Fifth Circuit Court of Appeals Issues Ruling in ACA CaseDecember 19, 2019 Alert
The Fifth Circuit Court of Appeals has ruled the Affordable Care Act’s individual mandate unconstitutional and sent the case back to the lower court.
At a Glance
• The Fifth Circuit Court of Appeals has ruled the Affordable Care Act’s (ACA) individual mandate unconstitutional, but did not invalidate the entire law.
• The employer mandate, IRS reporting requirements, dependent coverage until age 26, other coverage mandates, as well as protections for pre-existing conditions are still in effect.
• The Court sent the case back to the lower court to reconsider if the remaining parts of the law can stand without the individual mandate.
On December 18, 2019, the Fifth Circuit Court of Appeals issued its decision in the Texas v. Azar lawsuit. In its ruling, the Court struck down the individual mandate provision of ACA and ordered the lower court to reconsider whether the remaining provisions can remain intact. In its ruling, the Court opined that “the individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power”. In sending the question of severability back to the lower court, the Court of Appeals advised the lower court to use a “finer toothed comb” and conduct a more “searching inquiry” into which provisions Congress intended to be inseverable from the individual mandate.
When the Tax Cuts and Jobs Act (TCJA) was enacted in 2017, it reduced the Affordable Care Act’s penalty for people who did not have health insurance to zero. That penalty was a key part of the Supreme Court’s decision to uphold the law in 2012. After the change to the penalty, opponents of the ACA decided to challenge it again, led by the Attorney General of Texas. District Court Judge Reed O’Connor, agreed with the arguments presented by the plaintiffs and ruled the entire ACA unconstitutional. That decision was appealed to the 5th Circuit Court of Appeals, whose ruling was just issued.
The lower court is now charged with analyzing if the remainder of the law can stand. Additionally, the Court of Appeals’ decision may be appealed to the U.S. Supreme Court even before the lower court issues its new ruling. California Attorney General Xavier Becerra, who is leading the coalition of states defending the law, said his department is prepared to file a petition with the Supreme Court to challenge the ruling. Legal experts think it is unlikely the U.S. Supreme Court would accept a case that has not yet been resolved by the lower courts. Therefore, it’s more likely that the ACA’s fate won’t be determined anytime soon.
As the ruling did not address the remaining provisions of the law, like the employer mandate and related reporting requirements, it is important to understand that those provisions are still in effect and employers should remain prepared to comply with those requirements, as applicable.
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