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Sanction the 18 state AGs
The suit challenging the new health care law represents shockingly shoddy lawyering; the key claims are without support in the law and the facts.
Timothy Stoltzfus Jost, Robert L. Willett Professor at Washington and Lee University School of Law.
April 12, 2010, NATIONAL LAW JOURNAL
Much has been written about whether the complaint filed by state attorneys general challenging the constitutionality of the new health care law — the Patient Protection and Affordable Care Act — will result in a judgment holding the law to be unconstitutional. But the real question that should be asked is whether the court should require the attorneys who brought the case to pay personally the costs that the federal government will incur in defending it.
As we all know, Rule 11 of the Federal Rules of Civil Procedure requires an attorney filing a pleading in federal court to certify that "the claims, defenses, and other legal contentions are warranted by existing law" and "the factual contentions have evidentiary support." The court can sanction an attorney who violates this rule, including an obligation to pay the costs and reasonable attorney fees of the opposing party.
The complaint filed by the Florida attorney general and the AGs of 12 other states (joined last week by five additional state AGs) makes several allegations that are on their face neither legally nor factually true. At paragraphs 40 and 42, it alleges that the new law requires the states to enforce the insurance reforms and operate the exchanges. It further alleges: "Should a state not wish to participate in the exchanges, it can opt out only if it provides coverage for uninsured individuals with incomes between 133 percent and 200 percent of the federal poverty level....The only other way for a state to avoid the Act's requirements is to drop out of the Medicaid program, leaving millions of persons uninsured."
This is simple nonsense. In fact, the new law at Section 1321 offers the states the option either to enforce the law and operate the exchanges or not to do so. If states choose not to, the federal government will enforce the law in the state and either operate an exchange itself or do so through a nonprofit organization. This section of the law was clearly drafted to comply with the requirements set out in New York v. U.S., 505 U.S. 144 (1992) — the U.S. Supreme Court authority against the federal government commandeering the states to enforce its own law — and succeeds in doing so.
Paragraph 42 alleges that the health care law requires the states to establish an office to assist insurance consumers. The new law offers the states grants to establish such offices but does not require them to do so. This claim is simply false. Paragraph 47 alleges that no federal funding will be available for persons who withdraw from employer coverage because they become eligible for Medicaid. Nothing in the law even suggests this. Federal funding under the legislation will cover all persons otherwise qualified for Medicaid with household income below 133% of the poverty level, period.
Although the complaint suggests that the new law's expansion of Medicaid eligibility to Americans below 133% of poverty level will impose a massive financial burden on the states, nowhere does it mention the key fact that this population will be covered 100% by federal funds for years 2014 to 2016, after which the states' share will gradually climb to 10% in 2020, where it will remain thereafter.
The Congressional Budget Office estimates that the Medicaid changes will result in $434 billion in extra Medicaid and Children's Health Insurance Program money flowing to the states between 2010 and 2019, while total spending for all states in the 10-year period will increase by only $20 billion. Nowhere does the complaint mention the huge financial savings that state and local governments, as well as nonprofit community hospitals, will reap from not having to subsidize uncompensated care for this population.
Finally, the complaint fails to mention that the individual-responsibility requirement that it attacks does not apply to anyone whose income falls below the tax filing limit ($18,700 for a married couple filing jointly in 2009) or for whom health insurance would cost more than 8% of household income. These exceptions will cover a large percentage of uninsured individuals in the plaintiff states.
This is only the start of the shortcomings of this complaint. Long-established precedent holds that states do not have standing to challenge the constitutionality of a federal law. Massachusetts v. Mellon, 262 U.S. 447 (1923). Even if the states did, there are serious questions of ripeness, as the law does not go into effect until 2014. Moreover, the Tax Injunction Act would bar the relief the states seek: enjoining the collection of a tax. All this before one even gets to the merits, on which the states are also unlikely to prevail unless the courts abandon decades of established constitutional law.
This complaint not only represents shockingly shoddy lawyering but should be recognized by the courts for what it in fact is: A pleading whose key claims are without support in the law and the facts. The attorneys who brought this case — solely for political purposes — should have to bear personally the cost of defending this litigation that they are imposing on federal taxpayers.
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