BREAKING NEWS: Federal Appeals Court Tosses Out Challenge to Healthcare Reform Law

September 7, 2011
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The three-judge panel determines lack of standing for Virginia attorney general

by Mark Hagland In a surprise move, a three-judge panel of a federal appeals court based in Virginia has tossed out one of the most prominent challenges to the Affordable Care Act (ACA), the federal healthcare reform law passed by Congress and signed into law by President Barack Obama on March 23, 2010.

This is the first federal appeals court to throw out a case for lack of standing, after a lower court had ruled on the merits of the case (though on Dec. 9, 2010, a judge for the U.S. District Court of New Jersey had dismissed a lawsuit challenging the law on the part of a group called New Jersey Physicians, Inc., for lack of standing, before any substantive ruling was made). The three-judge panel for the United States Court of Appeals for the Fourth Circuit, based in Richmond, ruled that two plaintiffs bringing challenges to the law—the Lynchburg-based Liberty University, and Virginia Attorney General Kenneth Cuccinelli —did not have legal standing to bring the case. The concept of standing in U.S. law is anchored in the idea that in order to challenge the constitutionality of a federal law, a plaintiff must demonstrate that the plaintiff is or will imminently be harmed by that law.

After the ACA was passed in March 2010, the state of Virginia immediately passed a law barring the mandated purchase of health insurance in the state, in an effort on the part of Virginia state legislators to give the state standing in an eventual court challenge, by creating a direct conflict between state and federal law. Gov. Robert McDonnell signed the Virginia bill into law on March 25, just two days after President Obama had signed the ACA into federal law.

On Thursday, the Fourth Circuit argued that such a strategy was not legitimate. “To permit a state to litigate whenever it enacts a statue declaring its opposition to federal law… would convert the federal judiciary into a ‘forum’ for the vindication of a state’s ‘generalized grievances about the conduct of government,’” the judges wrote. The panel concluded that under such a theory, any state legislature could acquire standing to challenge any federal law merely by enacting a statute to prohibit the application of the federal law.

As it now stands, two federal court cases are making their way toward the United States Supreme Court. On Aug. 12, the Eleventh Circuit Court of Appeals, based in Atlanta, ruled that the individual mandate element in the law was unconstitutional, though that court also determined that the ACA as a whole was constitutional. Meanwhile, the Sixth Circuit Court of Appeals, based in Cincinnati, upheld the constitutionality of the entire ACA on June 29, explicitly affirming the constitutionality of the individual mandate. Both the rulings in the Sixth and Eleventh Courts were decided by 2-1 majorities. One more federal appellate court, in the District of Columbia, still has a legal challenge pending. Oral arguments in that case are scheduled for Sept. 23.