States Objecting to Health Care Law to Get Day in Appeals Court

For the third time in five weeks, the Obama administration's legal point man for defending the president’s health care overhaul will walk into a federal appellate courtroom Wednesday to defend the controversial measure as an appropriate and proper exercise of the government's power.

Acting Solicitor General Neal Katyal has steadfastly argued the law, passed in March 2010, is a necessary and reasonable response to halt the increasing costs of medical care despite claims by 26 state governments and the largest small-business group in the nation that the law's requirements are unconstitutional.

Katyal is expected to tell three judges of the 11th Circuit U.S. Court of Appeals in Atlanta that the law is a valid exercise of congressional power to regulate commerce and tax.

He'll try to convince the court that U.S. District Court Judge Roger Vinson's thorough repudiation of the law was incorrect. That January ruling striking down the entire law energized its detractors, who agree with Vinson's conclusion that the provision requiring all Americans to obtain health insurance, known as the individual mandate, is an impermissible attempt by lawmakers to regulate people's lives.

"In enacting this provision, Congress made detailed findings establishing a foundation for the exercise of its commerce power," Katyal wrote in his brief to the court. He went on to write that Vinson's ruling "impermissibly substituted (his) own judgment for that of the elected branches in declaring that an insurance requirement cannot be imposed until people actually seek medical care."

Wednesday's case originated in Florida and was brought by 26 states, the National Federation of Independent Business and two individuals. The plaintiffs argue the powers granted to the government under the Commerce Clause are limited to the regulation of interstate activity. Former Bush administration Solicitor General Paul Clement, representing the states, says the law pushes the government's constitutional powers too far by trying to regulate inactivity.

"The act imposes a direct mandate upon individuals to obtain health insurance, marking by all accounts the first time in our nation's history that Congress has required individuals to enter into commerce as a condition of living in the United States," Clement wrote. "Congress could mandate the 'economic decision' to purchase all manner of healthy products, from broccoli to gym-memberships," lawyer Gregory Katsas warned the court in his brief for the NFIB.

Katyal dismisses the charges and says the individual mandate is a "quintessential exercise" of commerce power.

"As Congress found, the minimum coverage provision regulates economic activity -- how participants in the national health care market pay for their services -- that substantially affects interstate commerce," he wrote.

The legal back-and-forth over the individual mandate has already taken place in appellate courtrooms in Richmond and Cincinnati with cases involving different challengers. No decision has been reached in either case but there are indications that the judges in each matter could issue a ruling without addressing the merits of the law.

Judges from the 6th Circuit U.S. Court of Appeals in Cincinnati heard arguments last week in a case brought by the Thomas More Law Center. But the suit could be tossed because one of the plaintiffs now has employer-provided health insurance and presumably can't demonstrate how she'd be directly harmed by the law.

In early May, the 4th Circuit U.S. Court of Appeals in Richmond heard a pair of cases from Virginia but a few days after the arguments, the judges asked the lawyers to address whether the cases could even be decided. In their post-argument briefs, lawyers from all sides said the judges shouldn't let a 19th century law -- prohibiting lawsuits aimed at stopping tax collections - -keep them from issuing a ruling on the merits of the health care law.

Even if both of these courts get beyond the procedural concerns and pass judgment on the Obama law, the case before the 11th Circuit remains one of the most closely watched of the several dozen health care lawsuits filed across the country. It could also be the primary case that ultimately reaches the Supreme Court.

The dispute over the law's tax language will also be an issue before the 11th Circuit. The law's opponents point to the word "penalty" that's written into the law as proof that the collection provision isn't a tax. Katyal contends that the exact language Congress used isn't fatal to the law.

Another part of Vinson's ruling in favor of the government will also be under examination Wednesday. The states strongly object to the law's provisions for Medicaid, which they claim is a major change to federal-state partnership that's the hallmark of the longstanding entitlement program. Clement says states will be forced to picked up more of the tab.

"The added burdens, costs and liabilities from this new requirement -- particularly in the face of federal projections of severe provider shortages -- are incalculable, but sure to be substantial, underscoring that the ACA transforms Medicaid well beyond anything the states volunteered to implement," he wrote.

This case and the suit filed by Virginia Attorney General Ken Cuccinelli are the only two in which federal judges have struck down the individual mandate. The biggest difference between the two is that Vinson said the mandate is so integral to the rest of the law that he invalidated the entire measure. The administration argues Vinson overstepped his authority with that ruling.

Arguments are set to start at 9:30 a.m. inside the 11th Circuit's courthouse in downtown Atlanta before Chief Judge Joel Dubina and Judges Frank Hull and Stanley Marcus. Hull and Marcus were appointed by President Bill Clinton. Dubina was appointed by President George H.W. Bush.