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.


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with State defined to by that statute to mean the 50 States plus D.C.)

HAHA …they don’t even know how many states we have
/Hussein

burrata on September 30, 2014 at 3:28 PM

Bwahahahahahahaha!

Feel the burn, fascists. And thank you for your sanity, Federal District Judge Ronald A. White.

AZCoyote on September 30, 2014 at 3:29 PM

From “Hope and Change” to nope on exchange.

Flange on September 30, 2014 at 3:31 PM

Will Roberts redeem himself if/when this goes to the Supreme Court?

Doughboy on September 30, 2014 at 3:31 PM

Fairly refreshing to read something where a judge is acting as the impartial agent they are supposed to be.

ConDem on September 30, 2014 at 3:33 PM

Now, there’s a Judge.

trigon on September 30, 2014 at 3:36 PM

Democrats will become the party most eager to repeal ObumbleCare if this decision stands.

MTF on September 30, 2014 at 3:38 PM

Ron White was also reported to have said of some courts “You can teach ignorance, but you can’t fix stupid.”

May have been a different Ron White, but it would have been just as true.

BKennedy on September 30, 2014 at 3:39 PM

Fairly refreshing to read something where a judge is acting as the impartial agent they are supposed to be.

ConDem on September 30, 2014 at 3:33 PM

Now, there’s a Judge.

trigon on September 30, 2014 at 3:36 PM

My reaction as well. :)

Anti-ControI on September 30, 2014 at 3:39 PM

Ronald White for SCOTUS!!!!

Bitter Clinger on September 30, 2014 at 3:40 PM

It depends on what the meaning of ” stste” is
/the first black Constitutional Law professor in US history

burrata on September 30, 2014 at 3:41 PM

The scary thing here is that the actual law means nothing to democrat judges. Bet King Barry fudgepacks that circuit court stat.

ConstantineXI on September 30, 2014 at 3:41 PM

It depends on what the meaning of ” state” is

/the first black Constitutional Law professor in US history

burrata on September 30, 2014 at 3:42 PM

Is there any chance scotus would dump the act wholesale, best case scenario? It’d be nice if they handed congress a pocket veto of sorts with a stay on full repeal if the language doesn’t get cleaned up by a certain date. Might take some heat off of the supremes while just letting the law expire. It’d certainly be an Obama-esque way of putting this law out to pasture. “We didn’t strike it down – Congress, we gave you an opportunity to fix it!” -SCOTUS

crrr6 on September 30, 2014 at 3:44 PM

Can we trade away Noah Rothman for Gabe Malor as regular HA poster?

Bitter Clinger on September 30, 2014 at 3:44 PM

with State defined to by that statute to mean the 50 States plus D.C.

You know, after seeing that, something occurred to me, and I went and looked up the text of the statute.

The Affordable Care Act actually defines “state” specifically as “each
of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa.”

So… what happens if we add a new state? Since the law specifically says it applies to the FIFTY states, not merely “all” states or somesuch, wouldn’t that mean none of it applies to a 51st state?

Shump on September 30, 2014 at 3:46 PM

“We didn’t strike it down – Congress, we gave you an opportunity to fix it!” -SCOTUS

crrr6 on September 30, 2014 at 3:44 PM

Leave it to the RINO stooges in Congress to say “hey, we can fix it!!”.

Bitter Clinger on September 30, 2014 at 3:46 PM

“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.

How do you argue against that? What could it possibly be?

“Yeah, but thats not what they meant”

BobMbx on September 30, 2014 at 3:46 PM

You know, after seeing that, something occurred to me, and I went and looked up the text of the statute.

The Affordable Care Act actually defines “state” specifically as “each
of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa.”

So… what happens if we add a new state? Since the law specifically says it applies to the FIFTY states, not merely “all” states or somesuch, wouldn’t that mean none of it applies to a 51st state?

Shump on September 30, 2014 at 3:46 PM

Probably only if the 51st state didn’t come from the list in the preceding paragraph. Marshall Islands??

Bitter Clinger on September 30, 2014 at 3:49 PM

This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed life-tenured judges.”

The Wide latina disagrees !

burrata on September 30, 2014 at 3:49 PM

Ronald A. White was appointed to the federal bench by George W. Bush, so clearly this is . . .(say it with me) Buuuuush’s fault!

AZCoyote on September 30, 2014 at 3:50 PM

On the contrary, the court is upholding the Act as written.

Damn right. It would be impossible to make something more clear:

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

Any judge that decides that it says something else for political reasons is unfit to be on the bench. It’s lawlessness. Anarcho-tyranny.

forest on September 30, 2014 at 3:51 PM

Go Scott Pruitt!

22044 on September 30, 2014 at 3:53 PM

but it would also end the employer mandate in any state that did not establish its own healthcare exchange.

We will not see the employer mandate in action until way after Obama leaves office. That puppy is weapons grade radioactive and we will see almost every employer provided or subsidized Health Insurance policy cancelled if/when it goes into effect.

Johnnyreb on September 30, 2014 at 3:55 PM

BTW , now that the decision has been passed , has Piglosi found out what is in it ?

burrata on September 30, 2014 at 3:55 PM

… it would also end the employer mandate in any state that did not establish its own healthcare exchange.

can anyone explain this assertion? this is the first i’ve heard that this decision would also abolish the employer mandate. do companies have to buy their insurance through exchanges?

dbilly76 on September 30, 2014 at 3:56 PM

What’s the soonest the SCOTUS can take this up? Next year?

HondaV65 on September 30, 2014 at 3:59 PM

Can we trade away Noah Rothman for Gabe Malor as regular HA poster?

Bitter Clinger on September 30, 2014 at 3:44 PM

I second that motion.

Flange on September 30, 2014 at 3:59 PM

Can we trade away Noah Rothman for Gabe Malor as regular HA poster?

Bitter Clinger on September 30, 2014 at 3:44 PM
I second that motion.

Flange on September 30, 2014 at 3:59 PM

THIRD!!!

HondaV65 on September 30, 2014 at 4:00 PM

The Kurds are begging for arms. The administration has not only refused to send arms, but is exerting pressure both on our NATO allies and on Israel not to send any either. Over 150,000 Kurds have fled their homes to try to escape to Turkey, but they are being blocked at the border by Turkish troops. Meanwhile, Turkey is allowing Islamist reinforcements to enter Syria to join the Islamic State, while Islamist elements of the Free Syrian Army, funded and armed by the United States, have joined forces with the group in the genocidal assault on the Kurdish enclave.

According to Kurdish sources, the Turks are massing troops on their own side of the border, with the apparent plan being to sit in place and allow the Kurds to be exterminated, and then move in to take over the region once they are gone. This is the same plan as Josef Stalin used when he allowed the Nazis to wipe out the Polish underground during the Warsaw rising of 1944, and only afterward sent in the Red Army to take control of what was left of the city. If anything, it is even more morally reprehensible, since it could be pointed out in Stalin’s defense that his forces were at least pummeling the enemy elsewhere while the Warsaw fight was under way. In contrast, the Turks are doing nothing of the sort. For an American [Obama] administration to collude in such a mass atrocity is infamous.
It would appear that Herr Obama and his good friend Herr Erdogen are trapping the Kurds, men, women and children, so as many of them can be exterminated as possible. Visions of the Christian Armenian genocide must be dancing in both their heads.

Obama, Erdogen and the Saudi King: The Axis of Evil.

Is there no longer a single general in the entire U.S. Military who will resign in protest of Obama’s utter depravity? Is there not a one with any honor at all?

VorDaj on September 30, 2014 at 4:03 PM

“Gut?” “Effectively destroy?” My, since when did Congress lose its power of legislative amendment? If Congress muddled the extent of tax credits and employer mandates, there’s a fairly straight forward method by which Congress can unmuddle it. Unless, of course, by Congress the Democrat judges siding with the IRS rule mean Democrat Congress. Which they couldn’t possibly mean, being impartial arbiters of the law and all.

Barnestormer on September 30, 2014 at 4:04 PM

What’s the soonest the SCOTUS can take this up? Next year?

HondaV65 on September 30, 2014 at 3:59 PM

I’m no “legal beagle” so I’m just taking a wild WAG, but……I would imagine next year since the DC Circuit still has to re-hear its case en banc and Judge White’s decision will no doubt be appealed by the Obama administration.

Bitter Clinger on September 30, 2014 at 4:06 PM

HAHA …they don’t even know how many states we have
/Hussein

burrata on September 30, 2014 at 3:28 PM

You know, I’m tired of people using that 57 state thing to claim Obama is a moron. That quote is taken out of context.

He said he’s been in 57 states, with one left to go, and Hawaii and Alaska he was not allowed to go to.

So Obama believes there are 60 states, not 57.

Get it right, folks.

The Rogue Tomato on September 30, 2014 at 4:07 PM

Yeah, but the Comrade in Chief still has a phone and a pen, so: no big, amirite?

orangemtl on September 30, 2014 at 4:09 PM

Excellent post Gabe

workingclass artist on September 30, 2014 at 4:10 PM

States need to start challenging every federal statute on the books that isn’t constitutionally authorized. Clog ever federal court and deny authority until SCOTUS has ruled against. The revamp the state statute and force the feds to challenge through the same process. Until the states stand up for their and our rights the fed will only continue to grow and become more intrusive.

smitty41 on September 30, 2014 at 4:13 PM

Ronald A. White was appointed to the federal bench by George W. Bush, so clearly this is . . .(say it with me) Buuuuush’s fault!

AZCoyote on September 30, 2014 at 3:50 PM

Yup, obviously an Activist Judge.

Del Dolemonte on September 30, 2014 at 4:13 PM

Pesky text always getting in the way. Nice to see we still have one branch of government with some distance between their heads and their backsides.

alchemist19 on September 30, 2014 at 4:13 PM

Can we trade away Noah Rothman for Gabe Malor as regular HA poster?

Bitter Clinger on September 30, 2014 at 3:44 PM
I second that motion.

Flange on September 30, 2014 at 3:59 PM

THIRD!!!

HondaV65 on September 30, 2014 at 4:00 PM

Motion carried…

bimmcorp on September 30, 2014 at 4:16 PM

“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.

How do you argue against that? What could it possibly be?

“Yeah, but thats not what they meant”

BobMbx on September 30, 2014 at 3:46 PM

The usual fix for this type of situation is for the legislature to amend the law to reflect what they intended, but that’s not possible now that the composition of congress has changed as well as the politics of the whole scenario. Sucks to have checks and balances.

AcidReflux on September 30, 2014 at 4:20 PM

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. . . “

This apocalyptic language is only true if the constitutionality of the entire law were being challenged and the judge(s) were throwing out the entire law. That is not the case.

These challenges are to specific wording in the law, that if applied as written would essentially gut the newly interpreted intention of the law that is the opposite of the documented intention of the law as written at the time of passage. The key being, as written. Congress is the sole governmental body with the authority to change the as written part.

Intentions need not be considered when there is no ambiguity in the language or statute. It is there, in plain English.

This judge is correct and anyone if this does fall at the Supreme Court, it is not the judges or the challengers to the implementation of the IRS rule that “gut” the law. It would be the inaction of Congress in changing the law that would ultimately be “gutting” the law.

airupthere on September 30, 2014 at 4:23 PM

The usual fix for this type of situation is for the legislature to amend the law to reflect what they intended, but that’s not possible now that the composition of congress has changed as well as the politics of the whole scenario. Sucks to have checks and balances.

AcidReflux on September 30, 2014 at 4:20 PM

The intention of the law has changed since passage.
There are numerous documented public statements by one of the architects that the subsidy issue was intended to pressure states into creating exchanges prior to passage of the law.

The fact that states have actually refused to create exchanges since the law was passed has made Democrats change the “intentions” of the law. It is pure politics and needs to go back to Congress.

airupthere on September 30, 2014 at 4:25 PM

Any judge that decides that it says something else for political reasons is unfit to be on the bench. It’s lawlessness. Anarcho-tyranny.

forest on September 30, 2014 at 3:51 PM

True, very true, but Zero has been stocking the bench with anarchy-terrorists for close to six years. We need to find a way around them. Impeachment for the most blatant ones is the best way, but we must capture the Senate for that to work.

yesiamapirate on September 30, 2014 at 4:26 PM

MOAR GABE! Really enjoy his writing. A good add to Hot Air.

BJ* on September 30, 2014 at 4:29 PM

Hope springs eternal.

filetandrelease on September 30, 2014 at 4:33 PM

Here’s the Wiki article on Judge White. He’s younger than me!

Ward Cleaver on September 30, 2014 at 4:35 PM

There are btw. 11-20 million illegals on obama’care’, illegally.

Strike that too.

Schadenfreude on September 30, 2014 at 4:40 PM

I hope that the next GOP president has an opening to put this judge on SCOTUS.

Imagine a level-headed justice ruling on the merits of a case.

txdoc on September 30, 2014 at 4:43 PM

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.

Obama and Reid have poisoned the DC Circuit with the appointments of ideological partisan hacks who will happily pervert jurisprudence in service to progressive political agendas. The Supreme Court will be kept busy undoing the damage the DC Circuit will do going forward.

novaculus on September 30, 2014 at 5:06 PM

Btw, not often do we see a HotAir post (at least that I’ve read) with

btw

in it.

Well done, Gabe.

drewwerd on September 30, 2014 at 5:21 PM

Can we trade away Noah Rothman for Gabe Malor as regular HA poster?

Bitter Clinger on September 30, 2014 at 3:44 PM

I second that motion.

Flange on September 30, 2014 at 3:59 PM

THIRD!!!

HondaV65 on September 30, 2014 at 4:00 PM

Motion carried…

bimmcorp on September 30, 2014 at 4:16 PM

If needed, this is worth adding a first round draft pick to sweeten the deal.

Would be an interesting conversation as someone notifies Noah he was just DFA’ed…

[DFA = Designated for Assignment. Either released to free agency or assigned to the minor league farm team for more ‘seasoning’…]

Athos on September 30, 2014 at 5:23 PM

“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 this is precisely why Obama’s top minion in the Senate tossed the filibuster, to get ignorant judges like these on the bench to protect his signature legislation and his unabashed lawlessness. This alone should motivate every single conservative to show up at the polls in November. We must stop Obama and Reid from damaging our nation more than they have already.

ncconservative on September 30, 2014 at 5:38 PM

What’s the soonest the SCOTUS can take this up? Next year?

HondaV65 on September 30, 2014 at 3:59 PM

This term. There is a petition for cert from the Fourth Circuit pending. The Fourth Circuit found that “state” meant the feds, too. There was a split with DC until the DC court granted reargument.

While a circuit split is a reason for taking cert, it is not a requirement.

SCOTUS can take something if four justices vote to because they think all the circuits might be wrong.

Wethal on September 30, 2014 at 5:47 PM

… it would also end the employer mandate in any state that did not establish its own healthcare exchange.

can anyone explain this assertion? this is the first i’ve heard that this decision would also abolish the employer mandate. do companies have to buy their insurance through exchanges?

dbilly76 on September 30, 2014 at 3:56 PM

I’ve seen that same assertion in various posts. While I’ll happily defer to the experts, my quick and dirty research suggests that the assertion is inaccurate. The “employer mandate” (imposition of the “shared responsibility assessment”) occurs when a large employer fails to provide qualified health coverage to any employee for/to whom an applicable premium tax credit or cost-sharing reduction is allowed or paid…. ( See 26 U.S. Code Sec. 4980(H)(a))

Thus, it would appear that striking down the employee tax benefit in federal exchange states could liberate some large employers from the mandate/assessment, but only if such employers employed NO OTHER employees entitled to the tax benefit as a result of residing in a state exchange state. And note that employment of a single tax benefit-eligible employee triggers an assessment against a non-compliant employer determined by the number of ALL full time employees employed during the applicable period, presumably including those employees residing in federal exchange states.

Barnestormer on September 30, 2014 at 5:48 PM

Judge White delivers a cold douche to his lefty colleagues on the federal bench. Bravo!

will77jeff on September 30, 2014 at 6:01 PM

Gabe, you ungrateful loaf od bread.

stldave on September 30, 2014 at 6:17 PM

Who knew Judges can read???

landlines on September 30, 2014 at 6:18 PM

As Joe Biden would say : Three words.

Justice Roberts.

CW on September 30, 2014 at 6:41 PM

HEY ERIC HOLDER…HOW DOES IT FEEL TO CONSTANTLY LOSE IN COURT..?? BYE BYE JACK(PETARD)..!!

Pelosi Schmelosi on September 30, 2014 at 7:00 PM

… it would also end the employer mandate in any state that did not establish its own healthcare exchange.

can anyone explain this assertion? this is the first i’ve heard that this decision would also abolish the employer mandate. do companies have to buy their insurance through exchanges?

dbilly76 on September 30, 2014 at 3:56 PM

This is probably a bit simplified, but the way I heard it explained when this case was first filed is that if your state did not establish its own exchange, then businesses did not have to comply with the mandates in that state. It was presented as a reason for businesses to relocate to states that did not have a state exchange. Similar to the tax inversions where the business can avoid corporate taxes by relocating its HQ oversees, a business can avoid some healthcare mandates by relocating to a state that doesn’t have a state exchange.

We all should be thanking those red state governors.

monalisa on September 30, 2014 at 7:22 PM

… it would also end the employer mandate in any state that did not establish its own healthcare exchange.

can anyone explain this assertion? this is the first i’ve heard that this decision would also abolish the employer mandate. do companies have to buy their insurance through exchanges?

dbilly76 on September 30, 2014 at 3:56 PM

This is probably a bit simplified, but the way I heard it explained when this case was first filed is that if your state did not establish its own exchange, then businesses did not have to comply with the mandates in that state. It was presented as a reason for businesses to relocate to states that did not have a state exchange. Similar to the tax inversions where the business can avoid corporate taxes by relocating its HQ oversees, a business can avoid some healthcare mandates by relocating to a state that doesn’t have a state exchange.

We all should be thanking those red state governors.

monalisa on September 30, 2014 at 7:22 PM

Excellent recall, I believe you are correct.

slickwillie2001 on September 30, 2014 at 7:52 PM

Just wanted to throw my vote on the “can Rothman” pile.

a5minmajor on September 30, 2014 at 8:22 PM

♥ Gabe

RushBaby on September 30, 2014 at 9:43 PM

Full repeal is the final solution to this problem.

Amazingoly on October 1, 2014 at 8:17 AM

There is a slippery slope that is easy to descend with the interpretation of law in this case.

I always like to put the “shoe on the other foot” before judging “fairness” instead of fact.

Imagine the possible interpretations of plain text law that could easily be perverted by those with whom you disagree, should the “missing” language be filled in by them instead of you.

The reality is that passing “a bill before your find out what’s in it” is just plain bad policy. To paraphrase Forest Gump:
Hasty law “is like a box of chocolates, you never know what you’re going to get”

J_Crater on October 1, 2014 at 9:22 AM

Will Roberts redeem himself if/when this goes to the Supreme Court?

Doughboy on September 30, 2014 at 3:31 PM

Still scratching my head over the ruling, but perhaps this is what he had in mind.

cheeflo on October 1, 2014 at 4:12 PM