States and individuals do not have standing in PPACA challenge

The U.S. Supreme Court held that several states and other plaintiffs that asked the federal courts to declare unconstitutional the Sec. 5000A minimum essential coverage provision enacted in the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, did not have standing to challenge the provision.

Background

Under Sec. 5000A, enacted by PPACA, individuals are required to obtain minimum essential health coverage or pay a penalty. Taxpayers challenged the constitutionally of this provision, but in a politically contentious decision, the Supreme Court in National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012), held the mandate was constitutional because the penalty is a tax and a justified exercise of Congress’s taxing power.

However, in 2017 Congress enacted the law known as the Tax Cuts and Jobs Act, P.L. 115-97, in which the penalty was reduced to zero. Texas, along with more than a dozen other states and two individuals, sued federal officials, claiming that, without a monetary penalty, Sec. 5000A is unconstitutional. The plaintiffs asked the court to declare Sec. 5000A unconstitutional, to hold that Sec. 5000A is not severable from the rest of PPACA, and to issue an injunction against enforcement of all provisions of the act.

A district court found that the plaintiffs had standing to sue and agreed that Sec. 5000A is unconstitutional and not severable from the rest of PPACA (Texas, 340 F. Supp. 3d 579 (N.D. Tex. 2018)). The Fifth Circuit agreed with the district court on the issue of standing and the unconstitutionality of Sec. 5000A but not on the severability issue (Texas, 945 F.3d 355 (5th Cir. 2019)). California and other states then intervened in the case, and it came before the Supreme Court for review.

The Supreme Court’s decision

The Supreme Court, in a 7-2 decision, held that the plaintiffs did not have standing to challenge the constitutionality of Sec. 5000A. The Court found that the plaintiffs could not show they had suffered a past or future injury that was fairly traceable to the government’s enforcement of Sec. 5000A’s minimum essential coverage mandate. Holding that the plaintiffs lacked standing, the Court did not address the constitutionality or severability questions but reversed and remanded the case with instructions to dismiss.

To have standing to sue in federal court, a plaintiff must “allege personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief” (DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006)).

Individual plaintiffs: The individual plaintiffs claimed injury in the form of past and future payments necessary to carry the minimum essential coverage that Sec. 5000A(a) requires. The Court disagreed, finding that even if this pocketbook injury satisfied the injury element of Article III standing, the injury was not fairly traceable to any allegedly unlawful conduct of the government because, without a penalty for noncompliance, Sec. 5000A(a) is unenforceable. Thus, the Court found the individuals did not show that any government action or conduct has caused or will cause the injury they claim, and the only thing they could point to was the statute’s now unenforceable language.

The Court stated that the unenforceable statutory language alone was not enough to establish standing. The plaintiffs, with respect to Sec. 5000A, asked for declaratory relief in the form of a declaration that the provision is unconstitutional. However, as the Court explained, a request for declaratory judgment must meet Article III’s case-or-controversy requirement, which requires that the requested remedy redress the injury claimed. Here the Court found that the plaintiffs’ requested remedy did not meet the redressability requirement.

The Court further explained that if it found a plaintiff had standing to attack an unenforceable provision, this would allow a federal court to issue what would amount to an advisory opinion without the possibility of an Article III remedy. In other words, it would give unelected judges a general authority to conduct oversight of decisions of the elected branches of government, which Article III guards against.

State plaintiffs: Likewise, the Court said, the state plaintiffs could not show any injuries traceable to the government’s allegedly unlawful conduct. The states alleged indirect injury because the minimum essential coverage provision caused more residents to enroll in the medical insurance programs that PPACA required the states to provide. The Court determined that they failed to show how that harm could be traced to the government’s enforcement of the Sec. 5000A mandate, stating that “neither logic nor evidence” showed that an unenforceable mandate would cause more residents to sign up for the programs. The Court found that where a standing decision rests on speculations on the decisions of third parties, a plaintiff must show that the third parties will react in predictable ways.

The states also claimed that they would also suffer a direct injury in increased administrative costs and related expenses as a result of the Sec. 5000A mandate. The Court, however, found that these costs, as well as other pocketbook costs the states were complaining of, were caused by other provisions of PPACA. The Court also determined that finding that Sec. 5000A was unconstitutional would not render the other provisions of PPACA unconstitutional and that the plaintiffs had not separately claimed that the other provisions of PPACA were unconstitutional. Therefore, the Court concluded that the government’s conduct that caused the state’s alleged injuries was not fairly traceable to Sec. 5000A, which was the provision that the plaintiffs claimed was unlawful.

Reflections

A strongly worded dissent in the case argues that the plaintiffs clearly had standing and claims that the Court’s argument on traceability relied on a “flat-out misstatement of the law” and that overall its holding is based on “a fundamental distortion of [the Court’s] standing jurisprudence.” While the question of the constitutionality of PPACA after the effective elimination of the individual mandate remains unanswered by the Supreme Court, it is likely that with this case, the challenges based on PPACA’s constitutionality are over.

California v. Texas, No. 19-840 (U.S. 6/17/21)