On May 1, 2019, the Department of Justice (DOJ), state plaintiffs, and individual plaintiffs filed initial briefs in the Fifth Circuit Court of Appeals in Texas v. United States. Texas is a lawsuit brought by Republican state officials and two individuals to challenge the individual mandate and, with it, the entire Affordable Care Act (ACA).
The brief is the first time that the DOJ has explained the dramatic shift in its position on the validity of the ACA. Prior to March 25, the DOJ had been defending the ACA in part. However, on the day opening briefs were due, the DOJ agreed with the lower court’s decision that the entire ACA should be invalidated. The DOJ took this position not in a brief or other explanatory filing but in a two-sentence letter to the Fifth Circuit. The May 1 brief provides the DOJ’s first explanation for its shift.
In the brief, the DOJ largely embraced the plaintiffs’ arguments and the district court’s rationale. Many of these legal arguments and conclusions, in areas from standing to severability, have been criticized by observers including prominent conservative legal scholars, the Wall Street Journal editorial board, and the National Review editorial board, among others.
Beyond the shift in the DOJ’s position on severability, the three briefs restate a number of arguments that have already been made or were included in the district court opinion. These arguments are not recounted here. Oral arguments in Texas will be held during the week of July 8.
Texas was initially filed by 20 Republican state attorneys general and governors, later joined by two individuals, after Congress zeroed out the individual mandate penalty in the 2017 tax reform bill. The plaintiffs argue that the penalty-less mandate is no longer enforceable as a tax and thus is no longer valid. Because they believe the entire ACA relies on the mandate, the plaintiffs ask that the rest of the ACA also be struck down.
In mid-December, Judge Reed O’Connor, a federal judge in the Northern District of Texas, agreed and declared the entire ACA to be invalid. He reaffirmed this decision in late December when issuing a stay and partial final judgment. This allowed the case to be appealed to the Fifth Circuit. In January 2019, the DOJ and Democratic attorneys general so appealed.
Since then, attorneys general from an additional four states and the House have intervened to defend the ACA while two plaintiff states have withdrawn from the case. Given the DOJ’s new position, 18 Republican attorneys general and governors, two individuals, and the DOJ are now arguing against the ACA, which is now being defended by 21 Democratic state attorneys general and the House.
The Trump Administration’s Brief
Even before its most recent shift, the DOJ had taken a highly unusual position in Texas by declining to defend the constitutionality of the mandate and major provisions of the ACA that protect people with preexisting conditions. These provisions are guaranteed issue, community rating, the ban on preexisting condition exclusions, and discrimination based on health status.
The DOJ had, however, drawn a line at those provisions, arguing in its briefs and during oral argument that all other ACA provisions were severable from the mandate. The reversal in the DOJ’s position follows the appointment of a new U.S. Attorney General, William Barr, who had previously joined an amicus brief asking the Supreme Court to strike down the entire ACA in 2012.
There is some tension between the DOJ’s positions on standing and remedy. Like the district court opinion, the DOJ does not grapple with whether the state plaintiffs have standing to sue, leaving this case hinging on whether two individuals in Texas have standing to invalidate a complex federal law that has been in place for nearly a decade.
The DOJ agrees with the district court that the individual plaintiffs are harmed by the penalty-less individual mandate, but it tells the court that it need not decide whether there must be a means of enforcing the mandate (i.e., a penalty) to impose an injury.
Why? Because, the DOJ argues, the individual plaintiffs face an additional injury related to the mandate. This additional injury is the ACA’s consumer protections: guaranteed issue, community rating, and the essential health benefits package. The injury is that these rules “limit choices in the insurance markets that both plaintiffs would prefer.” This is sufficient to give the individuals standing to challenge other parts of the ACA “that work together to harm them.”
However, the DOJ believes that plaintiffs cannot be granted relief from parts of the ACA that do not affect them. The DOJ makes no effort to reconcile these positions with its endorsement of Judge O’Connor’s sweeping remedy. Instead, it summarily asserts that the district court was correct to invalidate the entire ACA but that the relief for the plaintiffs should be limited to only those provisions that actually injure them.
As examples of non-injurious ACA provisions, the DOJ points to the ACA’s amendment of certain criminal statutes for health care fraud and anti-kickback violations. (The DOJ likely cites these provisions because it continues to prosecute fraud cases under these statutes, and at least one defendant has cited the DOJ’s position in Texas in his defense.) The DOJ does not address questions such as how the two individual plaintiffs (both small business owners in Texas) are burdened by ACA provisions like Medicaid expansion outside of Texas—or the ACA’s changes to Medicare, the Food and Drug Administration, public health funding, or menu labeling.
In the end, rather than take a definitive position on the tension between the limits of the individual plaintiffs’ standing and the district court’s invalidation of the entire ACA, the DOJ urges the Fifth Circuit to simply let Judge O’Connor decide “the precise scope of the judgment” on remand. This would leave it to the district court to determine whether the individual plaintiffs are burdened by each and every part of the ACA or not.
As mentioned, neither the lower court nor the DOJ address the question of the state plaintiffs’ standing. However, a significant portion of the state plaintiffs’ brief is focused on asserting, once again, that they do in fact have standing to sue. And the individual plaintiffs assert that, in addition to the penalty-less mandate, they face the additional injury and burden of having to report that they purchased minimum essential coverage on annual tax returns.)
The DOJ’s brief appears to respond to arguments made by conservative legal scholars in two amicus briefs about the lack of standing and subject matter jurisdiction in the case. The individual plaintiffs’ brief separately addresses one of those briefs, arguing that the court has subject matter jurisdiction and that a case known as Skelly Oil is irrelevant.
Defending A New Position On Severability
The DOJ justifies its newfound agreement with the district court by arguing that Congress would not have intended to retain 1) the guaranteed issue and community rating provisions, since these are dependent on the mandate; or 2) the rest of the ACA, since these “interdependent” provisions work together to expand coverage and shift health care costs.
The DOJ now believes that the rest of the ACA cannot operate as intended with a zeroed out individual mandate penalty. The ACA’s “desired interactions … cannot be achieved” if the individual mandate, guaranteed issue, and community rating are struck down. The DOJ takes this position even though the Trump administration has repeatedly highlighted stability in the individual market for 2019 (even in the absence of the individual mandate penalty).
This is also precisely the opposite of what the DOJ argued in its initial filing less than one year ago. Then, the DOJ argued that the plaintiffs “rely on a chain of speculative hypotheticals” to assert that the ACA is no longer coherent federal policy in the absence of the law’s core provisions. The DOJ cited Medicaid expansion and the marketplaces as examples, stating that “there is no reason why the ACA’s particular expansion of Medicaid hinges on the individual mandate.” The DOJ further acknowledged that “the other major provisions [of the ACA] still serve the objectives that Congress had when enacting the ACA … especially given that Congress itself reduced the effect of the mandate by eliminating its penalty in the TCJA, and yet did not repeal the rest of the ACA despite repeated attempts to do so.”
The DOJ also punts on severability of what it refers to as the ACA’s “minor” provisions—essentially those outside of Title I of the ACA. The DOJ acknowledges that some ACA provisions would be able to continue to operate in the manner that Congress intended when viewed in isolation. However, it believes the question of congressional intent is “complicated by the circumstances” in which the ACA—as an omnibus bill that includes unrelated provisions—was enacted. Because of this “unique context,” these minor provisions that were “tacked on” to the ACA should also be invalidated.