(Update) King v. Burwell is a fraud upon the Court

I have posted several times about the Libertarian lawyers who write for the Volokh Conspiracy at the Washington Post will make a Textualism argument in King v. Burwell, arguing that the text of “ObamaCare” limits federal subsidies only to people who buy insurance from state-run exchanges, not from the federal exchange.

The “free market, anti-government regulation” Competitive Enterprise Institute is bankrolling this case. Hillary Clinton was right: there really is “a vast right-wing conspiracy.”

What these Libertarian lawyers are engaged in, in my opinion, is perpetrating a fraud upon the court, for which the U.S. Supreme Court should impose sanctions and refer these lawyers for bar disciplinary proceedings. I have rarely seen anything as blatant as this. This case should not be in front of the Supreme Court.

Should the Court actually side with the plaintiff’s in this case, in furtherance of their fraud, we will have a serious constitutional crisis on our hands.

The media has finally begun paying attention to the fraud being perpetrated on the court with some belated good reporting in the past several weeks — just not here in Arizona.

Today Richard Wolf of USA Today, a Gannett Publication, the parent corporation of the Arizona Republic, reports Supreme Court case against Obamacare faces obstacles:

A legal challenge that threatens to unravel President Obama’s health care law has been stricken by a series of ill-timed setbacks before next month’s Supreme Court showdown.

The four plaintiffs’ qualifications to bring the lawsuit have been cast in doubt because of their low incomes and potential eligibility for other government benefits. At least one of the four Virginians must show that the law constitutes a burden.

The legal theory behind the complaint — that Congress intended to deny financial aid to consumers in states that use a federal health insurance exchange — has been refuted by the law’s authors. Officials from 22 states told the court they were never warned of that possibility.

The assumption that the administration, Congress or the states would rescue millions of purchasers if the court strips away their federal tax credits has been discredited (in the case of Congress acting anytime soon) or disputed (by officials in several states).

“Piece after piece after piece of evidence that they have put forward to try to support their far-fetched interpretation of the statute has fallen apart as we approach oral argument,” says Elizabeth Wydra, chief counsel at the liberal Constitutional Accountability Center. “That’s legally relevant, because it demolishes their claim that anyone thought the law works this way at the time.”

* * *

The forces behind the new challenge to Obamacare refuse to characterize recent developments as setbacks. In their final brief to the court, submitted Wednesday, they did not address the issue of their plaintiffs’ legal standing to sue the government.

Rather, they have doubled down on their central thesis — that the 906-page law passed in 2010 specifies that federal tax credits will be offered in exchanges “established by the State.” That language, they say, precludes such assistance in exchanges operated by the federal government in up to 37 states.

“The government cites nothing, in legislative history or elsewhere, supporting the notion that Congress did not ‘intend’ what its enacted language unambiguously said — nor rebuts the considerable contrary evidence,” the challengers’ attorney, Michael Carvin, argued.

Note: for those of us who have actually read the briefs, this assertion is without merit. There are a large number of amicus briefs as well that destroy plaintiff’s fantastical claim.

The plaintiffs’ legal standing could be the biggest obstacle for the challengers to surmount.

In declarations filed with the federal district court in 2013, David King, Douglas Hurst, Brenda Levy and Rose Luck said that without subsidies, the most inexpensive coverage allowed under Obamacare would cost more than 8% of their estimated 2014 household income. That would allow them to go uninsured without paying a penalty.

During those court proceedings, the government contended that even with subsidies, King and Luck might have to pay more than 8% of their income, so they would not be subjected to the penalty.

“The entire premise of this lawsuit — which is that plaintiffs are injured by premium tax credits because, without those credits, they allegedly could obtain ‘cheaper, high-deductible catastrophic coverage’ — is incorrect,” the government’s appellate court brief said.

The U.S. Court of Appeals for the 4th Circuit ruled that Hurst and Levy would have to choose between buying insurance under the law or paying a penalty, which it called an “actual or imminent” harm. Still, it ruled against the challengers, who then convinced the Supreme Court to hear the case.

Since then, The Wall Street Journal and Mother Jones magazine have raised more questions about all four of the plaintiffs — such as whether King and Hurst qualify for veterans’ benefits and whether Levy and Luck would fare better under the health care law than without it.

“The flimsiness of the injury … does highlight that this is not a remedial case,” Weiner said. “It’s a political case that is part of an overall political battle raised by opponents of the Affordable Care Act.”

* * *

Plaintiffs’ legal standing has been an issue in three other cases pending against the federal exchange subsidies. In two, the states of Oklahoma and Indiana were approved only as employers who faced increased costs or penalties. In the other case, the only plaintiff found by the court to have standing would have paid less than $21 annually with the subsidy he refused to take.

“Those consequences may be small, but even an ‘identifiable trifle’ of harm may establish standing,” the appeals court said.

Michael Cannon, a Cato Institute health economist who helped to conceive the court challenges, said the difficulty in finding plaintiffs stems from taking on the Internal Revenue Service.

“They don’t want to get audited,” Cannon said, “and this administration has a history of using the IRS for ideological purposes.”

Yet another hysterical assertion unsupported by any demonstrable evidence, something we have come to expect from the Libertarian Cato Institute.

Michael Hiltzik, who writes The Economy Hub for for the Los Angeles Times reports, Why the Supreme Court’s big Obamacare case never should have been filed:

King v Burwell, the lawsuit before the Supreme Court that conservatives regard as their last big hope to destroy the Affordable Care Act, has been coming apart on the merits for months.

Now there’s evidence that it was never even properly filed. Pressure is growing on the Supreme Court to drop the case because of doubts that its plaintiffs have any standing to sue: “It would be highly improper (and embarrassing) for the Court to decide the merits of such an important case” when there are such doubts, writes Gerard Magliocca of Indiana University school of law.

The fraying of the lawsuit’s claims and the doubts about its plaintiffs’ standing point to the fundamental problem with King v Burwell: it’s an ideological attack on Obamacare, ginned up by the Cato Institute among others, masquerading as a rule-of-law case.

* * *

King v. Burwell asserts that it’s illegal for the government to be handing out tax subsidies for health plans in the individual market in roughly three dozen states that relied on the federal government to run insurance exchanges for them (via healthcare.gov) rather than setting up their own state exchanges.

The case relies on a five-word phrase in one provision of the Affordable Care Act, which refers to “exchanges established by the state.” The lawsuit’s promoters say that rules out subsidies in healthcare.gov states.

The problem with this argument is that it’s contradicted by the rest of the ACA; by the explicit goals of the ACA (which include bringing affordable insurance to all Americans); by the Congressional drafters of the bill, who say the idea always was to deliver subsidies to all who qualified by income; and by the governors of several healthcare.gov states, who say they never thought their failure to set up state exchanges would deprive their citizens of subsidies.

Moreover, according to judicial precedent, the executive branch is empowered to interpret any ambiguity in a law to resolve the problem, as long as the interpretation is plausible according to that law. In this case, the IRS ruled that the law means that subsidies are available in all states.

* * *

That brings us to the latest wrinkle, the question of “standing.” The Constitution effectively states that lawsuits in federal courts can only be brought by plaintiffs who reasonably believe they have been injured by the defendant (in this case, the government by enforcing the ACA). Those plaintiffs have standing to sue.

For the King case, anti-Obamacare forces appear to have conjured up their legal argument first, then went trawling for plaintiffs to put their names to the complaint. It looks like they may have botched the job.

Recent articles by the Wall Street Journal (here and here) and Mother Jones cast doubt on whether the four named plaintiffs in King v. Burwell actually have suffered any injury.

* * *

Some of these plaintiffs may indeed have standing, but the uncertainties of their situations underscores the slipshod nature of King v Burwell. Before they landed on the list, one of the lawsuit’s chief promoters, Michael Cannon of the Cato Institute, tried to recruit former Cato interns as plaintiffs. No such persons ended up on the lawsuit.

Standing is a technicality but it’s not trivial. The issue plays into the Court’s decision to take the King case, which surprised many legal observers because lower courts were still pondering the issues it raised.

Bagley conjectures that “had the Court been apprised of concerns about plaintiffs’ standing when it agreed to take King in November, it might well have taken a pass.” Legal experts say the plaintiff lawyers, who represent the conservative Competitive Enterprise Institute, have a duty to report any doubts about standing to the Court.

[These lawyers failed to address the issue in their reply brief, as noted aboce.]

Nothing prevents the Court from ruling on King even if the plaintiffs don’t have standing to sue, but legal experts say the justices should at least address the issue. The most likely method may be for them to request supplemental briefs from the parties before they hear oral arguments next month. Either way, the standing mess adds one more joke to a case that already seemed absurd.

Iin his column for the Washington Post, A Supreme Court decision against Obamacare could cost states billions and billions of dollars, Greg Sargent suggests that, “[i]f you want a sense of just how far-reaching the impact of a Supreme Court decision gutting Obamacare subsidies could prove, new data on health care signups released this week provide a fresh way to game out such a ruling’s consequences.”

The Department of Health and Human Services announced the other day that some 11.4 million people have signed up for health plans through federal marketplaces. The new HHS data also provides a breakdown of the number of sign-ups in each of the three dozen states on the federal exchange — precisely the states that would no longer get subsidies if the Court invalidates tax credits to people in all federal exchange states.

This provides a way of approximating just how much money in tax credits each state could lose if the Court rules that way. We’re talking about enormous amounts of money[.]

Here it is in chart form (a note on methodology is below), detailing the impact of such a ruling on the 14 states that stand to lose the most:

This methodology was suggested to me by Larry Levitt, a senior vice president at the Kaiser Family Foundation who may know more about the Affordable Care Act than anyone else alive. He says one reasonable way of trying to calculate total subsidies per state is to take the total number of new signups in each state, and multiply that by the percentage in each state who qualify for tax credits, data that is also supplied by HHS. That produces the approximate total in each state who qualify for subsidies (the left column).  You then multiply that by HHS data detailing the average monthly subsidy payment in each state (the middle column), and it gives you the approximate total in monthly subsidies to each state (the right hand column).

* * *

If defenders of the law get their way, numbers like these could end up having legal significance. A number of states have argued, in a brief filed for the government’s side, that the plain text of the ACA contains no explicit threat to withdraw subsidies from states that fail to set up exchanges. Thus, they argue, if the Supreme Court guts subsidies, it would impose a “dramatic” hidden punishment on them and their residents for their decision not to set up an exchange, despite the fact that they had no clear warning of the consequences of that decision. This raises serious Constitutional concerns, and as a result, the states argue, the Supreme Court should opt for the interpretation of the statute that doesn’t raise those concerns — the government’s interpretation that subsidies are universal.

This federalism argument, which has been expanded upon by law professors Nicholas Bagley and Abbe Gluck, could potentially appeal to Anthony Kennedy or possibly to John Roberts. The fact that the states stand to lose such enormous amounts in subsidies to their residents could help underscore that case.

Indeed, all of this suggests that a SCOTUS ruling against the ACA could create real problems for GOP lawmakers in many states.

Not here in Arizona where Tea-Publican legislators have introduced a series of bills to prevent “ObamaCare” from being implemented or a state-run exchange from ever being established, and they are still in court challenging Gov. Jan Brewer’s Medicaid (AHCCCS) expansion. The Arizona GOP is the anti-healthcare  party: if you cannot afford healthcare insurance on the “free market,” “perhaps you should die and decrease the surplus population.”