Legal Times / National Law Journal
Federal Judge Strikes Down Health Insurance Mandate
Posted by Marcia Coyle, December 13, 2010

A federal judge in Virginia on Monday handed the Obama administration its first major defeat on the constitutionality of a health insurance mandate, but this hotly contested legal battle is far from over.

On Thursday, a federal judge in Florida will hear arguments in a challenge to the mandate in the federal Patient Protection and Affordable Care Act brought by 20 state attorneys general and a handful of governors.

Two other federal judges, one in Michigan and one in another Virginia district, have upheld the mandate’s constitutionality. Twelve other challenges have been dismissed on procedural grounds, according to the administration.

“History and the facts are on our side,” said Assistant to the President Stephanie Cutter in a statement. “Similar legal challenges to major new laws—including the Social Security Act, the Civil Rights Act, and the Voting Rights Act—were all filed and all failed. Contrary to what opponents argue, the new law falls well within Congress’s power to regulate economic activity under the Commerce Clause, the Necessary and Proper Clause, and the General Welfare Clause.”

In Commonwealth of Virginia v. Sebelius, U.S. District Judge Henry Hudson on Monday agreed with Virginia Attorney General Ken Cuccinelli that the mandate exceeds Congress’ power to regulate economic activity under the commerce clause and it also could not be upheld under the general welfare clause.

Hudson, appointed by President George W. Bush, said the constitutionality of the mandate turned on whether a person’s decision to refuse to buy health insurance was economic activity.

The Obama administration’s “broad definition of the economic activity subject to congressional regulation lacks logical limitation and is unsupported by Commerce Clause jurisprudence,” wrote Hudson in a 42-page opinion. “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

Hudson also rejected the necessary and proper clause as a “safe sanctuary” for the mandate, saying that clause’s authority must be “tethered” to the lawful exercise of an enumerated power. That was not the case here, he wrote, because the mandate exceeded Congress’ commerce clause powers.

The judge, however, rejected the state of Virginia’s request to strike down the entire law and to issue an injunction against enforcement of the insurance mandate. Hudson said a declaratory judgment was sufficient because the risk of harm was minimal since the mandate is not effective until 2014.

“This decision is solely a decision as to the minimum coverage requirement,” said health law scholar Timothy Jost of Washington and Lee University School of Law. “In reaching his decision, Judge Hudson has rewritten the commerce clause. His entire decision turns on the conclusion that Congress can only regulate economic activity. The clause nowhere contains the word ‘activity.’ Two other judges have rejected this distinction.”

Jost was referring to decisions by U.S. District Judges Norman Moon of Lynchburg, Va., and George Steeh in Detroit.

However, opponents of the mandate clearly were energized by Hudson’s ruling.

“The Obama administration’s arguments would, if accepted, give Congress absolute power to force Americans to join a gym to improve their health, or buy cars from government-owned General Motors to ‘stimulate the economy’ or do anything else that has any economic consequences—which, of course, means anything,” said Timothy Sandefur, principal attorney with the Pacific Legal Foundation, an amicus party supporting Virginia. “Judge Hudson rightly recognizes that the argument made by the Obama administration in this case would completely undo the Constitution’s crucial limits on federal power.”

The Virginia challenge differs from the Florida case—State of Florida v. U.S. Dept. of Health & Human Services—being heard on Thursday, according to Elizabeth Wydra of the Constitutional Accountability Center. The Virginia case involved the federal mandate’s conflict with a state law protecting its citizens’ right to refuse to purchase health insurance. The Florida case challenges the mandate as well as other provisions, such as new Medicaid requirements.

“The Florida case is the broadest of the challenges,” she said. “I think Judge [Roger] Vinson is an experienced judge who will look at the case before him and make his own decision. It’s important to note that two of the three federal judges who have considered the merits have held it to be constitutional. Judge Hudson’s ruling today is really a constitutional outlier that I think wouldn’t stand on appeal.”

The administration has 60 days from the entry of judgment to appeal Hudson’s decision to the U.S. Court of Appeals for the 4th Circuit. The Michigan case upholding the health law—Thomas More Law Center v. Obama—has been appealed to the 6th Circuit.

After Hudson’s ruling, Cuccinelli, Virginia’s attorney general, said, “I am gratified we prevailed. This won’t be the final round, as this will ultimately be decided by the Supreme Court, but today is a critical milestone in the protection of the Constitution.”