Impact of Virginia Federal Court Decision Finding Mandatory Coverage Provision of PPACA To Be Unconstitutional on Other PPACA Coverage Requirements

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On December 13, 2010, the U.S. Federal Court for the Eastern District of Virginia issued a decision holding that section 1501 of the Patient Protection and Affordable Care Act (PPACA) is unconstitutional. Section 1501 contains the mandatory coverage requirements and related penalty provisions effective in 2014 requiring that individuals (with very limited exceptions) must obtain and maintain health care coverage. Pub.L. No. 11-148, §1501, adding Internal Revenue Code §5000A.

In the decision in Commonwealth of Virginia v. Sebelius, 3:10CV188-HEH (E.D.Va. 2010), the district court stated that in striking down the mandatory coverage provision, it was not invalidating PPACA wholesale. Slip opinion at 38. Where there is no severability clause, the U.S. Supreme Court has articulated the test for the severability of statutory provisions found to be unconstitutional in a series of decisions. See, e.g., Free Enterprise Fund v. Public Company Accounting Oversight Board, __U.S. __, 130 S. Ct. 3138, 3161 (2010)(provisions of Sarbanes-Oxley relating to removal of Public Company Accounting Oversight Board members were unconstitutional, but severable from other Sarbanes-Oxley provisions); Alaska Airlines v. Brock, 480 U.S. 678, 686 (1987)(legislative veto provision of the employee protection program created by the 1978 Airline Deregulation Act was unconstitutional but severable from other provisions of the employee protection program). The test of severability as articulated by the U.S. Supreme Court involves determinations whether the Legislature would have enacted the balance of the statute without the invalidated provisions and whether the balance of the statute would function in a manner consistent with the Legislature’s intent without the invalidated provisions. In Sebelius, the district court stated that on the existing record it would be impossible to make these determinations and decided that it would “sever with circumspection.” Slip opinion at 40.

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