutional provision that authorizes all legislation "necessary and proper" to exercise federal power.

Justice Stephen Breyer, drawing on earlier opinions, wrote for the court that the Necessary and Proper Clause gives Congress "broad power to enact laws that are 'convenient, or useful' or 'conducive' " to carrying out the narrower specific powers the Constitution gives Congress.

In other words, he wrote, Congress could take any steps "rationally related" to its enumerated powers.

Justice Kennedy wrote a separate opinion taking a narrower view of the Necessary and Proper Clause. In the Commerce Clause context, he wrote, the "precedents require a tangible link to commerce, not a mere conceivable rational relation."

Before attorneys begin gaming the Supreme Court strategy, they face intermediate battles at the federal appeals courts. The most serious challenges have been filed in the judicial circuits whose judges skew to the right, said Gregory Garre, who served as solicitor general in the George W. Bush administration.

"If you had to handicap it, the Fourth and the 11th Circuits would be the most friendly to the challengers," said Mr. Garre.

The Fourth U.S. Circuit Court of Appeals, in Richmond, will hear appeals from Monday's ruling against the government, along with an appeal from a separate decision in November, in which a federal district judge in Lynchburg, Va., upheld the Affordable Care Act.

The 11th Circuit, in Atlanta, would hear an appeal from the Florida decision.

But a circuit's ideological leanings don't guarantee an outcome, because appeals are heard by three-judge panels randomly drawn from the entire court.