Menu
Tax Notes logo

States File Conditional Cross-Petition in Individual Mandate Case

FEB. 14, 2020

State of Texas et al. v. State of California et al.

DATED FEB. 14, 2020
DOCUMENT ATTRIBUTES

State of Texas et al. v. State of California et al.

STATES OF TEXAS, ALABAMA, ARIZONA, ARKANSAS, FLORIDA, GEORGIA, INDIANA, KANSAS, LOUISIANA, MISSISSIPPI, MISSOURI, NEBRASKA, NORTH DAKOTA, SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, UTAH, AND WEST VIRGINIA; NEILL HURLEY AND JOHN NANTZ,
Conditional Cross-Petitioners
v.

STATE OF CALIFORNIA, ET AL.

In the Supreme Court of the United States

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

CONDITIONAL CROSS-PETITION
FOR A WRIT OF CERTIORARI

ROBERT HENNEKE
TEXAS PUBLIC POLICY
FOUNDATION
901 Congress Avenue
Austin, Texas 78701
Telephone: (512) 472-2700
rhenneke@texaspolicy.com
Counsel of Record for
Individual Conditional
Cross-Petitioners

KEN PAXTON
Attorney General of Texas
JEFFREY C. MATEER
First Assistant
Attorney General

KYLE D. HAWKINS
Solicitor General
Counsel of Record

MATTHEW H. FREDERICK
Deputy Solicitor General
LANORA C. PETTIT
Assistant Solicitor General

OFFICE OF THE
ATTORNEY GENERAL
P.O. Box 12548 (MC 059)
Austin, Texas 78711-2548
Kyle.Hawkins@oag.texas.gov
(512) 936-1700

Counsel for State Conditional
Cross-Petitioners

QUESTIONS PRESENTED

Congress passed the Patient Protection and Affordable Care Act (“ACA”), Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010), with the express goal of achieving near-universal health-insurance coverage. To achieve that goal, Congress found it was “essential” to require healthy Americans to ensure that they have what Congress considered minimum essential coverage. In 2012, this Court held that “[t]he Federal Government does not have the power to order people to buy health insurance.” Nat'l Fed'n of Indep. Bus. v. Sebelius (“NFIB”), 567 U.S. 519, 575 (2012) (op. of Roberts, C.J.). The Court upheld the minimum-essential-coverage requirement, however, because it was “fairly possible” to construe the mandate as a tax. Id. at 574. In 2017, Congress eliminated that alternative construction by zeroing out any penalty. That legislative act rendered the individual mandate unconstitutional, as the court below correctly held.

The Court should deny the petitions in Nos. 19-840 and 19-841. But if it grants them, it should grant this conditional cross-petition, as well, which presents the following questions:

1. Whether the unconstitutional individual mandate to purchase minimum essential coverage is severable from the remainder of the ACA.

2. Whether the district court properly declared the ACA invalid in its entirety and unenforceable anywhere.

PARTIES TO THE PROCEEDING

Conditional cross-petitioners the States of Texas, Alabama, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah, and West Virginia, as well as Neill Hurley and John Nantz are plaintiffs in the district court and appellees in the court of appeals.

Cross-respondents the States of California, Connecticut, Delaware, Hawaii, Illinois, Massachusetts, Minnesota (by and through the Department of Commerce), New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, and Washington, Governor Andy Beshear of Kentucky, and the District of Columbia intervened as defendants in the district court and were appellants in the court of appeals. Cross-respondents the States of Colorado, Iowa, Michigan, and Nevada intervened as defendants-appellants in the court of appeals.

Cross-respondent the United States House of Representatives purported to intervene as defendant-appellant in the court of appeals. The Fifth Circuit, however, never ruled on the U.S. House's standing to do so.

Cross-respondents the United States of America, the United States Department of Health and Human Services, Alex Azar II, Secretary of the United States Department of Health and Human Services, the Internal Revenue Service, and Charles P. Rettig, the Commissioner of the Internal Revenue Service are defendants in the district court and filed a notice of appeal. Though designated as appellants in the court of appeals, they ultimately defended the district court's judgment and are designated as respondents to the petitions for writs of certiorari filed in Nos. 19-840 and 19-841.

RELATED PROCEEDINGS

The proceedings directly related to this conditional cross-petition are:

California, et al. v. Texas, et al., No. 19-840, Supreme Court of the United States. Petition for writ of certiorari pending.

U.S. House of Representatives v. Texas, et al., No. 19-841, Supreme Court of the United States. Petition for writ of certiorari pending.

Texas, et al. v. United States, et al., No. 19-10011, United States Court of Appeals for the Fifth Circuit. Judgment entered December 18, 2019.

Texas, et al. v. United States, et al., No. 4:18-cv-167, United States District Court for the Northern District of Texas. Partial final judgment entered December 30, 2018.


TABLE OF CONTENTS

Questions Presented

Parties to the Proceeding

Related Proceedings

Table of Authorities

Opinions Below

Jurisdiction

Constitutional and Statutory Provisions Involved

Statement

Reasons for Granting the Petition

I. Review of Either the Petitions or Conditional Cross-Petition Is Premature

II. If the Court Grants Either Petition, It Should Grant This Cross-Petition, Which Presents Complementary Questions That Allow the Court to Uphold the District Court's Judgment in Its Entirety

A.The district court correctly held that the individual mandate is not severable from the remainder of the ACA

B.The district court properly issued a declaratory judgment that was not limited by geography

Conclusion

TABLE OF AUTHORITIES

Cases

Abbott v. Veasey, 137 S. Ct. 612 (2017)

Alaska Airlines, Inc. v. Brock, 480 U.S. 678 (1987)

Califano v. Yamasaki, 442 U.S. 682 (1979)

California v. Rooney, 483 U.S. 307 (1987)

Champlin Ref. Co. v. Corp. Comm'n of Okla., 286 U.S. 210 (1932)

Combs v. Ryan's Coal Co., 785 F.2d 970 (11th Cir. 1986)

Exec. Benefits Ins. Agency v. Arkinson, 573 U.S. 25 (2014)

Florida ex rel. Bondi v. U.S. Dep't of Health and Human Servs., 780 F. Supp. 2d 1307 (N.D. Fla. 2011)

Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477 (2010)

Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66 (2013) 

Gill v. Whitford, 138 S. Ct. 1916 (2018)

Halbig v. Burwell, 758 F.3d 390 (D.C. Cir. 2014)

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251 (1916)

Hill v. Wallace, 259 U.S. 44 (1922)

Kontrick v. Ryan, 540 U.S. 443 (2004)

Madsen v. Women's Health Ctr., Inc., 512 U.S. 753 (1994)

Microsoft v. Baker, 137 S. Ct. 1702 (2017)

Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172 (1999)

Murphy v. NCAA, 138 S. Ct. 1461 (2018)

Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012)

New York v. United States, 505 U.S. 144 (1992)

Pub. Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237 (1952)

Reno v. ACLU, 521 U.S. 844 (1997)

Texas v. Hopwood, 518 U.S. 1033 (1996)

United Parcel Serv., Inc. v. Flores-Galarza, 318 F.3d 323 (1st Cir. 2003)

Va. House of Delegates v. Bethune-Hill, 139 S. Ct. 1945 (2019)

Va. Military Inst. v. United States, 508 U.S. 946 (1993)

Veasey v. Abbott, 888 F.3d 792 (5th Cir. 2018)

Whole Women's Health v. Hellerstedt, 136 S Ct. 2292 (2016)

Williams v. Standard Oil Co. of La., 278 U.S. 235 (1929)

Zobel v. Williams, 457 U.S. 55 (1982)

Statutes and Rules

26 U.S.C.

§ 36B

§ 4980H

§ 5000A(a)

§ 5000A(c)

§ 5000B

§ 6056

28 U.S.C.

§ 1254

§ 1291

42 U.S.C.

§ 254b-2

§ 300gg

§§ 300gg to gg-4

§ 300gg-1

§ 300gg-4(a)

§ 300gg-15

§ 300u-11

§ 1396a(k)(1)

§ 1396u-7(b)(1)

§ 1396u-7(b)(5)

§ 18081

§ 18091(2)(F)

§ 18091(2)(H)

§ 18091(2)(I)

§ 18091(2)(J)

Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010)

§ 9010(b)

§ 9010

Tax Cuts and Jobs Act of 2017, Pub. L. 115-97,

§ 11081, 131 Stat. 2054, 2092 (2017)

Sup. Ct. R. 12.53

Sup. Ct. R. 13.13

Other Authorities

Alan C. Monheit et al., Community Rating and Sustainable Individual Health Insurance Markets in New Jersey, 23 HEALTH AFFAIRS No. 4 (July/Aug. 2004), https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.23.4.167

ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS (2012)

Br. for Defendants-Appellants United States et al., Texas v. United States, 945 F.3d 355 (5th Cir. 2019)

Brief for Respondents (Severability), Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012)

CONGRESSIONAL BUDGET OFFICE, KEY ISSUES IN ANALYZING MAJOR HEALTH INSURANCE PROPOSALS (Dec. 2008), https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/reports/12-18-keyissues.pdf 2008 

DOUGLAS LAYCOCK ET AL., MODERN AMERICAN REMEDIES: CASES AND MATERIALS (4th ed. 2010)

Oral Argument, Texas v. United States, 945 F.3d 355 (5th Cir. 2019), www.ca5.uscourts.gov/OralArgRecordings/19/19-10011_7-9-2019.mp3

PETER H. SCHUCK, SUING GOVERNMENT: CITIZEN REMEDIES FOR OFFICIAL WRONGS (1983)

Robert Book, The Strange Effects of The Health Insurance 'Annual Fee' Tax, Forbes.com, Feb. 20, 2014, https://www.forbes.com/sites/theapothecary/2014/02/20/the-strange-effects-of-the-health-insurance-annual-fee-tax/#70027bf45cdf

Robert L. Sterne, When to Cross-Appeal or Cross-Petition — Certainty or Confusion?, 87 HARV. L. REV. 763 (1974)

Samuel L. Bray, The Myth of the Mild Declaratory Judgment, 63 DUKE L.J. 1091 (2014)

STEPHEN M. SHAPIRO, ET AL., SUPREME COURT PRACTICE (10th ed. 2013)

William J. Brennan, Jr., Some Thoughts on the Supreme Court's Workload, 66 JUDICATURE 230 (1983)


CONDITIONAL CROSS-PETITION
FOR A WRIT OF CERTIORARI

The petitions filed by the States (in No. 19-840) and the U.S. House of Representatives (in No. 19-841) should be denied. Those petitions seek review of the Fifth Circuit's decision that (1) conditional cross-petitioners have shown sufficient proof of standing to be entitled to partial summary judgment, (2) the ACA's minimum-essential-coverage requirement, also known as the “individual mandate,” is unconstitutional, and (3) remand was appropriate for the district court to address questions of severability and remedy. The Fifth Circuit's decision is not worthy for this Court's consideration at this time. The case is in an interlocutory posture, and none of the questions presented justify deviation from this Court's ordinary practice to grant review only after final judgment.

But if this Court were to grant either (or both) of the petitions, it should ensure that any writ of certiorari to the United States Court of Appeals for the Fifth Circuit encompasses whether the circuit court should have affirmed the district court's judgment in its entirety, including the district court's severability and remedial rulings.

This Court's rules are unclear on whether it is necessary for plaintiffs to separately cross-petition under these circumstances.1 Indeed, the U.S. House has all but argued that this conditional cross-petition is unnecessary for the plaintiffs to preserve their right to argue for full affirmance of the district court. See House Mot. for Expedition Reply 10 (questioning whether this cross-petition is required and describing it as “at best a technical formality”). Nevertheless, out of an abundance of caution, and to avoid any accusation of waiver or forfeiture, cross-petitioners request that any Court order granting review permit them to argue that the district court's ruling, including its holdings on severability and remedy, should have been affirmed in its entirety.

OPINIONS BELOW

The court of appeals has revised its opinion twice to correct technical errors. The operative version is published at 945 F.3d 355. As they do in their briefs in opposition, conditional cross-petitioners refer to the petitioners' appendix filed in California v. Texas, No. 19-840, to avoid confusion. The relevant orders of the district court are reported at 340 F. Supp. 3d 579 (App. 163a-231a) and 352 F. Supp. 3d 665 (App. 117a-162a).

JURISDICTION

The district court entered a partial final judgment on December 30, 2018. App.116a; id. 117a-162a.2 The court of appeals had jurisdiction under 28 U.S.C. § 1291. The judgment of the court of appeals was entered on December 18, 2019. App. 1a.

This Court has certiorari jurisdiction under 28 U.S.C. § 1254 over (1) the petition filed by the States who intervened in the courts below, and (2) this conditional cross-petition, which was filed within 90 days of the circuit court's judgment. Sup. Ct. R. 13.1; accord Sup. Ct. R. 12.5 (allowing an additional 30 days for a conditional cross-petition).

The Court lacks jurisdiction over the petition filed by the U.S. House in No. 19-841. Though timely, as one chamber of a bicameral legislature, the U.S. House of Representatives lacks standing to separately petition in this Court on its own behalf to defend a legislative enactment. Va. House of Delegates v. Bethune-Hill, 139 S. Ct. 1945, 1953 (2019). And the U.S. House has no distinct injury of its own sufficient to support standing. See id.

CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED

Certain pertinent constitutional and statutory provisions are reproduced at App. 232a-44a. Additional pertinent statutory provisions are reproduced at Cross-Pet. App. 1a-92a.

STATEMENT

Conditional cross-petitioners have already provided a complete statement in their briefs in opposition in Nos. 19-840 and 19-841, filed February 3, 2020. Cross-petitioners incorporate that statement by reference and add the following information relevant to consideration of the questions presented in this conditional cross-petition.

1. In 2010, Congress sought to achieve near-universal health-insurance coverage by creating a complex lattice-work of “closely interrelated” provisions resting on three key features. NFIB, 567 U.S. at 691 (dissenting op.). Those features, which the D.C. Circuit referred to as a “three-legged stool,” Halbig v. Burwell, 758 F.3d 390, 409 (D.C. Cir. 2014), vacated on other grounds, No. 14-5018, 2014 WL 4627181 (D.C. Cir. Sept. 4, 2014), were: (1) a requirement that Americans buy minimum essential health insurance, known as the “individual mandate”; (2) a guaranteed-issue provision; and (3) a community-rating provision. Id.

2. At the heart of the ACA is what is referred to as the individual mandate and its tax penalty enforceable against those who do not comply. The text of the mandate provides: “An applicable individual shall . . . ensure that the individual . . . is covered under minimum essential coverage.” 26 U.S.C. § 5000A(a). The statutory title of this subsection reiterates that it imposes a “requirement” on applicable individuals “to maintain minimum essential coverage.” Id. (capitalization altered).

As discussed in greater detail in conditional cross-petitioners' briefs in opposition, Congress used several mechanisms to give the mandate teeth. Br. Opp. 4-5. As relevant here, Congress built numerous provisions of the ACA to effectuate the minimum-essential-coverage requirement. For example, Congress obligated States to provide what it defined as minimum essential care in their Medicaid programs, 42 U.S.C. § 1396a(k)(1) (incorporating standard through id. §§ 1396u-7(b)(1), (5)), and obligated employers to provide insurance to employees, 26. U.S.C. § 4980H. Congress used the minimum-essential-coverage requirement to define insurance companies' disclosure obligations to their customers, 42 U.S.C. § 300gg-15, and employers' disclosure obligations to the IRS, 26 U.S.C. § 6056. And it used the same requirement to trigger individuals' ability to access public insurance exchanges, 42 U.S.C. § 18081; their right to receive public subsidies to buy insurance, 26 U.S.C. § 36B; and their obligation to pay a tax penalty if they did not do so, id. § 5000A(c). In 2010, Congress found that the insurance “requirement, together with the[se] other provisions of the Act” would lead to universal healthcare coverage and lower health-insurance premiums. 42 U.S.C. § 18091(2)(F).

3. Statutory text insists that the mandate and its effectuating provisions are vital to the proper function of the ACA, which imposes voluminous regulations on health-insurance companies, with the most prominent being “guaranteed issue” and “community rating” requirements. See id. §§ 300gg to gg-4. The guaranteed-issue provision mandates that health-insurance companies “accept every employer and individual in the State that applies for . . . coverage,” regardless of preexisting conditions. Id. § 300gg-1. The community-rating provision prohibits health insurers from charging higher rates to individuals within a given geographic area on the basis of their age, sex, health status, or other factors. See id. §§ 300gg, 300gg-4(a).

As the United States conceded in NFIB and again in this litigation, “the minimum[-]coverage provision is necessary to make effective the Act's guaranteed-issue and community-rating insurance market reforms.” Brief for Respondents (Severability) 26, NFIB, 567 U.S. 519 (“NFIB Br.”); ROA.1570. The government explained that “Congress's findings expressly state that enforcement of [community and guaranteed issue] without a minimum[-]coverage provision would restrict the availability of health insurance and make it less affordable — the opposite of Congress's goals in enacting the Affordable Care Act.” NFIB Br. 44-45. This problem would result because, “in a market with guaranteed issue and community rating, but without a minimum[-]coverage provision, 'many individuals would wait to purchase health insurance until they needed care.'” Id. at 45 (quoting 42 U.S.C. § 18091(2)(I)).

This “adverse selection” problem would cause premiums to “go up, further impeding entry into the market by those currently without acute medical needs, risking a 'marketwide adverse-selection death spiral.'” Id. at 46 (quoting Alan C. Monheit, et al., Community Rating and Sustainable Individual Health Insurance Markets in New Jersey, 23 HEALTH AFFAIRS No. 4 at 167, 169 (July/Aug. 2004), https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.23.4.167); see 42 U.S.C. § 18091(2)(J). This hazard is why Congress “twice described” minimum coverage “as 'essential'” to “the guaranteed-issue and community-rating reforms” in the ACA's text. NFIB Br. 46-47. In sum, “without a minimum[-]coverage provision, the guaranteed-issue and community-rating provisions would drive up costs and reduce coverage, the opposite of Congress's goals.” Id. at 26.

4. Neither this economic reality nor Congress's findings about the function of its own statute have changed since 2010. In 2017, Congress “eliminat[ed],”3 this Court's statutory “basis to adopt such a saving construction,” NFIB, 567 U.S. at 575 (Roberts, C.J.). Section 11081 of the Tax Cuts and Jobs Act (“TCJA”) reduced the operative parts of section 5000A(c)'s tax penalty to “[z]ero percent” and “$0.”

As petitioners acknowledge, the TCJA left “every other provision of the ACA in place,” including the mandate and the inseverability clause that labels that mandate “essential.” States Pet. 2; see House Pet. 31. Specifically, Congress preserved all of its earlier findings that the individual mandate “is an essential part of [the government's] regulation of economic activity.” 42 U.S.C. § 18091(2)(H).

5. Two individuals and eighteen States brought suit because the ACA, as amended, “forces an unconstitutional and irrational regime on the States and their citizens.” ROA.504, 530-35. As the United States agrees that the minimum-essential-coverage requirement is unconstitutional, state petitioners intervened to defend the law. ROA.220-56, 946-52.

In December 2018, the district court granted a declaratory judgment on the first of cross-petitioners' five claims: that the individual mandate is unconstitutional. App. 163a-231a. As to remedy, the court noted that respondents (individual, state, and federal) “agree[d] . . . that the guaranteed-issue and community-rating provisions . . . are inseverable” from the individual mandate. Id. 204a. Indeed, federal respondents requested that the district court “enter[ ] a declaratory judgment” to that effect. ROA.1581. The district court declared that the remainder of the ACA was inseverable from the requirement as well. Id. 204a-05a. It was the understanding of all parties that the declaration would apply nationwide. See Oral Argument at 7:31-8:35, Texas v. United States, 945 F.3d 355 (5th Cir. 2019) (No.19-10011), www.ca5.uscourts.gov/OralArgRecordings/19/19-10011_7-9-2019.mp3 (premising state conditional cross-respondents' appellate standing on nationwide impact of declaration); id. at 49:25-50:19. At the request of state petitioners (ROA.2674-706), the district court entered a partial final judgment to allow immediate appeal. App. 117a-62a.

The Fifth Circuit affirmed on almost everything except remedy. On the issues of severability and remedy, the court noted that the United States “ha[d] shifted [its] position on appeal more than once.” Id. 13a. At oral argument before the Fifth Circuit, the United States argued that under Gill v. Whitford, 138 S. Ct. 1916 (2018), remand was necessary because the remedy “should only reach ACA provisions that injure the plaintiffs.” App. 71a. Because this remedial argument “came as a surprise” to conditional cross-petitioners, the Fifth Circuit ordered the district court to consider this new argument — including whether it was “timely raised” — in the first instance. Id.

REASONS FOR GRANTING THE PETITION

I. Review of Either the Petitions or Conditional Cross-Petition Is Premature.

For the reasons conditional cross-petitioners explain in their briefs in opposition, the petitions should be denied. This case comes to this Court in an interlocutory posture in which the lower courts have not yet determined the scope of the relief to which conditional cross-petitioners are entitled. The proper procedure in those circumstances is to deny review. E.g., Abbott v. Veasey, 137 S. Ct. 612, 613 (2017) (Roberts, C.J., respecting the denial of certiorari); Va. Military Inst. v. United States, 508 U.S. 946, 946 (1993) (Scalia, J., respecting the denial of certiorari); accord Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 258 (1916).

This practice preserves this Court's resources and prevents it from becoming prematurely involved in disputes that may fundamentally change over the course of subsequent litigation. William J. Brennan, Jr., Some Thoughts on the Supreme Court's Workload, 66 JUDICATURE 230, 231-32 (1983); compare Abbott, 137 S. Ct. at 613 (Roberts, C.J.) (declining certiorari because no remedy had been awarded), with Veasey v. Abbott, 888 F.3d 792, 795 (5th Cir. 2018) (holding that no remedy was necessary in light of legislative action taken during remand). The petitioners' asserted and unspecified desire for “certainty” in the health-insurance market does not overcome this rule. See Br. Opp. 16-35.

In short, this Court “reviews judgments, not opinions,” even when those opinions address “an issue of great national importance.” Texas v. Hopwood, 518 U.S. 1033, 1033 (1996) (Ginsburg, J., respecting the denial of certiorari). This Court has said many times before that parties may not appeal to press disagreements with a lower court's abstract legal conclusions, divorced from any remedial consequences. See, e.g., California v. Rooney, 483 U.S. 307, 311 (1987) (per curiam). As conditional cross-petitioners have explained in their briefs in opposition, that is effectively all the petitioners seek to do here.

II. If the Court Grants Either Petition, It Should Grant This Cross-Petition, Which Presents Complementary Questions That Allow the Court to Uphold the District Court's Judgment in Its Entirety.

If this Court nonetheless decides to grant review as to either petition, it should also grant this conditional cross-petition and conclude that the district court's severability and remedy rulings were correct. The questions are complementary to the third question presented in Nos. 19-840 and 19-841. See House Mot. for Expedition Reply 10 (questioning whether this conditional cross-petition is necessary and labeling it “at best, a technical formality”). Granting this conditional cross-petition would thus allow the Court to fully analyze those questions and to hold that the district court's partial final judgment should have been affirmed in its entirety.

A. The district court correctly held that the individual mandate is not severable from the remainder of the ACA.

As petitioners explain, severability is a question of statutory interpretation. Though courts will avoid invalidating more of an act than necessary to remedy a constitutional defect, this principle does not allow the Court to “substitute the judicial for the legislative department of the government.” Whole Women's Health v. Hellerstedt, 136 S. Ct. 2292, 2319 (2016) (quoting Reno v. ACLU, 521 U.S. 844, 884-85 n.49 (1997)). Because severance is ultimately a question of legislative intent, Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 508 (2010), courts will not attempt to salvage pieces of a legislative scheme where it is “evident that [Congress] would not have enacted those provisions which are within its power, independently of [that] which [is] not,” Murphy v. NCAA, 138 S. Ct. 1461, 1482 (2018) (quoting Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 684 (1987) ). See also Champlin Ref. Co. v. Corp. Comm'n of Okla., 286 U.S. 210, 234-35 (1932). The district court correctly relied on the operative statutory text to hold that the ACA's remaining provisions are inseverable from the unconstitutional mandate.

1. As in all issues of statutory interpretation, the first question is whether Congress expressly addressed severability in the statutory text. While not an “inexorable command,” the presence of a severability — or inseverability — clause is evidence of the legislature's preferred remedy in the event that a portion of the statute is determined to be unconstitutional. Hellerstedt, 136 S. Ct. at 2319.

In this instance, Congress included an inseverability clause when it passed the ACA in 2010. It states that “[t]he requirement [to buy health insurance] is essential to creating effective health[-]insurance markets in which improved health[-]insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.” 42 U.S.C. § 18091(2)(I). The 2017 Congress evidently agreed, as it left in place both the mandate and the inseverability clause.

There can be no clearer statement of Congress's view that the mandate is not severable from the rest of the ACA. That is what the district court concluded. So, too, should this Court.

2. This conclusion is confirmed by looking to the broader statutory language. The Court looks to two inquiries to determine if an unconstitutional provision is inseverable. First, provisions are inseverable if they would not “function in a manner consistent with the intent of Congress” absent the unconstitutional provision. Alaska Airlines, 480 U.S. at 684. If the operation of the unconstitutional provision is “so interwoven with” the intended operation of other provisions “that they cannot be separated,” none will stand. Hill v. Wallace, 259 U.S. 44, 70 (1922).

Second, provisions are inseverable if “the Legislature would not have enacted [them] . . . independently of” the provisions found unconstitutional, even if those provisions operated in some otherwise meaningful way. Alaska Airlines, 480 U.S. at 684. In examining this question, the Court looks not (as petitioners would ask) to isolated floor statements by individual members of Congress. Instead, it looks to whether the statute at issue “embodie[s] a single, coherent policy” or a “predominant purpose,” and whether the unconstitutional provisions are necessary to that purpose. Minnesota v. Mille Lacs Band of Chippewa Indians, 526 U.S. 172, 191 (1999).

To sever the “essential” individual mandate from the rest of the ACA, both tests must be satisfied. NFIB, 567 U.S. at 692-94 (dissenting op.). The ACA satisfies neither. To see why the individual mandate is inextricably intertwined with the remainder of the ACA, it is easiest to divide the 900-page statute into three tranches: (1) the community-rating and guaranteed-issue provisions, (2) remaining major provisions, and (3) minor or ancillary provisions. See generally id. at 697-706.

a. The United States has conceded for nearly a decade — across two different presidential administrations — that the community-rating and guaranteed-issue provisions are “so interwoven” with the mandate “that they cannot be separated.” Hill, 259 U.S. at 70. As a result, “[n]one of them can stand.” Id.; see NFIB Br. 26; ROA.1570. This concession alone provides reason to declare those provisions inseverable. Exec. Benefits Ins. Agency v. Arkinson, 573 U.S. 25, 36-37 (2014); accord Zobel v. Williams, 457 U.S. 55, 65 (1982) (remanding severability of state statute). Congress had firm empirical evidence that “in a market with guaranteed issue and community rating, but without a minimum[-]coverage provision, 'many individuals would wait to purchase health insurance until they needed care.'” NFIB Br. 45 (quoting 42 U.S.C. § 18091(2)(I)); id. at 47; cf. NFIB, 567 U.S. at 694-96 (dissenting op.).

Amici assert that, notwithstanding Congress's decision to retain these express findings, the findings simply were no longer true by 2017. In particular, amici point to economic studies suggesting that subsidies have been the real driving factor for the increase in the rates of insured persons seen since 2010. E.g., Nat'l Hosp. Ass'n Br. 8-10. This argument is circular. Subsidies are one of several mechanisms that Congress used to effectuate the mandate that Americans buy minimum essential coverage. CONGRESSIONAL BUDGET OFFICE, KEY ISSUES IN ANALYZING MAJOR HEALTH INSURANCE PROPOSALS 50-53. (Dec. 2008), https://www.cbo.gov/sites/default/files/110th-congress-2007-2008/reports/12-18-key-issues.pdf. Moreover, neither petitioners nor amici cite evidence that Congress adopted this view beyond isolated floor statements by particular members of Congress. Such statements of individual legislators cannot change the meaning of the text adopted by both chambers of Congress and signed by the President. ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 369-90 (2012) (discussing “[t]he false notion” that “floor speeches are worth-while aids in statutory construction”).

b. The remaining major provisions are similarly inseverable because they effectuate the near-universal healthcare coverage that the mandate requires. These provisions are predominantly located in Title I of the ACA and are identified in detail in the NFIB dissent. 567 U.S. at 691-703. They include insurance regulations and taxes; changes to the Medicaid program (e.g., reducing hospital reimbursements); health-insurance exchanges and their federal subsidies; employer responsibility payments; and tax benefits to individuals. Id. Though highly varied, each of these provisions works to meet the “single, coherent policy” that all Americans have minimum-essential-healthcare coverage. Mille Lacs Band, 526 U.S. at 191.

To take an example of why they are inseverable from the individual mandate, consider the health-insurance provider fee contained in section 9010 of the ACA. This fee is an assessment imposed upon health-insurance providers on the theory that they will receive a windfall of new subscribers as a result of the mandate. Robert Book, The Strange Effects of The Health Insurance 'Annual Fee' Tax, Forbes.com, Feb. 20, 2014, https://www.forbes.com/sites/theapothecary/2014/02/20/the-strange-effects-of-the-health-insurance-annual-fee-tax/#70027bf45cdf. If the mandate is declared unconstitutional, any chance of such a windfall would evaporate. The tax would, however, remain unchanged due to the way the tax is calculated. Generally speaking, corporate income tax is assessed by multiplying a tax rate by the company's earnings. The ACA's health-insurance-provider fee, by contrast, is assessed by multiplying the insurer's market share by a total amount levied against the industry. ACA § 9010(b). Without the increase in customers caused by the mandate, insurers would have to increase their premiums on existing customers to meet the fee — which was the exact opposite of Congress's intent. Cf. NFIB, 567 U.S. at 699 (dissenting op.).

Because this provision would not “function in a manner consistent with the intent of Congress” without the mandate, it is inseverable from that mandate. Alaska Airlines, 480 U.S. at 685; see also NFIB, 567 U.S. at 692-93 (dissenting op.).

The same is true of all of the major provisions of the ACA. These provisions include “mandates and other requirements; comprehensive regulation and penalties; some undoubted taxes; and increases in some governmental expenditures, decreases in others.” NFIB, 567 U.S. at 694 (dissenting op.). As the NFIB dissent noted, these provisions work “to balance the costs and benefits affecting each set of regulated parties.” Id. Because that balance would be fundamentally altered by removing the individual mandate, the ACA's remaining major provisions are inseverable from that individual mandate. Cf. Alaska Airlines, 480 U.S. at 685; New York v. United States, 505 U.S. 144, 187 (1992).

c. Finally, the ACA's minor provisions are inseverable for similar reasons. These provisions included, among other things, a number of minor taxes, e.g., 26 U.S.C. §5000B, and “a number of provisions that provided benefits to the State of a particular legislator.” NFIB, 567 U.S. at 704 (dissenting op.). Without the main provisions, these minor provisions make little sense. For example, the “tax increases no longer operate to offset costs” as part of “the Act's scheme of 'shared responsibility.'” Id. at 705. Moreover, as a whole, “[t]here is no reason to believe that Congress would have enacted them independently” of the mandate, community-rating provision, and guaranteed-issue requirement. Id.; see also Williams v. Standard Oil Co. of La., 278 U.S. 235, 243 (1929).

Petitioners and their amici counter by pointing to ancillary provisions that, in their view, Congress included in the ACA for convenience. For example, the ACA reauthorized the Indian Health Service, which has existed since long before the ACA. Economic Scholars Am. Br. 22. If anything, however, highlighting these examples demonstrates why this case is not yet ripe for review. This entire appeal originated from the federal government's request that the district court treat a request for a preliminary injunction as a motion for summary judgment. ROA.1563. Like most requests for preliminary relief, the original motion was drafted and briefed in broad strokes. ROA.572-633. The Fifth Circuit “direct[ed] the district court to employ a finer-toothed comb on remand” before entering final judgment. App. 68a. The Court should allow the lower courts to conduct that analysis in the first instance. But if it chooses to hear the case now, it should allow conditional cross-petitioners to argue that the district court was correct that Congress would not have passed the ACA absent the mandate.

3. The district court faithfully applied the above principles — including the statutory inseverability clause — to reach the correct conclusion: No portion of the ACA is severable from the mandate. The Fifth Circuit should have affirmed that judgment. Instead, it vacated the district court's judgment and instructed that court to redo its analysis in light of authorities and arguments the federal government raised for the first time on appeal.

B. The district court properly issued a declaratory judgment that was not limited by geography.

If the Court grants review, it should also hold that the district court's remedy was correct. The district court declared the individual mandate unconstitutional and inseverable from the remainder of the ACA. App. 231a. Consistent with the conditional cross-petitioners' request for relief, that declaratory judgment carried nationwide effect. The Fifth Circuit should have affirmed that judgment in its entirety.

Instead, the Fifth Circuit vacated the district court's remedial determination based in part on a new argument that the federal government raised for the first time on appeal. In its district court papers, the federal government expressly argued that the injunctive relief that conditional cross-petitioners had requested was not warranted because such a declaration “would be adequate relief against the government,” ROA.1581, and that “a declaratory judgment is the functional equivalent of an injunction against the federal government,” ROA.2722. At oral argument before the district court, the federal government again insisted that it would treat its declaration like the nationwide injunction that conditional cross-petitioners had requested. Cf. Oral Argument 50:25-38 (describing oral concession to the district court). That concession is consistent with how courts and commentators have viewed declarations when government actors are involved. Cf. Pub. Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 247 (1952); Florida ex rel. Bondi v. U.S. Dep't of Health and Human Servs., 780 F. Supp. 2d 1307, 1315-16 (N.D. Fla. 2011); Samuel L. Bray, The Myth of the Mild Declaratory Judgment, 63 DUKE L.J. 1091, 1093 & n.9 (2014) (citing inter alia PETER H. SCHUCK, SUING GOVERNMENT: CITIZEN REMEDIES FOR OFFICIAL WRONGS 14-15 (1983)).

But on appeal, the federal government changed its position and argued for a narrower remedy. See Br. for Defendants-Appellants United States et al. 26-29 Texas v. United States, 945 F.3d 355 (5th Cir. 2019). The Fifth Circuit remanded in part to allow the district court to address this new argument in the first instance. App. 70a-72a. But there was no need to do so. Arguments raised for the first time on appeal are not properly before the appellate court. See DOUGLAS LAYCOCK, ET AL., MODERN

AMERICAN REMEDIES: CASES AND MATERIALS 955 (4th ed. 2010) (“[T]he court and the other litigants relied by continuing to litigate; courts will not retry a case to correct an error that could have been corrected when it was made.”) (citing Kontrick v. Ryan, 540 U.S. 443, 458 n.13 (2004)); accord United Parcel Serv., Inc. v. Flores-Galarza, 318 F.3d 323, 338 (1st Cir. 2003); Combs v. Ryan's Coal Co., 785 F.2d 970, 979 (11th Cir. 1986). Moreover, as Justice Thomas recently recognized in a different context, “it has long been the rule that a party may not appeal” from the conclusion of a district court if “the party consented to the judgment against it.” Microsoft v. Baker, 137 S. Ct. 1702, 1717 (2017) (Thomas, J., concurring) (collecting cases). The Fifth Circuit should have affirmed the district court's remedial order, rather than remanding to allow the United States to raise arguments that it could have raised — but did not raise — in district court.

Furthermore, the district court was correct to declare the entire ACA unconstitutional and unenforceable nationwide: Such a declaration is both equitable and necessary to “provide complete relief to the plaintiffs.” Califano v. Yamasaki, 442 U.S. 682, 702 (1979); see also Madsen v. Women's Health Ctr., Inc., 512 U.S. 753, 765 (1994). Invalidating the ACA in a more limited geographic area would force citizens of the cross-petitioning States to heavily subsidize other States with their general tax dollars. For example, citizens of and entities located in the cross-petitioning States would have their tax dollars collected and spent in accordance with ACA programs such as the Prevention and Public Health Fund, see 42 U.S.C. § 300u-11, and the Community Health Center Fund, see id. § 254b-2. Yet none of those funds would be spent in the cross-petitioning States. A less-than-nationwide injunction would effectively allow a transfer of hundreds of millions of dollars from the prevailing States to either conditional-cross-respondent or non-party States. Far from redressing conditional cross-petitioners' injuries, such an injunction would exacerbate their injuries by forcing them to pay for programs and services they no longer receive because they prevailed in showing those programs and services to be inseverable from the unconstitutional individual mandate. Such a result is plainly inequitable.

The district court therefore properly invalidated the ACA nationwide. In the event it grants either or both petitions, the Court should affirm the district court's remedial order in its entirety consistent with the federal government's representations in district court.

CONCLUSION

The petitions for writs of certiorari filed in Nos. 19-840 and 19-841 should be denied. But if the Court decides to grant either, it should grant this conditional cross-petition as well, which presents complementary questions of whether the Fifth Circuit should have affirmed the district court's judgment in its entirety.

Respectfully submitted.

STEVE MARSHALL
Attorney General of
Alabama

MARK BRNOVICH
Attorney General of
Arizona

LESLIE RUTLEDGE
Attorney General of
Arkansas

ASHLEY MOODY
Attorney General of
Florida

CHRISTOPHER M. CARR
Attorney General of
Georgia

CURTIS T. HILL, JR.
Attorney General of
Indiana

DEREK SCHMIDT
Attorney General of Kansas

JEFF LANDRY
Attorney General of
Louisiana

LYNN FITCH
Attorney General of
Mississippi

ERIC SCHMITT
Attorney General of
Missouri

DOUG PETERSON
Attorney General of
Nebraska

WAYNE STENEHJEM
Attorney General of
North Dakota

ALAN WILSON
Attorney General of
South Carolina

JASON R. RAVNSBORG
Attorney General of
South Dakota

HERBERT H. SLATERY, III
Attorney General of
Tennessee

KEN PAXTON
Attorney General of Texas

JEFFREY C. MATEER
First Assistant
Attorney General

KYLE D. HAWKINS
Solicitor General
Counsel of Record for State Conditional Cross-Petitioners

MATTHEW H. FREDERICK
Deputy Solicitor General

LANORA C. PETTIT
Assistant Solicitor General

SEAN REYES
Attorney General of
Utah

PATRICK MORRISEY
Attorney General of
West Virginia

OFFICE OF THE
ATTORNEY GENERAL
P.O. Box 12548 (MC 059)
Austin, Texas 78711-2548
Kyle.Hawkins@oag.texas.gov
(512) 936-1700

ROBERT HENNEKE
Counsel of Record for Individual
Conditional Cross-Petitioners

TEXAS PUBLIC POLICY FOUNDATION
901 Congress Avenue
Austin, Texas 78701
Telephone: (512) 472-2700
rhenneke@texaspolicy.com

FEBRUARY 2020

FOOTNOTES

1STEPHEN M. SHAPIRO, ET AL., SUPREME COURT PRACTICE 491 n. 131 (10th ed. 2013) (“If the first petition asserts that a judgment for damages is too high, a cross-petition must be filed by a party who wishes to argue that the same amount is too low.”) (citing Robert L. Sterne, When to Cross-Appeal or Cross-Petition — Certainty or Confusion?, 87 HARV. L. REV. 763, 767 (1974)); cf. Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 82 n.1 (2013) (Kagan, J., dissenting).

2ROA refers to the record on appeal in Texas v. United States, 19-10011 (5th Cir.).

3Tax Cuts and Jobs Act of 2017, Pub. L. 115-97, § 11081, 131 Stat. 2054, 2092 (2017) (capitalization altered).

END FOOTNOTES

DOCUMENT ATTRIBUTES
Copy RID