Texas District Court Decision: Repeal of Penalty Renders ACA Unconstitutional – What’s Next?

February 4, 2019
Hall Benefits Law, LLC

On March 3, 2010, the Patient Protection and Affordable Care Act of 2010 (“ACA” or “Obamacare”) was signed into law. Since then, numerous lawsuits have been filed against ACA. One lawsuit reached the United States Supreme Court, which upheld the personal mandate to buy health insurance. However, the flow of litigation did not cease. Attorneys general from Texas filed a new lawsuit in the U. S. District Court of North Texas. In what some call a decision based more on partisan ideology than substantive law, Judge Reed O’Connor declared ACA to be unconstitutional in its entirety on December 14, 2018. With the fate of ACA hanging in the balance, Americans are left wondering whether the repeal of the penalty renders ACA unconstitutional and, if so, what’s next for this sometimes controversial healthcare law?

The Lawsuit:
Texas, et al. v. United States of America, et al. Civil Action No. 4:18-CV-00167-O

This lawsuit was brought by and supported by a number of state governors and attorneys general. Plaintiffs alleged that the removal of the personal mandate rendersthe entire law untenable based on:

  • The Supreme Court decision in Nat’l Fed’n of Indep. Businesses v. Sebelius (NFIB) in which the Supreme Court noted that the individual mandate stands as an exercise of Congress’s tax power.
  • Congress and the Supreme Court have acknowledged the individual mandate as essential to ACA.
  • The Tax Cuts and Jobs Act of 2017 removed the individual mandate.

Judge O’Connor’s ruling stated that the individual mandate is essential and unseverable from ACA. Further, ACA is unsustainable without the individual mandate. He also notes that rewriting ACA without the individual mandate is “beyond the power” of his court.

Deficiencies of the Decision

Response has been swift and not always down party lines:

  • California Attorney General Xavier Becerra stated he and other like-minded Democratic state attorneys general would appeal the decision.
  • Incoming House Minority Leader Nancy Pelosi stated that the House of Representatives would work to uphold ACA against Republicans’ efforts to destroy it.
  • Senator Susan Collins (R) stated her confidence that Judge O’Connor’s ruling will be overturned.

White House Press Secretary Sarah Sanders stated that the ruling “vindicates President Trump’s position that Obamacare is unconstitutional.” However, the White House did issue a statement that affirmed ACA remains in place during the appeal process.

Current Status

Due to the government shutdown, the U.S. Court of Appeals for the 5th Circuit has temporarily paused this case. The Department of Justice requested the delay because DOJ lawyers were unable to adequately prepare.

Where Does ACA Stand Now?

Well, we wait. Until all appeals have been exhausted, ACA remains the law of the land.

At Hall Benefits Law, we help our clients understand current law and upcoming changes.

Please call 678-439-6236 to discuss your concerns with an experienced attorney. Our website contains more information about our firm, a Contact Form, and free resources for your review. From our home office in Georgia, we assist clients throughout the United States, from Connecticut to California.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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