On Monday, March 25, 2019, the Department of Justice (DOJ) endorsed the decision of a district court judge in the Northern District of Texas that invalidated the entire Affordable Care Act (ACA) as unconstitutional.  Texas v. United States, 336 F.Supp.3d 664 (N.D. Tex. 2018), appeal docketed, No. 19-10011 (5th Cir. Jan. 17, 2019).  The lawsuit, brought by the State of Texas and several other GOP-led states (the GOP States) against the federal government, claims that the ACA’s individual mandate—upheld by the U.S. Supreme Court as a valid exercise of Congress’s power to levy taxes—became unconstitutional in 2017 when Congress reduced to zero the tax penalty for failing to purchase health insurance.  The GOP States argued that the rest of the ACA is likewise unconstitutional because the remaining provisions of the law, including minimum coverage provisions, could not be severed from the individual mandate.  The district court agreed with the GOP States and ruled the entire ACA unconstitutional.  The case is now on appeal at the Fifth Circuit Court of Appeal.  The district court’s ruling is stayed pending the appeal.

At the district court, the DOJ argued for the invalidation of the ACA’s protections for individuals with pre-existing conditions but otherwise defended the remainder of the law as valid and constitutional.  In a significant shift, the DOJ reversed course in its two-sentence letter filed with the Fifth Circuit last Monday, which stated that it “has determined that the district court’s judgment should be affirmed” and “the United States is not urging that any portion of the district court’s judgment be reversed.”

The Democratic-controlled House of Representatives (House) intervened in the lawsuit in defense of the ACA, joining 16 other states and the District of Columbia (State Intervenors).  Given the DOJ’s abdication, the House and State Intervenors remain the only defenders of the ACA in this appeal.  The House and State Intervenors filed opening briefs in support of the ACA on Monday.  The GOP States will file their response brief, as will the DOJ, after which the Fifth Circuit will hear argument and render a decision.  Experts watching the case believe it will likely end up before the U.S. Supreme Court.  A spokesperson for the DOJ said that it will continue to enforce the ACA until this litigation concludes.  The DOJ’s letter filed with the Fifth Circuit can be found here .

At least one healthcare provider is taking advantage of the DOJ’s new position.  On Wednesday, March 27, 2019, the owner of several nursing homes requested dismissal of all charges against him, or alternatively, a mistrial, in a case where prosecutors allege he defrauded Medicare and Medicaid out of hundreds of millions of dollars.  According to the defendant, Philip Esformes, the charges against him are based only upon statutes and implementing regulations that the DOJ “just admitted are unconstitutional.”  United States v. Philip Esformes, No. 16-20549-CR-SCOLA (S.D. Florida).  The judge has not yet ruled on Mr. Esformes’ motion.  His motion can be found here.