Michael Carvin of Jones Day (Photo by Diego Radzinschi)
For the last three years, Michael Carvin of Jones Day and other conservative advocates have laid the groundwork for a constitutional challenge to the subsidies at the heart of the Affordable Care Act. Their campaign has been partly eclipsed in the media by cases like Hobby Lobby v. Burwell. But on Tuesday it shot to the forefront of the fight over Obamacare in a big way.
In a 2-1 decision in Halbig v. Burwell, the U.S. Court of Appeals for the D.C. Circuit ruled that the government can’t offer subsidies in the form of tax credits to individuals who buy health insurance on federally facilitated exchanges. Reversing the lower court, the majority found that the plain language of the ACA suggests Congress only authorized tax credits for insurance purchased on state-run exchanges. Only 14 states and the District of Columbia have implemented their own exchanges, so the ruling threatens subsidies that make health insurance under the ACA affordable to citizens of 36 states.
In a strange turn of events, the Fourth Circuit ruled just hours later in King v. Burwell that the ACA subsidies are constitutional. (As one journalist put it, “This has got to be the first time I’ve experienced a circuit split occurring the same day.”) In the Fourth Circuit’s view, a comprehensive reading of the ACA and its legislative history suggests that the government has the discretion to offer subsidies in all 50 states. But the court conceded that “a literal reading of the statute undoubtedly accords more closely” with the D.C. Circuit’s position.
Carvin is counsel of record in both Halbig and King, and handled the oral arguments in both cases. His clients are conservative-minded individuals who don’t want to be forced to purchase comprehensive health insurance. The Competitive Enterprise Institute is footing Carvin’s bills and coordinating the litigation. CEI is also funding two similar appeals that are in their early stages.
Carvin was a natural choice for the role, having coargued with Bancroft’s Paul Clement a prior challenge to the ACA at the U.S. Supreme Court in 2012. Carvin also previously teamed up with CEI in 2010 to win a Supreme Court ruling that struck down a provision of Sarbanes-Oxley.
After the ACA’s passage in 2010, conservative advocates combed through the statute in search of avenues of attack. Thomas Christina of Ogletree Deakins Nash Smoak & Stewart is credited with first drawing attention to a section of the Internal Revenue Code, enacted as part of the ACA, that states that subsidies are available for insurance purchased through exchanges “established by the state.” After Christina’s discovery, Jonathan Adler of Case Western Reserve University School of Law and Michael Cannon of the Cato Institute began popularizing the theory that if Congress also intended subsidies to be available through federal exchanges, the law would have said so explicitly.
Carvin added weight to the theory through his sharp advocacy at oral argument. “In both cases, he came under some pretty heated questioning,” CEI’s general counsel, Sam Kazman, said in an interview. “He handled it very skillfully.”
Carvin’s Big Law gravitas and his stature in the appellate bar haven’t hurt, either, especially since his clients’ interpretation of the law has generated plenty of skepticism. Critics say the plaintiffs in Halbig and King are overanalyzing a clumsily worded sentence in the legislation and ignoring the rest of it. “The evidence of congressional intent here is overwhelming,” one congressional staffer who worked on the ACA told Vox. “There is not a scintilla of evidence that the Democratic lawmakers who designed the law intended to deny subsidies to any state.”
Needless to say, Carvin doesn’t see it that way. “This a very big victory for the rule of law,” he said in an interview. “What the IRS has done is serially rewrite the statute.”
Carvin didn’t seem too discouraged by the Fourth Circuit putting a damper on his victory celebration. “We anticipated from the outset that this case would end up at the Supreme Court,” he said. “A circuit split may hasten that.”