National Federation of Independent Businesses v. Sebelius

PETITIONER: National Federation of Independent Businesses, et al.
RESPONDENT: Kathleen Sebelius, Secretery of Health and Human Services, et al.
LOCATION: The US Capitol

DOCKET NO.: 11-393
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Eleventh Circuit

CITATION: 567 US (2012)
GRANTED: Nov 14, 2011
ARGUED: Mar 26, 2012 / Mar 27, 2012 / Mar 28, 2012
DECIDED: Jun 28, 2012

ADVOCATES:
Donald B. Verrilli, Jr. - Solicitor General, Department of Justice, for the petitioners (Anti-Injunction Act); for the petitioners (Minimum Coverage Provision); for the respondents (Medicaid expansion)
Edwin S. Kneedler - Deputy Solicitor General, Department of Justice, for the respondents (Severability)
Gregory G. Katsas - for the respondents (Anti-Injunction Act)
H. Bartow Farr, III - for the Court-appointed amicus curiae (Severability)
Michael A. Carvin - for the respondents National Federation of Independent Business et al. (Minimum Coverage Provision)
Paul D. Clement - for the respondents Florida et al. (Minimum Coverage Provision); for the petitioners (Severability); for the petitioners (Medicaid expansion)
Robert A. Long, Jr. - for the Court-appointed amicus curiae (Anti-Injunction Act)

Facts of the case

Check out Oyez's deep-dive into the background of the Affordable Care Act cases.

Amid intense public interest, Congress passed the Patient Protection and Affordable Care Act (ACA), which became effective March 23, 2010. The ACA sought to address the fact that millions of Americans had no health insurance, yet actively participated in the health care market, consuming health care services for which they did not pay.

The ACA contained a minimum coverage provision by amending the tax code and providing an individual mandate, stipulating that by 2014, non-exempt individuals who failed to purchase and maintain a minimum level of health insurance must pay a tax penalty. The ACA also contained an expansion of Medicaid, which states had to accept in order to receive Federal funds for Medicaid, and an employer mandate to obtain health coverage for employees.

Shortly after Congress passed the ACA, Florida and 12 other states brought actions in the United States District Court for the Northern District of Florida seeking a declaration that the ACA was unconstitutional on several grounds. These states were subsequently joined by 13 additional states, the National Federation of Independent businesses, and individual plaintiffs Kaj Ahburg and Mary Brown.

The plaintiffs argued that: (1) the individual mandate exceeded Congress' enumerated powers under the Commerce Clause; (2) the Medicaid expansions were unconstitutionally coercive; and (3) the employer mandate impermissibly interfered with state sovereignty.

The District Court first addressed whether the plaintiffs had standing to bring the lawsuit. It determined that Brown had standing to challenge the minimum coverage provision because she did not have health insurance and had to make financial arrangements to ensure compliance with the provision, which would go into effect in 2014. The court further determined that Idaho and Utah had standing because each state had enacted a statute purporting to exempt their residents from the minimum coverage provision.

The court also concluded that the Anti-Injunction Act did not bar the suit.

The District Court then addressed the constitutional questions. It ruled that the individual mandate provision was not a valid exercise of Congress' commerce or taxing powers. The court held the entire act invalid because the mandate could not be severed from any other provision. The court dismissed the states' challenge to the employer mandates and granted judgment to the federal government on the Medicaid expansions, finding insufficient support for the contention that the spending legislation was unconstitutionally coercive.

A panel of the U.S. Court of Appeals for the Eleventh Circuit affirmed 2-to-1 the District Court's holdings as to the Medicaid expansions and the individual mandate. But it also reversed the District Court, holding that the individual mandate could be severed without invalidating the remainder of the ACA.

Question

  1. Is the suit brought by respondents to challenge the minimum coverage provision of the Patient Protection and Affordable Care Act barred by the Anti-Injunction Act, 2 U.S.C. 7421(a)?

  2. Does Congress have power under Article I, Section 8 of the Constitution, specifically under the Commerce Clause or the Taxing and Spending Clause, to require most Americans to purchase health insurance?

  3. Is the individual mandate severable from the ACA?

  4. Did Congress exceed its enumerated powers and violate principles of federalism when it pressured States into accepting conditions that Congress could not impose directly by threatening to withhold all federal funding under Medicaid, the single largest grant-in-aid program?

Media for National Federation of Independent Businesses v. Sebelius

Audio Transcription for Opinion Announcement - June 28, 2012 (Part 2) in National Federation of Independent Businesses v. Sebelius
Audio Transcription for Opinion Announcement - June 28, 2012 (Part 3) in National Federation of Independent Businesses v. Sebelius
Audio Transcription for Oral Argument - March 26, 2012 in National Federation of Independent Businesses v. Sebelius
Audio Transcription for Oral Argument - March 27, 2012 in National Federation of Independent Businesses v. Sebelius
Audio Transcription for Oral Argument - March 28, 2012 in National Federation of Independent Businesses v. Sebelius

Audio Transcription for Opinion Announcement - June 28, 2012 (Part 1) in National Federation of Independent Businesses v. Sebelius

John G. Roberts, Jr.:

I have the announcement in case number 11-393, National Federation of Independent Business versus Sebelius, and the related cases.

In these cases we consider claims that Congress lacked constitutional power to enact two provisions of the Patient Protection and Affordable Care Act of 2010.

The limits on government power foremost in many American's minds are likely to be affirmative restrictions such as contained in the Bill of Rights.

These are affirmative restrictions come into play however only where the government possesses authority to act in the first place.

And in our federal system, the national government possess only those limited powers the constitution assigns to it.

If no constitutional power authorizes Congress to pass a certain law, that law may not be enacted even if it would not violate any of the express prohibitions in the Bill of Rights or elsewhere in the constitution.

The first provision in issue here is often referred to as the individual mandate.

That provision requires individuals to maintain a specified level of health insurance.

For many, the mandate must be satisfied by purchasing health insurance from a private company.

Those who do not obtain the required coverage over the IRS what the Act calls, a shared responsibility of payment.

The question is whether Congress has the constitutional power to enact the individual mandate.

The government advances two arguments that it does.

First, the government contends that the constitution's Commerce Clause authorizes the mandate.

Second, the government says that Congress could enact the statute under its constitutional power to lay and collect taxes.

Turning first to the Commerce Clause.

Congress has never before attempted to use the commerce power to order individuals not engaged in commerce to buy an unwanted product.

And nothing in the text to the constitution suggests it can.

The Commerce Clause allows Congress to regulate commerce.

The power to regulate commerce presupposes the existence of commercial activity to be regulated.

Our president reflects that understanding.

As expansive as our cases construing the commerce power have been, they all have one thing in common.

They uniformly described the power as reaching activity.

It is nearly impossible to avoid the word when quoting our cases.

The individual mandate by contrast does not regulate existing activity.

It instead compels individuals to become active in commerce by purchasing a product they do not want.

The government contends that Congress can do this because the failure to purchase health insurance has a substantial effect on interstate commerce.

In particular, the government focuses on the costs that the uninsured as a group impose on the healthcare system when they need care but are unable to pay for it.

Allowing Congress to regulate individuals precisely because they do not do something however would vastly expand federal power.

People for reasons of their own often fail to do things that would be good for them or for society.

Those failures joined with the similar failures of others can have a substantial effect on interstate commerce.