New Obamacare Challenge: The Origination Clause

The Pacific Legal Foundation has filed a motion in its pending suit against Obamacare asking the judge (1) to rule that, when it enacted the Senate health care reform bill that includes a “tax” for not purchasing health insurance, Congress violated the Origination Clause, which says that all revenue bills must originate in the House; and (2) that their clients are under no legal obligation to purchase health insurance under the ruling of the Court.

The first of these issues was never litigated before the Supreme Court and remains open; the second concerns the meaning and effect of the Supreme Court’s ruling that the “requirement” to purchase insurance was unconstitutional under the Commerce and Necessary and Proper clauses (and that only the “penalty,” not the requirement, was upheld as an exercise of the tax power).

Here is their press release:

Pacific Legal Foundation continues to be on the front lines in the constitutional challenge to the Patient Protection and Affordable Care Act. In a new complaint filed yesterday on behalf of client Matt Sissel, PLF attorneys have asked Judge Beryl Howell to rule that Congress ignored the Constitution’s Origination Clause when it enacted the Obamacare “tax.” We’ve also asked the court to declare the Individual Mandate unconstitutional under the Commerce Clause—thereby clarifying whether Chief Justice John Roberts’ opinion is binding precedent, or merely non-binding “dicta,” as some lawyers have argued.

The Origination Clause requires “all bills for raising revenue” to “originate” in the House of Representatives. But the Obama Administration’s health care law did not originate in the House; it originated in the Senate, when Senator Harry Reid “amended” a bill the House had passed by striking out all of its text and replacing it with the Senate-written bill that eventually became Obamacare. At that time, Congress claimed that the bill wasnot a tax—and indeed, the Obama Administration continues to insist that it is not a tax—but this summer the Supreme Court issued a 5-4 decision ruling that while Congress had no power to force people to buy health insurance, it did have power to tax them for not buying insurance. The justices did not address the question of whether such a “tax” was constitutional under the Origination Clause, because none of the lawyers raised that issue—until now.

The founding fathers wrote the Origination Clause because they were deeply suspicious of government’s power to tax. Knowing how liable it was to be abused, they wanted that power kept as close to the voters as possible. The Senate—which at the time was not even elected by the people at all—could not be trusted with a power that could, in the words of one of the Constitution’s detractors, “light upon the head of every person in the United States,” shouting “Give! Give!” Conscious of such concerns, the founders provided that all bills for raising revenue would have to originate in the House most responsive to the voters.

Congress ignored this rule when it passed what became the Patient Protection and Affordable Care Act. As we explain further in this litigation backgrounder, the Senate used a “shell bill” procedure instead, scooping out the entire contents of a bill the House had passed, and replacing it with language the Senate had concocted. (Of course, they had to do this, since Congress was struggling to get the bill passed before anyone had time to read it.)

The Supreme Court has said thatcourts can consider questions about the Origination Clause. But so far it has never addressed a situation like this; all previous Origination Clause cases involved legitimate amendments to tax bills the House had passed. Once again, Obamacare is unprecedented—no prior case has involved such an egregious violation of constitutional requirements.

In addition to the Origination Clause argument, our new complaint asks the court to explain what parts of Chief Justice John Roberts’ June 28 opinionare binding precedent and which are not. Legal scholars—and the Ninth Circuit Court of Appeals, in a recent opinion—have expressed confusion about what parts of the decision qualify as law, and what parts are simply Chief Justice Roberts’ personal views, or what lawyers call “obiter dictum.” We’ve asked the judge to declare that Roberts’ ruling about the Individual Mandate—that it exceeds Congress’ authority under the Commerce Clause—is indeed the law of the land, since it was joined by four other justices.

Since June, the Obama Administration has been spinning the Supreme Court’s decision as if it had won the case and upheld the Individual Mandate. In fact, that did not happen. Five justices declared the Individual Mandate—the provision forcing Americans to buy insurance whether they want to or not—to be unconstitutional. Chief Justice Roberts went on to declare that Congress could impose a tax penalty on people who failed to buy insurance—but only because that penalty was relatively modest. If it became severe enough to be essentially the same as a Mandate, Roberts explained, he would have to findthat unconstitutional as well. And, of course, such a tax would have to satisfy other constitutional requirements, including the Origination Clause, to be valid.

Contrary to what the Obama Administration and its allies have claimed, the government did notwin the Obamacare case. Nor is the battle over. PLF’s defense of the Constitution has only just begun.

You can read our new complaint here, and learn more about the case at our case page and through this litigation backgrounder.

I recommend the backgrounder.  Here is most of what it says about the Origination Clause (footnotes omitted):

But what about the constitutionality of the Act’s “tax”? The Constitution provides that “all bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other bills.” Yet the Patient Protection and Affordable Care Act—including its monetary penalties for failing to purchase health insurance—did not originate in the House of

The founding fathers viewed the Origination Clause as a crucial protection for American freedom. They thought it important that the power to tax be kept as close as possible to the people’s representatives—members of the House, who are elected every two years by local districts.  This would give the voting public the strongest possible control over the taxing power, which the founders rightly saw as prone to dangerous abuse.

But as it was drafting the Act in 2010, Congress used a procedural maneuver called a “shell bill,” in which the Senate took a bill that had already been passed by the House, and amended it to strike out all of its language and replace it entirely with new language. The bill—H.B. 3590—began as the “Service Members Home Ownership Act of 2009,” introduced in September, 2009.48 That bill was passed by the House and sent to the Senate in October, 2009. But on November 19, 2009, Senate Majority Leader Harry Reid submitted an “amendment” which struck out everything in the bill and replaced it with what became the Patient Protection and Affordable Care Act. That Act contains 17 separate revenue provisions, including a dozen new taxes estimated to increase federal revenue by $486 billion by 2019.

Federal courts have reviewed cases involving Origination Clause challenges, but none has ever involved as extreme an example of the strike-and-replace procedure used in passing the Act. In Flint v. Stone Tracy Co., the Supreme Court upheld the constitutionality of a bill in which the Senate had added a tax increase through an amendment to a House bill that had originally eliminated an inheritance tax. And in Rainey v. United States, the Court allowed the Senate to add a tax to a tariff bill that had originated in the House. But in United States v. Munoz-Flores, a 1990 case, the Court indicated that it would not allow Congress simply to ignore the Origination Clause.  “Although the House certainly can refuse to pass a bill because it violates the Origination Clause, that ability does not absolve this Court of its responsibility to consider constitutional challenges to congressional enactments.”

If any act violates the Origination Clause, it would seem to be the Affordable Care Act.  The Supreme Court has never approved the “strike-and-replace” procedure the Congress employed here.  This challenge might be a good opportunity to discover whether the Origination Clause is part of the “Lost Constitution,” or whether it is still a part of the written Constitution that Congress must obey and the Courts will enforce. It seems an easy enough rule to follow and pass judgment upon.  So we will see.

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