Health care ruling spurs employment action, tort reform debate

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WASHINGTON – As lawyers, lawmakers and legal experts continue to digest the 193-page U.S. Supreme Court decision upholding most of the federal health care law, including its individual insurance coverage mandate, one thing is clear: the decision will make an indelible impact on the way lawmakers create law, the way many attorneys work and the legacy of Chief Justice John G. Roberts’ Court.

But more immediately, the ruling in National Federation of Independent Business v. Sebelius means that it’s time for many lawyers and their clients affected by the law to get moving quickly to prepare for its implementation next year.

The decision “brings over two years of speculation and uncertainty to a close,” said Mark S. Hedberg, a partner in the Richmond, Va., office of Hunton & Williams. “Those subject to the Act who adopted a wait-and-see attitude to implementation must now move to comply with the law’s requirements.”

In a surprising ruling, the Court rejected by 5-4 the government’s claim that Congress had the power to impose penalties on individuals who do not purchase health care coverage under the Commerce or Necessary and Proper Clauses. But an equally divided Court – with Roberts providing the crucial deciding vote – held that imposing such a measure was within federal lawmakers’ authority under the Taxing Clause, and therefore was constitutional.

“The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax,” wrote Roberts. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”

The Court also upheld the Act’s expansion of the Medicaid program, but ruled that the law may not “penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”

The decision “was a victory for people all over this country whose lives will be more secure because of this law and the Supreme Court’s decision to uphold it,” President Barack Obama said in remarks from the White House soon after the Court announced the ruling.

But GOP lawmakers assailed the ruling and vowed to knock the law down in Congress. Rep. Eric. I. Cantor, R-Va., scheduled a July 11 vote in the House to repeal the measure in its entirety.

“That way, we can clear the way towards trying to, again, focus on accomplishing a health care future that is focused on patient-centered care, lowering costs and affording better access,” Cantor said in a statement.

Though the repeal effort is not expected to get past the Democrat-controlled Senate, it signals that the debate over the law, and the Supreme Court’s approach to upholding it, will be ongoing.

Roberts ‘twistification’ saves law, gives lawmakers little guidance

While oral arguments and briefing on the constitutionality of the individual mandate focused on Congress’s power under the Commerce and Necessary and Proper Clauses, Roberts, in casting the deciding vote to uphold the measure, turned instead to lawmakers’ power under the Taxing Clause.

This approach was necessary because the Court has, Roberts wrote, “a duty to construe a statute to save it, if fairly possible.”

In doing so, Roberts avoided the kind of ruling experts said he did not want: a split decision along strict ideological lines.

Since the Court developed a reputation of having a wide ideological divide with a series of 5-4 rulings in its October 2006 term, Roberts has often expressed a desire to see more consensus among the justices. In 2007, Roberts said: “The Court functions most effectively as a judicial institution saying what the law is when it can deliver one clear and focused opinion of the Court.”

George Washington University professor of law Jeffrey Rosen said that in his health care law decision, Roberts made the “creative” move of seeking out a rationale under which he could to join the more liberal justices to preserve the mandate, and also the Court’s legacy. Rosen called Roberts’ approach legal “twistification” – a phrase invented by Thomas Jefferson to describe how Roberts’ judicial idol, Chief Justice John Marshall, allegedly finessed constitutional interpretation to achieve a desired result.

“It’s a dramatic vindication of the vision of bipartisanship that Chief Justice Roberts had expressed at the beginning of his tenure, but has had mixed results in achieving,” Rosen said. “There is no question that this was a moment of truth for John Roberts. … It reveals that Roberts really did mean what he said when he thought it would be bad for the Court to be polarized.”

But not everyone was impressed by Roberts’ approach – including the Court’s four dissenters, who cast Roberts as a judicial activist.

“[T]o say that the Individual Mandate merely imposes a tax is not to interpret the statute but to rewrite it,” states the joint dissent from Justices Antonin G. Scalia, Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito, Jr. “Judicial tax-writing is particularly troubling.”

Roberts’ approach on the mandate’s constitutionality created another odd situation: a majority opinion based on a rationale that only he joined in full. Four justices voted that the mandate was constitutional under the Commerce, Necessary and Proper and Taxing Clauses, while four voted that the measure failed under all three constitutional provisions.

As a result, “there is really no majority opinion” on the Commerce Clause issue that lawmakers can take instruction from, said Robert N. Weiner, a partner in the Washington office of Arnold & Porter and former head of the Justice Department’s litigation on the health care case. “Doctrinally, it’s not clear where that is going to lead.”

As employers prepare, tort reform debate reignites

One of the most immediate effects of the ruling is that it will spur to action employment attorneys and their clients who have yet to prepare for the law’s enforcement.

“There was a feeling among some employers that they didn’t really want to deal with the tough issues that [the law] will impose on them in 2014,” said Steven J. Friedman, chair of the employee benefits practice at Littler Mendelson in New York.

The biggest decision facing lawyers and their business clients: whether to continue to provide health care coverage to their employees or simply pay the employer mandate penalty under the law and leave workers to buy their own health insurance from state-based exchanges that offer coverage options. And that decision, Friedman said, depends on employers’ evaluation of their budgets.

“Certain employers [may] take the position that they don’t care what others are doing – that they are going to continue to offer health care no matter what,” Friedman said. “Other employers may look at the bottom line and ask themselves what they have to do to remain competitive as employers in this job market. And they may come to the conclusion [that they should] stop offering coverage, pay the penalty and save money.”

The Court’s 5-4 rejection of the government’s Commerce Clause power in this case is being hailed by the American Association for Justice, a trial lawyers’ group that says the ruling bolsters its argument that federal tort reform efforts are unconstitutional. Bills such as the House-passed H.R. 5 – which would cap non-economic damages in medical and other health-related negligence cases at $250,000, cut contingency fees paid to attorneys, limit punitive damages and allow courts to require periodic payments of damage awards –  have been introduced, citing lawmakers’ Commerce Clause authority.

“It’s an indirect way to use the Commerce Clause [to alter] patients’ legal rights under state law,” said Jennie Rasmussen, AAJ’s federal relations counsel. “If Congress cannot mandate health care coverage under Commerce Clause authority, I can’t see how they [can] justify a federal takeover of state tort law.”