Florida Joins Virginia in Declaring the Health Care Reform “Individual Mandate” Unconstitutional

On January 31, 2011, Judge Roger Vinson of the Federal District Court for the Northern District of Florida entered his ruling in Florida, et al. v. United State Department of Health and HumanServices, et al., (“Florida v. DHHS”) declaring that Section 1501 (“Individual Mandate”) of the Patient Protection and Affordable Care Act (“Health Care Reform” or “PPACA”) to be unconstitutional as the legislation exceeds the powers granted to the Congress pursuant to the Commerce Clause in the United States Constitution.

The states of Washington and Alaska are also plaintiffs in this action along with 23 other states. The decision in Florida v. DHHS joins the prior decision issued December 13, 2010, in Virginia v. Sebelius declaring the Individual Mandate unconstitutional.

Where the two decisions differ is that the decision in Virginia v. Sebelius only declared the Individual Mandate unconstitutional. The decision in Florida v. DHHS declared the Individual Mandate unconstitutional and then went further and declared all of PPACA to be “void.”

The court’s ruling in Florida v. DHHS focused on two particular issues raised by the Plaintiffs. The court addressed the argument that Congress exceeded its powers under Commerce Clause of the U.S. Constitution when it enacted the Individual Mandate.

The other issue addressed the argument that Congress exceeded its powers under the Spending Clause of the U.S. Constitution when it expanded eligibility rules under the Medicaid program. This is called the Medicaid Mandate and will be discussed in a future post.

The Individual Mandate
The Commerce Clause allows Congress to regulate “Commerce . . . among the several States. . .” In Florida v. DHHS the judge noted that the Commerce Clause allowed Congress to regulate those activities that affect interstate commerce. Here, the judge opined, the Individual Mandate did not seek to regulate an activity, but rather, sought to regulate a citizen’s inactivity.

In other words, the Individual Mandate would force citizens who had chosen not to participate in commerce by refusing to buy healthcare insurance to engage in commerce by mandating that they purchase healthcare insurance or receive a financial penalty.

The judge stated that the issue to be decided was whether the refusal to purchase healthcare insurance was an “activity” that could be regulated and whether Congress could fine individuals who refused to purchase healthcare insurance.

The federal government argued that every citizen at some point in their life would need and have to receive healthcare services. Since needing and receiving healthcare services is inevitable, all citizens have to pay for their healthcare privately, through insurance, or shift those costs to the general public (government) if they do not have insurance.

According to the federal government argument the decision to not purchase healthcare insurance is an “economic activity” because their decision to refuse to buy healthcare insurance ultimately shifts costs to others in the healthcare system when those uninsured individuals are unable to pay for needed healthcare services.

The court concluded that the Individual Mandate imposed a penalty on any citizen who failed to purchase healthcare insurance, i.e., failed to act as required by PPACA.

The court concluded that penalizing a citizen for their refusal to act by purchasing healthcare insurance would expand Congress’ powers beyond its limits since the Commerce Clause could only be used to regulate a citizen’s activity that substantially affected interstate commerce. Therefore, according to the court, the Individual Mandate was unconstitutional.

Legislation adopted by Congress inevitably has a clause that states that if any part of the legislation is determined to be unconstitutional the unconstitutional portion of the law is severed so that what remains is constitutional and can be enforced.

PPACA lacks the “severability clause” contained in virtually every piece of legislation passed by Congress.

In Florida v. DHHS the court recognized the usual rule that severability is favored where a portion of a legislation is determined to be unconstitutional. Nevertheless, the court found that “[t]he individual mandate and the remaining provisions are . . . inexplicably bound together.” Therefore, the court determined that “the individual mandate is unconstitutional and not severable” . . . so the entire [Health Care Reform] Act must be declared void.”
Even though two federal district courts have declared the Individual Mandate unconstitutional this legal fight is not over. As the court stated in Virginia v. Sebelius:

This case, however, turns on atypical and unchartered applications of constitutional law interwoven with subtle political undercurrents.

The outcome of this case has significant public policy implications. And the final word will undoubtedly reside with a higher court.