Supreme Court Healthcare Hearing, Day 1 Summary

March 27, 2012

Dear Fellow Virginians,

Today was the first day of the three-day healthcare hearing in the U.S. Supreme Court, and as promised, I wanted to offer you my reflections on today’s hearing.

Today the Court heard 90 minutes of argument on the Anti-Injunction Act (“AIA”).  The AIA was enacted in 1867 to require any lawsuits challenging tax statutes to happen only after the taxes are paid; i.e., pay first, then sue.  The rationale is that it’s important to keep the tax revenues flowing without nuisance lawsuits getting in the way, and the national government can pay back any necessary taxes and interest on those relatively rare occasions when it loses such a suit.

Two years ago, the federal government was arguing that the AIA barred the lawsuits challenging the federal healthcare bill, but they have since changed position to agree with the states that the AIA should not apply to bar this case.

Even if the AIA applied and the case was dismissed, it would not be a judgment on the merits of the lawsuit – i.e., it wouldn’t be a judgment about whether the individual mandate is constitutional or not.  So, we’d all be back in three years after folks refused to pay the penalty.

Can you imagine the destruction that would be caused by three more years of uncertainty about whether or not the federal healthcare law is constitutional?  I’d rather not contemplate it.

It’s always a bit dicey to read too much into oral argument, but the tone and focus of the justices’ questions and comments gave me the strong impression that they will not throw the case out without reaching the merits.

The moment the case began, Justice Kennedy was immediately on the front edge of his seat, but Justice Scalia got the first question in… followed closely by Justice Kennedy.  Pretty soon all of the justices were firing away (except Justice Thomas, as he famously does not ask questions during oral argument).

Some of the most interesting exchanges came from some unexpected directions.  And there was some spill-forward into tomorrow’s hearing regarding the individual mandate as it relates to the feds’ tax argument.

Today also saw a lawyer appointed by the Supreme Court itself arguing that the AIA bars the case from going forward.

It is fairly common for the Court to appoint a lawyer to argue a position that no party in the case is advancing, but I cannot remember a case in which the Court appointed two such lawyers.  The second Supreme Court appointed lawyer will argue on Wednesday regarding the severability of the individual mandate (more on that Wednesday night).

Justice Breyer was the first to ask a tax question that clearly will tie in to tomorrow’s arguments.  Quite simply, as it relates to the penalty you have to pay if you don’t buy the government-mandated health insurance, Justice Breyer asked simply “why is this a tax?”

While addressing the U.S. Solicitor General, Justice Alito noted words to the effect that ‘today you are arguing the penalty is not a tax, so the AIA shouldn’t come into play, but tomorrow you’ll be here arguing that the penalty is a tax.’  He clearly had a problem with that set of arguments, and he wasn’t alone.

Justice Sotomayor noted a series of exceptions or exemptions from the AIA, and wanted to know if there was ever a case where something was found to be a tax for constitutional purposes, but not for purposes of the AIA.  No such case was cited.

This is consistent with the federal government’s inconsistency (did you follow that?).  In this particular case, both the states and the feds agree the AIA should not apply, and today’s discussion seemed to suggest the Court is headed in that direction.  However, the states and the feds come to their conclusions differently, and once again, the feds rely on words meaning one thing here, and another thing there.

Wouldn’t it be nice if words meant the same thing every time?  Words like “tax,” “penalty,” and “economic activity.”  To you and me maybe, but not the federal government.

Regarding the tax question, Justice Ginsberg noted that the penalty was to induce compliance with the mandate, not to raise revenue (generally, to be a tax, an act must be intended to raise revenue generally).  Justice Ginsberg went on to note that because the penalty was to back up the compulsion to buy insurance, it wasn’t a tax.

I’ll finish today’s walk-through with what I thought was the most interesting exchange of the day, and it was between Justice Kagan and the SG.  Justice Kagan posed the following scenario and question: “If someone didn’t buy the mandated insurance, and paid the penalty, then later was answering a question about whether they had ever violated a federal law, what would the answer be?”  The SG, in a decidedly unconfident manner answered “No.”

Think about that.  The feds mandate you have to buy insurance, but if you don’t obey that mandate, you have not broken the law?  Again, this illustrates the incredible inconsistencies undertaken by the feds.

Assuming that the AIA does not bar the case – an outcome I expect – then they will reach the question of the constitutionality of the mandate itself… and that is what will be argued for two hours tomorrow.

This really is the heart of the case, and it goes to the outer limits of already-expansive federal power.

If the federal government can order you to buy health insurance, then there’s nothing to stop them from ordering you to buy a car, asparagus, or a gym membership (the very examples used by the district court judge in Virginia’s case).  That’s why I say this case is not about health care or health insurance, it’s about liberty.

On a separate note, it’s worth recognizing that today’s subject matter – the AIA – is in many ways the most confusing subject in the case.  After you read my analysis of all three days, I think you’ll see what I mean.

If you’d like to hear the audio briefing I gave to Virginia media today, click here.

Tomorrow I will again be in the courtroom taking notes to share with you tomorrow night in The Compass.  And while all three days are important, tomorrow is the biggest of them all, so stay tuned tomorrow night!

Also – please make sure to share this with your friends!  If you can – please forward this on!

Sincerely,

Ken Cuccinelli, II
Attorney General of Virginia