President Obama and the Rule of Law

I’m sharing an excellent article by Vanderbilt Law Professor James Blumstein and Bernard Health founder Alex Tolbert.  It explains the legal concept of standing and why Congress has been unable to prevent the President from selectively enforcing the Affordable Healthcare Act. The concept of standing also applies to immigration and other areas of the law.   

Why President Obama Can Break The Law With Impunity  (www.Forbes.Com, April 30, 2014).

“The law is in my mouth.”

Thus spoke King John of England before he was forced at the point of a sword on June 15, 1215 A.D. to eat his words by signing the Magna Carta, the first in a series of documents that established rule of law in England – versus rule by whatever the king says. It was a signal moment in the history of civilization, and the foundation of the United States’ great experiment in government of the people, by the people and for the people.

When it comes to healthcare reform, many accuse President Obama of sharing King John’s pre-Magna Carta attitude as he continuously and unilaterally changes the law without going to Congress. In fact, 11 state attorneys general recently signed a letter to former Secretary of Health and Human Services Kathleen Sebelius protesting that the administration is violating the law by making changes without congressional approval.

“The Administration may not decide single-handedly which parts of the law it will enforce and which parts it will ignore. The only way to fix this problem-ridden law is through congressional action,” the attorneys general wrote.

Those who rush to President Obama’s defense often say, in effect, “If the President is acting illegally, then why isn’t anyone suing?” The lack of lawsuits, they contend, indicates that President Obama is acting within the law.

What these defenders fail to take into account is the legal principle of “standing.” The principle of “standing” requires that, in order to bring a lawsuit, a party must be able to prove that it is directly and adversely affected by the action in question – i.e., that it is injured in a distinct and individualized manner. As former Chief Justice Warren Burger held in United States vs. Richardson, an important Supreme Court case pertaining to a taxpayer’s right to sue the federal government, “… to invoke judicial power, the claimant must have a personal stake in the outcome, in short, something more than generalized grievances….”

As a general matter, the Obama Administration’s breaches of the Affordable Care Act have been quite strategic, not adversely affecting any one person or entity. Just the opposite: the administration has blocked implementation of portions of the law so as to benefit individuals or groups and thereby soften the adverse political impact of the ACA. Those that benefit are not injured directly; those that suffer are adversely affected, but only in a very generalized way. As a result, with an important exception, no one has had “standing” and no one has been able to sue.

For example, the 11 attorneys general objected in their letter to the White House’s decree that insurance companies can ignore the ACA’s prohibition against offering so-called “sub-standard” healthcare plans. No individual has been hurt with this decree; the point is to benefit those individuals and offset their political opposition to the ACA.  The harm is generalized, diffused to premium ratepayers or taxpayers who have difficulty tracing that harm in a measurable way to the White House’s decision.

A similar phenomenon exists when the Obama Administration postponed the tax penalty on large employers that did not provide comprehensive and affordable health insurance to their employees as of January 1, 2014 (as required by the ACA). Again, this assuages a political constituency and benefits those entities; they are not harmed, do not have standing, and therefore have nothing to sue about.  Taxpayers or ratepayers who suffer from the forgone revenue confront generalized grievances that courts have found to be an insufficient basis for standing to sue.

An important exception to these examples – and an important issue to watch – involves an IRS regulation that provides for subsidies to income-qualified individuals on federally-run exchanges.  The ACA provides for two types of exchanges – one run by states and the other run by the federal government, when states elect not to set up an exchange.  The statute itself only provides for subsidy on state-established exchanges, but the IRS has expanded those subsidies to cover federally-run exchanges as well.

Parties who are directly and individually hurt by the IRS have come forward to challenge the IRS regulation, and cases are pending in four jurisdictions; one case has already been argued in the Court of Appeals in D.C., and another (from Virginia) is pending argument in the Court of Appeals in Richmond.  These cases should be watched carefully, as they provide courts with an opportunity to rein in the IRS that has seemingly exercised authority not conferred by the ACA.

Two trial courts have approved the IRS regulation on the ground that Congress intended to expand subsidies to those on federally-run as well as state-run exchanges.  But the issue for the courts is not some abstraction about what Congress intended to do but what it, in fact, did.  And about that there can be little dispute.  It provided for subsidies on state-run exchanges established under Section 1311 of the ACA; it did not provide for subsidies on federally-run exchanges under an entirely different section of the ACA (Section 1321).  Stay tuned.

Bottom line: the fact that, with the exception discussed above, no one has sued over President Obama’s attitude that the healthcare law “is in his mouth” has nothing to do with whether he is right or wrong, but rather that no one has had “standing” to bring suit.

“But wait,” one might ask, “if the Supreme Court won’t let people use the courts to stop our elected leaders from unilaterally changing the law by fiat, then what does it have in mind for us to do?”

Vote.