Category Archives: US Supreme Court
On September 6, 2017, I appeared on the Besler Hospital Finance Podcast regarding:
Update on the Medicare appeals backlog [PODCAST]
Feel free to listen to the podcast, download it, and share with others!
DHHS is under criminal investigation by the federal government for allegedly overpaying employees without a bid process, and, simply, mismanaging and overspending our Medicaid tax dollars. See blog.
When I first started writing this blog, I opined that the federal investigation should be broadened. While I still believe so, the results of broadening the scope of a federal investigation could be catastrophic for our Medicaid providers and recipients. So I am metaphorically torn between wanting to shine light on tax payer waste and wanting to shield NC Medicaid providers and recipients from the consequences of penalties and sanctions on NC DHHS. Because, think about it, who would be harmed if NC lost federal funding for Medicaid?
[BTW, of note: These subpoenas were received July 28, 2015. Aldona Wos announced her resignation on August 5, 2015, after receipt of subpoenas. The Subpoenas demand an appearance on August 18, 2015, which, obviously, has already passed, yet we have no intel as to the occurrences on August 18, 2015. If anyone has information, let me know.]
Does this criminal investigation go far enough? Should the feds investigate more Medicaid mismanagement over and above the salaries of DHHS employees? What are the potential consequences if NC is sanctioned for violating Medicaid regulations? How could a sanction affect providers and recipients?
DHHS’ employees are not the only highly compensated parties when it comes to our Medicaid dollars! It is without question that the contracts with vendors with whom DHHS contracts contain astronomically high figures. For example, DHHS hired Computer Sciences Corporation (CSC) to implement the NCTracks software for $265 million. Furthermore, there is no mention of the lack of supervision of the managed care organizations (MCOs) and the compensation for executives of MCOs being equal to that of the President of the United States in the Subpoenas.
The subpoenas are limited in scope as to documents related to hiring and the employment terms surrounding DHHS employees. As I just said, there is no mention of violations of bid processes for vendors or contractors, except as to Alvarez & Marsal, and nothing as to the MCOs.
Specifically, the subpoena is requesting documents germane to the following:
- Les Merritt, a former state auditor who stepped down from the North Carolina State Ethics Commission after WRAL News raised questions about potential conflicts of interest created by his service contract with DHHS;
- Thomas Adams, a former chief of staff who received more than $37,000 as “severance” after he served just one month on the job;
- Angie Sligh, the former director of the state’s upgraded Medicaid payment system who faced allegations of nepotism and the waste of $1.6 million in payments to under-qualified workers for wages, unjustified overtime and holiday pay in a 2015 state audit;
- Joe Hauck, an employee of Wos’ husband who landed a lucrative contract that put him among the highest-paid workers at DHHS;
- Alvarez & Marsal, a consulting firm overseeing agency budget forecasting under a no-bid contract that has nearly tripled in value, to at least $8 million;
Most likely, the penalties imposed would be more civil in nature and encompass suspensions, recoupments, and/or reductions to the federal matching. Possibly a complete termination of all federal matching funds, at the worst.
42 CFR Part 430, Subpart C – of the Code of Federal Regulations (CFR) covers “Grants; Reviews and Audits; Withholding for Failure To Comply; Deferral and Disallowance of Claims; Reduction of Federal Medicaid Payments”
The Center for Medicare and Medicaid Services (CMS) is charged with the oversight of all 50 states’ management of Medicaid, which makes CMS very busy and with solid job security.
CMS may withhold federal funding, although reasonable notice and opportunity for a hearing is required (unlike the reimbursement suspensions from providers upon “credible” (or not) allegations of fraud).
If the Administrator of a hearing finds North Carolina non compliant with federal regulations, CMS may withhold, in whole or in part, our reimbursements until we remedy such deficiency. Similar to health care providers’ appeals, if the State of North Carolina is dissatisfied with the result of the hearing, NC may file for Judicial Review. Theoretically, NC could go all the way to the U.S. Supreme Court.
Other penalties could include reductions of (1) the Federal Medical Assistance Percentage; (2) the amount of State expenditures subject to FFP; (3) the rates of FFP; and/or (4) the amount otherwise payable to the state.
As a reminder, the penalties listed above are civil penalties, and NC is under criminal investigation; however, I could not fathom that the criminal penalties would differ far from the civil allowable penalties. What are the feds going to do? Throw Wos in jail? Highly unlikely.
The subpoena was addressed to:
NC DHHS, attention the Custodian of Records. In NC, public records requests go to Kevin V. Howell, Legal Communications Coordinator, DHHS.
But is the federal government’s criminal investigation of DHHS too narrow in scope?
If we are investigating DHHS employees’ salaries and bid processes, should we not also look into the salaries of DHHS’ agents, such as the salaries for employees of MCOs? And the contracts’ price tags for DHHS vendors?
Turning to the MCOs, who are the managers of a fire hose of Medicaid funds with little to no supervision, I liken the MCOs’ current stance on the tax dollars provided to the MCOs as the Lion, who hunted with the Fox and the Jackal from Aesop’s Fables.
The Lion went once a-hunting along with the Fox, the Jackal, and the Wolf. They hunted and they hunted till at last they surprised a Stag, and soon took its life. Then came the question how the spoil should be divided. “Quarter me this Stag,” roared the Lion; so the other animals skinned it and cut it into four parts. Then the Lion took his stand in front of the carcass and pronounced judgment: The first quarter is for me in my capacity as King of Beasts; the second is mine as arbiter; another share comes to me for my part in the chase; and as for the fourth quarter, well, as for that, I should like to see which of you will dare to lay a paw upon it.”
“Humph,” grumbled the Fox as he walked away with his tail between his legs; but he spoke in a low growl:
Moral of Aesop’s Fable: “You may share the labours of the great, but you will not share the spoil.”
At least as to DHHS employees’ salaries, the federal government is investigating any potential mismanagement of Medicaid funds due to exorbitant salaries, which were compensated with tax dollars.
Maybe this investigation is only the beginning of more forced accountability as to mismanaging tax dollars with Medicaid administrative costs.
One can hope…(but you do not always want what you wish for…because the consequences to our state could be dire if the investigation were broadened and non compliance found).
Let us quickly contemplate the possible consequences of any of the above-mentioned penalties, whether civil or criminal in nature, on Medicaid recipients.
To the extent that you believe that the reimbursement rates are already too low, that medically necessary services are not being authorized, that limitations to the amount services are being unduly enforced…Imagine that NC lost our federal funding completely. We would lose approximately 60% of our Medicaid budget.
All our “voluntary” Medicaid-covered services would, most likely, be terminated. Personal care services (PCS) is an optional Medicaid-covered service.
With only 40% of our Medicaid budget, I could not imagine that we would have much money left to pay providers for services rendered to Medicaid recipients after paying our hefty administrative costs, including overhead,payroll, vendor contracts, MCO disbursements, etc. We may even be forced to breach our contracts with our vendors for lack of funds, which would cause us to incur additional expenses.
All Medicaid providers could not be paid. Without payments to providers, Medicaid recipients would not receive medically necessary services.
Basically, it would be the next episode of “Fear the Walking Dead.”
Hopefully, because the ramifications of such penalties would be so drastic, the federal government will not impose such sanctions lightly. Sanctions of such magnitude would be a last resort if we simply refused to remedy whatever deficiencies are found.
Otherwise, it could be the zombie apocalypse, but the Lion’s would be forced to share.
Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state. Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states. The Health and Human Services (HHS) is now our 51st state.
Today the Supreme Court decided the King v. Burwell case.
If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld. According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).
“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”
“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”
In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”
However, the majority disagrees.
Apparently, HHS is now our 51st state.
The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails. Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”
Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.” Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.
In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd. In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”
NC Medicaid Reimbursement Rates for Primary Care Physicians Slashed; Is a Potential NC Lawsuit Looming?
Here is my follow-up from yesterday’s blog post, “NC Docs Face Retroactive Medicaid Rate Cut.”
Nearly one-third of physicians say they will not accept new Medicaid patients, according to a new study. Is this shocking in light of the end of the ACA enhanced payments for primary physicians, NC’s implementation of a 3% reimbursement rate cut for primary care physicians, and the additional 1% reimbursement rate cut? No, this is not shocking. It merely makes economic sense.
Want more physicians to accept Medicaid? Increase reimbursement rates!
Here, in NC, the Medicaid reimbursement rates for primary care physicians and pediatricians have spiraled downward from a trifecta resulting in an epically, low parlay. They say things happen in threes…
(1) With the implementation of the Affordable Care Act (ACA), the Medicaid reimbursement rate for certain primary care services increased to reimburse 100% of Medicare Cost Share for services paid in 2013 and 2014. This enhanced payment stopped on January 1, 2015.
(2) Concurrently on January 1, 2015, Medicaid reimbursement rates for evaluation and management and vaccination services were decreased by 3% due to enactments in the 2013 NC General Assembly session.
(3) Concurrently on January 1, 2015, Medicaid reimbursement rates for evaluation and management and vaccination services were decreased by 1% due to enactments in the 2014 NC General Assembly session.
The effect of the trifecta of Medicaid reimbursement rates for certain procedure codes for primary care physicians can be seen below.
As a result, a physician currently receiving 100% of the Medicare rates will see a 16% to 24% reduction in certain E&M and vaccine procedure codes for Medicaid services rendered after January 1, 2015.
Are physicians (and all other types of health care providers) powerless against the slashing and gnashing of Medicaid reimbursement rates due to budgetary concerns?
No! You are NOT powerless! Be informed!!
Section 30(A) of the Medicaid Act states that:
“A state plan for medical assistance must –
Provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1396b(i)(4) of this title) as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”
Notice those three key goals:
- Quality of care
- Sufficient to enlist enough providers
- So that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area
Courts across the country have held that low Medicaid reimbursement rates which are set due to budgetary factors and fail to consider federally mandated factors, such as access to care or cost of care, are in violation of federal law. Courts have further held that Medicaid reimbursement rates cannot be set based solely on budgetary reasons.
For example, U.S. District Court Judge Adalberto Jordan held in a 2014 Florida case that:
“I conclude that while reimbursement rates are not the only factor determining whether providers participate in Medicaid, they are by far the most important factor, and that a sufficient increase in reimbursement rates will lead to a substantial increase in provider participation and a corresponding increase to access to care.”
“Given the record, I conclude that plaintiffs have shown that achieving adequate provider enrollment in Medicaid – and for those providers to meaningfully open their practices to Medicaid children – requires compensation to be set at least at the Medicare level.
Judge Jordan is not alone. Over the past two decades, similar cases have been filed in California, Illinois, Massachusetts, Oklahoma, Texas, and D.C. [Notice: Not in NC]. These lawsuits demanding higher reimbursement rates have largely succeeded.
There is also a pending Supreme Court case that I blogged about here.
Increasing the Medicaid reimbursement rates is vital for Medicaid recipients and access to care. Low reimbursement rates cause physicians to cease accepting Medicaid patients. Therefore, these lawsuits demanding increased reimbursement rates benefit both the Medicaid recipients and the physicians providing the services.
According to the above-mentioned study, in 2011, “96 percent of physicians accepted new patients in 2011, rates varied by payment source: 31 percent of physicians were unwilling to accept any new Medicaid patients; 17 percent would not accept new Medicare patients; and 18 percent of physicians would not accept new privately insured patients.”
It also found this obvious fact: “Higher state Medicaid-to-Medicare fee ratios were correlated with greater acceptance of new Medicaid patients.”
Ever heard the phrase: “You get what you pay for.”?
A few months ago, my husband brought home a box of wine. Yes, a box of wine. Surely you have noticed those boxes of wine at Harris Teeter. I tried a sip. It was ok. I’m no wine connoisseur. But I woke the next morning with a terrible headache after only consuming a couple of glasses of wine. I’m not sure whether the cheaper boxed wine has a higher level of tannins, or what, but I do not get headaches off of 2 glasses of wine when the wine bottle is, at least, $10. You get what you pay for.
The same is true in service industries. Want a cheap lawyer? You get what you pay for. Want a cheap contractor? You get what you pay for.
So why do we expect physicians to provide the same quality of care in order to receive $10 versus $60? Because physicians took the Hippocratic Oath? Because physicians have an ethical duty to treat patients equally?
While it is correct that physicians take the Hippocratic Oath and have an ethical duty to their clients, it’s for these exact reasons that many doctors simply refuse to accept Medicaid. It costs the doctor the same office rental, nurse salaries, and time devoted to patients to treat a person with Blue Cross Blue Shield as it does a person on Medicaid. However, the compensation is vastly different.
Why? Why the different rates if the cost of care is equal?
Unlike private insurance, Medicaid is paid with tax dollars. Each year, the General Assembly determines our Medicaid budget. Reducing Medicaid reimbursement rates, by even 1%, can affect the national Medicaid budget by billions of dollars.
But, remember, rates cannot be set for merely budgetary reasons…
Is a potential lawsuit looming in NC’s not so distant future???
This is a copy of an article written by William Baude on SCOTUSblog.
In the article, William analyzes the oral arguments for Armstrong v. Exceptional Child Center, a very important Supreme Court case heard by the Justices January 20, 2015. If you don’t recall the lawsuit, see my blog: “Low Medicaid Reimbursement Rates Violate the Supremacy Clause?!… The Supreme Court to Weigh In!”
Here is the analysis:
The Supreme Court has heard a lot of preemption suits, but Tuesday’s arguments in Armstrong v. Exceptional Child Center suggest that the Court has not yet agreed on what exactly the formal underpinnings of those suits are.
The case features a debate about the intersection of two lines of precedent. One line restricts the availability of a federal statutory cause of action unless Congress has deliberately included one. The other line makes a cause of action broadly available when the plaintiff seeks an injunction to enforce a constitutional provision. At issue in this case is whether suits to enforce the preemptive effect of a federal statute are more like constitutional injunctions or statutory suits.
Both lines of precedent were on full display at yesterday’s argument. Shortly after his argument started the state’s counsel, Carl Withroe, was pressed with questions about the many prior preemption cases the Court had heard. Justice Ruth Bader Ginsburg adverted to a list of fifty-seven cases attached to the Medicaid recipients’ brief that are alleged to fail under the state’s theory. Withroe made several different attempts to distinguish those cases, although he did not seem to fully satisfy the Court. Towards the end of Withroe’s argument, Justice Anthony Kennedy asked “Did I miss something? … I thought you were going to give us a principled way to say why this case is different from our other preemption cases.”
Deputy Solicitor General Ed Kneedler took the podium next, attempting to supply that principled basis. He argued that Spending Clause legislation, and Medicaid specifically, was different from the usual preemption case for reasons rooted in the history of equity practice. Traditional equitable remedies, he said, could vindicate a person’s “liberty,” “property,” or “business,” but Medicaid was none of those things because it was a spending program created by a cooperative agreement with the state. Once again, Justice Kennedy chimed in at the end of Kneedler’s time to question whether his theory really distinguished one of the Court’s prior cases, American Trucking Associations v. City of Los Angeles.
Representing the Medicaid recipients, attorney James Piotrowski also faced skepticism about the implications of his position, and seemed to embrace them more than to distinguish them. He openly conceded that his clients would not have a right to sue under the Court’s statutory cause of action cases or under Section 1983. But the Supremacy Clause suit, he stressed, would seek only the narrow remedy of an injunction.
Justice Samuel Alito asked Piotrowksi whether his argument implied that someone could challenge a state’s decision to legalize marijuana as preempted by federal drug laws. Yes, Piotrowksi agreed, so long as Article III standing was satisfied, there would indeed be a cause of action. (Though Justice Alito did not specifically mention a suit by a state, the question might have been inspired by the recent marijuana preemption lawsuit filed in the Supreme Court’s original jurisdiction by two states — Oklahoma and Nebraska.)
And when Chief Justice John Roberts suggested to Piotrowski that his position would open “the courthouse door to everybody who says that federal law was not followed,” Piotrowski agreed: “Yes, your honor, that’s right. We open the courthouse doors.”
At the same time, Piotrowski also conceded that Congress could expressly preclude a preemption suit if it spoke clearly. The key, he argued, is that Congress’s decision not to create a statutory cause of action was not the same as a congressional decision to prohibit a cause of action that came from other background legal principles. Justice Kennedy did not ask Piotrowski any questions.
Lest this abbreviated summary make it seem like argument followed a clear path, I should say that there were also plenty of side points raised throughout. There were questions about how the state’s reimbursement rates related to its formula, a question from Justice Elena Kagan about why nobody from the federal Department of Health and Human Services had signed the federal government’s amicus brief, a response from Chief Justice Roberts about whether DHS was just trying to help the health-care sector “get a bigger chunk of the federal budget,” and a series of questions from Justice Stephen Breyer about the doctrine of “primary jurisdiction,” including a nostalgic reminiscence about the Civil Aeronautics Board “of blessed memory.” But the Justices also constantly reminded one another that the question was whether the suit could be brought, not whether it should prevail.
Four Justices have already answered that question in their dissent three years ago in Douglas v. Independent Living Center. Over the next few months, we will see if they have persuaded any of their colleagues to join them.
AZ Supreme Court Holds AZ Legislators Have Standing to Challenge AZ Law, But Media Mischaracterizing the Lawsuit
You know the old adage, “Believe none of what you hear, and only half of what you see?” –Benjamin Franklin.
Well the old adage still holds true, especially when it comes to journalists and the media interpreting and reporting on lawsuits that deal with Medicaid laws, and which, perhaps, only an infinitesimal, ancillary aspect may touch the issue of Medicaid expansion.
Even if the lawsuit will not impact Medicaid expansion, journalists and the media hype the lawsuits as “conservatives challenging Obamacare yet again,” which mischaracterizes the actual lawsuit.
It seems that the media have become so accustomed to polarizing the topic of Medicaid expansion that reporters seem incapable of truly assessing the issues objectively and reporting accordingly. This has happened recently when the AZ Supreme Court rendered a decision December 31, 2014, regarding legal standing, not the constitutionality of Medicaid expansion as many journalists report. Biggs, et al. v. Hon. Cooper, et al.
The Arizona Supreme Court only decided that 36 legislators have the legal standing to challenge the passage of House Bill 2010, which was signed into law as A.R.S. § 36-2901.08.
What is A.R.S. § 36-2901.08?
For starters, A.R.S. stands for Arizona Revised Statutes (ARS). For those of you who missed “Schoolhouse Rock” as a child, a statute is a law that is enacted by the legislative body and which governs the state. Statutes are considered “black letter law” and should be interpreted on their face value and plain meaning.
The content of 36-2901.08 allows the State of Arizona to expand Medicaid. In addition to expanding Medicaid, 35-2901.08 assesses a levy on hospitals to aid in funding the expansion of Medicaid.
36 Arizona legislators voted against 36-2901.08. It passed by a simple majority and was signed into law. The 36 legislators, who voted against the bill, brought a lawsuit to enjoin the statute from being applied or enacted. The State of Arizona’s position is that the 36 legislators lack the legal standing to bring the lawsuit.
Here are the issues in the legislators’ case, BIGGS ET AL. v. HON. COOPER ET AL.:
1. Do the 36 legislators have the standing to bring an injunctive action enjoining Arizona from carrying out 36-2901.08?
2. If the answer to #1 is yes, then have the 36 legislators proven that 36-2901.08 was passed in violation of the AZ Constitution?
I’ve read a number of articles from journalists covering this matter who mischaracterize the Biggs lawsuit as a lawsuit brought by the Arizona legislators, predominantly Republicans, asking the Arizona Supreme Court to strike statute 36-2901.08 because the expansion of Medicaid is unconstitutional, or “challenging Governor Jan Brewer’s Medicaid expansion plan,” or “challenging the legality of the state’s Medicaid expansion…”
These journalists are mischaracterizing the Arizona Supreme Court’s opinion. And I am not talking about journalists for small, local papers are making these mistakes…the above quotations are from “The New York Times” and “The Associated Press.”
So, let’s discuss the true, correct ramifications of the Arizona Supreme Court opinion in Biggs…
First, the Biggs opinion does not hold that Medicaid expansion in Arizona or elsewhere is unconstitutional…nor does it decide whether Medicaid expansion in Arizona is invalid on its face.
The opinion, rendered December 31, 2014, only holds that the 36 legislators have the legal standing to bring the lawsuit…there is no holding as to constitutionality of Medicaid expansion, despite so many journalists across America stating it so.
What is standing?
Standing, or locus standi, is the capacity of a party to bring suit in court. This is not a question of whether a person is physically capable of bringing a lawsuit, but whether the person prove that he or she has sustained or will sustain a direct injury or harm and that the harm is redressable (or can be fixed or set right by the lawsuit).
The issue on the Supreme Court level in Arizona is only the narrow issue of whether the 36 legislators have standing. Period.
The Arizona Supreme Court held that the 36 legislators do possess the requisite legal standing in order to bring the lawsuit.
Now, the case will be remanded (sent to a lower court), in this instance, to the Superior Court, for a new fact-finding trial now that the issue of standing has been resolved. In other words, at the lower superior court level, the ref (judge) made a call that the football players on the team (36 legislators) were ineligible to play NCAA football (poor grades, were red-shirted last year), and the alleged ineligible players appealed the decision all the way up. Now the NCAA (AZ Supreme Court) has determined that the players are eligible and the game will resume.
Again, despite the rhetoric put forth by numerous widespread journalists, the 36 legislators are not merely challenging Arizona Medicaid expansion on its face.
Instead, the Arizona Constitution requires that certain Acts that increase state revenues must pass the legislature by a supermajority vote. See Ariz. Const. art. 9, § 22(A).
Remember from the beginning of this blog that 36-2901.08 was passed by a simple majority.
The 36 legislators argue that the assessment of a levy on Arizona hospitals constitute an Act that requires a supermajority vote, which, obviously would require more than a straight 50% approval.
So the 36 legislators’ lawsuit in AZ is about whether 36-2901.08 needs a supermajority or simple majority to vote it into law.
Not whether Medicaid expansion is constitutional.
Believe none of what you hear, and only half of what you see…especially when it comes to journalists and media reporting on lawsuits regarding Medicaid rules and regulations.
Supreme Court Will Decide Whether Citizens in NC and 26 Other States Can Receive Tax Credits for Health Care Premiums!!
With a decision that, I can only imagine, ricocheted against the White House walls, the Supreme Court granted certiorari to hear King v. Burwell this past Friday, November 7, 2014, despite Obama’s administration’s request for the Supreme Court to postpone granting certiorari in order to wait for a D.C. circuit to re-visit an opinion, the Halbig ruling.
The Supreme Court’s decision in King could, potentially, have devastating consequences on the Affordable Care Act (ACA). However, I write that last sentence with an asterisk. Journalists across the country are entitling articles, “Obamacare Is Doomed! Everybody Panic!”, “The Supreme Court Might Gut Obamacare. Your State Could Save It,” and “Obamacare vs. Supreme Court.” These titles to articles are misleading, at best, and factually incorrect, at worst. King v. Burwell is actually not an attack on the ACA. But I will explain later…
First of all, what the heck is certiorari…or “cert”, as many attorneys call it?
A writ of certiorari is actually an order from a higher court to a lower court demanding a record in a case so that the higher court may review the lower court’s decision. A writ of certiorari is the instrument most used by the Supreme Court to review cases. The Supreme Court hears such a small, minute fraction of lawsuits that when the Supreme Court “grants cert,” it is a big deal.
I have written in the past about these same two appellate court cases, which were both published July 22, 2014, within hours of one another, regarding the Health Care Premium Subsidies Section of the Affordable Care Act. These two cases yield polar opposite holdings. In Halbig v. Burwell, the D.C. Circuit Court found that the clear language of the ACA only allows the health care premium subsidies in states that created their own state-run health care exchanges, i.e, residents in NC along with 35 other states would not be eligible for the subsidies. See my blog: Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges.
Juxtapose the 4th Circuit Court’s decision in King v. Burwell, which held that “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.”
So the two cases came to two entirely different conclusions. Halbig: ACA is clear; King: ACA is ambiguous.
Well, for everyone else, that is as clear….as mud.
When the D.C. court decided Halbig, it was not an en banc decision. In English, this means that the entire bench of judges in the D. C. Circuit did not hear the case, only a panel of three (which is the usual way for a case to be heard on appeal to a federal circuit). The Obama administration, along with other proponents of the ACA, hoped that the U.S. Supreme Court would deny cert to King until the D.C. court could re-visit its decision, this time en banc.
Yet, this past Friday, the Supreme Court opted to consider King v. Burwell.
The sole issue to be decided is: Whether the Internal Revenue Service may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the Patient Protection and Affordable Care Act.
How is King v. Burwell NOT an attack on the ACA?
The plaintiffs in King are not asking the Supreme Court to strike down the ACA, even, in part. They are asking the Court to uphold the plain language of the ACA by holding that the IRS’s interpretation of the ACA is erroneous. Let me explain…
Section 1311 directs states to establish exchanges, and Section 1321 directs the federal government to establish exchanges “within” any state that opts to not set up its own state-run exchange, e.g., NC.
Section 1401 authorizes subsidies for people whose household income falls between 100 and 400% of the federal poverty level, who are not eligible for qualified employer coverage or other government programs, and who enroll in coverage “through an Exchange established by the State.” (emphasis added). These 3 criteria are crystal clear based on the plain language of the statute.
The statute makes no provision for subsidies in states that opt not to create their own exchange but, instead, allow the federal government to create an exchange within its state.
The ACA was intended to create penalties if the states do not establish their own exchanges. For example, the subsidies are not allowed to citizens of states without state-created exchanges.
In August 2011, the IRS issued a proposed rule [add link] announcing it would provide tax credits (and implement the resulting penalties) in states with federal exchanges, too. IRS officials later admitted to Congress that they knew the statute did not authorize them to issue tax credits through federal exchanges…Oops…
The proposed rule received much negative feedback based on the fact that the IRS appeared to have no statutory basis for the rule. Nonetheless, the proposed rule was finalized in May 2012, and lawsuits ensued…
Oklahoma began the litigation with Pruitt v. Burwell in September 2012. In September 2014, a federal district court held that the plain language of the ACA does not allow subsidies in states with federally-run exchanges. In May 2013, Halbig v. Burwell was filed, and in September 2013, King v. Burwell was filed.
So, much to the contrary of popular belief, these lawsuits are not “against the ACA” or “proving the unconstitutionality of the ACA.” Instead, these lawsuits are “against” the IRS interpreting the ACA to allow tax credits for all states, even if the state has a federally-run exchange.
Will it negatively impact the ACA if the plaintiffs win? That would be a resounding yes.
Oral argument could be as soon as March 2015.
Have you ever said something that you immediately wished you could put back in your mouth? I know I have! In fact, just recently, I was eating lunch with my husband and one of our closest friends Josh. Josh, his wife, Tracey, my husband Scott and I ride horses together almost every weekend. Our daughters come with us, and it’s a fun family event. So, I should have known that a manger is a tool used in barns to hold the hay for the horses to eat, not just baby Jesus’ bed.
Josh tells me that he is going to pick up a manger. To which I respond, “Josh, why do you need a baby manger?” If words came out of your mouth on a string, I would have grabbed that string and shoved it back into my mouth. Of course, my husband had no end to his ribbing. “Josh, why do they sell baby mangers in Tractor Supply?” And “Baby Jesus was so lucky that someone put a manger in that barn for when he was born.”
At that point, I would have liked to claim that I had a “speak-o.” You know, like a typo, but for speech.
At least this is what Jonathan Gruber has claimed…that he made a speak-o in 2012.
Jonathan Gruber is one of the architects of the Affordable Care Act (ACA). He drafted much of the language included in the ACA. After the ACA was passed, Gruber was interviewed by a number of journalists regarding specific sections of the ACA. One of the sections on which he spoke was the section that allowed for health care premium subsidies for people enrolled in the program who reside in states which created state-run health care exchanges as opposed to states that opted to use the federal exchange. For ease of this blog, I will call this ACA section the “Health Care Premium Subsidies Section.”
As I am sure you are aware if you follow my blog, two appellate court cases came out July 22, 2014, regarding the Health Care Premium Subsidies Section, with polar opposite holdings. In Halbig v. Burwell, the D.C. Circuit Court found that the clear language of the ACA only allows the health care premium subsidies in states that created their own state-run health care exchanges, i.e, residents in NC along with 35 other states would not be eligible for the subsidies. See my blog: “Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges.”
Juxtapose the 4th Circuit Court’s decision in King v. Burwell, which held that “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.”
The two cases were released within hours of each other and came to two entirely different conclusions. Halbig: ACA is clear; King: ACA is ambiguous.
Interesting to note is that D.C. is not a state, and the 4th Circuit clearly embraces five states.
In my Halbig blog, I explain the legal analysis of statutory interpretation. I also explain that based on my reading of the Health Care Premium Subsidies Section, I tend to side with the D.C. courts and opine that the Section is not ambiguous.
If, however, a court finds that the statutory language is ambiguous, the court defers to the agency’s interpretation “so long as it is based on a permissible construction of the statute,” which is clear case law found in the 4th Circuit.
Therefore, once the 4th Circuit determined that the statute is ambiguous, the court made the correct determination to defer to the IRS’ ruling that all states could benefit from the subsidies.
Yet another approach to statutory interpretation is considering the legislative intent. The courts may attempt to evaluate legislative intent when the statute is ambiguous. In order to discern legislative intent, courts may weigh proposed bills, records of hearing on the bill, amendments to the bill, speeches and floor debate, legislative subcommittee minutes, and/or published statements from the legislative body as to the intent of the statute.
Recently, some journalists have uncovered 2012 interviews with Gruber during which he states that the Health Care Premium Subsidies Section was drafted intentionally to induce the states to create their own health care subsidies and not rely on the federal exchange. How’s that for intent?
The exact language of that part of the 2012 interview is as follows:
Interviewer: “You mentioned the health information [sic] Exchanges for the states, and it is my understanding that if states don’t provide them, then the federal government will provide them for the states.”
Gruber: “I think what’s important to remember politically about this is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get the tax credits… I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it.”
What do you think? You think Gruber is pretty explicit as to legislative intent? Well, at least in 2012….
In 2014, Gruber states, as to his 2012 comment, “I honestly don’t remember why I said that. I was speaking off-the-cuff. It was just a mistake. People make mistakes. Congress made a mistake drafting the law and I made a mistake talking about it.”
According to Gruber, Congress made a typo; Gruber made a speak-o.
“It’s unambiguous that it’s a typo,” Gruber tells reporter Chris Matthews from NBC and MSNBC.
Um…a typo when the statement is spoken? Hence, the new word “speak-o” blowing up Twitter.
If Gruber’s statement was truly a speak-o, it was a re-occurring speak-o. Gruber also made two speeches in which he listed three possible threats to the implementation of Obamacare. In both cases the third “threat” was that states would not set up exchanges and, instead, would rely on the federal government.
I anticipate that Gruber’s 2012 and contrary 2014 statements will be at issue as these cases, Halbig and King, move forward.
As for me, I would like to invoke my own speak-o’s. I can only imagine how I will be received when I appear before a court and say, “Your Honor, I apologize. That was a speak-o.”
Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges
Remember my post, “The Great and Powerful ACA: Are High, Inflated Premiums Hiding Behind the Curtain?” I warned of the possible consequences of Halbig v. Burwell…and it happened.
Halbig v. Burwell was decided earlier today.
The Halbig court held that the Internal Revenue Service (IRS) went too far in extending subsidies to those who buy insurance through the federally run, Healthcare.gov website.
The Halbig court ruled that the subsection of the ACA that allows high insurance premium tax credits, according to the plain language of the statute, only applies to those individuals enrolled “through an exchange established by the state.” (emphasis added). Therefore, if Halbig is upheld on en banc review by the D. C. Circuit (see below) or on appeal to the U. S. Supreme Court, residents who reside in two-thirds (or 36) of the states that did not establish state-run health care exchanges (including NC), will not benefit from the health care subsidies.
Looking at the decision through a purely objective, legal lens, I believe the federal court of appeals is correct in its ruling. I also agree that the ruling will have drastic and devastating consequences for the ACA and the people who would have benefited from the health care subsidies.
However, the law governing statutory construction and interpretation is clear. Statutory interpretation is the process by which courts interpret legislation.
For years, the U.S. Supreme Court has been explicit on statutory interpretation. “We begin with the familiar canon of statutory construction that the starting point for interpreting a statute is the language of the statute itself. Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” Consumer Product Safety Commission et al. v. GTE Sylvania, Inc. et al., 447 U.S. 102 (1980).
In other words, if the words of a statute are unambiguous, then the statutory interpretation ends. The clear words of the statute must be followed.
Let me give an example of ambiguous language:
A magazine printed the following: “Rachel Ray enjoys cooking her family and her dogs.” If that were true, Rachel Ray’s family and dogs would be very upset. I am sure what the editor meant to write was “Rachel Ray enjoys cooking, her family, and her dogs.”
It is amazing how important a comma is.
The Halbig court held that the section of the ACA allowing health care subsidies only apply to those enrolled in an exchange established by the state is not ambivalent. Thus, according to statutory interpretation rules, the judicial inquiry ends.
So what happens now?
A request for an en banc ruling by the D. C. Circuit is the next step for Department of Justice. An en banc ruling is a decision made by all the justices, or the entire bench, of an appeals court, instead of a panel selected by the bench. In this case, three federal judges sat on the panel and the case was decided 2-1. An appeals court can only overrule a decision made by one of its panels if the court is sitting en banc.
Looking beyond any en banc ruling, the case could, potentially, be heard by the U.S. Supreme Court, especially in light of the importance of the decision and the fact that a 4th Circuit Court of Appeals ruled the opposite way literally hours after Halbig was announced. See David King, et al. v. Burwell, et al.
The Fourth Circuit found the ACA ambiguous, and it states, “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion. We thus affirm the judgment of the district court.”
Bizarre that two courts hold opposing positions on the same issue and publish both decisions on the same day. It reminds of the old Sam the Sheepdog cartoon, “Duh! Which way did he go? Which way did he go, George?”
Finally, in closing, and on a personal note, I would like to dedicate this blog to my lab-doberman mix, Booker T, who, sadly, passed Sunday. He was my best friend for over 14 years. You will be greatly missed, Booker T. Rest in peace.
A lawsuit that could come out as early as tomorrow could be catastrophic for the Affordable Care Act (ACA) in as many as 36 states and impact approximately 5.4 million Americans.
In so many ways, in the last year or so, the all-changing, great and powerful ACA that promised affordable health care for all and “if you like your health care coverage, you can keep it,” has fallen monumentally short of its original, lofty promises.
In a way, we all wanted to believe in the promises of the ACA, like Dorothy in “The Wizard of Oz.” Who can forget the disappointed sigh Dorothy expels when Toto pulls back the curtain of the Great and Powerful Oz only to see a mundane, elderly man with absolutely no super powers or means to grant her wishes. Dorothy wanted Oz to be real. She wanted desperately for Oz to be as Great and Powerful as he proclaimed. However, in reality, he was not.
Like Dorothy wanted Oz to be real, we all wanted the ACA to create an affordable, nationwide health care system…this health care utopia.
So many lofty promises of the ACA have already been crushed, either by the Supreme Court’s decision that allows states to opt-out of Medicaid expansion, or by President Obama himself in executive actions, including an action delaying the employee mandate.
The courts may deflate the illusions of grandeur of the ACA even more with an upcoming and anxiously awaited decision. The case of Halbig v. Burwell, a D.C. Court of Appeals case, has concerned citizens everywhere, who wait on bated breath for a ruling. Halbig could have a huge (negative) impact on health care premiums. Halbig could be the Toto that pulled back the curtain on the ACA.
Let me explain:
There is a subsection of the ACA that allows high insurance premium tax credits, in an effort to make premiums more affordable for low-income families. The subsection applies to individuals who make less than $46,075. In implementing the ACA, it was contemplated that those individuals who make under $46,075 will have difficulty affording the insurance premiums; therefore, the ACA gives nice, large tax credits to offset the costs of premiums.
However, according to the plain language of the statute, these tax credits only apply to those individuals enrolled “through an exchange established by the state.” (emphasis added). Yet two-thirds (or 36) of the states did not establish state-run health care exchanges (including NC). Instead, these states relied on the federal exchange, in part, to avoid additional cost expenditures.
Here is a map of states according to whether it is expanding Medicaid:
The Halbig case asks the question: Can people living in states run by a federal health exchange reap the benefit of tax credits intended for those people participating in an exchange run by the state?
If the Halbig Court takes that stance that the statute is not ambivalent and must be followed exactly as it is written, then millions of Americans will become ineligible for the tax credits for health care premiums, because they will not be enrolled in a state-run exchange. Premiums would sky-rocket and many Americans would be unable to afford health care…again. It is estimated that without the tax credits, the health care premiums will cost 4x as much.
Interestingly, the Internal Revenue Service (IRS) weighed in and issued a highly-contested rule authorizing the federal exchange to issue tax credits. Amidst all the tomfoolery about the IRS targeting 501(c) charities owned by the Tea Party, it is surprising, at least to me, that the IRS would issue such a contentious ruling in favor of the ACA and anti-conservatives.
Hence, the Halbig case, in which Plaintiffs argue that the IRS has exceeded its statutory authority in issuing tax credits to those residing in states with federal exchanges, when the ACA clearly states that the tax credits only apply to state-run exchanges.
If the D.C. Court of Appeals sides in favor of the Plaintiffs, the following could occur:
• Residents of 36 states could pay health care premiums 4x more than promised;
• The ACA would fall short of promises…again;
• The IRS will have exceeded its authority to benefit Democrats…again;
• People may not be able to afford the health care premiums;
• The ACA could risk the downfall of many more promises.
We all wanted the ACA to create health care utopia. We all wanted the Great and Powerful Oz to be Great and Powerful.
But the courts may tell us we just can’t say, “Pay no attention to the man behind the curtain!!”