Mead v. Holder ( 2011 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
MARGARET PEGGY LEE MEAD, )
et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 10-950 (GK)
)
ERIC H. HOLDER, JR., et al., )
)
Defendants. )
______________________________)
MEMORANDUM OPINION
Plaintiffs Margaret Peggy Lee Mead, Charles Edward Lee, Susan
Seven-Sky, Kenneth Ruffo, and Gina Rodriguez bring this action
against Defendants Eric H. Holder, Jr., Kathleen Sebelius, and
Timothy F. Geithner in their official capacities and Defendants
United States Department of Health and Human Services and United
States Department of the Treasury. Plaintiffs seek a declaration
pursuant to 28 U.S.C. §§ 2201-2202 that the individual insurance
mandate of the Patient Protection and Affordable Care Act, Pub. L.
No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care
and Education Reconciliation Act, Publ. L. No. 111-152, 124 Stat.
1029 (2010) (“Affordable Care Act” or “ACA”) is unconstitutional on
its face. Plaintiffs also seek injunctive relief against
enforcement of the mandate.
This matter is presently before the Court on Defendants’
Motion to Dismiss Plaintiffs’ Amended Complaint [Dkt. No. 15]
pursuant to Federal Rule of Civil Procedure 12(b)(6).1 On January
31, 2011, oral argument was heard on Defendants’ Motion. Upon
consideration of the Motion, Opposition, Reply, the arguments
presented by the parties in open court, and the entire record
herein, and for the reasons set forth below, the Motion to Dismiss
is granted.
The present litigation is one of many similar lawsuits
challenging the Affordable Care Act in United States District
Courts around the country. The controversy surrounding this
legislation is significant, as is the public’s interest in the
substantive reforms contained in the Act. It is highly likely that
a decision by the United States Supreme Court will be required to
resolve the constitutional and statutory issues which have been
raised. Needless to say, this Court’s personal views on the
1
In their August 20, 2010, Motion to Dismiss, Defendants
also moved for dismissal under Federal Rule of Civil Procedure
12(b)(1), arguing that Plaintiffs lacked standing, that this case
was not ripe for judicial review, and that this case was barred by
the Anti-Injunction Act, 26 U.S.C. § 7421. See Defs.’ Mot. at 9-16
[Dkt. No. 15]. On January 21, 2011, Defendants filed a Notice
stating that they do not intend to pursue their Rule 12(b)(1)
arguments. See Notice Regarding Mot. to Dismiss [Dkt. No. 34]. The
Court therefore will deem the Defendants’ arguments concerning the
Anti-Injunction Act waived and will not consider them. However,
because the parties cannot waive any defect in this Court’s
jurisdiction, the arguments concerning standing and ripeness will
still be addressed. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1945,
173 L.Ed.2d 868 (2009) (“Subject-matter jurisdiction cannot be
forfeited or waived and should be considered when fairly in
doubt.”) (citations omitted).
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necessity, prudence, or effectiveness of the Affordable Care Act
are of no moment whatsoever. The only issues concerning the ACA
presently before this Court are those raised by the parties:
namely, whether § 1501 passes muster under the Constitution of the
United States, and whether it violates the Religious Freedom
Restoration Act of 1993, 42 U.S.C. § 2000bb et seq. (“RFRA”).
I. Background
On March 23, 2010, President Barack Obama signed the
Affordable Care Act into law in an effort to curb rising health
care costs and to provide greater coverage for the more than 45
million Americans who were uninsured during 2009. See Cong. Budget
Office, Key Issues in Analyzing Major Health Insurance Proposals 1
(2008), available at http://www.cbo.gov/ftpdocs/99xx/
doc9924/12-18-keyissues.pdf. The ACA contains many provisions
designed to improve access to the national health care market,
reduce health care costs, and increase coverage for those who now
lack protection. For example, the ACA (1) creates state-operated
health benefit exchanges which enable individuals and small
businesses to obtain price-competitive health insurance, see ACA §§
1311, 1321, (2) expands Medicaid coverage, see ACA § 2001, (3)
prohibits insurance companies from denying or increasing the price
of coverage to individuals with pre-existing medical conditions,
from limiting the amount of coverage available, and from rescinding
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coverage when an individual becomes sick, see ACA §§ 1001, 1201,
(4) requires that large employers offer health insurance to their
employees, see ACA § 1511, and (5) waives all Medicare coinsurance
and copayment fees for a multitude of preventive services,
including screening for depression, colon cancer, breast cancer,
and cervical cancer, see ACA § 4104.
Plaintiffs challenge § 1501 of the Affordable Care Act,
entitled “Requirement to Maintain Minimum Essential Coverage.” See
ACA § 1501 (adding 26 U.S.C. § 5000A) (“individual mandate”); id.
§ 10106 (amending findings in § 1501). Section 1501 requires
“individuals,” as defined under the ACA,2 “for each month beginning
after 2013 [to] ensure that the individual, and any dependent of
the individual who is an applicable individual, is covered under
minimum essential coverage for such month.” 26 U.S.C. § 5000A(a).
If an individual fails to obtain such minimum essential coverage,
he or she must include with their annual federal tax payment a
2
Under the ACA, the term “individual” excludes those who
qualify for a religious conscience exemption under § 1311(d)(4)(H),
are members of a health care sharing ministry, or are incarcerated.
26 U.S.C. § 5000A(d). In addition, § 1501 exempts from its penalty
provision those individuals for whom the annual cost of the
required coverage exceeds eight percent of their household income,
individuals whose household income falls below the poverty line,
members of Indian tribes, and individuals deemed to have suffered
a hardship with respect to their capability to obtain coverage. Id.
§ 5000A(e).
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“shared responsibility payment,” which is a “penalty” consisting of
a fixed dollar amount. Id. §§ 5000A(b), (c).
In short, § 1501 establishes a requirement that, beginning in
2014, each individual obtain health care coverage or pay a monetary
penalty. This individual mandate is a critical element in
Congress’s comprehensive plan to reduce the spiraling health care
costs that this country has experienced and is expected to
experience in the future. Indeed, Congress specifically concluded
that “[t]he requirement is essential to creating effective health
insurance markets in which improved health insurance products that
are guaranteed issue and do not exclude coverage of preexisting
conditions can be sold.” ACA § 1501(a)(2)(I), as amended by §
10106. Thus, the individual mandate provision must be viewed not as
a stand-alone reform, but as one piece of a larger package of
reforms meant to revamp the national health care market by creating
new procedures and institutions to reduce overall costs. See ACA §
1501(a)(2)(H), as amended by § 10106. Put differently, many of the
reforms contained in the Affordable Care Act rely on the individual
mandate--or, more specifically, the reduction in health insurance
premiums that the mandate is intended to produce--to help support
their own financial viability.
Plaintiffs are individual federal taxpayers who specifically
allege that they can afford health insurance coverage, but that
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they have chosen not to purchase it in the past and do not wish to
purchase it in the future. Plaintiff Mead is a sixty-two year-old,
self-employed resident of North Carolina who has not had health
insurance for approximately eighteen years. Am. Compl. ¶¶ 11-14
[Dkt. No. 10]. Plaintiff Lee is a sixty year-old, unemployed
resident of Texas who has not had health insurance for
approximately twenty-two years, although he could obtain coverage
under the plan held by his wife, who is employed. Id. ¶¶ 23-26.
Plaintiff Seven-Sky is a fifty-three year-old, self-employed
resident of New York who has not had health insurance for at least
six years. Id. ¶¶ 37-39. Plaintiff Ruffo is a forty-nine year-old,
self-employed resident of Texas who has not had health insurance
for at least five years. Id. ¶¶ 51-54. Finally, Plaintiff Rodriguez
is a thirty-six year-old resident of Texas who is a stay-at-home
mother of three children and who has not had health insurance for
approximately ten years. Id. ¶¶ 63-75.
According to Plaintiffs, they are all “generally in good
health.” Id. ¶¶ 12, 25, 39, 53, 65. While Plaintiffs Ruffo and
Rodriguez do intend to consume medical services in the future, they
object to § 1501 because they would prefer to pay for those
services out of pocket. Plaintiffs Mead, Lee, and Seven-Sky, on the
other hand, allege that they will continue to refuse all medical
services for the remainder of their lives.
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None of the Plaintiffs currently qualify for Medicare or
Medicaid, and Plaintiffs Mead, Lee, and Seven-Sky have stated that
they will not enroll in Medicare once they do qualify. Id. ¶¶ 11,
24, 38, 52, 64. Plaintiffs contend that they also do not qualify
for any of the exemptions under the ACA, and that it is thus
“highly likely” that they will be required to either purchase
health insurance or make an annual shared responsibility payment
beginning in 2014. Id. ¶¶ 14, 27, 41, 55, 67.
Plaintiffs strenuously object to the Act’s individual mandate
because they believe that the federal government lacks the
constitutional authority to require them either to purchase health
insurance or pay a substantial penalty. According to Plaintiffs,
the individual mandate provision will impose annual shared
responsibility payments through 2020 costing Plaintiffs Mead, Lee,
Seven-Sky, and Ruffo a minimum of $3,895 each and Plaintiff
Rodriguez a minimum of $11,685, for a total cost to Plaintiffs of
$27,265 in this period. Plaintiffs claim that anticipation of these
costs has compelled them to “adjust their fiscal affairs” in the
present. Id. ¶ 4.
Plaintiffs also object to the individual mandate on religious
grounds. Plaintiffs Mead, Lee, and Seven-Sky believe that God will
provide for their physical, spiritual, and financial well-being,
and that “[b]eing forced to buy health insurance conflicts with
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[their] religious faith because [they] believe[] that [they] would
be indicating that [they] need[] a backup plan and [are] not really
sure whether God will, in fact, provide for [their] needs.” Id. ¶¶
16, 29, 43. Plaintiffs Ruffo and Rodriguez do not wish to purchase
health insurance because it is contrary to their beliefs in a
holistic approach to medicine. Id. ¶ 56, 68. Rodriguez specifically
objects on the ground that health insurance would not cover many of
the medical services and health products she currently pays for out
of pocket.3 Id. ¶ 69.
Based on these objections, Plaintiffs assert in their Amended
Complaint that the Act’s individual mandate and its related
enforcement provisions exceed Congress’s power under Article I of
the Constitution and, consequently, that these provisions are
unconstitutional and unenforceable. In the alternative, Plaintiffs
argue that the individual mandate violates their rights as set
forth in RFRA.
On August 20, 2010, Defendants filed the present Motion to
Dismiss under Federal Rule of Civil Procedure 12(b)(6).4 The
Government argues that the Amended Complaint fails to state a claim
3
Plaintiff Rodriguez does not specify which services that
she currently pays for out of pocket would not be covered by health
insurance.
4
As noted earlier, Defendants have, for all practical
purposes, withdrawn their Motion to Dismiss under Rule 12(b)(1).
See supra n.1.
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because Congress does have authority under the Commerce Clause and
the General Welfare Clause of Article I of the Constitution to
enact § 1501, and because § 1501 does not violate RFRA.
II. Standard of Review
Under Rule 12(b)(6), a plaintiff need only plead “enough facts
to state a claim to relief that is plausible on its face” and to
“nudge[] [his or her] claims across the line from conceivable to
plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007). “[A] complaint [does not]
suffice if it tenders naked assertions devoid of further factual
enhancement.” Iqbal, 129 S.Ct. at 1949 (internal quotations
omitted) (citing Twombly, 550 U.S. at 557, 127 S.Ct. 1955).
Instead, the complaint must plead facts that are more than “merely
consistent with” a defendant’s liability; “the pleaded factual
content [must] allow[] the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. at
1940.
“[O]nce a claim has been stated adequately, it may be
supported by showing any set of facts consistent with the
allegations in the complaint.” Twombly, 550 U.S. at 563, 127 S.Ct.
1955. Under the standard set forth in Twombly, a “court deciding a
motion to dismiss must . . . assume all the allegations in the
complaint are true (even if doubtful in fact) . . . [and] must give
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the plaintiff the benefit of all reasonable inferences derived from
the facts alleged.” Aktieselskabet AF 21. November 2001 v. Fame
Jeans Inc., 525 F.3d 8, 18 (D.C. Cir. 2008) (internal quotations
marks and citations omitted); see also Tooley v. Napolitano, 586
F.3d 1006, 1007 (D.C. Cir. 2009) (declining to reject or address
the government’s argument that Iqbal invalidated Aktieselskabet).
Of course, if a claim does not rest on sound legal conclusions, it
does not state “a plausible claim for relief,” regardless of the
facts alleged. Iqbal, 129 S.Ct. at 1950.
III. Analysis
The Court will first address its subject matter jurisdiction
over this case, before turning to the parties’ legal arguments
concerning Plaintiffs’ substantive claims.
A. Article III Subject Matter Jurisdiction
On January 21, 2011, Defendants gave notice to this Court of
their intent not to pursue their arguments that the Amended
Complaint should be dismissed under Federal Rule of Civil Procedure
12(b)(1) for lack of subject matter jurisdiction. Although
Defendants have waived these arguments, every federal court must
satisfy itself of its own subject matter jurisdiction, which is
limited by Article III of the Constitution. See FW/PBS, Inc. v.
Dallas, 493 U.S. 215, 230-31, 110 S.Ct. 596, 107 L.Ed.2d 603-10-
(1990). Therefore, this Court must determine whether it has
jurisdiction.
Article III of the United States Constitution limits federal
jurisdiction to actual cases and controversies. “Three
inter-related judicial doctrines--standing, mootness, and ripeness-
-ensure that federal courts assert jurisdiction only over” such
disputes. Worth v. Jackson, 451 F.3d 854, 855 (D.C. Cir. 2006). Two
of those doctrines formerly asserted by Defendants, standing and
ripeness, have been the topic of extended discussion in the
district court opinions deciding motions to dismiss in similar
challenges to the ACA made across the country,5 and will now be
considered in the context of this case.
5
See Goudy-Bachman v. United States Dep’t of Health and
Human Svs., No. 10-cv-763, 2011 WL 223010, at *4-8 (M.D. Pa. Jan.
24, 2011); New Jersey Physicians, Inc. v. Obama, No. 10-cv-1489,
2010 WL 5060597, at *3-8 (D.N.J. Dec. 8, 2010); Liberty Univ., Inc.
v. Geithner, No. 6:10-cv-00015, 2010 WL 4860299, at *3-8 (W.D. Va.
Nov. 30, 2010); State of Florida ex rel. McCollum v. United States
Dep’t of Health and Human Servs., 716 F.Supp.2d 1120, 1144-50 (N.D.
Fla. 2010); Thomas More Law Ctr. v. Obama, 720 F.Supp.2d 882, 887-
90 (E.D. Mich. 2010); United States Citizens Ass’n v. Sebelius, No.
10-cv-1065, 2010 WL 4947043, at *3-5 (N.D. Ohio Nov. 22, 2010);
Baldwin v. Sebelius, No. 10-cv-1033, 2010 WL 3418436, at *1-5 (S.D.
Cal. Aug. 27, 2010); see also Virginia ex rel. Cuccinelli v.
Sebelius, 702 F.Supp.2d 598, 602-08 (E.D. Va. 2010) (discussing
standing and ripeness in challenge brought by Commonwealth of
Virginia, rather than any individual plaintiffs).
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1. Standing
In Lujan v. Defenders of Wildlife, the Supreme Court
established the following three requirements for Article III
standing:
First, the plaintiff must have suffered an
injury in fact-an invasion of a legally
protected interest which is (a) concrete and
particularized, and (b) actual or imminent,
not conjectural or hypothetical. Second, there
must be a causal connection between the injury
and the conduct complained of--the injury has
to be fairly ... trace[able] to the challenged
action of the defendant, and not ... th[e]
result [of] the independent action of some
third party not before the court. Third, it
must be likely, as opposed to merely
speculative, that the injury will be redressed
by a favorable decision.
504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)
(internal quotations and citations omitted). In this case, the
issues regarding standing relate only to the first element, namely
the requirement that Plaintiffs suffer an injury in fact.
Plaintiffs allege two separate injuries arising from the
individual mandate provision of the ACA in their Amended Complaint.
First, Plaintiffs allege a future injury based on the Act’s
requirement that, beginning in 2014, they make annual shared
responsibility payments for having failed to obtain minimum
essential coverage. Second, Plaintiffs allege that the ACA is
causing actual injury now by forcing them to rearrange their
finances at this time in order to prepare for enforcement of the
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individual mandate in 2014. The question before this Court is
whether either of these claimed injuries establishes Plaintiffs’
standing in this case.
a. Future Injury
The Court will first consider whether Plaintiffs’ alleged
threat of future injury in the form of shared responsibility
payments is “actual or imminent,” and not “conjectural and
hypothetical.” Id. at 560, 112 S.Ct. 2130 (internal quotations and
citations omitted). Specifically, the Court must decide whether
Plaintiffs have demonstrated that the individual mandate will apply
to them in 2014, given the possibility that intervening events
could result in their exemption from the minimum coverage
requirement. Of course, if Plaintiffs are found to be exempt from
the minimum coverage requirement in 2014, their claimed injury--
payment of the penalty--will not occur.
For example, Plaintiff Mead may not be subject to the
individual mandate in 2014 because she will likely be eligible for
Medicare Part A by that time. See Defs.’ Mot. at 11 (“Plaintiff
Mead . . . will likely be subject to automatic entitlement to
Medicare Part A by 2014, thus satisfying the minimum coverage
requirement.”). In addition, the other Plaintiffs “might find
employment by 2014 that provides adequate health [care] coverage,
find that their economic situation has deteriorated to the point
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where they qualify for Medicaid or a financial hardship exemption,
or discover that they have changed their minds about the necessity
of health insurance due to such possible life events as a serious
illness.” Id. at 11-12 (internal citation and footnote omitted). In
short, the argument is that the facts alleged in the Amended
Complaint may change between now and 2014, and therefore this Court
risks “deciding a case in which no injury would have occurred at
all.” Lujan, 504 U.S. at 564 n.2, 112 S.Ct. 2130.
Section 1501 of the ACA provides that Medicare Part A will
satisfy the minimum coverage requirement. See 26 U.S.C. §
5000A(f)(1)(A). Thus, if Plaintiff Mead is covered under Medicare
Part A in 2014, it appears that she would not be subject to the
Act’s penalty provision. However, Mead alleges that she will
nevertheless refuse to enroll in Medicare once she qualifies.
The Social Security Act provides that “[e]very individual who
has attained age 65 and is entitled to monthly [Social Security]
benefits . . . shall be entitled to hospital insurance benefits
under Part A of [the Medicare Act].” 42 U.S.C. § 426(a). To be
entitled to Social Security benefits, Mead must file an
application. See 42 U.S.C. § 402. If Mead does apply for Social
Security benefits, her enrollment in Medicare Part A becomes
automatic. In addition, she may not opt out of Medicare Part A and
still maintain her Social Security benefits; if she chooses to
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maintain her Social Security benefits, she will remain enrolled in
Medicare Part A. See Social Security Administration, POMS Section
HI 00801.002 Waiver of HI Entitlement by Monthly Beneficiary,
available at http://policy.ssa.gov/poms.nsf/lnx/0600801002; Hall v.
Sebelius, 689 F.Supp.2d 10, 15-16 (D.D.C. 2009) (rejecting in part
a challenge to Social Security Administration requirement that
individuals who receive Social Security benefits must also receive
Medicare Part A coverage).
The Amended Complaint states that Mead will refuse to enroll
in Medicare Part A, but it does not allege that she will forgo her
Social Security benefits. See Am. Compl. ¶ 11. In the absence of
such an allegation, the Court is not persuaded that there is a
substantial probability that she will reject her monthly Social
Security checks and therefore not be covered under Medicare Part A
in 2014. Thus, it is unlikely that Plaintiff Mead will be subject
to § 1501’s penalty provision in 2014, which compels the conclusion
that she lacks standing in this case.
Still, if just one of the other Plaintiffs has standing to
raise the claims alleged in the Amended Complaint, this Court has
subject matter jurisdiction. Watt v. Energy Action Educ. Found.,
454 U.S. 151, 160, 102 S.Ct. 205, 70 L.Ed.2d 309 (1981). As
discussed above, the other Plaintiffs’ circumstances could also
change before 2014 so that they either are no longer subject to the
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minimum essential coverage requirement or they satisfy it. However,
this Court agrees with Judge Vinson in McCollum that:
Such ‘vagaries’ of life are always present, in
almost every case that involves a pre-
enforcement challenge. If the defendants’
position were correct, then courts would
essentially never be able to engage in pre-
enforcement review. Indeed, it is easy to
conjure up hypothetical events that could
occur to moot a case or deprive any plaintiff
of standing in the future.
McCollum, 716 F.Supp.2d at 1147 (emphasis in original). Indeed, as
our Court of Appeals has made clear, a plaintiff need only
establish the elements of standing by a “substantial probability,”
not with certainty. Sierra Club v. EPA, 292 F.3d 895, 899 (D.C.
Cir. 2002).
The possible changes in the facts of this case are by no means
certain, or even likely to occur. By the same token, there is a
substantial probability that Plaintiffs will remain subject to 26
U.S.C. § 5000A(a) in 2014. In addition, whether Plaintiffs will be
subject to the individual mandate in the future does not depend on
such future contingencies as third-party actions. This case is
therefore distinguishable from cases in which the alleged future
injuries are truly speculative. See, e.g., Public Citizen, Inc. v.
NHTSA, 489 F.3d 1279, 1290 (D.C. Cir. 2007);6 Gulf Restoration
6
In Public Citizen, four individual tire manufacturers, a
tire industry trade association, and an organization advocating for
consumer safety challenged a National Highway Traffic Safety
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Network, Inc. v. Nat’l Marine Fisheries Serv., 730 F.Supp.2d 157,
165-67 (D.D.C. 2010). Consequently, Plaintiffs have alleged facts
sufficient to show a substantial probability that they will remain
without health insurance coverage in 2014 and that they will
thereafter be required by the ACA to make annual shared
responsibility payments.
A separate issue, however, is whether Plaintiffs’ alleged
future injury is imminent. It first bears noting that, unlike the
plaintiffs in Lujan, Plaintiffs in this case have given a definite
point in time by which their injury will occur, namely 2014, the
effective date of the Act’s individual mandate provision. Thus,
injury is not alleged at “some indefinite future time,” which would
indicate a lack of imminence. Lujan, 504 U.S. at 2139 n.2, 112
S.Ct. 2130.
Administration performance standard for tire pressure monitors. See
489 F.3d 1279. The standard imposed no requirements upon any of
those petitioners, but only on automobile manufacturers, none of
whom were a party to the lawsuit. The petitioners’ claimed injuries
instead arose from an alleged increased risk of car accidents. The
court rejected the tire industry petitioners’ “increased-risk-of-
harm” claim, concluding that such injury was speculative because it
turned on both the occurrence of an accident and the victim’s
subsequent decision to bring a product liability claim against tire
manufacturers. However, the court did not close the door to the
organization’s increased-risk-of-harm claim, but sought further
information that would demonstrate “at least both (i) a
substantially increased risk of harm and (ii) a substantial
probability of harm with that increase taken into account.” Id. at
1296 (emphasis in original).
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Still, Plaintiffs’ alleged injuries are temporally remote. In
McConnell v. FEC, the Supreme Court concluded that an FEC
regulation which would not affect the plaintiff Senator until five
years in the future was “too remote temporally to satisfy Article
III standing.” 540 U.S. 93, 226, 124 S.Ct. 619, 157 L.Ed.2d 491(2003); see also Shays v. FEC, 414 F.3d 76, 122-23 (D.C. Cir. 2005)
(noting that directly regulated parties do not have automatic
standing absent showing of imminent injury). Thus, McConnell
suggests that an injury which is several years in the future may
not be imminent, and therefore insufficient to establish standing.
As the Court noted in Lujan, however, imminence is an “elastic
concept” that does not lend itself to mathematical precision.
Lujan, 504 U.S. at 564 n.4, 112 S.Ct. 2130. In addition, it is
significant that our Circuit held, in a case decided shortly after
McConnell,7 that temporal remoteness alone does not automatically
defeat standing. In Village of Bensenville v. FAA, our Court of
7
Although the threatened injury in Village of Bensenville
was significantly more remote than that in McConnell, the court
never cited McConnell in its opinion. See Village of Bensenville v.
FAA, 376 F.3d 1114 (D.C. Cir. 2004). It is hard to believe that the
Court of Appeals was not fully aware of that decision. One possible
reason for this omission is that, in Village of Bensenville, the
FAA had made a final decision to approve the challenged fees. Thus,
the fee’s application to plaintiffs was nearly certain, although it
was many years in the future. Id. at 1119. In contrast, in
McConnell, it was not as clear that the challenged regulation would
apply to the plaintiff, as its application depended on a number of
factors such as the plaintiff’s decision to seek re-election. 540
U.S. at 226, 124 S.Ct. 619.
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Appeals found standing where the plaintiffs were challenging a fee
scheduled to be collected thirteen years in the future because
“[t]he FAA’s order is final and, absent action by us, come 2017
Chicago will begin collecting the passenger facility fee;
accordingly, ‘the impending threat of injury [to the
municipalities] is sufficiently real to constitute injury-in-fact
and afford constitutional standing.’” 376 F.3d 1114, 1119 (D.C.
Cir. 2004) (quoting Wyo. Outdoor Council v. United States Forest
Serv., 165 F.3d 43, 51 (D.C. Cir. 1999)). In this case, the ACA’s
individual mandate provision is similarly final and, absent action
by the courts or Congress, the federal government will begin to
impose penalties on qualifying individuals who refuse to obtain
minimum essential coverage in 2014.
Although it cannot be said with absolute certainty that
Plaintiffs will qualify as individuals subject to the minimum
essential coverage requirement in 2014, such a conclusion is not
required. All that is required is that Plaintiffs allege a
substantial probability that they will be subject to the ACA’s
requirement to maintain minimum essential coverage in 2014. Sierra
Club, 292 F.3d at 899 (stating that plaintiff need not prove merits
of case, but only demonstrate that there is a “substantial
probability that local conditions will be adversely affected and
thereby injure a member of the organization”) (citation and
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internal quotations omitted). Because the Court finds that
Plaintiffs have met this standard, it concludes that they have
demonstrated a concrete, particularized, and imminent future
injury: payment of a penalty under 26 U.S.C. § 5000A(b) for having
failed to satisfy section § 5000A(a)’s requirement.
b. Actual Injury
As noted above, in addition to alleging future injury,
Plaintiffs also allege actual injury: the requirement that they
adjust their finances now by setting aside money to pay the
anticipated penalties. It is established that the taking of current
measures to ensure future compliance with a statute can constitute
an injury: “The present or near-future costs of complying with a
statute that has not yet gone into effect can be an injury in fact
sufficient to confer standing.” Liberty Univ., 2010 WL 4860299, at
*5 (discussing Virginia v. Am. Booksellers Ass’n, Inc., 484 U.S.
383, 392-93, 108 S.Ct. 636, 98 L.Ed.2d 782 (1988)).
Indeed, as Plaintiffs allege in their Amended Complaint, being
forced to set aside money now prevents them from using that money
for discretionary spending, charitable donations, or paying debts,
thus requiring them to “adjust [their] lifestyle[s] accordingly.”
Am. Compl. ¶¶ 20, 34, 48, 60, 73. For example, Plaintiff Rodriguez
specifically alleges that she is prevented from saving money for
her children’s college education because she must set aside funds
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now in order to pay the Act’s penalties. Id. ¶ 73. As this example
demonstrates, a burden is placed on those individuals who
anticipate being subject to the Act’s individual mandate penalty.
Plaintiffs have therefore suffered an injury in fact.
To summarize, then, Plaintiffs have alleged two distinct
injuries: (1) a future injury fairly traceable to the enforcement
of the ACA beginning in 2014, when they are forced to make annual
shared responsibility payments, and (2) a present injury resulting
from their needing to rearrange their finances now in anticipation
of those mandatory payments. Plaintiffs therefore have demonstrated
their Article III standing to bring this challenge to the ACA.
2. Ripeness
Next, this Court will consider whether it lacks subject matter
jurisdiction over Plaintiffs’ challenge because the case is not yet
ripe for review. Like the Article III case and controversy
requirements for standing, a plaintiff must suffer present or
imminent injury in fact to establish Constitutional ripeness. See
Wyo. Outdoor Council, 165 F.3d at 48 (“Just as the constitutional
standing requirement for Article III jurisdiction bars disputes not
involving injury-in-fact, the ripeness requirement excludes cases
not involving present injury.”). “If a threatened injury is
sufficiently ‘imminent’ to establish standing, the constitutional
requirements of the ripeness doctrine will necessarily be
-21-
satisfied. At that point, only the prudential justiciability
concerns of ripeness can act to bar consideration of the claim.”
Nat’l Treasury Employees Union v. United States, 101 F.3d 1423,
1428 (D.C. Cir. 1996).
Having found both a present injury and a sufficiently imminent
threatened injury to establish Plaintiffs’ standing in this case,
the Court next considers the doctrine of prudential ripeness.
Courts apply a two-pronged balancing test to determine whether a
case is ripe for adjudication. See Abbott Laboratories v. Gardner,
387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). First, a
court must evaluate the “fitness of the issue for judicial
decision.” Id. Second, a court must consider “the hardship to the
parties of withholding [its] consideration.” Id.A case is fit for judicial resolution when it does not depend
upon “contingent future events that may not occur as anticipated,
or indeed may not occur at all.” Thomas v. Union Carbide Agric.
Prods. Co., 473 U.S. 568, 580-81, 105 S.Ct. 3325, 87 L.Ed.2d 409(1985). The possibility of intervening changes in Plaintiffs’
circumstances which would exempt them from the individual mandate
provision has been noted, but once again it does not persuade this
Court that Plaintiffs’ case is nonjusticiable:
[A] litigant seeking shelter behind a ripeness
defense must demonstrate more than a
theoretical possibility that harm may be
averted. The demise of a party or the repeal
-22-
of a statute will always be possible in any
case of delayed enforcement, yet it is well
settled that a time delay, without more, will
not render a claim of statutory invalidity
unripe if the application of the statute is
otherwise sufficiently probable.
Riva v. Com. of Mass., 61 F.3d 1003, 1011 (1st Cir. 1995)
(citations omitted). For the reasons already given, the application
of the individual mandate to at least one of the Plaintiffs is
sufficiently probable that the delay in its enforcement does not
render their claims unripe.
In addition, Plaintiffs have also alleged a ripe, actual
injury consisting of the impact on their current financial
decision-making. That injury is being felt now, and is therefore
not subject to contingent future events. Finally, the issues
presented in this case are overwhelmingly legal, and it is well
established that cases involving only purely legal issues are more
fit for immediate review than those with key unresolved factual
issues. Abbott Laboratories, 387 U.S. at 149, 87 S.Ct. 1507.
In short, the facts as alleged show that “there is a
substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.” Maryland Cas. Co. v. Pacific
Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826(1941). The Court therefore concludes that this case is fit for
judicial resolution.
-23-
With respect to the hardship prong, it is clear that the
individual mandate provision has “a direct effect on the day-to-day
business” of Plaintiffs. Abbott Laboratories, 387 U.S. at 152, 87
S.Ct. 1507. Plaintiffs must restructure their finances either to
buy unwanted health insurance or to put aside money for future
penalties. Pls.’ Opp’n at 7. Thus, if this Court were to delay
consideration of Plaintiffs’ challenge, they would have to choose
between using their money for other purposes now and risking their
inability to pay future penalties under the Affordable Care Act, or
needlessly saving money in the interim that could have been put to
different uses. See Riva, 61 F.3d at 1012 (concluding that hardship
prong was satisfied when plaintiff challenging future pension
reduction would be forced, in absence of judicial review, to guess
whether his benefits would not be reduced--thus finding himself
inadequately prepared if they were--or whether they would be --thus
needlessly “depriv[ing] himself in the intervening seven years”).
For these reasons, the Court concludes that the present case
is fit for judicial review and that delaying its review would
result in further hardship to Plaintiffs.8 Consequently, the Court
8
Apart from the hardship which delaying resolution of this
case would impose on Plaintiffs, “it certainly appears that the
government has an interest in knowing sooner, rather than later,
whether an essential part of its program regulating the national
health care market is constitutional, although in this case it is
not the government asking for the review.” Thomas More Law Ctr.,
720 F.Supp.2d at 890. In addition, as a practical matter, other
-24-
holds that it has subject matter jurisdiction over Plaintiffs’
case.
B. Congress’s Authority for Enacting the Individual Mandate
Having determined that it has subject matter jurisdiction, the
Court now turns to the parties’ substantive arguments concerning
the constitutionality of the ACA. Article I of the Constitution
establishes that the legislative branch of the federal government
shall be one of enumerated--and therefore limited--powers. See U.S.
Const. art. I, § 8. Pursuant to the Tenth Amendment, any powers not
granted to the federal government and not prohibited to the states
by the Constitution are reserved to the states and to the people.
U.S. Const. amend. X. By maintaining this separation between the
federal government and the states, the far-seeing Framers of our
Constitution intended to “‘reduce the risk of tyranny and abuse
from either front.’” United States v. Lopez, 514 U.S. 548, 552, 115
S.Ct. 1624, 131 L.Ed.2d 626 (1995) (quoting Gregory v. Ashcroft,
501 U.S. 452, 458, 111 S.Ct. 2395, 115 L.Ed.2d 410 (1991)).
Plaintiffs seek a declaration that § 1501 is unconstitutional
on the basis that Congress exceeded its constitutional powers when
it required individuals to either purchase health insurance or pay
actors in the health care market who are not parties to this
litigation but must take significant steps to adapt to the ACA’s
reforms--including hospitals, doctors, and, of course, insurance
companies--have a substantial interest in knowing whether the ACA
passes constitutional muster.
-25-
a penalty. Because Plaintiffs are mounting a facial challenge to
the ACA, they must satisfy the demanding requirement to demonstrate
that “no set of circumstances exist under which the Act would be
valid.” United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct.
2095, 95 L.Ed.2d 697 (1987). The Government moves for dismissal of
Plaintiffs’ challenge on the basis that it fails to state a claim
because Article I, § 8 delegates to Congress the power to enact the
individual mandate provision under the Commerce Clause, the
Necessary and Proper Clause, and the General Welfare Clause. The
Court will consider each of these claimed authorities for § 1501 in
turn.
1. Commerce Clause
Article I, § 8 of the Constitution delegates to Congress the
power “[t]o regulate Commerce with foreign Nations, and among the
several States, and with the Indian Tribes.” The earliest judicial
pronouncement setting forth the breadth of the Commerce Clause was
issued by Chief Justice Marshall in Gibbons v. Ogden, 9 Wheat. 1,
196, 6 L.Ed. 23 (1824), where he described it as “the power to
regulate; that is, to prescribe the rule by which [interstate]
commerce is to be governed.”
Since Chief Justice Marshall’s pronouncement, the Commerce
Clause has greatly evolved as the country’s economic system has
become ever more dominated by commerce “among the several States.”
-26-
In the first century of the United States’s history, Congress used
its Commerce Clause power primarily to ensure the survival of the
federal republic by preventing the states from engaging in economic
competition with one another. Thus, the earliest judicial decisions
focused “almost entirely [on] the Commerce Clause as a limit on
state legislation that discriminated against interstate commerce.”
Lopez, 514 U.S. at 553-54, 115 S.Ct. 1624. However, by the turn of
the 20th century the Court’s focus shifted to examining the extent
of Congress’s positive power to regulate, beginning with the
enactment of--and subsequent challenges to--two major pieces of
legislation: the 1887 Interstate Commerce Act, 24 Stat. 379, and
the 1890 Sherman Antitrust Act, 26 Stat. 209, as amended, 15 U.S.C.
§ 1 et seq. See id.; State of Florida ex rel. Bondi, 2011 WL
285683, at *14-15.
Following this shift in focus, the Supreme Court’s
interpretation of Congress’s Commerce Clause power began to evolve
in a line of cases decided in the 20th century. Because these cases
established a number of basic principles applicable to this case,
a brief discussion of them is necessary before turning to an
analysis of the parties’ specific arguments.
a. Long-Standing Principles of Commerce Clause
Jurisprudence
In the early 20th century, when the focus of Commerce Clause
jurisprudence was only beginning to shift toward Congress’s power
-27-
to regulate, the Court’s interpretation of this power was quite
narrow. Famously, in A.L.A. Schechter Poultry Corp. v. United
States, 295 U.S. 495, 550, 55 S.Ct. 837, 79 L.Ed. 1570 (1935), the
Court struck down regulations determining employee hours and wages
because such intrastate employment related only “indirectly” to
interstate commerce.
However, beginning with a case decided in 1937, NLRB v. Jones
& Laughlin Steel Corp., the Court’s interpretation of the Commerce
Clause power expanded to include regulation of those purely
intrastate activities which have a substantial effect, whether
direct or indirect, on interstate commerce. 301 U.S. 1, 36-37, 57
S.Ct. 615, 81 L.Ed. 893 (1937); see also United States v. Darby,
312 U.S. 100, 119-21, 61 S.Ct. 451, 85 L.Ed. 609 (1941)
(reaffirming that Congress may regulate intrastate activities which
affect interstate commerce); Lopez, 514 U.S. at 559, 115 S.Ct. 1624(clarifying that activities must “substantially” affect interstate
commerce to fall within the Commerce Clause power). In the seminal
case of Perez v. United States, the Court therefore identified
three strands of Commerce Clause power: (1) the power to regulate
the channels of interstate commerce, (2) the power to protect the
instrumentalities of interstate commerce and persons or things in
its stream, and (3) the power to regulate activities substantially
affecting interstate commerce. 402 U.S. 146, 150, 91 S.Ct. 1357,
-28-
1359, 28 L.Ed.2d 686 (1971). Defendants rely on this third
category--the power to regulate activities substantially affecting
interstate commerce--to argue that § 1501 falls within the well
established parameters of the Commerce Clause.
In the wake of Jones & Laughlin Steel and Darby, several
Commerce Clause cases have further explained this third strand of
Congress’s power. The earliest relevant case is Wickard v. Filburn,
317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122 (1942), where a plaintiff
wheat farmer challenged a penalty imposed on him pursuant to the
Agricultural Adjustment Act of 1938 for harvesting wheat in excess
of the amount allotted to him. The farmer alleged that the excess
wheat was grown only for his personal consumption, and thus
Congress lacked power under the Commerce Clause to impose the
penalty because his activity was both local and non-commercial in
nature.
The Supreme Court disagreed, concluding that the wheat
“supplies a need of the man who grew it which would otherwise be
reflected by purchases in the open market . . . .” Id. at 128, 63
S.Ct. 82. In other words, the wheat grown for personal consumption
was found to distort the interstate wheat market by eliminating the
demand of the farmer, who would otherwise be forced to purchase it
on the open market. This effect was sufficient for Congress to step
-29-
in and prevent the farmer from harvesting wheat for personal
consumption under its Commerce Clause power.
In reaching this conclusion, Wickard established two basic
principles which are particularly applicable to this case. First,
the Court held that “even if appellee’s activity be local and
though it may not be regarded as commerce, it may still, whatever
its nature, be reached by Congress if it exerts a substantial
economic effect on interstate commerce . . . .” Id. at 125, 63
S.Ct. 82. Wickard therefore signals that the prime focus of the
Commerce Clause inquiry is the activity’s effect on interstate
commerce, not whether it is local or commercial.
Second, the Court held that the fact “[t]hat appellee’s own
contribution to the demand for wheat may be trivial by itself is
not enough to remove him from the scope of federal regulation
where, as here, his contribution, taken together with that of many
others similarly situated, is far from trivial.” Id. at 128, 63
S.Ct. 82. Put differently, an individual’s activities may fall
within the reach of Congress’s Commerce Clause power even if, when
considered alone, the effect on interstate commerce is negligible,
so long as such activities, in the aggregate, have a substantial
effect on such interstate commerce. Thus, courts may not “excise,
as trivial, individual instances of the class,” but must look to
whether the larger class of activities regulated by Congress
-30-
substantially affects interstate commerce. Perez, 402 U.S. at 154,
91 S.Ct. 1357 (citation and internal quotations omitted); see also
Gonzales v. Raich, 545 U.S. 1, 23, 125 S.Ct. 2195, 162 L.Ed.2d 1(2005).
In two other cases decided more than fifty years after
Wickard, the Court examined the outer bounds of Congress’s power
under the third strand of the Commerce Clause by focusing on
whether the activity being regulated was “economic” in nature. In
Lopez, the plaintiff challenged the Gun-Free School Zones Act of
1990, 18 U.S.C. § 922(q)(1)(A) (1988 ed., Supp. V), which
criminalized the possession of a firearm in a school zone. The
Court held that Congress had exceeded its authority in enacting the
law because possession of a firearm “ha[d] nothing to do with
‘commerce’ or any sort of economic enterprise”; because the law
itself was “not an essential part of a larger regulation of
economic activity, in which the regulatory scheme could be undercut
unless the intrastate activity were regulated”; and because the law
contained no jurisdictional element to ensure it would affect only
interstate, and not intrastate, commerce. 514 U.S. at 561, 115
S.Ct. 1624.
The Court also noted the lack of any congressional findings
showing that handgun violence substantially affects interstate
commerce. Finally, the Court refused to “pile inference upon
-31-
inference” to connect handgun violence with interstate commerce
because it concluded that upholding a law on the basis of such a
logical stretch would erode the constitutional limits on Congress’s
power. Id. at 563-65, 115 S.Ct. 1624.
Ten years later, in Morrison, the Court reinforced Lopez’s
emphasis on the “economic” nature of the activity allegedly
affecting interstate commerce when it struck down a section of the
1994 Violence Against Women Act (“VAWA”), 42 U.S.C. § 40302, which
provided a federal civil cause of action for victims of gender-
motivated violence. United States v. Morrison, 529 U.S. 598, 120
S.Ct. 1740, 146 L.Ed.2d 658 (2000). Reviewing its decision in
Lopez, the Court concluded that “the noneconomic, criminal nature
of the conduct at issue was central to our decision in that case.”
Id. at 610, 120 S.Ct. 1740. The Court further stated that “[w]hile
we need not adopt a categorical rule against aggregating the
effects of any noneconomic activity in order to decide these cases,
thus far in our Nation’s history our cases have upheld Commerce
Clause regulation of intrastate activity only where that activity
is economic in nature.” Id. at 613, 120 S.Ct. 1740.
Because VAWA regulated activity--gender-motivated crimes of
violence--that was not economic in nature, and because the statute
did not include a jurisdictional element, the Morrison Court
concluded that the law did not fall within Congress’s Commerce
-32-
Clause power. Although Congress did include in VAWA some findings
on the impact of gender-motivated violence on the economy, the
Court did not regard them as dispositive. Instead, the Court
considered the link which Congress found between gender-motivated
violence and interstate commerce to be too attenuated, and feared
that upholding the law on such a basis could lead Congress to “use
the Commerce Clause to completely obliterate the Constitution’s
distinction between national and local authority . . . .” Id. at
615, 120 S.Ct. 1740.
Lopez and Morrison establish additional principles which must
guide this Court’s analysis. Most importantly, Lopez and Morrison
make clear that Congress may not rely on its Commerce Clause power
to regulate purely non-economic activities when the effect on
interstate commerce is shown only by “pil[ing] inference upon
inference.” Lopez, 514 U.S. at 563-65, 115 S.Ct. 1624.
Significantly, however, Lopez stated that a regulation may be
upheld if it is “an essential part of a larger regulation of
economic activity, in which the regulatory scheme could be undercut
unless the intrastate activity were regulated.” Id. at 561, 115
S.Ct. 1624.
Morrison also made clear that courts undertaking
constitutional review must determine whether Congress had a
rational basis that is not overly attenuated for concluding that
-33-
the class of activity substantially affects interstate commerce.
See Gonzales, 545 U.S. at 22, 125 S.Ct. 2195. In doing so,
congressional findings regarding the regulated activity’s impact on
interstate commerce must be considered, although they are not
necessarily dispositive. Morrison, 529 U.S. at 614-15, 120 S.Ct.
1740.
Finally, the most recent Commerce Clause case of significance
to this lawsuit, Gonzales v. Raich, reaffirmed the continuing
vitality of Wickard. Gonzales, 545 U.S. 1, 125 S.Ct. 2195. In
Gonzales, two plaintiffs who were producing and consuming marijuana
for their own medical treatment pursuant to California law
challenged the Controlled Substances Act (“CSA”), a federal
regulatory scheme which prohibits the intrastate manufacture and
possession of marijuana. The Court upheld the CSA, noting the
striking similarity of the facts in Gonzales to those in Wickard.
In Gonzales, the Court emphasized that the “case law firmly
establishes Congress’ power to regulate purely local activities
that are part of an economic ‘class of activities’ that have a
substantial effect on interstate commerce.” Id. at 17, 125 S.Ct.
2195. The Court therefore distinguished Gonzales from Lopez and
Morrison on the basis that the production and consumption of
marijuana for medical treatment was a “quintessentially economic”
-34-
activity, unlike the possession of a firearm or gender-motivated
violence. Id. at 25, 125 S.Ct. 2195.
The Court also rejected the argument that, although the larger
regulatory scheme contained in the CSA was constitutional, its
particular application to the California plaintiffs’ intrastate,
non-commercial activities was not:
We have never required Congress to legislate
with scientific exactitude. When Congress
decides that the total incidence of a practice
poses a threat to a national market, it may
regulate the entire class.
Id. at 17-18, 125 S.Ct. 2195. In sum, the Court held that Congress
may regulate an entire class of activities if, in the aggregate,
that class has a substantial effect on interstate commerce, even if
particular instances of the activity do not. Id.When considered together, as they must be, Wickard, Lopez,
Morrison, and Gonzales establish three major lines of inquiry. See
id. at 15, 125 S.Ct. 2195 (“[N]one of [the] Commerce Clause cases
can be viewed in isolation.”). First, the Court must consider
whether the decision not to purchase health insurance is an
“economic” one, like the activities in Wickard and Gonzales, or a
“non-economic” one like those in Lopez and Morrison. Second, if the
decision is economic, the Court must determine whether Congress had
a rational basis for concluding that such decisions, when taken in
the aggregate, substantially affect the national health care
-35-
market. Third, the activity may be found to be within the reach of
Congress’s Commerce Clause power if it is “an essential part of a
larger regulation of economic activity, in which the regulatory
scheme could be undercut unless the intrastate activity were
regulated.” Lopez, 514 U.S. at 561, 115 S.Ct. 1624.
b. Application of Long-Standing Principles of
Commerce Clause Jurisprudence to Plaintiffs’
Claim
With these principles in mind, the Court now turns to its
analysis of Defendants’ 12(b)(6) Motion. In undertaking this
analysis, the Court is mindful of the proper balance of power among
the different branches of the federal government and, in
particular, of its duty to apply a presumption of constitutionality
when reviewing laws passed by Congress. See Morrison, 529 U.S. at
606, 120 S.Ct. 1740 (“Due respect for the decisions of a coordinate
branch of Government demands that we invalidate a congressional
enactment only upon a plain showing that Congress has exceeded its
constitutional bounds.”). At the same time, this Court must also be
mindful of the Supreme Court’s consistent warning that the outer
limits of the Commerce Clause must be respected, lest “the
distinction between what is national and what is local” be
“obliterate[d],” resulting in “a completely centralized
government.” Jones & Laughlin Steel, 301 U.S. at 37, 57 S.Ct. 615.
-36-
When it enacted § 1501 of the Affordable Care Act, Congress
made several findings, chief among them the general finding that
“[t]he individual responsibility requirement provided for in this
section . . . is commercial and economic in nature, and
substantially affects interstate commerce.” ACA § 1501(a)(1). Thus,
there can be no doubt that it was the intent of Congress to invoke
its Commerce Clause power in enacting § 1501.9
Congress’s authority under the Commerce Clause to regulate the
interstate insurance markets has long been established. United
States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 552-53,
64 S.Ct. 1162, 88 L.Ed. 1440 (1944). In addition, there is nothing
extraordinary about Congress’s use of its Commerce Clause power to
rein in the price of health insurance policies. “It is well
established by decisions of this Court that the power to regulate
commerce includes the power to regulate the prices at which
commodities in that commerce are dealt in and practices affecting
such prices.” Wickard, 317 U.S. at 128, 63 S.Ct. 82. The question
before this Court, then, is whether Congress’s conclusion that §
9
While such congressional findings are not dispositive of
this Court’s inquiry into the constitutionality of § 1501, they can
help to clarify the purpose of the statutory scheme. See Gonzales,
545 U.S. at 21, 125 S.Ct. 2195 (“[C]ongressional findings are
certainly helpful in reviewing the substance of a congressional
statutory scheme, particularly when the connection to commerce is
not self-evident, and [] we will consider congressional findings in
our analysis when they are available.”).
-37-
1501 was within the reach of its Commerce Clause powers is in
accord with the principles which have been well established in the
Commerce Clause cases discussed above.
(1) An Individual’s Decision to Purchase or
Not to Purchase Health Insurance Is an
“Economic” One
The first question which must be answered is whether
Plaintiffs’ decisions not to purchase health insurance are
“economic” in nature. As noted above, Congress has clear authority
under the Commerce Clause to regulate the insurance markets because
insurance policies are “commodities” in the flow of interstate
commerce. South-Eastern Underwriters Ass’n, 322 U.S. at 552-53,
546-47, 64 S.Ct. 1162. Both the decision to purchase health
insurance and its flip side--the decision not to purchase health
insurance--therefore relate to the consumption of a commodity: a
health insurance policy.
It therefore follows that both decisions, whether positive or
negative, are clearly economic ones. See Gonzales, 545 U.S. at 25-
26, 125 S.Ct. 2195 (“‘Economics’ refers to ‘the production,
distribution, and consumption of commodities.’”) (quoting Webster’s
Third New International Dictionary 720 (1966)). Thus, unlike Lopez
and Morrison, which involved non-economic activity such as the
possession of a firearm or gender-motivated violence, this case
-38-
involves an economic activity: deciding whether or not to purchase
health insurance.
(2) In the Aggregate, the Decisions of
Individuals to Forgo Health Insurance
Substantially Affect the National Health
Care Market
Next, the Court must determine whether Congress had a rational
basis for concluding that such decisions, when considered in the
aggregate, substantially affect the national health insurance
market. The findings on this subject could not be clearer: the
great majority of the millions of Americans who remain uninsured
consume medical services they cannot pay for, often resulting in
personal bankruptcy. In fact, the ACA’s findings state that “62% of
all personal bankruptcies are caused in part by medical expenses.”
ACA § 1501(a)(2)(G), as amended by § 10106. Of even greater
significance to the national economy is the fact that these
uninsured individuals are, in fact, shifting the uncompensated
costs of those services--which totaled $43 billion in 2008--onto
other health care market participants, as well as federal and state
governments and American taxpayers. See ACA §§ 1501(a)(2)(F), (G),
as amended by § 10106; Thomas More Law Ctr., 720 F.Supp.2d at 894.
Because of this cost-shifting effect, the individual decision
to forgo health insurance, when considered in the aggregate, leads
to substantially higher insurance premiums for those other
individuals who do obtain coverage. According to Congress, the
-39-
uncompensated costs of caring for the uninsured are passed on by
health care providers to private insurers, which in turn pass on
the cost to purchasers of health insurance. “This costshifting
increases family premiums by on average over $1,000 a year.” ACA §
1501(a)(2)(F), as amended by § 10106. Thus, the aggregate effect on
interstate commerce of the decisions of individuals to forgo
insurance is very substantial.10
Further, the effect on insurance premiums is not at all
attenuated, as were the links between the regulated activities and
interstate commerce in Lopez and Morrison. In this case, the link
is strikingly similar to that described in Wickard: individuals are
actively choosing to remain outside of a market for a particular
commodity, and, as a result, Congress’s efforts to stabilize prices
for that commodity are thwarted. As Wickard demonstrates, the
effects of such market-distorting behavior are sufficiently related
to interstate commerce to justify Congress’s efforts to stabilize
the price of a commodity through its Commerce Clause power.
10
To put it less analytically, and less charitably, those
who choose--and Plaintiffs have made such a deliberate choice--not
to purchase health insurance will benefit greatly when they become
ill, as they surely will, from the free health care which must be
provided by emergency rooms and hospitals to the sick and dying who
show up on their doorstep. In short, those who choose not to
purchase health insurance will ultimately get a “free ride” on the
backs of those Americans who have made responsible choices to
provide for the illness we all must face at some point in our
lives.
-40-
For the foregoing reasons, the Court finds that Congress had
a rational basis for its conclusion that the aggregate of
individual decisions not to purchase health insurance substantially
affects the national health insurance market. Consequently,
Congress was acting within the bounds of its Commerce Clause power
when it enacted § 1501 in order, as Chief Justice Marshall said,
“to prescribe the rule by which [interstate] commerce is to be
governed.” Gibbons, 9 Wheat. at 196, 6 L.Ed. 23. Thus, Defendants’
Motion to Dismiss on the basis that Plaintiffs have failed to state
a constitutional claim is granted.
(3) Necessary and Proper Clause
The Necessary and Proper Clause delegates to Congress the
power “[t]o make all Laws which shall be necessary and proper for
carrying into Execution the foregoing Powers, and all other Powers
vested by this Constitution in the Government of the United States,
or in any Department or Officer thereof.” U.S. Const., art. I § 8.
This clause is best understood as “a caveat that the Congress
possesses all the means necessary to carry out the specifically
granted ‘foregoing’ powers of § 8 ‘and all other Powers vested by
this Constitution,’” Kinsella v. United States ex rel. Singleton,
361 U.S. 234, 247, 80 S.Ct. 297, 4 L.Ed.2d 268 (1960) (quoting U.S.
Const., art. I § 8), rather than as an independent source of
congressional power.
-41-
As the Supreme Court recently noted, the Necessary and Proper
Clause “grants Congress broad authority to enact federal
legislation.” United States v. Comstock, 130 S.Ct. 1949, 1956, 176
L.Ed.2d 878 (2010). “Let the end be legitimate, let it be within
the scope of the constitution, and all means which are appropriate,
which are plainly adapted to that end, which are not prohibited,
but consist with the letter and spirit of the constitution, are
constitutional.” McCulloch v. Maryland, 4 Wheat. 316, 421, 4 L.Ed.
579 (1819). Courts look to see whether the challenged statute
constitutes a means that is “rationally related to the
implementation of a constitutionally enumerated power” when
determining whether it falls within Congress’s power under the
Necessary and Proper Clause. Comstock, 130 S.Ct. at 1956. In the
specific context of the Commerce Clause, the Supreme Court held in
Lopez that regulation of intrastate economic activity may be upheld
if it is found to constitute “an essential part of a larger
regulation of economic activity, in which the regulatory scheme
could be undercut unless the intrastate activity were regulated.”
Lopez, 514 U.S. at 561, 115 S.Ct. 1624.
As noted above, the individual mandate is best viewed not as
a stand-alone reform, but as an essential element of the larger
regulatory scheme contained in the ACA. For example, without the
individual mandate, § 1001 of the ACA, which prohibits insurance
-42-
companies from denying or limiting coverage on the basis of pre-
existing conditions, would otherwise create incentives for people
to wait until they are sick or injured to obtain insurance. Not
only might this increase the incidence of sickness by discouraging
such individuals from obtaining preventive care, but insurance
premiums would rise for all other individuals as a result. See
Thomas More Law Ctr., 720 F.Supp.2d at 895 (“As a result, the most
costly individuals [the sick] would be in the insurance system and
the least costly [the well] would be outside it. . . .
aggravat[ing] current problems with cost-shifting and lead[ing] to
even higher premiums.”). Thus, without § 1501’s individual mandate,
the ACA’s efforts to end discrimination in insurance on the basis
of pre-existing conditions would be financially untenable.
For this reason, the individual mandate provision is an
appropriate means which is rationally related to the achievement of
Congress’s larger goal of reforming the national health insurance
system. In other words, § 1501 is a clear-cut example of “an
essential part of a larger regulation of economic activity, in
which the regulatory scheme could be undercut unless the intrastate
activity were regulated.” Lopez, 514 U.S. at 561, 115 S.Ct. 1624.
Thus, the Court reaffirms its conclusion that Congress acted within
the bounds of its Commerce Clause power, especially when
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considering the Necessary and Proper Clause, when it enacted §
1501.
As this analysis makes clear, the principles established by
the Supreme Court in its Commerce Clause jurisprudence, which of
course must guide this Court’s analysis, compel the conclusion that
§ 1501 was enacted pursuant to Congress’s Commerce Clause power.
Defendants’ Motion to Dismiss for failure to state a claim on the
basis that the Commerce Clause, when considered together with the
Necessary and Proper Clause, delegates to Congress the power to
enact § 1501’s individual mandate is therefore granted.
(4) Plaintiffs’ Arguments Attempting to
Distinguish this Case from Wickard and
Gonzales Are Unpersuasive
Despite the clear application of long-established Commerce
Clause principles to this case, Plaintiffs attempt to distinguish
it from Wickard and Gonzales in two ways. Specifically, Plaintiffs
argue (1) that § 1501 is not a valid exercise of the Commerce
Clause power because it reaches economic decision-making, which is
“passive activity” not subject to regulation under the Commerce
Clause case law, and (2) that, in any event, Congress cannot
regulate the entire class of individuals included under § 1501
because some, including Plaintiffs, will either continue to pay out
of pocket for medical services, rather than shift those costs onto
others, or will refuse medical care altogether.
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(a) Economic Decision-Making Is an
Activity Subject to Congress’s
Commerce Clause Power
First, Plaintiffs define the conduct regulated by § 1501 as
“being lawfully present in the United States without health
insurance,” which they contend is not activity at all, but rather
“abstract economic decision-making.” Pls.’ Opp’n at 17. The core of
Plaintiffs’ challenge is that Congress may not, under the auspices
of its Commerce Clause power, regulate such economic inactivity.
See id. at 12-13.
As previous Commerce Clause cases have all involved physical
activity, as opposed to mental activity, i.e. decision-making,
there is little judicial guidance on whether the latter falls
within Congress’s power. See Thomas More Law Ctr., 720 F.Supp.2d at
893 (describing the “activity/inactivity distinction” as an issue
of first impression). However, this Court finds the distinction,
which Plaintiffs rely on heavily, to be of little significance. It
is pure semantics to argue that an individual who makes a choice to
forgo health insurance is not “acting,” especially given the
serious economic and health-related consequences to every
individual of that choice. Making a choice is an affirmative
action, whether one decides to do something or not do something.
They are two sides of the same coin. To pretend otherwise is to
ignore reality.
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More importantly, the premise underlying Plaintiffs’
activity/inactivity distinction--that individuals can, in the
absence of § 1501’s individual mandate, remain outside of the
health care market altogether--is erroneous.
First, this Court agrees with the two other district courts
which have ruled that the individuals subject to § 1501’s mandate
provision are either present or future participants in the national
health care market. See Liberty Univ., 2010 WL 4860299, at *15
(“Nearly everyone will require health care services at some point
in their lifetimes, and it is not always possible to predict when
one will be afflicted by illness or injury and require care.”);
Thomas More Law Ctr., 720 F.Supp.2d at 894 (“The health care market
is unlike other markets. No one can guarantee his or her health, or
ensure that he or she will never participate in the health care
market. . . . The plaintiffs have not opted out of the health care
services market because, as living, breathing beings . . . they
cannot opt out of this market.”). Thus, the vast majority of
individuals, if not all individuals, will require some medical care
in their lifetime.
Second, in contrast to other markets for goods and services,
if an individual is sick or injured, medical providers may not
refuse basic medical services under federal law, regardless of the
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individual’s ability to pay.11 See Emergency Medical Treatment and
Active Labor Act of 1986, 42 U.S.C. § 1395dd (requiring all
hospitals participating in Medicare and offering emergency services
to stabilize any patient who arrives, regardless of whether the
patient has insurance). In addition to this federal requirement,
most hospitals “have some obligation to provide care for free or
for a minimal charge to members of their community who could not
afford it otherwise” and “[f]or-profit hospitals also provide such
charity or reduced-price care.” Cong. Budget Office, Key Issues in
Analyzing Major Health Insurance Proposals 13 (2008).
11
This second aspect of the health care market
distinguishes the ACA from Plaintiffs’ hypothetical scenario in
which Congress enacts a law requiring individuals to purchase
automobiles in an attempt to regulate the transportation market.
Even assuming that all individuals require transportation in the
same sense that all individuals require medical services,
automobile manufacturers are not required by law to give cars to
people who show up at their door in need of transportation but
without the money to pay for it. Similarly, food and lodging are
basic necessities, but the Court is not aware of any law requiring
restaurants or hotels to provide either free of charge.
It should be emphasized that this distinction is not merely a
useful limiting principle on Congress’s Commerce Clause power.
Rather, it is a basic, relevant fact about the operation of the
health care market which is critical to understanding the ACA’s
efforts to reform the health care system. The requirement placed
upon medical providers by federal law to care for the sick and
injured without recompense is part of the cost-shifting problem
that Congress sought to redress by enacting the ACA. When a
supplier is obligated by law to produce goods or services for free,
there is bound to be a substantial effect on market prices if
consumers’ behavior results in that obligation’s frequent
invocation.
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The combined effect of these two unique aspects of the health
care market--the inevitability of individuals’ entrance into that
market and the obligation of providers to serve those who do enter-
-is to guarantee that nearly all individuals, rich or poor, are or
will be consumers of medical services. This effect distinguishes
the present case from Plaintiffs’ hypothetical scenario in which
Congress “could not have dealt with the issue of low wheat prices
[in Wickard] by declaring that all Americans must buy a specific
amount of wheat or pay a penalty for failing to do so.” Pls.’ Opp’n
at 13. Plaintiffs’ argument that the Commerce Clause power does not
extend to regulations which require individuals to enter a market
they would otherwise choose to remain outside of is irrelevant to
this case. Here, Congress enacted § 1501 based on its understanding
that (1) all individuals inevitably consume medical services and
(2) when they do consume those services, the way in which they pay
for them substantially affects market prices.
Thus, as inevitable participants in the health care market,
individuals cannot be considered “inactive” or “passive” in
choosing to forgo health insurance. Instead, as Defendants argue,
such a choice is not simply a decision whether to consume a
particular good or service, but ultimately a decision as to how
health care services are to be paid and who pays for them. See ACA
§ 1501(a)(2)(A), as amended by § 10106 (“The requirement [of
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minimum essential coverage] regulates activity that is commercial
and economic in nature: economic and financial decisions about how
and when health care is paid for, and when health insurance is
purchased.”). In choosing not to purchase health insurance,
Plaintiffs are actively arranging their circumstances (whether to
save for their children’s education or buy a new car) so that they
must, in the future, rely on either their own resources or on
federal law requiring medical providers to care for the sick and
injured. There is no question, as Congress noted, that such
mandatory care often goes uncompensated, although ultimately paid
for by other market participants and the taxpayer. See ACA §
1501(a)(2)(F), as amended by § 10106. For these reasons, the Court
concludes that a decision not to purchase health insurance is an
“activity.”
(b) Congress May Regulate the Class of
Individuals Who Forgo Health
Insurance
Next, the Court turns to Plaintiffs’ argument that § 1501 is
unconstitutional because it reaches individuals who will either pay
for future medical services out of pocket or who will refuse
medical services altogether.
As stated above, Plaintiffs Ruffo and Rodriguez admit that
they will consume medical services in the future, but allege that
they will pay for all services out of pocket as they have in the
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past. As an initial matter, the Court notes that Plaintiffs have no
way of predicting what their future medical costs will be. In 2008,
the average hospital stay in the United States lasted 4.6 days and
included total charges of $29,046. See U.S. Dep’t of Health and
Human Servs., Agency for Healthcare Research and Quality,
Healthcare Cost and Utilization Project (HCUP), available at
http://www.ahrq.gov/data/hcup/. If Plaintiffs Ruffo and Rodriguez
or dependents in their care were to become seriously ill,
necessitating hospital stays in excess of 4.6 days, one can only be
skeptical about how long they would be able to continue to pay out
of pocket for such costly medical services. Such skepticism seems
especially warranted in light of Plaintiffs’ admissions that their
concern about their ability to make the far less costly shared
responsibility payments in 2014 is already leading them to adjust
their current finances. Am. Compl. ¶¶ 60-62, 73. In fact, over 62%
of personal bankruptcies in this country are attributable in part
to medical expenses, a fact which Congress relied upon in enacting
§ 1501. See ACA § 1501(2)(G), as amended by § 10106.
In any event, even assuming that Plaintiffs will be able to
pay for their future medical expenses, the question is whether
Congress has the power to regulate the class of individuals
participating in the health care market, which includes Ruffo and
Rodriguez because they concede they will use health care services
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in the future. This Court has already concluded that Congress’s
regulation of that class is within the limits of the Commerce
Clause power. Thus, § 1501 is constitutional regardless of whether
Plaintiffs Ruffo and Rodriguez, by paying out-of-pocket for every
medical charge accrued, will individually avoid the cost-shifting
effect which § 1501 is meant to ameliorate. See Gonzales, 545 U.S.
at 17-22, 125 S.Ct. 2195 (refusing to “excise individual components
of th[e] larger scheme”); Perez, 402 U.S. at 154-55, 91 S.Ct. 1357(“Where the class of activities is regulated and that class is
within the reach of federal power, the courts have no power to
excise, as trivial, individual instances of the class.”) (internal
quotations and citation omitted).
In contrast to Plaintiffs Ruffo and Rodriguez, Plaintiffs Lee
and Seven-Sky12 allege that they will remain passive, meaning they
will not enter the national health care market in the future to
consume services no matter what their circumstances are. Similar
avowals that “non-commercial” activity would remain as such were
viewed with some skepticism in both Wickard and Gonzales. See
Wickard, 317 U.S. at 128, 63 S.Ct. 82 (stating that home-consumed
wheat could have a substantial influence on price and market
conditions because “being in marketable condition such wheat
12
It should be remembered that Plaintiff Mead, who made the
same allegation, was dismissed for lack of standing. See supra Part
III.A.1.
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overhangs the market and if induced by rising prices tends to flow
into the market and check price increases”); Gonzales, 545 U.S. at
31-32, 125 S.Ct. 2195 (“[T]he danger that excesses [of marijuana
produced for personal consumption] will satisfy some of the
admittedly enormous demand for recreational use seems obvious.”).
It is worth noting that, like the farmer and marijuana user in
Wickard and Gonzales, respectively, individuals like Plaintiffs who
allege now that they will refuse medical services in the future may
well find their way into the health care market when they face the
reality of illness or injury.
Indeed, for the reasons discussed above, this Court has
rejected the premise that individuals can opt out of the health
care market indefinitely. See supra Part III.B.1.b(4)(a). The Court
therefore likewise rejects Plaintiffs’ argument that Congress
cannot subject them to regulation under § 1501 because they will
never consume medical services.13
13
It is correct that, for the purposes of deciding a Rule
12(b)(6) motion, this Court must accept the factual allegations in
Plaintiffs’ Amended Complaint as true. Iqbal, 129 S.Ct. at 1949-50.
However, Plaintiffs’ allegations as to their future conduct are
purely speculative and therefore unprovable. As such, they are not
entitled to an assumption of truth. See Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001) (explaining that a
court reviewing a 12(b)(6) motion is not required “to accept as
true allegations that are merely conclusory, unwarranted deductions
of fact, or unreasonable inferences”).
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Even assuming for the purposes of this Motion, however, that
Plaintiffs Lee and Seven-Sky do remain committed to refusing
medical care throughout their lives, Congress may still regulate
the larger class of individuals when it “decides that the total
incidence of a practice poses a threat to a national market.”
Gonzales, 545 U.S. at 17, 125 S.Ct. 2195. Consequently, the Court
looks not to Plaintiffs’ particular situation, but must ask instead
whether the practice of the broader class of uninsured individuals
threatens the national health care market. However, “when it is
necessary in order to prevent an evil to make the law embrace more
than the precise thing to be prevented it may do so.’” Perez, 402
U.S. at 154-55, 91 S.Ct. 1357 (quoting Westfall v. United States,
274 U.S. 256, 259, 47 S.Ct. 629, 71 L.Ed. 1036 (1927)). Because
this Court has determined that the practices of the broader class
of uninsured individuals substantially affects the health care
market, Plaintiffs’ own individual activity may be regulated
pursuant to Congress’s Commerce Clause power.
In addition, as this Court has explained, § 1501’s individual
mandate is “an essential part of a larger regulation of economic
activity, in which the regulatory scheme could be undercut unless
the intrastate activity were regulated.” Lopez, 514 U.S. at 561,
115 S.Ct. 1624. Because excepting individuals like Plaintiffs from
§ 1501 would create a “gaping hole” in the ACA, this Court declines
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to do so. Gonzales, 545 U.S. at 22, 125 S.Ct. 2195 (refusing to
excise individual components involving only intrastate activity
from Congress’s larger regulatory scheme in part because exclusion
of such components would leave a “gaping hole” in the CSA).
For all these reasons, the Court finds Plaintiffs’ arguments
against dismissal of their constitutional claim unpersuasive. The
crux of Plaintiffs’ arguments is that § 1501 is an unprecedented
attempt by Congress to regulate individual behavior, and therefore
threatens individuals’ freedom of choice. Appealing as this
emotionally charged argument may sound, the ACA is not as
unprecedented as Plaintiffs claim: as already discussed, Congress’s
broad power to regulate individual behavior under the Commerce
Clause is well established. See Gibbons, 9 Wheat. at 196, 6 L.Ed.
23; Wickard, 317 U.S. at 118-29, 63 S.Ct. 82; Gonzales, 545 U.S. at
15-33, 125 S.Ct. 2195.
In addition, the mere fact that a case presents a novel set of
facts is not cause for viewing an act of Congress with skepticism
or doubt. See, e.g., Liberty Univ., 2010 WL 4860299, at *14 (“While
the unique nature of the market for health care and the breadth of
the Act present a novel set of facts for consideration, the
well-settled principles expounded in [Gonzales] and Wickard control
the disposition of this claim.”); Florida ex rel. McCollum, 715
F.Supp.2d at 1164 (“[T]o say that something is “novel” and
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“unprecedented” does not necessarily mean that it is
“unconstitutional” and “improper.”). On the contrary, as noted
above, this Court is bound to grant congressional action a
presumption of constitutionality. Morrison, 529 U.S. at 606, 120
S.Ct. 1740 .
Finally, Plaintiffs argue that upholding § 1501 under the
Commerce Clause will eviscerate any limits on Congress’s power.
First, this Court emphasizes that its task is only to determine
whether this particular statute is constitutional, and not to
speculate about other Commerce Clause challenges presenting
different factual scenarios which may arise in the future. Second,
there is a straightforward response to the “parade of horribles”
claim: the limits on Congress’s Commerce Clause power are spelled
out clearly in Lopez, 514 U.S. 549, 115 S.Ct. 1624, and Morrison,
529 U.S. 598, 120 S.Ct. 1740. These two cases establish that (1)
the activity subject to regulation under the Commerce Clause must
be economic in nature, (2) the link between the activity and
interstate commerce must not be too attenuated, and (3) other
activities may be upheld if they are an essential part of a larger
regulatory scheme. Because § 1501 satisfies these requirements,
this Court sees no danger of granting Congress limitless power by
concluding that § 1501 was enacted pursuant to the Commerce Clause.
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2. General Welfare Clause
As an alternative to their Commerce Clause arguments,
Defendants argue that the General Welfare Clause, also called the
Taxing and Spending Clause, in Article I, Section 8 of the
Constitution grants Congress the power to enact the shared
responsibility payment provision, 26 U.S.C. § 5000A(b). The General
Welfare Clause states that “[t]he Congress shall have Power To lay
and collect Taxes, Duties, Imposts and Excises, to pay the Debts
and provide for the common Defence and general Welfare of the
United States; but all Duties, Imposts and Excises shall be uniform
throughout the United States.” U.S. Const. art. I, § 8. Under this
Clause, Congress must have intended 26 U.S.C. § 5000A(b) as a tax
if it is to be deemed constitutional.
Therefore, we must first consider whether § 5000A(b), which
uses the term “penalty,” operates as a tax. See Helwig v. United
States, 188 U.S. 605, 613, 23 S.Ct. 427, 47 L.Ed. 614 (1903).
(“[I]n the absence of any declaration by Congress affecting the
manner in which the provision shall be treated, courts must decide
the matter in accordance with their views of the nature of the
act.”). In reaching its decision, the Court notes that, to date,
every court which has considered whether § 1501 operates as a tax
has concluded that it does not. See Goudy-Bachman, 2011 WL 223010,
at *10-12; Liberty Univ., 2010 WL 4860299, at *9-11; State of
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Florida, 716 F.Supp.2d at 1130-41; United States Citizens Ass’n,
2010 WL 4947043, at *5; Virginia ex rel. Cuccinelli v. Sebelius,
728 F.Supp.2d 768, 786-88 (E.D. Va. 2010).
“In construing a statute, the court begins with the plain
language of the statute.” United States v. Braxtonbrown-Smith, 278
F.3d 1348, 1352 (D.C. Cir. 2002). As already noted, Congress chose
to label the shared responsibility payment in § 5000A(b) as a
penalty, although it chose to label several other assessments
required under the ACA as taxes. Compare 26 U.S.C. § 5000A(b)
(labelling the shared responsibility payment a “penalty”) with ACA
§§ 1405, 9001, 9015, 10907 (imposing “taxes”).
Because “[w]e must strive to interpret a statute to give
meaning to every clause and word,” this choice of language
obviously suggests that Congress did not intend the mandatory
payment in § 5000A(b) to act as a revenue-raising tax, but rather
as a punitive measure. Donnelly v. FAA, 411 F.3d 267, 295 (D.C.
Cir. 2005); see also Dep’t of Revenue v. Kurth Ranch, 511 U.S. 767,
779-80, 114 S.Ct. 1937, 128 L.Ed.2d 767 (1994) (“Whereas fines,
penalties, and forfeitures are readily characterized as sanctions,
taxes are typically different because they are usually motivated by
revenue-raising, rather than punitive, purposes.”); Russello v.
United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983)
(“Where Congress includes particular language in one section of a
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statute but omits it from another section of the same Act, it is
generally presumed that Congress acts intentionally and purposely
in the disparate inclusion or exclusion.”).
This conclusion is bolstered by the Congressional findings in
support of § 5000A. First, Congress makes clear that it is invoking
its regulatory authority under the Commerce Clause, not its power
to lay and collect taxes. See ACA § 1501(a), as amended by § 10106.
Second, the findings demonstrate that the goal of § 5000A is not to
raise revenue, but to achieve near-universal health care coverage
by giving individuals the incentive to maintain their health
insurance under threat of penalty:
[I]f there were no requirement [to maintain
minimum essential coverage], many individuals
would wait to purchase health insurance until
they needed care. By significantly increasing
health insurance coverage, the requirement,
together with the other provisions of this
Act, will minimize this adverse selection and
broaden the health insurance risk pool to
include healthy individuals, which will lower
health insurance premiums. The requirement is
essential to creating effective health
insurance markets in which improved health
insurance products that are guaranteed issue
and do not exclude coverage of preexisting
conditions can be sold.
Id. at § 1501(a)(2)(I), as amended by § 10106.
Finally, as Judge Vinson of the United States District Court
for the Northern District of Florida discusses in great detail, the
legislative history of § 1501 makes clear that Congress did not
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intend the provision to operate as a tax. See State of Florida, 716
F.Supp.2d at 1130-41. To the contrary, the legislative history
indicates that Congress specifically rejected the term “tax” in
favor of “penalty.” Id. As Judge Vinson notes, “‘[f]ew principles
of statutory construction are more compelling than the proposition
that Congress does not intend sub silentio to enact statutory
language that it has earlier discarded in favor of other
language.’” Id. at 1134 (quoting INS v. Cardoza-Fonseca, 480 U.S.
421, 442, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987)).
For these reasons, the Court concludes that Congress did not
intend § 1501 to operate as a tax, and therefore Defendants cannot
rely on the General Welfare Clause as authority for its enactment.
Consequently, Defendants’ Motion to Dismiss on the basis that §
1501 was constitutionally enacted pursuant to the General Welfare
Clause is denied.
C. Religious Freedom Restoration Act
Finally, Defendants move under Rule 12(b)(6) for dismissal of
Plaintiffs Lee and Seven-Sky’s claim that § 1501 violates RFRA.
RFRA prevents the federal government from substantially burdening
a person’s exercise of religion, “even if the burden results from
a rule of general applicability.” 42 U.S.C. § 2000bb-1(a). The only
exception to this rule is when the burden “(1) is in furtherance of
a compelling governmental interest; and (2) is the least
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restrictive means of furthering that compelling governmental
interest.” Id. § 2000bb-1(b); see also Gonzales v. O Centro
Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 424, 126 S.Ct.
1211, 163 L.Ed.2d 1017 (2006).
To survive Defendants’ Motion to Dismiss, the Amended
Complaint must allege sufficient facts showing that § 1501 imposes
a substantial burden on Plaintiffs’ exercise of religion. Under
RFRA, “religious exercise” includes “any exercise of religion,
whether or not compelled by, or central to, a system of religious
belief.” 42 U.S.C. §§ 2000bb-2(4), 2000cc-5(7). When considering a
RFRA claim, the focus is therefore not on the centrality of the
religious exercise to the adherent’s own religion, but on whether
the adherent’s sincere religious exercise is substantially
burdened. Kaemmerling v. Lappin, 553 F.3d 669, 678 (D.C. Cir. 2008)
(citing Levitan v. Ashcroft, 281 F.3d 1313, 1321 (D.C. Cir.2002)).
“A substantial burden exists when government action puts
‘substantial pressure on an adherent to modify his behavior and to
violate his beliefs, Thomas v. Review Bd., 450 U.S. 707, 718, 101
S.Ct. 1425, 67 L.Ed.2d 624 (1981) . . . . An inconsequential or de
minimis burden on religious practice does not rise to this level,
nor does a burden on activity unimportant to the adherent’s
religious scheme.” Id.The Amended Complaint states that:
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[Lee and Seven-Sky] believe[] in trusting in
God to protect [them] from illness or injury,
and to heal [them] of any afflictions, no
matter the severity of the health issue, and
[they] do[] not need, or want to be forced to
buy, health insurance coverage . . . In
addition, [Lee and Seven-Sky have] a sincerely
held religious belief that God will provide
for [their] physical, spiritual, and financial
well-being. Being forced to buy health
insurance conflicts with [their] religious
faith because [they] believe[] that [they]
would be indicating that [they] need[] a
backup plan and [are] not really sure whether
God will, in fact, provide for [their] needs.
. . . Because [Lee and Seven-Sky] believe[] in
relying on God to preserve [their] health and
provide for [their] physical, spiritual, and
financial needs, and object[] to participation
in the health insurance system, the Act
imposes direct and substantial religious and
financial burdens upon [them] by requiring
[them] to either 1) purchase and maintain
minimum essential coverage, without any
consideration of [their] individual needs,
Christian faith, and financial situation, or
2) pay an annual shared responsibility
payment.
Am. Compl. ¶¶ 15-18, 28-33, 42-45. In essence, then, Plaintiffs
allege that § 1501‘s minimum essential coverage requirement
conflicts with their Christian faith because it requires them to
perform an act that implies that they doubt God’s ability to
provide for their health.
Accepting these allegations as true, the conflict alleged
between § 1501’s requirements and Plaintiffs’ Christian faith does
not rise to the level of a substantial burden. First, Plaintiffs
have failed to allege any facts demonstrating that this conflict is
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more than a de minimus burden on their Christian faith. Second, it
is unclear how § 1501 puts substantial pressure on Plaintiffs to
modify their behavior and to violate their beliefs, as it permits
them to pay a shared responsibility payment in lieu of actually
obtaining health insurance. See 42 U.S.C. § 5000A(b). In fact,
Plaintiffs specifically allege in the Amended Complaint that they
view this shared responsibility payment as “the lesser of two
evils” and therefore intend to pay it rather than purchase health
insurance. Am. Compl. ¶¶ 19, 33, 46. Finally, as Defendants point
out, Plaintiffs routinely contribute to other forms of insurance,
such as Medicare, Social Security, and unemployment taxes, which
present the same conflict with their belief that God will provide
for their medical and financial needs. See Defs.’ Mot. at 37.
Even if § 1501 does substantially burden the exercise of
Plaintiffs’ Christian faith, Plaintiffs have failed to state a
claim for relief under RFRA because the individual mandate
provision serves a compelling public interest and is the least
restrictive means of furthering that interest. 42 U.S.C. § 2000bb-
1(b); see Kaemmerling, 553 F.3d at 680. First, the Government
clearly has a compelling interest in safeguarding the public health
by regulating the health care and insurance markets. See, e.g.,
Olsen v. Drug Enforcement Admin., 878 F.2d 1458, 1462 (D.C. Cir.
1989) (noting compelling interest in protecting individual health
-62-
and social welfare). RFRA requires that this compelling interest
apply specifically to the “particular claimant whose sincere
exercise of religion is being substantially burdened.” O Centro
Espirita, 546 U.S. at 430-31, 126 S.Ct. 1211. In this case,
Congress has made clear that the goal of § 1501 is to achieve near-
universal health insurance coverage. ACA § 1501(a)(2). Thus,
Congress’s compelling interest--reforming the health care market by
increasing coverage--applies to Plaintiffs, just as it applies to
all individuals.
Second, the individual mandate, as enacted in § 1501, is the
least restrictive means of furthering this compelling interest.
Congress found that, “[i]n the absence of the requirement, some
individuals would make an economic and financial decision to forego
health insurance coverage and attempt to self-insure, which
increases financial risks to households and medical providers.” ACA
§ 1501(a)(2)(A), as amended by § 10106. In addition, § 1501
includes a number of exemptions on the basis of religious
conscience, membership in a health care sharing ministry,
incarceration, poverty or inability to afford coverage, membership
in an Indian tribe, and hardship. 26 U.S.C. §§ 5000A(d), (e).
Finally, when pressed at oral argument to name a less restrictive
means of lowering health insurance premiums or otherwise improving
access to health care, Plaintiffs could not do so.
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Consequently, the Court concludes that (1) § 1501 does not
place a substantial burden on the exercise of Plaintiffs’ Christian
faith, and (2), even assuming that it does, it is the least
restrictive means of serving a compelling governmental interest.
Defendants’ Motion to Dismiss Plaintiffs’ RFRA claim is therefore
granted.
IV. CONCLUSION
For the reasons set forth above, Defendants’ Motion to Dismiss
is granted. An Order will accompany this Memorandum Opinion.
/s/
February 22, 2011 Gladys Kessler
United States District Judge
Copies to: attorneys on record via ECF
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