Big Mistake in Court’s Obamacare Ruling

Published September 29, 2011

The Fourth Circuit Court of Appeals Sept. 8 ruling that the Commonwealth of Virginia lacks standing to challenge the constitutionality of the individual mandate in Obamacare was egregiously wrong on both the facts and the law.

We deserve much better from our judges on an issue of such vital importance to the nation. Virginia ought to call out the Fourth Circuit on its error.

Here is the background. Virginia passed a law providing no resident of the Commonwealth can be required to purchase individual health care insurance. According to official state records, that law became effective on March 10, 2011, the date it was signed by Gov. Bob McDonnell. The governor later held a ceremonial signing, on March 24, 2010.

On March 23, 2010, President Barack Obama signed his Obamacare bill into law. On the same day, Virginia filed a lawsuit in federal court challenging the federal government’s power to enact Obamacare’s individual mandate, citing its “collision” with the Virginia statute. The Commerce Clause in the U.S. Constitution, Virginia alleged, empowers the federal government to regulate commerce but can’t be used to force citizens to engage in it through required purchases.

The federal district court agreed with Virginia, but the federal government appealed to the Fourth Circuit. That court threw out the case last week, arguing the Commonwealth was barred from bringing the case because it lacked standing. Standing means there must be a concrete dispute between the parties involved. The court did not even consider the merits of the Commerce Clause argument.

Among the reasons there was no justiciable dispute, according to the court, is the Virginia statute merely declared the state’s “opposition to a federal insurance mandate.” The court found the timing of the statute’s finalization–on March 24, 2010, the day after Obamacare was signed–proves the statute was a mere declaration of a state’s objection to an existing federal mandate.

The court also found Virginia has no “sovereign interest” in whether its residents can be required to purchase health insurance: “Only when a federal law interferes with a state’s exercise of its sovereign ‘power to create and enforce a legal code’ does it inflict on the state the requisite injury-in-fact.”

The Virginia law doesn’t create a state code and thus the state has nothing to enforce, the court ruled. The law “simply purports to immunize Virginia citizens from federal law” and to nullify the federal insurance requirement.

The court’s theory–that the Virginia law merely sought to “nullify” the federal Obamacare individual mandate and to “immunize” residents from it–works only if the federal law was in existence before the state law. Otherwise, there is nothing to nullify. The court used March 24 as the effective date of the state law, but it was wrong in doing so. In actuality, the federal law was not in existence when the Virginia law became effective. So the entire legal basis of the court’s decision collapses.

It should be noted the timing of the Virginia law’s final enactment was not raised by either the Commonwealth or the Obama administration, nor was this issue briefed by them. The court raised the issue itself and evidently did its own research. And it was wrong.

There is yet another reason why the Fourth Circuit opinion was wrong. The court said the “only” possible “sovereign interest” Virginia could have, sufficient to give it standing, would be if the Virginia statute established a code establishing state regulations or a state program. For this point, the Fourth Circuit says it is quoting the U.S. Supreme Court case Snapp v. Puerto Rico, 458 U.S. 592, 601 (1982).

The problem here is the Supreme Court in Snapp did not hold that the “only” circumstance in which a state has standing as a sovereign is when it creates and enforces a legal code. Snapp held this circumstance is only one of several ways in which a state can have such standing. Three others include (1) “the demand for recognition from other sovereigns,” (2) the “health and well-being–both physical and economic–of its residents in general,” or (3) according a state “its rightful status within the federal system.”

Virginia exercised its sovereign powers when it enacted its statute.

Under the Constitution, as the U.S. Supreme Court has held repeatedly, the federal government has no “police powers.” Those powers are reserved to the states and authorize states exclusively to address the health, safety, and welfare of their residents. The federal government’s lack of such powers under the Constitution explains why Congress had to resort to its strained reading of the Commerce Clause to justify Obamacare’s individual mandate.

The Fourth Circuit should have found Virginia had standing in this case because its statute was enacted pursuant to and in furtherance of the police powers it possesses as a matter of federal constitutional law. As a sovereign exercising such powers, Virginia was entitled to recognition by the Court of its rightful status within the federal system. This is particularly the case because the Virginia statute did not merely express its disagreement with the individual mandate. It also attacked it as beyond the federal government’s power and thus unconstitutional.

These are serious issues. The Fourth Circuit’s decision was legally and factually baseless. Virginia should move for a rehearing–the Commonwealth undoubtedly has grounds–from the entire court.

Maureen Martin, J.D. ([email protected]) is senior fellow for legal affairs at The Heartland Institute.