Wednesday, May 30, 2012

Living In the Past: Judicial Recidivism and the Affordable Care Act

Guest Blogger

Rob Weiner

To a remarkable degree, the challenges to the Affordable Care Act reflect an effort to codify legal nostalgia as legal doctrine. The opinions of some lower courts striking down the individual mandate, as well as the arguments of the States and private plaintiffs in the Supreme Court urging that result, repeatedly hark back to bygone eras of American jurisprudence. This legal facsimile of reincarnation seeks to revive not just the long discredited doctrines invoked by an ossified Judiciary to thwart the New Deal. It goes back further still, to the dogma of an earlier time when the Judiciary regarded its principal function as the protection of private property, even at the expense of social justice, democratic values, and other individual rights.

Let’s start with the most obvious throwback, the claim that requiring health insurance threatens individual liberty. The District Court that struck down the Affordable Care Act in the case brought by Virginia stated the point this way: “At its core, this case is not simply about regulating the business of insurance –or crafting a scheme of universal health insurance coverage – it’s about an individual’s right to choose to participate.” The States’ brief in the case before the Supreme Court was similarly pro-choice -- as to insurance, that is. The States argued that, “The Constitution protects and promotes individual liberty while the mandate’s threat to liberty is obvious.” Moreover, the States claimed, upholding the mandate “would allow Congress to control the most basic of decisions about how to live life—in other words, to withhold from individuals the very liberty that the Constitution was designed to protect.”

This argument begs a fundamental question, “What is the liberty interest that is supposedly at risk?” It is the right not to obtain insurance --by any other name, freedom of contract. It was this freedom of contract that Lochner v. New York in 1905 treated as “part of the liberty of the individual protected by the Fourteenth Amendment of the Federal Constitution,” barring New York from regulating the hours of bakery employees. It was the same freedom of contract that the Court in Adkins v. Children's Hospital invoked to shield employers from the minimum wage law. But that was in 1923. In the modern era -- generously, the last 75 years -- the Supreme Court repudiated these cases and gave Congress broad deference in the realm of economic regulation. Starting in 1937, the Court in West Coast Hotel Co. v. Parrish ended the primacy of contract rights. “What is this freedom?,” Chief Justice Hughes asked there. “The Constitution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without due process of law. . . . Liberty under the Constitution is thus necessarily subject to the restraints of due process, and regulation which is reasonable in relation to its subject and is adopted in the interests of the community is due process.” No court has suggested that the minimum insurance coverage requirement in the Affordable Care Act violates due process, and any such claim would be frivolous. But that has not stopped the challengers of the Act from seeking to advance this claim indirectly by importing the jurisprudence of Lochner, Adkins, and similar legal relics into the case law under the Commerce Clause.

The private plaintiffs before the Supreme Court advanced an additional and equally archaic argument. They contended that the “mandate’s predominant purpose and effect was . . . to conscript the uninsured to provide a $28-39 billion annual subsidy to insurers and their customers,” and that it improperly compelled “individuals to subsidize legal strangers through economically disadvantageous contracts.” Indeed, the word “subsidy” or its derivative appears 23 times in the private parties’ brief. The point, aside from being factually inaccurate, mirrors a key rationale the Supreme Court proffered in 1923 for striking down the minimum wage. The Court in Adkins held that, “To the extent that the sum fixed [for the wages] exceeds the fair value of the services rendered, it amounts to a compulsory exaction from the employer for the support of a partially indigent person,” the employee. As noted, the Court overruled Adkins in 1937, and it has since rejected this subsidization theory many times as inimical to any regulatory system. Instead, for the last 70 years, the Court has adhered to what it said in Wickard v. Filburn, finding it to be “the essence of regulation that it lays a restraining hand on the self-interest of the regulated and that advantages from the regulation commonly fall to others.” To return to the pre-New Deal doctrine would, by judicial fiat, imperil thousands of laws and regulations.

The anachronisms resurrected in challenging the health care legislation are not limited to these points, however. The 11th Circuit held, and the challengers in the Supreme Court echoed the point, that the mandate to obtain insurance exceeds Congress’s commerce powers because it “does not regulate behavior at the point of consumption.” In other words, Congress cannot regulate how an individual pays for health care until he or she actually enters the market and purchases medical services. That rationale precisely parallels the approach the Court took in the late 19th and early 20th centuries, when it ruled that Congress could not regulate manufacturing, mining, or agriculture, because the product would not enter the stream of commerce until after it was manufactured, mined, or grown. Thus, in 1899, the Court ruled that the regulation of interstate commerce does not extend to “the regulation of all such manufactures as are intended to be the subject of commercial transactions in the future.” Otherwise, the Court said, Congress would have “the power to regulate, not only manufacture, but also agriculture, horticulture, stock-raising, domestic fisheries, mining,-in short, every branch of human industry.” By the middle of the 20th century, the interconnections and complexities of a growing national economy laid to rest this formalistic, categorical delineation of Congress’s commerce powers -- at least until it was disinterred in the challenges to the Affordable Care Act to obstruct Congressional efforts to deal with 21st century economic problems.

Additionally, both the States and the private plaintiffs in the Supreme Court relied on the 1922 decision in Bailey v. Drexel Furniture Co. for the proposition that Congress cannot accomplish through the taxing power what it lacks authority to achieve under other enumerated powers. The bottom line of Bailey provides a hint regarding its aboriginal pedigree. The Court there struck down a federal law banning child labor. It has been nearly 40 years since the Court in Bob Jones University v. Simon confirmed that many years before that, it had “abandoned the view” expressed in Bailey and similar old cases “that bright-line distinctions exist between regulatory and revenue-raising taxes.”

These are just a few of the anachronistic attacks on the health care law. Those tempted by these antiquated theories would do well to heed the wisdom of Will Rogers, “Things ain't what they used to be and probably never was.” In the supposedly good old days, children were exploited because judges overrode laws passed by elected officials to prevent child labor. Unscrupulous, uncaring, or uninformed employers exposed their workers to toxic and dangerous conditions. Minorities could not get a fair shake. Women, for the most part, did not even try. And when the country plummeted into the Great Depression, the federal government had no regulatory brakes to slow the fall nor a social safety net to cushion the impact.

The decision in the health care litigation is critically important. It will determine whether millions of people face potentially ruinous medical expenses because they cannot obtain insurance, whether the federal government is able to rein in the skyrocketing cost of health care, and whether many other consumer protections, preventive care programs and regulatory improvements continue in force. But as important as these issues are, the case may have even broader significance . If it enshrines in modern jurisprudence doctrines long ago cast aside as outmoded, it will mark not only a turning point in the law, but a judicial mandate for political regression.

Rob Weiner, formerly Associate Deputy Attorney General in the United States Department of Justice, is a partner at Arnold & Porter LLP. You can reach him by e-mail at robert.weiner at

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