The Supreme Court begins a new term today, which means the justices will soon have to decide whether to hear King v. Burwell, a lawsuit challenging an arbitrary IRS edict that tax credits and penalties will be issued through federally created Obamacare exchanges. It is always risky to make predictions about the Court, but it is quite plausible that the justices will accept this case. Two federal courts, including one in Oklahoma last week, have already declared the IRS decree unconstitutional and the Roberts Court has demonstrated a marked aversion for the very kind of bureaucratic lawmaking that provoked this lawsuit.
Attorneys representing the plaintiffs in King v. Burwell filed their petition with the Court last July, after the Fourth Circuit Court of appeals upheld the IRS rule was valid, using transparently political rather than legal arguments. Indeed, when Judge Ronald A. White of the U.S. District Court for the Eastern District of Oklahoma ruled against the Obama administration last week in Pruitt v. Burwell, he was not reticent about expressing his unfavorable view of the conspicuous absence of legal reasoning in the Fourth Circuit’s decision in King. He unambiguously reminded them about their proper function as federal judges.
The Fourth Circuit judges had admonished the King plaintiffs that they could not “rely on our help to deny to millions of Americans desperately-needed health insurance.” This clearly raised Judge White’s hackles: “[A] proper legal decision is not a matter of the court ‘helping’ one side or the other.” He then dismissed the notion that this somehow changes in high stakes cases: “[T]he principle of legislative supremacy that guides us is higher still.… This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed life-tenured judges.”
In this, White quoted the U.S. Court of Appeals for the D.C. Circuit, which also ruled against the IRS and the Obama administration lawyers in Halbig v. Burwell. That adverse Halbig ruling was later vacated by the same court when its 8 Democrat-appointed judges outvoted its 5 Republican appointees in agreeing to the Obama administration’s request for an en banc hearing. Ironically, this overtly political decision by those Democrat appointees, 4 of whom were installed after Senate Majority leader Harry Reid colluded with the White House to change the rules on how the Senate approves judicial appointments, may backfire.
It may encourage the Court to grant a hearing in King, not merely to resolve the pig’s breakfast the lower courts have made of the IRS case, but also to depoliticize it. Obamacare’s dwindling cadre of supporters are apparently under the impression that, when the partisan judges who now dominate the D.C. appeals court inevitably rule in favor of their Democrat masters, the Supremes will let the issue die in the lower courts. But the Supreme Court is not required to wait for a disagreement among appeals courts to take up a case. They can, and often do, “grant cert” merely because they deem the issue under dispute to be important.
As the lead attorney for the plaintiffs in King, Michael Carvin, told Talking Points Memo, “There’s plenty of cases where [Supreme Court justices] take important issues even if there’s no circuit split — like the gay marriage cases.” And Carvin is not worried about the en banc hearing of the D.C. appeals court. The high court will take up a case if as few as 4 justices vote to do so, and Carvin seems confident that at least that many will want to hear it. “I don’t know that four justices, who are needed to [take the case] here, are going to give much of a damn about what a bunch of Obama appointees on the D.C. Circuit think.”
Why would the justices consider a mere IRS regulation so important? Both Judge White and the original three-judge panel from the D.C. Court of Appeals who ruled against the government in Halbig discussed its primary problem at considerable length. It’s about “legislative supremacy.” The real question to be decided is as follows: Who gets to make laws under our system of government? The Constitution places this power in the hands of Congress. And Obamacare, as passed by Congress, unambiguously stipulates that Obamacare’s tax credits and penalties can only be issued by exchanges “established by the state.”
But when two-thirds of the states decided not to establish Obamacare exchanges, the federal government rushed in and set up its own exchanges in those abstaining states. Then, ignoring the clear language of the “reform” law, the IRS promulgated its imperial edict indicating that it would grant tax credits and impose penalties through federally created exchanges. Thus, as the D.C. appeals court put it: “The ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges ‘established by the State.’” Likewise, Judge White ruled the arbitrary regulation beyond the legitimate powers of the IRS.
The Supremes also take a dim view of bureaucratic lawmaking. As Michael Cannon points out, even Justice Kagan shares these misgivings. She wrote the following about a case called Michigan v. Bay Mills Indian Community: “[The IRS] urges us to adopt a ‘holistic method’ of interpreting [the Patient Protection and Affordable Care Act] that would allow [it] to [issue premium-assistance tax credits through health-insurance Exchanges established by the Secretary of Health and Human Services] … But [the agency] fails to identify any specific textual or structural features of the statute to support its proposed result.”
Justice Scalia has made strikingly similar observations in other cases. If Kagan and Scalia are on the same page where bureaucratic lawmaking is concerned, this does not bode well for the Obama administration in King v. Burwell. The Supremes were originally asked to decide whether to hear the case by September 3, but the government lawyers asked for a 30-day extension, at the end of which (late last Friday) they predictably petitioned the Court to delay their decision. But the justices may deny that request. If they do, and ultimately rule for the plaintiffs, it won’t kill Obamacare outright, but the law will have been rendered moribund.