Federal Court Rejects Challenge To Obamacare Subsidies
A federal district court judge has ruled in favor of the federal government in a lawsuit that claimed the Internal Revenue Service did not have the authority under the Patient Protection and Affordable Care Act to write rules providing tax credits to individuals purchasing health insurance on the health insurance exchange set up by the federal government.
The IRS issued a final rule in May 2012 implementing the premium tax credit provision of the Affordable Care Act, in which it interpreted the PPACA as authorizing the agency to grant tax credits to individuals who purchase insurance on either a state-run health insurance exchange or a federal exchange such as the one that has been available on the problem-prone HealthCare.gov site for people in states that have not set up state exchanges.
The plaintiffs in the lawsuit, who include the conservative advocacy organization, the Competitive Enterprise Institute, contended that the IRS’s interpretation was contrary to the statute, which, they asserted, authorizes tax credits only for individuals who purchase insurance on state-run exchanges, but not on federal exchanges.
Plaintiffs in the case claimed that the rule promulgated by the IRS exceeded the agency’s statutory authority and was arbitrary, capricious and contrary to law, in violation of the Administrative Procedure Act.
The U.S. District Court for the District of Columbia heard oral arguments in the case last month and a judge on the court tossed out the lawsuit Wednesday, agreeing with the federal government that the law made clear that the tax credits should be available on both state-run and federally run health insurance exchanges.
“In sum, the Court finds that the plain text of the statute, the statutory structure, and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated exchanges,” wrote U.S. District Judge Paul Friedman. “What little relevant legislative history exists further supports this conclusion and certainly–despite plaintiffs’ best efforts to suggest otherwise–it does not undermine it.”
The case is known as Jacqueline Halbig, et al v. Kathleen Sebelius, et al.© Copyright 2014 Michael Cohn, All rights Reserved. Written For: Law & Industry Daily