[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|
Status: Not Logged In; Sign In
Health/Medical Title: Indiana et al v Internal Revenue Service et al, INSD 1-13-cv-01612, Doc 1, COMPLAINT (8 Oct 2013) Indiana et al v Internal Revenue Service et al, INSD 1-13-cv-01612, Doc 1, COMPLAINT (8 Oct 2013) Introduction and Summary 1. This is an Administrative Procedure Act challenge to a new IRS regulation implementing the Patient Protection and Affordable Care Act (ACA). It is also a Tenth Amendment challenge to two aspects of the ACA: (1) the Federal Government’s attempt to apply to the States and their political subdivisions the ACA’s “Employer Mandate,” which requires all large employers to pay a tax penalty for failure to afford “minimum essential coverage” to all employees who work at least 30 hours per week; and (2) a separate ACA provision seeking to tax or regulate States in the same manner as private employers. These claims arise based not only on the ACA itself, but also based on factual and legal developments that have occurred since the Supreme Court’s June 28, 2012, decision in NFIB v. Sebelius, 132 S.Ct. 2566 (2012). 2. In NFIB, where Indiana and twenty-five other States were plaintiffs, the Supreme Court used principles of structural federalism, statutory interpretation, and constitutional avoidance to uphold the provision of the ACA known as the “Individual Mandate,” but also to invalidate the provision known as the mandatory Medicaid Expansion. The result was an Affordable Care Act very different from the one Congress enacted, and very different from the one the States litigated in that case. No longer is there a federal mandate that individuals buy health insurance, but instead merely a tax on the failure to do so; no longer is there a massive new condition on Medicaid participation, but merely a new program States may eschew with no consequences for their current ones. The Supreme Court’s construction of those ACA provisions in NFIB, however, has raised new questions about how other provisions of the ACA—and in particular those regulating employers— should be understood and implemented. 3. The facts on the ground in Indiana have also changed since the NFIB decision in June 2012. The State litigated that case on the assumption that Indiana would establish an Insurance Exchange under Section 1311 of the ACA. Indeed, on January 3, 2011, then-Governor Mitch Daniels issued an Executive Order instructing State agencies to conditionally establish an Exchange while officials studied the matter further. Based on the Daniels administration’s further deliberations and the results of the 2012 gubernatorial election, however, Governor Daniels informed the Department of Health and Human Services that Indiana would not be establishing an Exchange. 4. Meanwhile, also in the wake of the NFIB decision, the United States has made yet more changes to the ACA in the form of federal regulations, presidential pronouncements, and even bureaucratic blog posts. Through such decrees, it has, among many other changes, expanded the class of individuals who may claim federal insurance subsidies. It has also purported to delay implementation of tax reporting requirements and penalties on large employers that do not afford all employees “minimum essential” health insurance. 5. As explained in more detail below, the United States has expanded the class of beneficiaries entitled to federal insurance subsidies by redefining the term “exchange” in Section 1401(a) of the ACA to include both state-run insurance exchanges and federally-run exchanges. This redefinition causes injuries to States and their political subdivisions as sovereign policymakers and employers. 6. The idea behind creating the health insurance Exchanges is to facilitate market competition that will drive down prices for health insurance. Creating and operating such Exchanges, however, costs substantial amounts of money, so Congress sought to assign those tasks to States. 7. In light of the Tenth Amendment, Congress could not require states to set up their own Exchanges, so instead it created a system designed to convince states to do so voluntarily. In addition to providing funds for start-up costs, Congress wrote into the ACA subsidies for citizens who purchased health insurance on state-established Exchanges, but provided no similar benefits for citizens who purchase insurance using federally established Exchanges. Theoretically, the availability of exclusive federal subsidies to customers of state exchanges would prompt citizens to pressure state officials to establish (and ultimately absorb the expense of operating) Insurance Exchanges. 8. Exchange-user subsidies also cost money, however, so Congress also sought to minimize state Exchange utilization by requiring large employers to provide full-time employees with minimum essential coverage on pain of a financial penalty—an “assessable payment”—payable to the Internal Revenue Service. An employer that is required to, but does not, provide minimum essential health insurance coverage to full-time employees will incur a financial penalty if at least one full-time employee purchases insurance from a state Exchange and receives a federal subsidy to do so. But by the terms of the ACA, if no full-time employee receives a federal subsidy, the employer need not pay the assessable payment, even if the employer does not offer minimum essential coverage to employees. In that way large employers are deterred from steering employees toward federally funded Exchange subsidies—deterrence that is unnecessary where the employees cannot receive such subsidies. 9. Given (1) the costs of running an Exchange, (2) the impact Employer Mandate penalties (triggered by federally funded exchange subsidies) would have on States, their political subdivisions and their largest companies as employers, and (3) the ACA’s proviso that the Federal Government would create an Exchange for a State’s citizens if a State does not, Indiana has made a policy decision not to establish a State Exchange. The result should be that, commencing in 2014, Indiana citizens purchasing coverage from a Federal Exchange would not receive subsidies for doing so, with the consequence that Indiana employers (including the State and its political subdivisions) who do not afford minimum essential coverage to all employees working 30 hours or more per week would not have to pay Employer Mandate penalties. 10. Instead, the IRS, which administers the Exchange subsidies, has promulgated a rule stating that citizens who purchase coverage on a Federal Exchange are entitled to the same subsidies as citizens who purchase from a State Exchange (“IRS Rule”). This decision contravenes the text of the ACA, thwarts Indiana’s ability to execute State policy sparing employers from Employer Mandate penalties, induces Plaintiffs to reduce the hours of certain employees, including part-time and intermittent employees, to avoid having to provide all such employees with minimum essential coverage, and requires Plaintiffs to file onerous reports with the IRS detailing insurance coverage decisions. It thereby violates both the Administrative Procedure Act and the Tenth Amendment, and the Court should permanently enjoin Defendants from putting it into effect. At 40-42: F. The Federal Government Declares in Violation of the ACA’s Text that for 2014 It Will Not Enforce ACA Sections 1513 and 1514 119. On July 2, 2013, Mark J. Mazur, Assistant Secretary for Tax Policy at the U.S. Department of the Treasury, posted a blog entry in which he stated that neither 26 U.S.C. § 6055 (not at issue in this litigation), nor 26 U.S.C. § 6056, will be in effect for 2014. Mark J. Mazur, U.S. Dep’t. of the Treasury, Treasury Notes: Continuing to Implement the ACA in a Careful, Thoughtful Manner, http://www.treasury.gov/connect/ blog/Pages/Continuingto- Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspx. The blog post also says the Treasury recognizes it would be “impractical” to assess “shared responsibility payments (under section 4980H) for 2014,” and therefore that those payments “will not apply for 2014.” Id. The blog post does not specify that 26 U.S.C. § 4980H does not apply in 2014, only that “payments” will not be assessed, leaving the possibility that all large employers are still under the Employer Mandate as a matter of law, but no enforcement action will be taken against them for their illegal noncompliance. 120. This statement appears to have no legal force. There is nothing in the text of ACA § 1513 or § 1514 authorizing any officer of the Federal Government to suspend, extend, or modify the taxes/mandates under those provisions of the ACA. Even if the ACA did delegate such power, and if such a delegation of authority were constitutional, it would more likely be vested in the Secretary of the Treasury or the Commissioner of Internal Revenue, not an Assistant Secretary. 121. Moreover, there is no record in the Federal Register of any Notice of Proposed Rulemaking or any other entry associated with establishing federal policy carrying the force of law. The Federal Government has issued nothing more than a blog post from a Treasury employee who claims without citing any legal authority to absolve every large employer in the Nation from compliance with mandatory provisions of an Act of Congress. 122. On August 9, 2013, President Obama elaborated on his rationale for unilaterally modifying this legal requirement, claiming that he could “tweak” provisions in a law so long as the modification “doesn’t go to the essence of the law.” President Barack Obama, Remarks by the President in a Press Conference, Aug. 9, 2013, http://www.whitehouse.gov/the-pressoffice/ 2013/08/09/remarks-president-press-conference. 123. As a result of the confusion generated by this online announcement and the President’s press conference, Plaintiffs have no assurance that they are not currently still fully liable under 26 U.S.C. §§ 4980H, 6056, and as such have a reasonable apprehension that they may be sanctioned in 2015 or thereafter for noncompliance during 2014. 124. Even if the threat of sanctions for noncompliance were entirely eliminated, the government officers leading the State of Indiana and other subdivisions or units of the State of Indiana are duty-bound to faithfully adhere to the laws of the United States, and as such must at minimum expeditiously resolve the uncertainty regarding the Plaintiffs’ legal obligations.
Post Comment Private Reply Ignore Thread |
|
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|