High court ruling a legal game changer

June 29, 2012
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The U.S. Supreme Court’s narrow decision last week that upheld the constitutionality of the “mandate” provision in the Patient Protection and Affordable Care Act of 2010 was its most significant decision since the Bush v. Gore case in 2000. Twelve years ago, five justices stopped a voting recount in Florida following a very close presidential election.

“Oh, without question,” said Devin Schindler of the ruling’s legal importance. Schindler teaches constitutional law and health care regulation at Thomas M. Cooley Law School in Grand Rapids.

“Everybody has been focused on the political impact, and that is relative and important. But for a law guy, this ruling changes, at some level, our view of the commerce clause. It changes our view of the necessary-and-proper clause. It changes our view of Congress’ power to spend because in the ruling they change the expansion of the Medicaid program. It changes our jurisprudence on the tax clause,” he added.

“Constitutionally, this decision really resets a large portion of our Constitution. I won’t say ‘change,’ but it resets the debate. In the future, how we interpret the commerce clause, the necessary-and-proper clause, the tax power, the spending power — any case where any of those are an issue is going to cite this case, beyond health care.”

Schindler said he wasn’t surprised by the 5-4 decision, but he added that he was surprised the court made its ruling based on the taxing power of Congress instead of the Constitution’s commerce clause, which regulates interstate business activity.

When Congress passed the act that mandates the purchase of health insurance beginning in 2014, lawmakers said failure to do so by those capable of making that purchase would face a penalty. But because the Internal Revenue Service was chosen to administer and collect the penalty, which would be reported on IRS Form 1040, others said it was really a tax.

“If this court agreed and found this to be a penalty, the justices would have had to strike it down. But the court went beyond the label placed on it by Congress and looked at the actual effect of the provision. And even though Congress called it a ‘penalty,’ the court ruled, in effect, that it was a constitutional tax,” said Schindler.

Calling it a tax could have allowed the court to delay its decision on the PPACA through the anti-injunction law until the tax was levied and paid, which under the act won’t happen until 2015.

“This is the other very surprising element of the case. This anti-injunction law says a tax can’t be challenged until it’s paid. But the court essentially said that for purposes of the anti-injunction act, this is a penalty. But for purposes of the tax-spending clause, it was a tax,” said Schindler.

The ruling also means the court won’t be taking up the tax issue when it goes into effect in three years. “No, they’ve taken it up now,” said Schindler.

When the Obama administration argued before the court in March that the PPACA was constitutional, Solicitor General Donald Verilli Jr. relied on the commerce clause as the basis for his defense of the act. But the court rejected that argument.

“It is evident from (Chief) Justice (John) Roberts’ opinion that all of the judges were very concerned about writing Congress a blank check in regard to the commerce clause,” said Schindler.

“If the court had approved this under the commerce power, Congress’ power would essentially be unlimited. By doing it this way, they were able to limit Congress’ commerce power in the future, without having to strike down the act in its entirety.”

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