District Court Upholds Individual Mandate Against Challenge Filed by Liberty University

Yesterday, federal district Judge Norman Moon of the Western District of Virginia upheld the Obamacare individual mandate against a constitutional challenged filed by Liberty University and several private plaintiffs. For the most part, Judge Moon’s reasoning closely follows that of Michigan district Judge George Caram Steeh in the recent Thomas More Law Center decision. Both judges upheld the mandate under the Constitution’s Commerce Clause alone on the grounds that failure to purchase health insurance, even if it doesn’t qualify as “economic activity,” is an “economic decision” that has substantial effects on interstate commerce. I outlined my objections to Judge Steeh’s reasoning here and here, and will not repeat them in detail in this post. Here is the most important flaw:

“Economic decisions,” [Steeh] reasoned, include decisions not to engage in economic activity. This approach would allow the Commerce Clause to cover virtually any choice of any kind. Any decision to do anything is necessarily a decision not to use the same time and effort to engage in “economic activity.”

If I choose to spend an hour sleeping, I necessarily choose not to spend that time working or buying products. Under Judge Steeh’s logic, the Commerce Clause authorizes Congress to force workers to get up earlier in the morning so that they would spend more time on the job.

Judge Moon also contends that the mandate should be upheld under Gonzales v. Raich and Wickard v. Filburn. In reasoning thus, he simply ignores the various ways in which Raich does not in fact cover the mandate case, which I analyzed in detail here. To briefly summarize, Raich gave Congress the power to regulate virtually any kind of “economic activity” and a wide range of “noneconomic” activities, but said absolutely nothing about regulation of inactivity, which is what the mandate does. His reliance on Wickard is even more dubious, since Wickard involved regulation of economic activity narrowly defined (commercial farming); I discuss this point in more detail in my amicus brief on behalf of the Washington Legal Foundation and a group of constitutional law scholars, submitted in the anti-mandate case filed by the state of Virginia (pp. 11-12).

Interestingly, Judge Moon follows Florida District Judge Roger Vinson in ruling that “the better characterization of the exactions imposed under the Act for violations of the employer and individual coverage provisions is that of regulatory penalties, not taxes.” This rejects the federal government’s claim that the mandate should be upheld because it is a tax that Congress has the power to impose under the Tax Clause.

Finally, Moon ruled that both Liberty University and some of the individual plaintiffs have standing. This contributes to an increasing trend under which every judge who has considered the case has ruled that plaintiffs have standing so long as they are state governments, private individuals who do not have health insurance, or employers who do not provide their employees the kind of health insurance benefits that the law requires.

Between this decision and the Michigan case, anti-mandate plaintiffs have now lost the first two district court rulings that addressed the merits of the mandate litigation. However, it is highly likely that they will win at least one and probably both of the next two decisions: those in the cases brought by the Commonwealth of Virginia and a coalition of twenty state governments and the National Federation of Independent Business. Both the Virginia and Florida judges have issued preliminary rulings expressing strong skepticism about the federal government’s arguments. The New York Times reports that the Obama administration expects that there is a high probability that they will lose one or both of these cases at the district level.

As should by now be obvious, no district court is going to resolve this issue definitively. All of these cases will next be addressed by federal courts of appeals. And there is a high likelihood that the matter will ultimately be resolved by the Supreme Court (a virtual certainty if even one federal appellate court strikes down the mandate). If the plaintiffs lose all the district court decisions, that could create momentum for the federal government that will be difficult to overcome. Court of appeals judges might hesitate to upset what would seem like an emerging judicial consensus. Such an outcome is, however, highly unlikely given the situation in the two cases filed by state governments.

I continue to believe that the Supreme Court is more likely to uphold the mandate than strike it down. But the course of the litigation so far shows that there is no consensus on the issue among judges and other experts, and that the plaintiffs have a much better chance of winning than many commentators (myself included) initially thought.

UPDATE: For those interested, the ACA Litigation Blog has a more complete summary of Judge Moon’s ruling that covers various minor issues that I have decided not to include in this post.