NFIB Cert Petition and the Anti-Injunction Act

This morning, the National Federation of Independent Business filed with the Supreme Court a petition for a writ of certiorari to reverse the Eleventh Circuit’s ruling that the individual insurance mandate it held to be unconstitutional could be severed from the rest of the Affordable Care Act. With regard to severability, the legal issue is whether Congress would have passed the Affordable Care Act without the individual mandate. Even the government concedes that the individual insurance mandate is essential to the costly restrictions being imposed on insurance companies and therefore is not severable. It is inconceivable that Congress would have enacted the ACA without the insurance regulations that comprise the very heart of the scheme.

In its petition, the NFIB also addresses the issue of the Anti-Injunction Act (AIA) that was ignored as judge after judge rejected this theory–and the government too–until the Fourth Circuit sua sponte (on its own) concluded (2-1) that the AIA barred it from reaching the merits of the constitutional challenge. Because the AIA is the legal theory du jour, I thought it would be useful to reproduce this portion of the petition (with many citations omitted so readers can more easily get the the flow of the argument):

1. The Anti-Injunction Act provides, with a few exceptions, that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court.” 26 U.S.C. § 7421. . . . . [The Act] is clearly inapposite here, due to the critical distinction between the mandate and its penalty. The mandate itself is simply a free-standing legal “[r]equirement” that every “applicable individual shall … ensure that [he or she] … is covered under minimum essential coverage.” 26 U.S.C. § 5000A(a), (d). By contrast, the “penalty” is simply a means of enforcing compliance with that legal command, which is imposed on all “taxpayer[s]” who unlawfully “fail[] to meet th[at] requirement,” unless they are separately “except[ed]” from the “penalty.” Id. § 5000A(b), (e). [This was the position Judge Silberman appeared to take in the Seven-Sky oral argument last week—RB] Given this relationship between the mandate and the penalty, there are three fundamental reasons why Petitioners’ challenge to the mandate cannot possibly be foreclosed by the Anti-Injunction Act, which bars “suit[s] for the purpose of restraining the assessment or collection of any tax.” 26 U.S.C. § 7421(a) (emphases added).

First, the monetary sanction for non-compliance with the mandate is not even “a[] tax” under § 7421(a). The sanction is not “an enforced contribution to provide for the support of government,” but simply “an exaction imposed by statute as punishment for an unlawful act,” which is the quintessential definition of a non-tax “penalty.” [citations omitted]

Second, even if the monetary sanction for noncompliance with the mandate were a “tax” as a statutory matter, under §7421(a), the “purpose” behind Petitioners’ “suit” is not to “restrain[]” that so-called “tax.” Rather, Petitioners’ “purpose” is to “restrain” the mandate’s free-standing legal requirement that they must buy costly insurance, which itself is not a “tax” in any way, shape, or form. Petitioners’ “purpose” here obviously has nothing to do with “restraining” the sanction for non-compliance with the mandate: as law-abiding citizens, they are completely indifferent to a so-called “tax” that they will never incur. [citations omitted]

Third, Petitioners would have no lawful means of challenging Congress’ command that they purchase insurance if the Anti-Injunction Act truly required them to violate the mandate simply to incur the socalled “tax” that authorizes suit. Indeed, the dilemma would be even worse for the millions of lawabiding individuals who are subject to the mandate but exempt from the penalty, because they could never incur the so-called “tax” that is the supposed predicate to bringing a challenge. Not only would the complete absence of judicial review for all law-abiding individuals subject to the mandate underscore why the Anti-Injunction Act should not be interpreted to bar suits brought for the “purpose” of eliminating a substantive legal requirement, but the absence of such redress also reveals that there would be grave Due Process concerns with the contrary interpretation. [citations omitted]

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