Courts of Appeal split on semantics and statutory contruction of ‘ObamaCare’

The New England Journal of Medicine in a report published last week estimated that some 20 million Americans had been covered by the Affordable Care Act aka “ObamaCare.”

Early this morning, Tea-Publicans in Congress were celebrating the possibility that millions of their fellow American citizens would lose their health insurance after a panel of the D.C. Circuit Court of Appeals ruled 2-1 that the federal subsidies only apply to states that created their own health insurance exchanges. That could cripple the insurance exchanges and the ability of Americans to afford health insurance. What today’s Obamacare ruling reveals about the GOP.

Read the D.C. Circuit Court Opinion in Halbig v. Burwell Here (.pdf).

Abbe Gluck, professor of law at Yale Law School, posted a quick reaction to the decision at her fellow Yale law professor Jack Balkin’s web site Balkinization, The Loss in Halbig:

Initial quick reaction, more to come:  The opinion is terribly disappointing from a statutory interpretation perspective. It relies in part on irrelevant legislative history (from the HELP committee, whose bill wasn’t even the basis for these provisions–the Finance committee’s was) and gets it wrong anyway (as I argued here);  it bends over backwards to come up with reasons why Congress might have intended this result (which we all know it certainly did not); and it attaches far too much significance to a line in the statute that expressly deems exchanges in the territories to be state exchanges and does not replicate the special deeming language for the federal exchanges.  The territories language is boilerplate language used by Congress when talking about territories in statutes even beyond the ACA, and should have been attached no significance here. What’s more, applying the exclusio unius presumption  (that when Congress specifies X we can assume that it meant not to specify X elsewhere) to a statute as long and complicated as the ACA — and one that did not go through the usual linguistic “clean up” process in Conference (as I wrote here) does a disservice to textualism and all those who have defended it over the years–turning it into a wooden unreasonable formalism rather than the sophisticated statutory analysis that textualists have been claiming they are all about.

Shortly after the D.C. Circuit Court ruled, a unanimous panel of the Fourth Circuit Court of Appeals ruled exactly the opposite way: Congress clearly intended that the subsidies apply to all states, including those run by the federal government by default (due to “Red State” attempts to sabotage “ObamaCare” by refusing to participate as a full partner with the federal government for the benefit of their citizens).

Read the Fourth Circuit Court opinion in King v. Burwell Here (.pdf).

The New York Times reports: Ruling Restricts Health Law Subsidies; 2nd Court Disagrees.

The Washington Post reports: Appeals courts split on Obamacare subsidies.

The D.C. Circuit Court of Appeals has for years been dominated by conservative activist judges, until the recent appointments of four judges by President Obama to fill vacancies on the court and approved thanks to Senate Majority Leader Harry Reid’s “nuclear option” on the GOP’s abuse of the Senate filibuster rules. The Obama administration will reportedly seek an en banc hearing of the full D.C. Circuit Court of Appeals.

While en banc hearings are disfavored by the appellate courts, this is a case that affects millions of Americans and a huge sector of the American economy. I believe it will be granted, and this panel decision will be overturned by the full D.C. Circuit Court of Appeals because it is so glaringly contrary to the long-established canons of statutory interpretation. The Fourth Circuit Court of Appeals opinion got it right.

FAUX Nation and the conservative media entertainment complex are all wetting themselves with excitement this morning after the D.C. Circuit Court ruling — its the death spiral of ObamaCare! — but the fact is that this was an aberrant decision that will be overturned on appeal.

Tom Goldstein, one of the most experienced Supreme Court practitioners, writes at the Washington Post, Why Obamacare probably isn’t doomed:

The Affordable Care Act took a potentially serious hit today when the D.C. Circuit Court of Appeals struck down a rule that extended the law’s health-care subsidies to residents of the  three-dozen states where the federal government runs a health insurance exchange.

But the fact that another court of appeals upheld the same rule on the same day shows that the legal issue is very thorny and will very likely  be ultimately resolved by the Supreme Court. And the administration probably will come out ahead in the end.

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The argument against the administration’s rule is straightforward: if a state refuses to set up an exchange, forcing the federal government to operate it instead, then the subsidies aren’t available. That legal reading of the statute makes some sense, because Congress may have wanted to encourage states to create exchanges with the carrot of promising subsidies for the states’ residents.

But the courts are required to uphold the rule if the law is ambiguous and the administration’s position is reasonable. The Supreme Court will probably uphold the rule under that lax standard.

Here’s why. Other provisions of the statute reference an exchange “established by [a] State,” but really include the federal government. Another section of the law refers to a state-run exchange when everyone agrees that it means to include the federal government too. Also, the law actually requires every state to set up an exchange, and it refers to all the exchanges as having been established by states. So you can look at the statute as a whole and reasonably read it to extend the subsidies to residents of every state.

It also makes some difference that the section of the law cited by the rule’s opponents is a strange place for Congress to have limited the availability of subsidies, because that section states the formula for tax credits rather than core rules on who gets benefits under the Act. There also isn’t much evidence to suggest that Congress actually was intending to use the subsidies to encourage states to create exchanges.

We won’t have a final answer for a while. The parties can ask all the judges of both of the courts of appeals that issued today’s rulings to rehear the case. The administration has the better chance, because recent appointments to the court that struck down the rule tilt the court to the left. But it may be that both courts will see that Supreme Court review is inevitable and stand aside to let the Justices decide the issue.

The issue is so close and contentious that it is basically inevitable that the Supreme Court will have to resolve it.

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My best guess is that a majority of the Justices will cite the limited role of the courts and rule for the administration and uphold the rule by the same5-to-4 majority that rejected the major constitutional challenge to the law two years ago.

If the U.S. Supreme Court followed the canons of statutory interpretation, the decision would be a unanimous 9-0.