Thoughts on the Federal District Court Ruling Refusing to Dismiss the Virginia Health Care Lawsuit

Federal District Judge Henry Hudson’s opinion refusing to dismiss Virginia’s lawsuit challenging the constitutionality of the Obama health care plan has several interesting aspects. The suit focuses primarily on a challenge to the “individual mandate” element of the plan, which requires most American citizens and legal residents to purchase a government-approved health insurance plan by 2014 or pay a fine for nocompliance. Here are a few of the most important points covered in the opinion.

First, Hudson rejected the federal government’s claim that Virginia did not have standing to challenge the mandate. Although states are generally not allowed standing to litigate the interests of their citizens, Hudson argues that Virginia has standing because the federal health care bill conflicts with a recently enacted Virginia state law, the Health Care Freedom Act. This, he argues, is enough to give Virginia standing, overcoming the sorts of federal government standing arguments that I discussed in this post. This argument may have negative implications for the other major lawsuit against Obamacare, filed by 20 states and the National Federation of Independent Business. Most of those states do not have state laws comparable to the Health Care Freedom Act. NFIB, however, has individual members who are subject to it, such as self-employed businessmen. In addition, the other states could try to establish standing by relying on the broad theories of state standing endorsed by the Supreme Court in Massachusetts v. EPA. Hudson also rejects the federal government’s argument that the lawsuit isn’t “ripe” for adjudication because the individual mandate will not come into effect until 2014. He points out that the new federal law will force both individuals and the state government to make adjustments to their health insurance plans even before that.

Second, Hudson agrees with co-blogger Randy Barnett that the individual mandate isn’t clearly covered by existing Supreme Court precedent under either the Commerce Clause or federal government’s power to tax. He argues that this provision “literally forges new ground and extends Commerce Clause powers beyond its current high watermark.” He takes the same view of the government’s Tax Clause argument:

While this case raises a host of complex constitutional issues, all seem to distill to the single question of whether or not Congress has the power to regulate – and tax – an individual’s decision not to participate in interstate commerce. Neither the US Supreme Court nor and federal circuit court of appeals has squarely addressed this issue. No reported case from any federal appellate court has extended the Commerce Clause or Tax Clause to include the regulation of a person’s decision not to purchase a product…

I previously criticized the Commerce Clause and Tax Clause rationales for the individual mandate here.

Judge Hudson’s decision does not decide the case in Virginia’s favor. It merely denies the federal government’s motion to dismiss the suit on the grounds that the state’s arguments are too weak to justify a full-scale consideration of the merits. It is also possible that Hudson will ultimately decide the case in the federal government’s favor. Moreover, any decision made by the district court will surely be appealed to the Fourth Circuit Court of Appeals and ultimately the Supreme Court.

Nonetheless, Hudson’s ruling is a victory for Virginia and others who contend that the individual mandate is unconstitutional. It also makes it more difficult to argue that the state lawsuits against the mandate are merely political grandstanding with no basis in serious legal argument.