11th Circuit Finds Individual Mandate Unconstitutional

stethoscope and gavel3.JPGTwo months after the U.S. Court of Appeals for the Sixth Circuit upheld the constitutionality of the Affordable Care Act, the 11th Circuit has come to the opposite conclusion, holding that Congress exceeded its powers in requiring individuals to obtain health insurance or pay a penalty. The lawsuit – Florida v. U.S. Dept. of Health and Human Services (pdf) – was filed by the Florida state attorney general, and subsequently joined by the National Federation of Independent Business (NFIB), a small business advocacy group, plus 26 other states.

In its 2-1 decision, the divided panel disagreed that the mandate is within Congress’s power to regulate interstate commerce. The Obama Administration’s position is that the Affordable Care Act regulates economic decisions regarding the way in which health care services are paid for in order to reduce the number of uninsured. The argument is that since nearly all individuals avail themselves of healthcare at some point in their lives, and that selective failure to purchase insurance impacts the insurance market as a whole, the mandate is constitutional because it regulates “quintessentially economic” activity “related to an industry of near universal participation.” In rejecting this theory, the 11th Circuit referred to the “unprecedented nature” of the individual mandate in its 304-page decision, concluding:

the individual mandate contained in the Act exceeds Congress’s enumerated commerce power. This conclusion is limited in scope. The power that Congress has wielded via the Commerce Clause for the life of this country remains undiminished. Congress may regulate commercial actors. It may forbid certain commercial activity. It may enact hundreds of new laws and federally-funded programs, as it has elected to do in this massive 975-page Act. But what Congress cannot do under the Commerce Clause is mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.

Alternatively, the government argued that the individual mandate constitutes a tax validly enacted pursuant to the Constitution’s Taxing and Spending Clause. Specifically, this clause provides, in relevant part, that “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States.” The 11th Circuit rejected the reliance on the taxing and spending clause as well, stating that the “plain language of the individual mandate is clear that the individual mandate is not a tax, but rather, as the statute itself repeatedly states, a ‘penalty’ imposed on an individual for failing to maintain a minimum level of health insurance coverage in any month beginning in 2014.” The court further explained that:

Congress repeatedly told us that the individual mandate is a “penalty” and expressly invoked its Commerce Clause power as the foundation for the mandate. The two are not the same thing. Ultimately, we are hard pressed to construe the statute in a manner that would require us to ignore the plain text of the statute, the words repeatedly employed by Congress, well-settled principles of statutory construction, and well settled law emphasizing the substantive distinction between a tax and a penalty.

Unlike the Florida federal district court that issued the underlying opinion, however, the 11th Circuit held that the unconstitutionality of the individual mandate does not render the entire health care law null and void: “[e]xcising the individual mandate from the Act does not prevent the remaining provisions from being ‘fully operative as a law.’” In addition, the appellate court upheld the constitutionality of the Affordable Care Act’s expansion of the Medicaid program, holding that it was not “unduly coercive.”

Although dozens of lawsuits challenging the Affordable Care Act are pending throughout the country, only a handful of cases have reached the federal appellate level. Now that there is an official split between two circuits, it is even more likely that the Supreme Court will be forced to render its own decision on this issue.

Photo credit: Feverpitch Photography

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.