Court Finds Individual Mandate of PPACA Unconstitutional

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On December 13, 2010, the U.S. District Court for the Eastern District of Virginia issued a memorandum opinion in Commonwealth of Virginia Ex. Rel. Cuccinelli v. Sebelius (Case number 3:10-cv-00188-HEH), ruling that the individual mandate to maintain health insurance coverage under the Patient Protection and Affordable Care Act (PPACA) must be stricken from the law on constitutional grounds. Under section 1501 of PPACA, Congressional authority to enforce the individual mandate is predicated on findings that mandatory health coverage is “commercial and economic in nature” and “substantially affects interstate commerce.” The Cuccinelli ruling represents the first successful challenge to this Congressional authority, and the decision may have a significant impact on provisions in the law relating to employer-sponsored health plans.

Background

The Cuccinelli action was filed on PPACA’s enactment date, March 23, 2010, by Attorney General Kenneth Cuccinelli on behalf of the Commonwealth of Virginia. The federal government filed a motion to dismiss the suit, which was denied on August 2, 2010. Cuccinelli was one of several state actions filed immediately after PPACA was passed, challenging the new law on constitutional grounds. Under Florida’s lead, 21 states1 have combined their constitutional challenges into a consolidated action that is currently under consideration by the U.S. District Court for the Northern District of Florida. The court has dismissed four of the six claims in that lawsuit, but will hear oral arguments on the remaining claims – including the constitutionality of the individual mandate – on December 16, 2010. The Commonwealth of Virginia did not join the Florida action because of unique state law concerns. Virginia argued that PPACA conflicted with a Virginia law and, thus, violated the 10th Amendment to the Constitution, but the court did not reach that issue.

While other federal courts, including the Western District of Virginia and the Eastern District of Michigan, have ruled favorably on the constitutionality of the individual mandate, approximately 19 cases challenging PPACA are making their way through various court systems. On December 8, 2010, the U.S. Supreme Court declined to review the first petition for writ of certiorari in a case challenging PPACA’s individual mandate filed by a California state assemblyman. (Steven Baldwin, et al. v. Kathleen Sebelius, et al., No. 10-369, U.S. Sup.).

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