Another federal court strikes Obamacare subsidies on federal exchanges
posted at 3:21 pm on September 30, 2014 by Gabriel Malor
When last we left this line of cases, the Democrat-packed D.C. Circuit Court of Appeals had just vacated the decision in Halbig v. Burwell that struck down subsidies on the federal Obamacare exchanges. The D.C. Circuit decided that it would rehear the case en banc, something largely perceived as merely a partisan delay of the issue. That left just King v. Burwell out of the Fourth Circuit, and that decision upheld the IRS rule expanding subsidies.
Well, another federal court finally chimed in (there’s a fourth still pending in Indiana). A district court in Oklahoma struck down the IRS rule providing federal subsidies in the case of Pruitt v. Burwell. You can read the decision here. Scott Pruitt, the Oklahoma attorney general, sued on behalf of the state, individuals, and employers to block the IRS rule, which the plaintiffs in all three cases contend was issued by IRS in violation of the law.
Like the now-vacated decision in Halbig, the judge in Pruitt could not find any statutory authority for IRS to offer tax subsidies to individuals that purchased insurance on the federal exchanges. And, unlike the court in King, the judge in Pruitt does not find that “wiggle room” (his term, no joke) to find the statute ambiguous enough to approve the IRS rulemaking.
In short, the judge concluded that when the Obamacare statute says “Exchanges established by the State” (with State defined to by that statute to mean the 50 States plus D.C.) it means only what it says and not additionally “Exchanges established by the federal government.” He took a swipe at speak-o prone Obamacare architect Jonathan Gruber along the way.
But why the district court came to its conclusion isn’t as interesting as how. This judge took an unusually combative view of the hysteria demonstrated by the circuit court judges who upheld the IRS rule. Here he is, recounting the prior decisions (internal citations removed):
Other judges in similar litigation have cast the plaintiffs’ argument in apocalyptic language. The first sentence of Judge Edwards’ dissent in Halbig is as follows: “This case is about Appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act (‘ACA’).” Concurring in King, Judge Davis states that “[a]ppellants’ approach would effectively destroy the statute . . . .” Further, “[w]hat [appellants] may not do is rely on our help to deny to millions of Americans desperately-needed health insurance. . . “
And then he lays down some judicial wisdom (again, internal cites removed and emphasis below is the court’s):
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 occurrence in this country, not an affront to judicial dignity. A higher-profile case results in greater scrutiny of the decision, which is understandable and appropriate. “[H]igh as those stakes are, the principle of legislative supremacy that guides us is higher still. . . This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed life-tenured judges.”
This is a case of statutory interpretation. “The text is what it is, no matter which side benefits.” Such a case (even if affirmed on the inevitable appeal) does not “gut” or “destroy” anything. On the contrary, the court is upholding the Act as written.
As I remarked on Twitter, it’s rare for a district court to chide other judges like that. Let’s be honest, though, this is a pretty rare case. It would not only bring the Obamacare subsidies to a halt in most states, but it would also end the employer mandate in any state that did not establish its own healthcare exchange. That’s the ball game for Obamacare, which is why partisans are getting so screechy about this case. This is another example, btw, where Obamacare supporters started by laughing off the lawsuit and slowly realized that perhaps things weren’t so funny after all.
Where does this leave us? Well, this decision is likely headed to appeal at the 10th Circuit, which could take a while. Now that the Halbig decision has been vacated, there is technically no circuit split on this issue with which to make Supreme Court review more certain. But, as I remarked to Ace, I don’t expect the Supreme Court to wait for a circuit split in this case. Not with the D.C. Circuit playing obviously partisan games, and not when it takes only four votes (the NFIB dissenters, perhaps) to accept a case for review.