Supreme Court Roundup Part Two: King v. Burwell

Posted on Categories Constitutional Law, Health Care, Judges & Judicial Process, Marquette Law School, Public, U.S. Supreme Court

Obama_signs_health_care-20100323On October 5, I participated in an event at the Marquette University Law School entitled “Supreme Court Roundup” with Cato Institute Scholar Ilya Shapiro.  The event was sponsored by the Law School Chapters of the Federalist Society and the American Constitution Society.  A previous post contained my remarks on Obergefell v. Hodges (the “Gay Marriage case”).  What follows are my prepared remarks on King v. Burwell (the “Obamacare case”).

The issue in this case was whether the Affordable Care Act’s tax credits are available in States that have a federal health insurance exchange rather than a state exchange. In Section 36A, the Affordable Care Act (commonly known as “Obamacare”) states that tax credits “shall be allowed” for any “applicable taxpayer.” Then, in Section 36B, the Act provides that the amount of the tax credit depends in part on whether the taxpayer has enrolled in an insurance plan through “an Exchange established by the State.” (emphasis added).

In King v. Burwell, the U.S. Supreme Court, in an opinion written by Chief Justice John Roberts, held that Section 36B allows tax credits to be used for insurance purchased on any exchange created under the Act, including insurance purchased on a federal exchange.

I want to be clear.  I make the following statement with the intent to be as objective and non-partisan as possible.  This litigation was nothing more than a post hoc attack on the Affordable Care Act, using one isolated provision of the law read out of context in order to arrive at a nonsensical meaning, which then used a manufactured theory of legislative intent – a theory without a shred of contemporaneous support in the legislative history – in a desperate attempt to prop up the nonsensical meaning.

The background of how this case arose is illuminating.  At a 2010 conference sponsored by a conservative think tank, devoted to brainstorming ideas for how to challenge the Affordable Care Act, one lawyer mentioned in his presentation an odd quirk regarding the wording of one provision of the law.  He himself has said that he didn’t ascribe any great significance to this provision at the time.  Later, a law professor listening to an audio recording of the presentation made note of the odd wording of the provision.  He thought that the language being discussed was an interesting snafu in the law, but didn’t think it was very significant.  But when the law professor happened to mention the quirky language to a lawyer from the Cato Institute, named Michael Cannon, everything changed.  Michael Cannon had an “a ha” moment and decided that this provision could provide an entry way for disrupting the entire law.  And so the litigation began.(1)

My point is not that the Cato Institute did anything wrong in cobbling together this legal challenge to the Affordable Care Act.  One of the best things about being an American is our God-given right to file a lawsuit.  My point is that there is a difference between suing based upon the understanding that everyone involved in the health care debate had at the time, and suing years later based on a reading of the law that no one at the time expressed, advocated or complained of.  Not even the opponents of the Affordable Care Act—and there were many — claimed at the time of the law’s passage that it did what this manufactured lawsuit claims that it did.

Now, clearly the ACA is a mess of a statute.  It was always going to be an incredibly complex piece of legislation, but the procedural history of its passage was convoluted and sloppy.  The House of Representatives passed a bill premised upon the use of insurance exchanges operated at the federal level.  The Senate passed a bill premised upon the use of insurance exchanges by the states, with the federal exchanges as a back-up.  Normally, both bills would have been consolidated by a Conference Committee and sent back to both houses for re-approval.  But the Democrats had lost their supermajority in the Senate with the death of Senator Ted Kennedy, and they didn’t want to risk holding another vote.  Instead, the House simply adopted the Senate bill’s language as it was.

So what became the law was rushed and sloppy because when the drafters of the Senate bill said “this whole thing will get cleaned up in Committee,” as bills usually do, the drafters didn’t anticipate that the Committee would never happen.

The case before the Supreme Court hinged on whether subsidies to help pay for insurance premiums were available only to people who bought coverage on exchanges established by a state, or whether such subsidies were also available to people who bought policies on a federal exchange.  Taken in isolation, Section 36B says the former.  But read as a whole, the entire statute assumes the latter.

This matters because, as everyone on both sides of the issue agree, denying subsidies to persons who purchase insurance on a federal exchange will create a death spiral that destroys the whole concept of mandatory health coverage.

So here is the fundamental question: should a judge take advantage of the sloppy nature of the bill’s language, and enforce a literal reading of the text even where doing so destroys the whole purpose of the Act?  Is the court’s job to punish Congress for poor drafting, without regard to the consequences that follow?

Or should a judge consider the structure and other provisions of the ACA that make it clear that congress intended the subsidies to apply to both federal and state exchanges, and therefore discount one section’s literal language suggesting otherwise?

The job of the judge is to ascertain the intent of Congress, not to play “gotcha” games with the legislative branch.  It is significant that there is simply no contemporaneous evidence in the legislative history surrounding the passage of the ACA that the subsidies were intended to be limited to state exchanges.  Not one statement by a member of Congress, not one piece of testimony at a hearing, and not one commissioned report expresses that view.  Here I refer to the comprehensive discussion of the legislative history contained in the amicus brief filed by a group of health policy scholars, which walks through the legislative history in detail and states:

“The background and legislative evolution of the ACA squarely support the government’s position because they show that the 111th Congress subscribed throughout to the principle that an exchange cannot succeed without subsidies.”  (at p. 20)

Why would Congress create federal insurance exchanges but include Section 36B which only authorizes subsidies for the users of state exchanges?  It appears that the Senate bill began with the premise that only state exchanges would be used, and included subsidies as an integral part of the exchanges.  Later, the Senate bill was amended to include federal exchanges as a backup to the state exchanges.  But the language authorizing subsidies was located in a different part of the bill, where various tax provisions were grouped, and that language was not changed to coincide with the expansion to federal exchanges.  It was missed.

Supporters of the plaintiff’s legal challenge argued that this explanation for the presence of Section 36B is based upon after-the-fact recollections, and that there is no contemporaneous evidence that the drafters intended to amend Section 36B but simply missed one provision in a very large and complicated bill.  Of course, it is hard to imagine what this sort of evidence might look like.  If I go off to the grocery store, and come back without milk, I am likely to respond to my wife’s accusatory stare by saying that “I forgot.”  If she demands that I produce some concrete evidence that my failure to purchase milk was not intentional, I am not sure that I could do that.  We don’t document our acts of forgetfulness.

On the other hand, the plaintiffs were alleging that the denial of federal subsidies was part of the original plan all along, as part of an intent to incentivize the creation of state exchanges.  While there is plenty of evidence that the backers of the Affordable Care Act recognized that the presence of subsidies was an important component of the success of the law, there was simply no evidence from the time of the drafting that congress thought that denying the subsidies to persons using a state exchange was an integral part of their plan.  It is the plaintiffs who put forth an after-the fact theory of motive without any no contemporaneous evidence in support, not the law’s defenders.

Chief Justice Robert’s opinion for the Court follows a simple progression:

(1) Read in isolation, the most natural reading of “an Exchange established by the State” as used in Section 36B of the Internal Revenue Code’s provision governing the size of tax credits available for the purchase of health insurance would make such credits unavailable for individuals purchasing insurance through the federal exchange in those states that did not create their own exchanges;

(2) however, statutory code sections should not be read in isolation, and given other provisions of the Affordable Care Act as well as its overall design, the language is ambiguous; and

(3) accordingly, to implement rather than frustrate the manifest purpose of the law, in this provision (though not necessarily in others) “by the State” means “by the State or by the federal government acting in place of the State.”(2)

Critics of Justice Roberts’ reasoning accuse him of being activist.  Yale law professor Abbe Gluck turns this criticism around:

What could be more activist than using judge-made rules of interpretation to impose a meaning on a statute that has no connection to its context and would literally smash the law to pieces? It is no accident that the majority opinion opens with the lengthy explanation of the ACA. The Court is showing us that it understands this law, and that it is important that it does. . . . [The Chief Justice’s] opinion does not use the tools of textualism to shirk responsibility for the result or as a substitute for justifying its decision in the context of what Congress actually did.

In other words, the Supreme Court rejected a clever attempt to construct an alternate reality out of a few words.  Instead, a majority of the Court focused on doing its job and identifying the intent of Congress.

Professor Stanley Fish has characterized the opinion of Justice Roberts in the following way:

[Justice Roberts writes] “we cannot interpret federal statutes to negate their own stated purposes.” In this case, the stated purpose, he tells us, was to “improve health insurance markets and not to destroy them,” and therefore “we must interpret the Act in a way that is consistent with the former and avoids the latter.”

This is not to subvert the natural reading, but to insist on it. The unnatural reading is the one that regards the phrase “exchange established by the state” as if it floated in space untethered to the constraint of any actual communicative project and bore a timeless meaning that was somehow its property. The unnatural reading is Scalia’s. As Justice Elena Kagan said in the oral arguments, “We don’t look at four [or five] words. We look at the whole, the particular context, the more general context, try to make everything harmonious with everything else.” And when we do this, she might have added, we are not engaging in a special or aberrant mode of interpretation; we’re just doing interpretation in the way that it is always, and necessarily, done.

I can’t say it any better than that.

(1) This summary of the background of the litigation comes from Sarah Kliff.  Michael Cannon has written that this summary is largely correct.

(2) This succinct summary comes courtesy of Cornell law professor Michael Dorf.


One thought on “Supreme Court Roundup Part Two: King v. Burwell”

  1. The accidental case against Obamacare
    How a lawyer, a law professor, and a libertarian found the Affordable Care Act’s secret weakness
    By Sarah Updated May 26, 2015

    This writer happened to come across your article, and so feels compelled to respond. Even though this case you wrote about is ‘over’, the issue is still ‘relevant’ considering that the U.S.S.Ct. is currently deciding an Obama Care case, and, according to the newspaper article, appears to be willing to uphold it, contrary to basic principles of law.
    Now, discussing your article, “The accidental case against Obamacare”, last updated May 26, 2015, the King v. Burwell case:
    Your basic premise is that you, and the U.S.S.Ct., feel that a court has the right or duty to ‘interpret’ a statute, and so you and they do so, so as to arrive at your desired conclusion.
    In this case, ‘interpreting’ or or saying what the ‘intent’ is, is not allowed.
    If a statute is a codification of the common law, then the principles of the common law would be applied to that case under consideration as if that statute had never been adopted. So if a statute which codified the common law is not specific, then a court may or might be legally allowed to interpret the statute so that the common law principle would apply to the case under consideration because without the statute the same common law principle would be applied to that case.
    But where a statute is not based on the common law, is a creation of Congress, in fact in this insurance case is contrary to the common law because there is no such thing as a government universal health insurance policy at the common law, as is this Affordable Care Act, then the statute must be strictly construed and followed because it is a creation of Congress. It is up to Congress to re-write or correct the statute, not the Judicial Branch.
    The High Court violated the most basic, fundamental, ‘kindergarten law school’, law school 101, principle of law that one Branch must not exercise another Branch’s power.
    The court played politics and inserted their own will, want, and desire and so re-wrote and thereby legislated when it wrote that “accordingly, to implement rather than frustrate the manifest purpose of the law, in this provision (though not necessarily in others) “by the State” means “by the State or by the federal government acting in place of the State.”, changing the statute from “an Exchange established by the State.” to a state exchange or federal exchange or by the federal government acting in place of the state!
    The U.S.S.Ct. violated the Separation of Powers Principle when it legislated, when it re-wrote and re-enacted the statute, when it re-wrote with your and their desired conclusion so as to uphold the Obama Care insurance policy. When one interprets, one is merely writing the statute as one thinks it should have been written. When one interprets by using ‘intent’, one is simply coming to the conclusion one thinks it should be.
    Using intent to interpret goes against the very meaning of intent. Intent means one did because that was his intent. That is, it was not the intent of Congress to enact the statute as you and the court legislated it, if it were, Congress would have written it that way. But it was because Congress consciously chose to do what they did, as you wrote, and so chose to abdicate their duty to be responsible stewards of their power of legislating if it was their desire that subsidies be given to all, not just to those subscribing on state exchanges, they made a conscious and knowing decision to do what they did, to write the statute as they wrote it, state established exchanges only. This was their intent. You and the High Court chose to inject your own will into the issue and so the High Court abdicated its duty to act as a checks and balance, to act as a balance of power between the Congress and the Constitution and thereby the People, to not violate the separation of powers principle.
    Going back above, even if a statute is a codification of the common law, the court should not ‘interpret’ due to the Separation of Powers Principle. Rather, the statute could be declared incomplete or unconstitutional, and so then the court could apply the common law principle which the statute ‘left out’ or did not specify. Then let the legislative body go back and re-write their statute, if that is their desire.
    As regards your comment that: “So here is the fundamental question: should a judge take advantage of the sloppy nature of the bill’s language, and enforce a literal reading of the text even where doing so destroys the whole purpose of the Act? Is the court’s job to punish Congress for poor drafting, without regard to the consequences that follow?” The answer is Yes, this as a matter of law. Second, it was not a matter of poor drafting, it was a choice made by Congress, as you wrote. We do not know what the drafter’s intent and purpose was in drafting the statute as written, but both sides argued their version of what their intent was.
    Any ‘punishment’ which results if the U.S.S.Ct. had obeyed the law, had not legislated, would be a punishment which the Congress inflicted upon itself, brought upon itself because, as Nancy Pelosi so famously and well-publicized said: “We will know what the statute says once we pass it.” You also recognized this in your article justifying the Court’s legislating. You wrote: “But the Democrats had lost their supermajority in the Senate with the death of Senator Ted Kennedy, and they didn’t want to risk holding another vote. Instead, the House simply adopted the Senate bill’s language as it was. So what became the law was rushed and sloppy …”.
    A court’s duty is to act as a Balance of Power and a Checks and Balance, not legislate so as to uphold an insurance program, not to keep the Legislative Branch from punishing itself due to its own intent and purpose to play politics with an enactment of legislation and so thereby enact statute, not knowing what that statute says because Congress never did write that statute, statute writers, you call them “drafters”, employed by ‘somebody’, either in or outside of government, behind the scenes, wrote Obama Care. The Congress simply took these writers at face value and enacted what the writers wanted.
    And, if, what you say occurred, that the House chose to adopt the Senate version instead of trying to hash it out in committee, they did so because they chose to play politics with or they let politics govern their power of legislating, as you wrote, and so they let their playing politics dictate their better sense of judgment and duty to be prudent and careful with their power to legislate. So a ‘bad’ statute, bad because it was contrary to what was needed to make Obama Care complete according to your and their want or desire to have a new program and to save it from self-implosion.. It was intentionally and knowingly enacted by them. But it was not ‘bad’ from other persons’ viewpoint of what was wanted by others.
    It was the U.S.S.Ct’s. duty to let Congress ‘correct’ their statute, to let Congress ‘grow up’ and be responsible, if that is what Congress wants. The Court’s duty was to act as a Check and Balance on the Congress, act as a Balance of Power, not legislate for them and so cover up Congress’ intentional and knowing nonfeasance or malfeasance of their duty to be prudent and good stewards, as opposed to being political, with their legislative power.

    Taking the liberty to write more:
    The U.S.S.Ct. has, sadly, done this before, let politics govern a case instead of the rule of law:
    The internet sales tax case of South Dakota v. Wayfair, Inc., 585 U.S. ___, 138 S. Ct. 2080; 201 L. Ed. 2d 403 (2018), decreed that one state’s law or statutes can be imposed on persons living elsewhere, that is, that a state can regulate and tax persons, (internet retail) companies, in another state!
    “Wayfair”, id., in Part IV of its opinion, said that : “Here, stare decisis can no longer support the Court’s prohibition of a valid exercise of the States’ sovereign power.”
    However, it is not a valid exercise of sovereign power to regulate and tax persons in another jurisdiction, in another state.
    This case violates another ‘law school 101’ principle that a state’s or nation’s “sovereign power” has no jurisdiction in or over another state or nation or its peoples, that a state’s laws stop at its border, have no jurisdiction, power or efficacy in another jurisdiction, have, what is called in legal terms, no extraterritorial jurisdiction.
    The reason is, to illustrate so as to make the point, is that the laws of the U.S., or of a state, do not control or regulate the people living in China, just as the laws of China do not control or regulate the people in the U.S. If China tried to regulate or control and tax the people in the U.S., it would not be an act of law, but rather it would be an act of pure, naked domination, an act of war. The reason for this is that the people who are within a certain territory have agreed or consented to or are bound to abide by the rules of the governing authority of that territory, not the rules of some other governing authority and territory, and so ‘sovereignty’ of that law exists only over the people in that jurisdiction. When a stranger enters a territory, he is also understood to agree to or consent to abiding by the laws of that territory, unless that person entered to make war upon that territory and those people, that is, did not agree to abide by their system and laws because he is there to try to dominate those people, not live with them or do business with them, etc. This conduct would be an act of war or a raid, not an act of law.
    For a state to regulate and tax people in another state is an act of that state dominating the citizens of the other state, of making war on the other state, is an act of a state sending a raiding party into another state to steal money or wealth from the citizens of the other state. And that other state which is being raided is not doing its duty to protect its citizens from invasion from without.
    The U.S.S.Ct. violated the elementary due process of law principle of law that a state or nation has no extraterritorial jurisdiction. Its sovereignty does not extend beyond its borders, except when it goes beyond its border to make war or to make a raid into another jurisdiction, then its sovereignty in that other territory, state or nation, is determined by battle and conquest, not as a matter of the rule of law.
    Their decision was based on the politics of the moment, not upon the rule of law, not upon the elementary, basic rule of law, a law which law school students read about at the beginning of their law school education and which every person knows but because they are lay people may not know the technical legal terminology for this concept, but know that when one jurisdiction tries to regulate or tax them when they are in another jurisdiction, that it is not legal; albeit now the lawyers have convinced their internet retail clients that now it is legal, that South Dakota can regulate and tax them while they live and are located in some other state. That is, South Dakota can send a raiding party into their state and take their money and that it is now an act of regulation and law, not what it is, a raid to regulate/dominate them so as to plunder them.

    Taking a greater liberty to write about another issue:
    “Roe v. Wade”, 410 U.S. 113 (1973), the case which said that the Due Process Clause provides a “right to privacy” that protects a pregnant woman’s right to choose whether or not to have an abortion, and so she can have an abortion.
    Of course, a person has a right to privacy. Even a bank robber has a right to privacy, which is why he wears a mask. Even if caught, he even retains this right to privacy under the Fifth Amendment concept that no one can be compelled to incriminate himself.
    But note that his right to privacy does not entitle him to rob the bank, does not make legal his robbery. The banker has a say in whether or not he wants to ‘give’ his money to the robber. The robber cannot claim his privacy and so automatically get to say his taking of the other person’s money was legal. Yet this is exactly what Roe v. Wade did!
    Roe v Wade violated three fundamental, basic, oh so basic and simple rules of law:
    A person can exercise his rights any way he wants, but he cannot exercise his rights such that doing so invades the rights of another. Hence the robber cannot use his privacy right to take money from others. One must not use one’s own property or right such that it harms another. Roe v. Wade declared that a woman can exercise her right to privacy such that to do so will kill, murder the human being, the fetus, in her womb!
    Second, an agreement between two people cannot affect a third person not a party to the agreement. If you and I agree to rob a bank, our agreement does not affect or govern the third party, the bank. Certainly, we will rob the bank, but our agreement does not make the robbery legal. Even an agreement for you and I to give a person $10,000 as a free gift does not bind that third person because our agreement does not bind him or affect him, he can refuse the gift if he so chooses. Yet this is what Roe v. Wade ruled, that an agreement between the woman and her ‘abortioner’ is legal and so binds and affects the human being inside the woman. That is, the agreement is not a conspiracy to commit murder, known as feticide.
    Third, it is a well-known rule of court procedure that where a court case and its judgment will affect a third person not a party to the case, that the court will require that that third person be made a party to the case, be brought into court as a party, or the case will be dismissed. See Rule 19, F.R.Civ.P, and the comparable state rule, rules which are codifications of the above common law principle of law. And it is another rule that if that third person is incompetent to represent himself, that the court will appoint a “guardian ad litem” to represent the best interests of that incompetent, in this case, the unborn child. (This rule is so well known and understood it is automatically followed in cases where an estate is being settled, where a will is being probated, etc., because the (unborn) child of the father has rights to the estate.)
    Yet Roe v. Wade ignored these rules, and so the child was ignored, and so we say that he can be murdered, albeit we ‘delicately’ say aborted.
    As a note: Just to be sure, Roe v. Wade did not say that that child in the womb was not a human being. This lie about Roe v. Wade has long been refuted and now is understood to be a lie by those who advocate for abortion.
    These above three common law rules obliterate the efficacy of Roe v. Wade. It is unconstitutional, in reality, under the common law, it has no legal effect on the mother, the doctor, and the child. That is, the mother and doctor can be prosecuted for murder and Roe v. Wade cannot be a defense to the murder charge or the charge of feticide.
    I took this liberty to look at the above two extra cases of the sales tax and the murder case just to illustrate that we as a nation have a problem, a huge problem in our justice system and in the Bar Association. The Obama Care case of your article is not the first time politics governed the outcome of a case as opposed to the rule of law. The politics of the day also governed the outcome of the sales tax and abortion cases, as opposed to the rule of law.
    The upcoming decision of the High Court as regards the current pending Obama Care case must be watched. But as it stands now, the Judicial Branches of the States and Federal government are losing their stereotype as being places of justice, and the Bar Association is losing its stereotype as being an association of people who stand for the rule of law, who will defend their client against trespasses by the unconstitutional conduct on the part of their government.
    Even the rioting in the streets today is due to the cases of the Breonna Taylor murder and the ‘inummerable’ cases like it are caused by our Courts and Bar Associations not advocating for and standing up for the rule of law, but are instead putting unjust decisions on the books which is known will result in the murders of people like Breonna Taylor. The police had zero authority to enter her house, a void or valid search warrant notwithstanding. No search warrant authorizes nor can authorize an entry such as the police did in Taylor’s case. But this is another memorandum.
    Whether or not you see this ‘late’ addition to your ‘blog’, you did invite comment with your “Join the Conversation” invitation.
    Thank you.
    Sincerely yours,
    Reuben Larson

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