Skip to content
Breaking News Alert 92 Percent Of Kamala Harris' Staff Left In Her First Three Years As VP

The Supreme Court Probably Isn’t Done With Obamacare Litigation


Two recent court decisions, including a pair of rulings this morning by the Eighth Circuit Court of Appeals on the contraceptive mandate, ensure that the saga of litigation over Obamacare is not over, and will probably be making a fourth and possibly fifth trip to the U.S. Supreme Court.

The Court will probably return to the subject of its Hobby Lobby decision—statutory religious-liberty exemptions from the contraceptive mandate—within the next year. A fight over the funding of subsidies to insurance companies may take longer, but presents an issue unsettled in the courts. This issue could affect the balance of power between the president and Congress for years to come on a core question of federal budget policy that underlies the looming showdown over Planned Parenthood funding.

Circuits Now Split on the Contraceptive Mandate

Brief background: the Supreme Court in Hobby Lobby found that a closely-held for-profit corporation could assert the religious liberty of its owners from being forced, under the Affordable Care Act, to provide their employees with insurance coverage for certain forms of contraceptives that they found morally objectionable under their faith (specifically, contraceptives that amounted to abortifacients—Hobby Lobby did not object to most of the contraceptives covered).

Hobby Lobby was decided, not on the basis of the Free Exercise Clause of the First Amendment, but under a 1993 federal law signed by President Clinton, the Religious Freedom Restoration Act, which requires courts to use a balancing test to decide claims of religious exemption from otherwise generally applicable laws.  If the court finds that the law imposes a substantial burden on the free exercise of religion, it then asks whether the law has used the least restrictive means to accomplish a compelling government interest, in which case the freedom of religion must give way.

The next wave of lawsuits after Hobby Lobby involved explicitly religious institutions—religious orders, hospitals, universities, and the like.  Unlike for-profit companies, the ACA allows them more leeway. They don’t have to directly provide insurance coverage they object to, but they do have to file an objection with Health and Human Services that triggers a separate form of coverage from the same insurer at taxpayer expense. The core of the objection by the Little Sisters of the Poor, the University of Notre Dame, and other challengers to this requirement is that the “Form 700” that triggers taxpayer-funded coverage nonetheless entangles them in causing their own insurer, with whom they contract for health insurance, to provide coverage for things they regard as gravely sinful.

This morning, that winning streak came to an end, and the challengers have the Circuit split they wanted.

Thus far, most of those challenges have been unsuccessful. The DC, Third, Fifth, Seventh, and Tenth Circuits have all ruled in favor of the government (in some cases over the dissents of significant numbers of circuit judges), mostly on the grounds that the Form 700 process is too indirect to constitute a substantial burden on religious liberty or that it is the least restrictive means of providing contraceptive coverage. There are already petitions from some of those cases sitting on the Supreme Court’s docket, including from the Little Sisters of the Poor case from the Tenth Circuit, and the Court could act on them when it returns to session in October, taking cases that it would then decide by July 2016 (just in time for the heat of the presidential election!).

The Obama administration has cited the lack of a split among the Circuits as a reason not to take the case—the Supreme Court’s number-one criteria for taking cases is when multiple lower courts have reached conflicting decisions—but it has also suggested that the Priests For Life case from the DC Circuit should be the one to go up, if one is heard.

This morning, that winning streak came to an end, and the challengers have the circuit split they wanted.  The Eighth Circuit, in Sharpe Holdings, Inc. v. HHS, No. 14-1507, and Dordt College v. Burwell, No. 14-2726, found that the Form 700 process did, in fact, place an undue burden on religious institutions. As the Sharpe Holdings opinion concluded:

The government insists that because the ACA’s requirement that insurance issuers and group health plans include contraceptive coverage is wholly independent of CNS and HCC’s self-certification, their exercise of religion cannot be substantially burdened by the accommodation process. Even if the ACA requires that insurance issuers and group health plans include contraceptive coverage regardless of whether CNS and HCC self-certify, it also compels CNS and HCC to act in a manner that they sincerely believe would make them complicit in a grave moral wrong as the price of avoiding a ruinous financial penalty. If one equates the self-certification process with, say, that of obtaining a parade permit, then indeed the burden might well be considered light. But if one sincerely believes that completing Form 700 or HHS Notice will result in conscience-violating consequences, what some might consider an otherwise neutral act is a burden too heavy to bear….The question here is not whether CNS and HCC have correctly interpreted the law, but whether they have a sincere religious belief that their participation in the accommodation process makes them morally and spiritually complicit in providing abortifacient coverage. Their affirmative answer to that question is not for us to dispute.

The court went on to call out HHS for its hypocrisy in claiming that the Form 700 process was no big deal, while threatening ruinous financial penalties against religious dissenters who refused to provide one:

The government also argues that the self-certification process cannot substantially burden CNS and HCC’s exercise of religion because they were already instructing their TPA not to provide contraceptive coverage and thus had already declared their religious objection to such devices and products. What this argument fails to appreciate, however, is that self-certification under the accommodation process accomplishes what CNS and HCC’s prior instructions had specifically prevented: the provision of objectionable coverage through their group health plans. We need look no further than to the government’s own litigation behavior to gauge the importance of self-certification in the regulatory scheme. If TPAs had a wholly independent obligation to provide contraceptive coverage to religious objectors’ employees and plan beneficiaries, there would be no need to insist on CNS and HCC’s compliance with the accommodation process.

Finally, the court concluded that the government had not carried its burden of proof to show that it was using the least restrictive means, given that it could use alternative arrangements to provide contraceptive coverage directly without the involvement of the religious institutions’ health plans:

CNS and HCC also suggest other less restrictive means that could accomplish the government’s objectives and relieve the substantial burden on their exercise of religion. These include what the Court in Hobby Lobby characterized as “[t]he most straightforward way of doing this,” namely, “for the Government to assume the cost of providing the . . . contraceptives at issue to any women who are unable to obtain them under their health-insurance policies due to their employers’ religious objections.”…CNS and HCC urge that the government could provide subsidies, reimbursements, tax credits, or tax deductions to employees, or that the government could pay for the distribution of contraceptives at community health centers, public clinics, and hospitals with income-based support. On the minimal record thus far developed, the government has not shown that these alternatives are infeasible….CNS and HCC also propose that the government could make contraceptives available to employees through its own healthcare exchanges.

The Supreme Court has thus far been unsympathetic to lawsuits that it sees as threatening to dismantle the ACA, but in Hobby Lobby as well as its disposition of the Medicaid expansion in the original Obamacare case, it has been more sympathetic to claims that the statute goes too far in dragooning states and private companies into its orbit in disregard of their rights. The circuit split over the Form 700 process promises another opportunity to see how far that sympathy goes.

Power of the Purse

Meanwhile, a decision last week by U.S. District Judge Rosemary Collyer of the federal District of the District of Columbia on one of House Speaker John Boehner’s lawsuits raises a different constitutional challenge, not to Obamacare itself, but to the Obama administration’s bid to keep the program funded without having to get annual appropriations from a Republican-controlled Congress that may lack the nerve to eliminate pre-existing funding, but has no interest in voting to provide another penny in funding to the program.

But one of the most bedrock powers of Congress is its sole control of the ‘power of the purse.’

One part of Boehner’s lawsuit on behalf of the entire House of Representatives sought to compel the president to enforce the employer mandate, a part of the ACA that contains an explicit effective date in 2013 and which Obama has effectively nullified by refusing to enforce it. Consistent with well-established precedents in this area, Judge Collyer concluded that the House doesn’t have legal standing to sue the executive branch over claims that it has failed to enforce or follow a federal statute.

An individual harmed by that failure could still bring a challenge, but, as she noted, the courts have long feared that it would open the floodgates to too many lawsuits between Congress and the executive branch if Congress could sue every time the president went too far—or not far enough—in his enforcement of the law. The remedy for the executive’s failure to execute the laws has generally been held to be either political (at the ballot box), or institutional (congressional investigations or withholding of funding or consent to other things the president wants), or ultimately, in extreme cases, impeachment.

But the other piece of the suit is more interesting. Section 1402 of the ACA is one of the two forms of subsidies for policies purchased on Obamacare’s exchanges, and in some ways the more insidious one because it’s hidden from public view: in certain circumstances, subsidies to keep the apparent prices of policies down are provided behind the scenes by the federal government to the insurers. After Congress turned down the administration’s effort in 2013 to provide annual funding for the insurer subsidy, Obama’s HHS simply decided to deem the program permanently funded and find money elsewhere to keep paying the subsidies without having to go back to Congress.

But one of the most bedrock powers of Congress is its sole control of the “power of the purse” provided by the Appropriations Clause of Article I, Section 9, clause 7: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”

The Supreme Court, especially in the nineteenth century, has often taken a strong view of the sanctity of the Appropriations Clause, and in 1975 it upheld Congress’ power by statute to strip the executive branch of the long-exercised power of “impoundment” (refusal to spend money explicitly appropriated by Congress). But it has never squarely ruled on whether Congress can sue to prevent the president from spending money not appropriated, or if so, what sort of spending might violate the Appropriations Clause.

The main recent precedent, Raines v Byrd, simply found that a few individual legislators—not a full House of Congress—could not sue to challenge the constitutionality of the line-item veto (which was later held unconstitutional when a suit was filed by New York City and other private institutions that lost tax credits vetoed by President Clinton). Collyer noted that the Supreme Court has, in cases involving state legislators (including one this past term from Arizona), taken a different view when entire legislative bodies file suit.

In her decision, Collyer did not decide whether the House was right that HHS had no right to deem Section 1402 subsidies as permanently funded, but she did conclude that the House of Representatives has standing to file a suit in light of its unique institutional interest—that can’t be remedied any other way—in preventing the executive branch from spending money without an appropriation within the meaning of the Appropriations Clause:

Once the nature of the Non-Appropriation Theory is appreciated, it becomes clear that the House has suffered a concrete, particularized injury that gives it standing to sue. The Congress (of which the House and Senate are equal) is the only body empowered by the Constitution to adopt laws directing monies to be spent from the U.S. Treasury.…Yet this constitutional structure would collapse, and the role of the House would be meaningless, if the Executive could circumvent the appropriations process and spend funds however it pleases. If such actions are taken, in contravention of the specific proscription in Article I, § 9, cl. 7, the House as an institution has standing to sue.

This is a functional more than a textual analysis of standing, but separation of powers issues have often been resolved by the courts on functional lines because the Constitution’s text simply doesn’t explain how else to do so, and it’s the Supreme Court’s job in deciding such questions—including its own role in them—to avoid stripping any branch of so much power that its textual grants of authority become a dead letter in practice. And like the Eighth Circuit, Collyer chided the Obama administration for taking a two-faced legal position that belied its real agenda:

The Secretaries further argue that the House is not injured by the lack of an appropriation because it can remedy or prevent that injury through means outside this lawsuit…Chief among those means, they contend, is “the elimination of funding.”…As the House points out, the Secretaries are “apparently oblivious to the irony” of their argument…Eliminating funding for Section 1402 is exactly what the House tried to do. But as the House argues, Congress cannot fulfill its constitutional role if it specifically denies funding and the Executive simply finds money elsewhere without consequence. Indeed, the harm alleged in this case is particularly insidious because, if proved, it would eliminate Congress’s role vis-a-vis the Executive. The political tug of war anticipated by the Constitution depends upon Article I, § 9, cl. 7 having some force; otherwise the purse strings would be cut.

The administration has promised an immediate appeal, and given the gravity of the issue, the DC Circuit could well be just a way-station on the path to the Supreme Court for this dispute as well (although a new presidential administration could moot it first if a Republican is elected in 2016).

The real stakes of this battle may not be life-or-death for the ACA, but they go well beyond it.  Consider the looming fight (or what should be a looming fight) over Planned Parenthood funding. Under the Constitution as envisioned by the Founding Fathers,  the exclusive power of the Congress—and specifically the House, elected every other year directly by the people and making appropriations on an annual basis—over government spending was the single greatest power possessed by that branch. As James Madison explained in Federalist No. 58, citing Britain’s history of how Parliament after the Glorious Revolution came to tame the monarchy through its power over the government’s finances, explained:

The House of Representatives cannot only refuse, but they alone can propose the supplies requisite for the support of the government. They, in a word, hold the purse—that powerful instrument by which we behold, in the history of the British Constitution, an infant and humble representation of the people gradually enlarging the sphere of its activity and importance, and finally reducing, as far as it seems to have wished, all the overgrown prerogatives of the other branches of government. This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.

The House needs the agreement of anywhere from 51 to 60 to 67 Senators to make laws, create appropriations, override presidential vetoes, or impeach executive branch officials. It can launch investigations on its own, but that power only extends so far. But a majority of the House, standing all by its lonesome, can simply refuse to fund something, and in our system of government as designed, it is not funded.

But a majority of the House, standing all by its lonesome, can simply refuse to fund something, and in our system of government as designed, it is not funded.

Today, of course, our system of budgeting has strayed far from this design, and there is widespread despair that the House (even in combination with a majority of the Senate) has any power to prevent federal funds from being handed over by the hundreds of millions to an organization abhorrent to the House without the consent of the president, which consent can only even theoretically be obtained by bringing the entire operation of the whole federal government to a halt for weeks or months.  If at some point the courts reassert the principle that money not appropriated by the House cannot be spent by the executive branch, that would restore at least some semblance of the original balance of power Madison foresaw.

Stay tuned. None of this is over yet.