Editor’s note: This article first appeared March 5 in our newsletter Supreme Court Insider, which is previewing arguments and profiling the lawyers who will argue before the Court in the health care cases beginning on March 26.
Close to noon on March 26, the first day of history-making arguments in the health care cases, journalists will emerge from the U.S. Supreme Court to breathlessly report on what the justices and advocates said about — the Anti-Injunction Act (AIA).
Soaring arguments about the individual mandate and the Constitution’s commerce clause will wait for another day. In the first high court face-off over the law, the justices will be preoccupied with a decidedly less glamorous — but crucially important — issue: namely, whether the challenges can proceed at all in light of a once obscure federal statute that bars suits against federal taxes before they are collected.
Though some parties disagree, the AIA has usually been viewed as a “jurisdictional bar,” which means that, if the Court rules that the 1867 law applies to the health care litigation, it cannot proceed. The ballgame would be over — at least until 2015, when the first taxpayer who refused to buy required minimum health care coverage in 2014 would have to pay a penalty along with his or her income taxes.
Some shrug off the issue as an obvious nonstarter. But the Roberts Court takes jurisdictional issues very seriously. It was no accident that the Court scheduled the issue for the first day of argument or that, in an order issued on Feb. 21, it expanded the allotted time for it from 60 to 90 minutes. Covington & Burling partner Robert Long, appointed by the Court to argue that the AIA bars the health care challenge, will have 40 minutes. Jones Day partner Gregory Katsas will argue for 20 minutes on behalf of challengers to the law who say there is no jurisdictional bar. And a lawyer as yet unnamed will make similar points for 30 minutes for the solicitor general’s office. The vehicle for discussing the issue is Department of Health and Human Services v. State of Florida.
“The recent addition of another 30 minutes of argument time on the Anti-Injunction Act signals the importance and complexity of the issue,” said University of Richmond School of Law professor Kevin Walsh, who has written extensively about this aspect of the litigation. “A majority of justices very well could conclude that the Anti-Injunction Act requires the Supreme Court to stay its hand in ruling on the constitutionality of the individual mandate until after it actually goes into effect and gives rise to penalties on individual taxpayers.”
The prospect of shutting down the challenges to the Affordable Care Act for three years, by which time the nation’s health care system will have restructured itself at the cost of billions, is daunting — and may in itself be a powerful argument to persuade the Court not to apply the AIA. A brief filed on behalf of state chambers of commerce asserts that the government in the next few years may collect as much as $500 billion in taxes under the entire health care law — all of which would have to be refunded if it is declared unconstitutional after 2015. But those who think the AIA does apply argue that a law is a law, and policy considerations should not affect its enforcement.
The Anti-Injunction Act stems from a basic concept of tax collecting: Get the revenue in hand first, before allowing anyone to challenge the law that produced it. “Anyone who is in the tax field gets this argument,” said former Internal Revenue Service commissioner Sheldon Cohen. Without a strict interpretation of the AIA law, Cohen said, “Everybody would sue. If they could put off the taxes by six months by suing, they would sue.” Cohen joined with another former IRS commissioner, Mortimer Caplin, in a brief that supports application of the AIA to the health care law. It was written by George Washington University Law School associate dean Alan Morrison, who first raised the issue in a newspaper op-ed soon after the law was passed.
The AIA argument persuaded the U.S. Court of Appeals for the 4th Circuit to decide last September in Liberty University v. Geithner that it had no jurisdiction. Just as importantly, when the D.C. Circuit upheld the health care law in Seven-Sky v. Holder last November, Judge Brett Kavanaugh, a respected conservative on the court, dissented. “The tax code is never a walk in the park,” Kavanaugh wrote. But he said the AIA applied because, even though the health care law calls it a penalty, the IRS, under the tax code, would administer and collect the money that health-insurance holdouts would have to pay.
At early stages of the cases now before the Court, the solicitor general’s office agreed that the AIA barred jurisdiction and foreclosed the challenges. But on “further reflection,” as it told one appeals court, the Obama administration withdrew that argument and took the position that the AIA did not apply to the health care law. University of Richmond’s Walsh speculates that the administration calculated that its chances of convincing the courts to uphold the health care law were strong enough to outweigh the political costs of trying to put off the reckoning on President Barack Obama’s biggest domestic accomplishment.
Whatever the reason, the government’s change in position led the high court to appoint Long to make the now-orphaned argument that the AIA does apply as a jurisdictional bar to the lawsuit against the health care law.
Long’s brief argues that in every relevant respect, the penalty for not buying minimum health insurance under the health law is a tax. In addition to being paid with individual tax returns “in the same manner” as a tax, it will actually produce revenue: between $5 billion and $6 billion annually by the end of the decade, according to the Congressional Budget Office. He also asserts that Congress could “amend or repeal” the Affordable Care Act before any penalty or tax is ever paid — making it unwise for the Court to make a constitutional ruling that could prove unnecessary.
Solicitor General Donald Verrilli Jr. agrees with Long that the AIA is a jurisdictional limitation when it applies, and accepts that the insurance-holdout penalty “can be construed as an exercise of Congress’ taxing power.” Nonetheless, he argues that the AIA does not apply, because in this instance the penalty does not operate like a tax.
The parties challenging the health care law counter Long mainly by asserting that the individual mandate, not the penalty, was the target of their lawsuit. As a result, they say their lawsuit is not barred by the AIA, which specifically targets legal actions brought “for the purpose of restraining the assessment and collection” of taxes.
Representing individual challengers to the law, Jones Day’s Michael Carvin insists that the individual mandate is a “free-standing legal duty to obtain insurance” that operates independently from the penalty. If the AIA does apply, Carvin said that taxpayers would face the unacceptable prospect of having to violate the health care law by refusing to pay the penalty before they could challenge it.
Paul Clement of the Bancroft firm in Washington represents the states challenging the health care law. Calling it an “assertion of federal power of unprecedented scope,” Clement said in his brief that the health care law cannot “avoid judicial review for years based on a provision limited to taxes. The time for review of the individual mandate is now.”
Contact Tony Mauro at firstname.lastname@example.org.