Tuesday, March 27, 2012

Anti-Injunction Act - A Simple Explanation Of The Issues Argued Today With Oral Argument Update

Originally posted to September 17, 1787 on Mon Mar 26, 2012      By  Gary Norton

The front page has a very long and detailed article about the Anti-Injunction Act issues being discussed in the Supreme Court today. Since it may be a little dense for many people here is a simpler and shorter explanation of the issues.

For over one hundred and fifty years there has been a law that says a person cannot challenge a tax law until the tax has actually been assessed and they pay the tax or challenge an IRS collection action. That law is the Anti-Injunction Act. If the law applies to a suit then, almost uniformly, courts have ruled that they cannot even hear the case. It must be thrown out because the court lacks jurisdiction.

Today the Court is hearing arguments on whether the Anti-Injunction Act applies to the suits challenging the Affordable Care Act.

The two main issues are whether the ACA provision that requires people to pay a penalty if they don't have insurance constitutes a tax, and whether a suit challenging the mandate is really a suit challenging that tax.

(There are some minor issues which are excluded here but explained in the linked article.)

One case challenging the ACA was dismissed on this ground but it is not before the court today. In another suit that is before the Court today, there is a dissenting opinion by a Judge Kavanagh in which he says that the case should be dismissed because of the Anti-Injunction Act.

The hearing today on the Anti-Injunction Act is a fairly rare event. The government is not arguing for it and of course the plaintiffs don't think it applies. However the Supreme Court itself decided that it wanted to hear arguments on the issue. To get the issue presented the Court appointed an outside lawyer to argue the Anti-Injunction Act issue before the court.

What is the significance of this issue? If the court finds that the penalty is a tax, and that the challenge to the mandate is really a challenge to that tax, then the Court will dismiss these ACA challenges on the Anti-Injunction Act grounds.

Some people think that such a ruling would merely be punting the issue down the road. I don't share that view for the following reasons. Substantively, if the penalty is a tax then it will almost certainly be upheld in any later suit. Keep in mind that if it is a tax it can only be challenged based on Congress' taxing authority, not the Commerce Clause or the other things being used to challenge the law now. Congress' taxing authority is very broad and I don't think there has been a case since the thirties that has overturned a tax.

Secondly, if it is a tax, no suits can be filed until 2015. It would be until 2017 before they make it to the Supreme Court. By then the entire landscape will have changed. Obama will not be President. Since the idea of a mandate was invented by Republicans one doesn't have to be cynical to conclude that the challenges to the ACA are merely challenges to Obama. Once the law is implemented it will be clear to all that the  hysteria about "socialized medicine" is nonsense.

Additionally, the ACA has budgetary savings provisions that even the Republicans like. Those savings and the additional revenues will be built into future budgets. All the hue and cry will be tamped down in light of that reality.

Lastly, the state exchanges will be facts on the ground, The insurance companies will have adjusted and will be participants. People will see all the benefits in their own lives. There will be little appetite to go back to 2009.

Do not be surprised if this case is dismissed on AIA grounds. For Justices like Scalia who have written very expansive opinions on the Commerce clause it would be a really convenient way to avoid eating his past words, which he would have to if he ruled against the ACA, or disappointing his base if he ruled in favor of the ACA.

Update Just finished reading the transcript of the oral argument. It is wise to never draw any conclusions from an oral argument. Having said that the one thing that came across pretty clear is that Scalia does not think the AIA applies. The Justices who said things that could lead to the opposite conclusion were Breyer, Kagan and Sotomayor though their questions seemed more probative than signaling.

Of the two core issues the main problem the Justices were having was with calling the penalty a tax for purposes of the AIA. On the second question, whether the mandate is tied to the penalty/tax, even Roberts said he did not see how they could be separated.

One thing that surprised me was how long they discussed one aspect of the AIA that I didn't get into: whether it deprives a court of jurisdiction. That question seemed pretty well settled for the past fifty years but they wanted to talk about it.