Individual Insurance Mandate Held Unconstitutional Again

A second federal district court has held that the individual insurance mandate in the health care reform legislation is unconstitutional (Florida v. Department of Health and Human Services, No. 3:10-cv-91-RV/EMT (N.D. Fla. 1/31/11)). And, in this case, the court has refused to sever the mandate from the rest of the legislation, declaring the entire act void.

The case was brought by the attorneys general and/or governors of 26 states against the U.S. Departments of Health and Human Services, Treasury, and Labor, and it challenged the constitutionality of the health care legislation under the Commerce Clause, the Spending Clause, and the Ninth and Tenth Amendments to the U.S. Constitution.

Sec. 5000A requires U.S. citizens and legal residents to maintain minimum amounts of health insurance coverage, starting in 2014. Individuals who fail to maintain minimum essential coverage will be charged a penalty. The plaintiffs challenged the constitutionality of this provision, arguing that it exceeds Congress’ power under the Commerce Clause (U.S. Const., art. I, § 8, cl. 3).

The key issue was whether not having insurance amounts to an activity that substantially affects interstate commerce, which Congress has the power to regulate under the Commerce Clause. The plaintiffs argued that the Commerce Clause can only reach individuals engaged in an “activity,” and because failure to purchase health insurance is “inactivity,” it is beyond Congress’ power to regulate.

The defendants argued that “activity” is not required before Congress can act under the Commerce Clause and, even if it is required, that not having insurance constitutes activity. They also argued that the individual mandate falls within Congress’ power to “make all Laws which shall be necessary and proper” (U.S. Const., art. I, § 8, cl. 18) to regulate interstate commerce.

After a lengthy review of the history of Commerce Clause jurisprudence, the court concluded that Congress can only regulate “activity” under the Commerce Clause and that it would be a “radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause” (slip op. at 42). The court went on to hold that Sec. 5000A attempts to regulate inactivity (that is, the failure to purchase health insurance) and is therefore unconstitutional because it lies outside of Congress’ Commerce Clause power. The court rejected the defendants’ argument that, because uninsured individuals have an economic effect on the health care market, they are engaged in interstate commerce.

The court also held that the defendants’ argument under the Necessary and Proper Clause failed because that clause “cannot be utilized to ‘pass laws for the accomplishment of objects’ that are not within Congress’ enumerated powers” (slip op. at 62).

After ruling the individual insurance mandate unconstitutional, the court refused to sever it from the rest of the health care legislation. The court noted that the legislation does not contain a severability clause (although earlier drafts of the legislation had contained a severability clause, it was removed before enactment). It also noted the defendants’ argument and Congress’ acknowledgment that the mandate is “essential to the Act’s comprehensive scheme to ensure that health insurance is available and affordable” (slip op. at 69-70).

Because it found the individual insurance mandate was not severable from the rest of the health care legislation, the court held all of the health care legislation to be void. However, the court refused to enjoin implementation of the act on the presumption that “the Executive Branch will adhere to the law as declared by the court” (slip op. at 75).

In December, the U.S. District Court for the Eastern District of Virginia also held that the individual insurance mandate was unconstitutional, but that court severed the mandate from the rest of the health care reform legislation (Virginia v. Sebelius, 728 F. Supp. 2d 768 (E.D. Va. 2010)). (See “Federal Court Rules Health Care Insurance Mandate Unconstitutional.”) The Fourth Circuit has granted expedited review in this case.

Two other federal courts have held the individual mandate to be a proper exercise of Congress’ commerce power (Liberty Univ. v. Geithner, No. 10-2347 (W.D. Va. 11/30/10) (currently on appeal to the Fourth Circuit); Thomas More Law Center v. Obama, 720 F. Supp. 2d 882 (E.D. Mich. 2010) (currently on appeal to the Sixth Circuit)).