Employer Mandate Delay Bolsters Legal Challenges to Obamacare

Published August 13, 2013

The Obama administration’s one year delay of the employer mandate may strengthen two cases challenging parts of President Obama’s law.

The two cases, Halbig v. Sebelius and Pruitt v. Sebelius, take different approaches to challenging the Obama IRS in its decision to allow subsidies in states with federal exchanges. The IRS decision, unsupported by the legislative language, is estimated to cost $800 billion over ten years.

The Halbig plaintiffs are a group of individuals and small and medium-sized businesses suing to avoid the premium subsidies, penalties, and compliance costs. The plaintiff in Pruitt v. Sebelius is the State of Oklahoma, which chose not to implement a state-based exchange partly to lure business and jobs to the state.

In deciding on July 11 against Liberty University, the Fourth Circuit Court of Appeals ruled the school had standing to sue. The same legal logic to allow standing should apply to other employers.

Postponement Impacts Case

Oklahoma Attorney General Scott Pruitt said in a release that the federal government’s delay of the employer mandate bolsters Oklahoma’s case.

“Until now, the Obama administration has argued in court that the mandate is uncomplicated and easy, but its sudden reversal and delay of the mandate, clearly demonstrates acknowledgement that the ‘large-employer mandate’ is in fact a complex, job-killing, and harmful mandate on businesses,” Pruitt said.

Michael Cannon, director of health policy studies at the Cato Institute, said the administration’s illegal move to postpone the employer mandate does not otherwise affect the Halbig case.

“If the injury exists today even though the mandate doesn’t take effect until 2014, then the same is true if it takes effect in 2015,” Cannon said.

“Alternatively,” continued Cannon. “even if you buy the administration’s bogus argument that the plaintiffs are challenging the collection of a tax, which they are not, the Anti-Injunction Act would delay the timing of the case until April 2014 anyway. The employer mandate delay wouldn’t affect the timing of the case until then.

“And delaying the employer mandate doesn’t affect the individual plaintiffs, who are injured under the individual mandate,” he added.

Vote to Delay Wouldn’t Change Cases

Even a congressional vote to postpone the employer and individual mandates would have no effect, Cannon said.

Sam Kazman, who is advising on the case for the Competitive Enterprise Institute, agreed, saying “I suspect it too would have no real effect.”

“In our view,” continued Kazman, “it affects neither the standing nor timing of the case. For example, the business employers still have to figure out how they’ll deal with the mandate. The individual plaintiffs aren’t affected by the delay.”

Kaznan notes the government has repeatedly tried to delay the case. “Now, with the one-year delay, they’re seeking to postpone things even further by arguing that this is yet another reason for the court to go slow. It wouldn’t surprise if, having argued that our case was filed too late, they’ll now claim it was filed too early.”

Motives for Delay

Jonathan Small, fiscal policy director for the Oklahoma Center for Policy Analysis, said the delay of the mandate was forced by the law’s complexity.

“The delay of the employer mandate just shows how overly complex and intrusive the law was,” Small said. “I think that the reason the administration moved to delay the mandate was out of knowing that it was going to be a train wreck to implement.”

Cannon sees little reason to think the lawsuits forced the government to delay the employer mandate, but the timing raised a flag for him.

“Within 24 hours of announcing the delay, they filed a letter with the 4th Circuit citing the delay as a reason the court should not hear the Liberty case. The 4th Circuit soundly rejected the government’s arguments,” Cannon said.

Small said the move appears to violate the law, but it was not a new kind of action for the administration.

“If they were willing to ignore statutes and say they could issue billions of dollars in subsidies though federal exchanges, then we shouldn’t be surprised that they’re arguing that they can selectively not impose penalties when they want to, as well,” said Small.