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Update: Legal Challenges to the Affordable Care Act — Liberty v. Geithner Petition for Rehearing

Posted on October 25, 2012 | No Comments

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Implementation Briefs

By Katherine Jett Hayes

Introduction and Background

One of a number of lawsuits filed in opposition to the ACA was Liberty University, Inc., et al. v. Geithner et al. Under this lawsuit in 2010, a private Christian university and a number of individual petitioners sued the government to block enforcement of the ACA’s employer requirement to provide health insurance coverage to employees, as well as the individual requirement to maintain health insurance coverage.[1] The district court in the Western District of Virginia rejected all the plaintiffs’ claims, which included challenges based on the Commerce Clause, the Necessary and Proper Clause, the Tenth Amendment, the First Amendment, the Fifth Amendment, and the Religious Freedom Restoration Act (RFRA).[2] On appeal, the Fourth Circuit held that the Anti-Injunction Act (AIA) barred federal courts from hearing the case, invalidating the district court holding.[3] Liberty University and a number of individuals then filed a writ of certiorari with the U.S. Supreme Court, appealing the Fourth Circuit decision. Following the Supreme Court’s ruling in NFIB v. Sebelius, which addressed the AIA jurisdiction issue as well as challenges to the individual requirement under the Commerce Clause, the Necessary and Proper Clause and Congressional taxing and spending authority, as well as a challenge to the Medicaid expansion under the Tenth Amendment, the Court denied Liberty University’s petition for certiorari.

The Liberty petitioners recently filed a petition for rehearing of their earlier petition for certiorari, asserting that the Supreme Court should have granted the first petition, vacated the Fourth Circuit decision, and remanded the case to hear claims that were not considered in NFIB v. Sebelius. Specifically, petitioners argue that the Fourth Circuit did not reach the merits of claims not addressed by the Supreme Court in NFIB v. Sebelius, and that the previous Fourth Circuit decision was overturned by the NFIB holding that the AIA did not bar courts from hearing a pre-enforcement challenge to the ACA’s individual mandate. In support of their argument, the petitioners cite Supreme Court precedent, asserting that the Court has agreed to a rehearing of a petition for writ of certiorari when there are “intervening circumstances of a substantial or controlling effect,” and that under 28 U.S.C §2106 — the statute governing Court rules — the Court may modify any judgment brought before it, and vacate and remand the case to a lower court.

Petitioners characterize the NFIB decision as a significant intervening change that will be outcome-determinative and that the lower courts should hear their remaining claims on the merits. As a result, the petitioners argue that they have unresolved challenges to the employer penalty (including the religious exceptions to the requirement to provide coverage) and to the individual penalty under the First Amendment Free Exercise Clause, the Establishment Clause and the Equal Protection Clause of the U.S. Constitution. Petitioners go on to argue that they are entitled to rehearing because without it, they would arguably be forever barred from having their remaining claims heard.[4]

On October 1, 2012, the Supreme Court asked the Justice Department to file a response to the rehearing petition within 30 days. If the Court agrees to a rehearing, grants the petition to vacate the Fourth Circuit decision, and remands the case to be reconsidered, the Liberty petitioners will be able to receive an airing of the claims that were not addressed by the Supreme Court in NFIB v. Sebelius. The findings of the district court related to those issues not addressed by the Supreme Court are outlined below.

Outstanding Issues in Liberty and the District Court’s Holding

Commerce Clause claim as relating to Employer Penalty: Liberty University alleges that employers are being compelled to participate in interstate commerce when they otherwise would not, in violation of the Commerce Clause. The trial court dismissed the claim, noting that it is well-established Supreme Court precedent that Congress has the power to regulate the terms and conditions of employment. The court cited a string of Supreme Court decisions relating to minimum wage, overtime, prohibiting unfair labor practices, establishing maximum hours and other requirements.[5]

Establishment Clause: The First Amendment to the Constitution provides that, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…” The petitioners argued that the ACA’s exceptions to the individual mandate violate the establishment clause because they 1) give the government the right to determine which religious sects are “recognized,” 2) do not have a “secular purpose,” as required under existing case law, and 3) privilege certain religious sects over others. The court held that the First Amendment permits Congress to enact laws accommodating religious exercise, and that the religious exemption and the “health care sharing ministries” exemption of the ACA fall within the bounds of permissible religious accommodation. The district court held that the ACA exemptions ensure that similarly situated groups are treated similarly, do not require the government to differentiate among faiths, and apply to all members of all recognized faiths that have a sincere, conscientious objection to receiving medical benefits. Finally, in addressing the charge that the religious exemption must have a “secular purpose,” the court held that the “purpose” requirement aims to prevent the government from abandoning neutrality and acting with intent to promote a particular point of view in religious matters, and that the exemption has a permissible legislative purpose, namely to alleviate significant government interference with the ability of religious organizations to define and carry out their religious missions.[6]

Free Exercise Clause and RFRA: Plaintiffs argue that requiring the purchase of insurance violates their “sincerely held religious beliefs” against facilitating, subsidizing, easing, funding or supporting abortions, and that providing choices for employees in health care will conflict with the mission of the University and its core Christian values. The Religious Freedom Reformation Act forbids the government from imposing a substantial burden on the free exercise of religion, even if the burden results from a rule of general applicability. The district court held that Congress is free to accommodate religious practices without violating the Free Exercise Clause, noting that the Free Exercise Clause seeks to protect against governmental hostility toward religion. The court held that the ACA is not hostile toward religion, but instead seeks to carve out exceptions for those who are conscientiously opposed to receiving benefits and those who share medical benefits in accordance with their religious beliefs. The court also notes that the law contains safeguards to prevent federal funds from being used to fund abortion services, except in cases of rape, incest or where the life of the mother is endangered. The court held that the plaintiffs fail to allege more than a mere possibility of harm, which is insufficient to withstand a motion to dismiss.[7]

Equal Protection Clause: The plaintiffs in Liberty also argued that the exemptions to the individual coverage requirement do not apply equally to all similarly situated individuals (i.e., some individuals who have religious objections to the individual requirement will qualify for the objections and some will not – namely, those who object to all medical treatment will qualify and those who object because the insurance product covers abortion services will not.) As a result, they argue that their right to equal protection under the due process clause of the Fifth Amendment to the Constitution is violated. The district court concluded that the petitioners made no argument that a fundamental right has been violated or that they are among a class of individuals considered to be a target of discrimination, or a “suspect class” — typically defined as targeting based on race, gender, or another trait that has been the basis of historical discrimination characteristics. As such, the court concluded that Congress need only have a rational basis for including the exemptions, which serve the valid secular purpose of accommodating the religious practice of persons who have religious objections to accepting the benefits of health insurance, or who already share health expenses with others in accordance with shared religious beliefs.[8]

Freedom of Speech and Association: Plaintiffs also argue that the law violates their rights of freedom of speech and association under the First Amendment by forcing them to associate with those who support or engage in abortion and with insurers who fund abortion. The district court rejected the argument, noting the ACA does not require plans to cover abortion, and that the law ensures that at least one policy offered in each health insurance exchange will not cover non-excepted abortion services. The Court concluded that the plaintiffs’ holding insurance policies in the same health care system in which others cover abortion is too remote to intrude upon their free association rights. The court also held that requiring an individual to purchase or offer coverage does not implicate what individuals must say, and that there is no freedom of speech implication.[9]

[1] Liberty University, Inc. v. Geithner, 753 F. Supp. 2d 611 (2010).
[2] Id.
[3] Liberty University, Inc. v. Geithner, 671 F. 3d 391 (2011).
[4] Liberty v. Geithner, petition for rehearing.
[5] Liberty, 753 F. Supp. 2d at 635.
[6] Id. at 638.
[7] Id. at 642-643.
[8] Id.
[9] Id. at 646.
Liberty University, Inc. v. Geithner, 753 F. Supp. 2d 611 (2010).
Liberty University, Inc. v. Geithner, 671 F. 3d 391 (2011).
Liberty v. Geithner, petition for rehearing.
Liberty, 753 F. Supp. 2d at 635.
Id. at 638.
Id. at 642-643.
Id. at 646.

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