Wednesday, December 15, 2010

Virginia Court Strikes Down Individual Mandate In Health Reform

The 2010 health reform requirement that individuals maintain essential health coverage or pay a penalty invites an “unbridled exercise of federal police power” and “exceeds the constitutional boundaries of congressional power,” according to a December 13 ruling by Judge Henry E. Hudson of the U.S. District Court for the Eastern District of Virginia.

In the ruling (Commonwealth of Virginia v. Kathleen Sebelius (Civ. Act. No. 3:10CV188-HEH)), the judge specifically declared unconstitutional Sec. 1501 of the Patient Protection and Affordable Care Act (ACA), the Requirement To Maintain Minimum Essential Coverage. The case originally was filed soon after passage of the ACA by Virginia attorney general Kenneth T. Cuccinelli II.

Under Sec. 1501, beginning in 2014, a penalty is imposed on applicable individuals for each month they fail to have minimum essential health coverage for themselves and their dependents. This penalty also is called a “shared responsibility payment.”

Implementation Can Proceed

Although Virginia had asked that the court invalidate the entire law, Mr. Hudson made clear that the ruling only involved Sec. 1501 and that the rest of the law remained intact.

Mr. Hudson also denied request to prevent implementation of Sec. 1501 until a higher court acts, noting that because the provision does not take effect for at least three years, “the likelihood of any irreparable harm pending certain appellate review is somewhat minimal.”

In a press briefing on December 13, White House press secretary Robert Gibbs noted that “the individual responsibility portions of the ACA are the basis and the foundation for examining and doing away with insurance company discrimination on behalf of preexisting conditions. Obviously, without an individual responsibility portion in the law, you could not find yourself dealing with preexisting conditions because the only people that would likely get involved in purchasing health care would be the very sick. And obviously, that would be enormously expensive.”

Three other district courts already have ruled on health reform challenges. In late November, the United States District Court for the Western District of Virginia ruled that employer and individual coverage provisions in the ACA are legal under the Constitution. In addition, in two other challenges to the ACA, a Michigan court dismissed a case and a Florida court allowed two challenges to move forward. Finally, in November, the Supreme Court declined to hear a challenge to the ACA.

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.


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