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Fourth Circuit dismisses health reform challenges for lack of standing

In two cases decided on September 8, the Fourth Circuit Court of Appeals has dismissed challenges to the Patient Protection and Affordable Care Act (PPACA). In both cases, rather than reaching the merits of the PPACA, the court ruled that the plaintiffs did not have standing to sue.

Virginia. In Commonwealth of Virginia v. Sebelius (No. 11-1057), a district court had declared the PPACA’s individual mandate unconstitutional. However, a three-judge panel on the Fourth Circuit ruled unanimously that Virginia lacked standing to sue. Thus, the appeals court vacated the judgment of the district court and sent the case back with instructions to dismiss the case.

Virginia contended that Congress lacked constitutional authority to enact the individual mandate in the PPACA. However, noted the court, the individual mandate imposes no obligations on the state of Virginia. Nevertheless, Virginia maintained that it had standing to bring this action because the individual mandate allegedly conflicts with a newly-enacted state statute, the Virginia Health Care Freedom Act (VHCFA), which states that “[n]o resident of this Commonwealth…shall be required to obtain or maintain a policy of individual insurance coverage.”

The appellate court disagreed: “Contrary to Virginia’s arguments, the mere existence of a state law like the VHCFA does not license a state to mount a judicial challenge to any federal statute with which the state law assertedly conflicts. Rather, only when a federal law interferes with a state’s exercise of its sovereign ‘power to create and enforce a legal code’ does it inflict on the state the requisite injury-in-fact.”

Liberty University. In a 2-1 decision, the Fourth Circuit also vacated a different district court’s decision declaring the PPACA constitutional.

In Liberty University v. Geithner (No. 10-2347), the Fourth Circuit hinged its opinion on the penalty imposed by the PPACA if individuals do not purchase insurance. Arguing that the penalty in essence is a form of a tax, the court concluded that a suit cannot be brought against this “tax” because the federal Anti-Injunction Act (AIA) “provides that ‘no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.’” The court thus vacated the district court ruling because the AIA bars a suit seeking to bar the collection of a tax, despite the fact that neither Liberty University nor the federal government had claimed that the AIA affected the case.

The September 8 decisions are the fourth and fifth appellate court rulings on the PPACA. One appellate court previously ruled the PPACA constitutional, one has ruled it unconstitutional, and a third dismissed a claim because of lack of standing to sue.