BREAKING: Federal Appeals Court Withdraws Decision Defunding Obamacare

CREDIT: AP Photo/Charles Dharapak

Cathey Park from Cambridge, Mass. shows the words "I Love Obamacare" on her cast for her broken wrist as she waits for President Barack Obama to speak at Boston's historic Faneuil Hall about the federal health care law, Wednesday, Oct. 30, 2013.

In July, two Republican judges on the United States Court of Appeals for the District of Columbia Circuit handed down a decision defunding much of the Affordable Care Act (ACA). This effort to implement Sen. Ted Cruz’s (R-TX) top policy priority from the bench was withdrawn on Thursday by the DC Circuit, and the case will be reheard by the full court — a panel that will most likely include 13 judges. In practical terms, this means that July’s judgment cutting off subsidies to consumers who buy insurance plans in federally-operated health exchanges is no more. It has ceased to be. It is, in fact, an ex-judgment.

The reason why this matters is because the plaintiffs in this lawsuit, known as Halbig v. Burwell, are hustling to try to convince the GOP-dominated Supreme Court to hear this case, where they no doubt believe that they have a greater chance of succeeding than in the DC Circuit, as a majority of the active judges in the DC Circuit are Democrats. The Supreme Court takes only a tiny fraction of the cases brought to their attention by parties who lost in a lower court — a study of the Court’s 2005 term, for example, found that the justices granted a full argument to only 78 of the 8,517 petitions seeking the high Court’s review that term. The justices, however, are particularly likely to hear cases where two federal appeals courts disagree about the same question of law.

Two hours after the divided DC Circuit panel released its opinion attempted to defund Obamacare, a unanimous panel of the Fourth Circuit upheld the health subsidies that are at issue in Halbig. Thus, so long as both decisions remained in effect, Supreme Court review was very likely. Now that the full DC Circuit has vacated the two Republican judges’ July judgement, Supreme Court review is much less likely.

Although it is possible that the full DC Circuit could agree with the two judges who voted to cut off health subsidies to millions of Americans, this outcome is unlikely. The plaintiffs’ arguments in this case are weak and are unlikely to move judges who do not have a partisan stake in undermining the Affordable Care Act.

The litigants seeking to undermine Obamacare through this lawsuit — Oklahoma Attorney General Scott Pruitt (R), who filed a brief supporting the plaintiffs in this case, admitted in a Wall Street Journal op-ed that the purpose of this lawsuit is to cause “the structure of the ACA” to “crumble” — waged a two front effort trying to convince the full DC Circuit not to vacate their two GOP colleagues’ decision. The first half of this effort was a brief the plaintiffs filed with in the DC Circuit urging the full court to give the case a miss — although the argument raised in this brief is rather unusual. In essence, it broke down to three claims:

  1. This case is really important. And potentially very disruptive. According to the Halbig plaintiffs, “continued uncertainty” over whether Obamacare will be defunded “is simply not tenable, given its enormous consequences for millions of Americans, hundreds of thousands of businesses, dozens of states, and billions of dollars in monthly federal spending.”
  2. If the full DC Circuit agreed to hear the case, however, that “would cause delay without providing any certainty,” because the Supreme Court may ultimately decide to take the case.
  3. Thus, the DC Circuit must not near this case, and it must “proceed immediately” to a “final resolution by the Supreme Court.”

On the surface, this argument may have some appeal, but it collapses upon a fairly minimal amount of scrutiny. It would indeed be disruptive if much of the Affordable Care Act were defunded, and the existence of this lawsuit does raise some uncertainty over whether or not that will happen. It would be even more disruptive, however, if President Obama were deposed because the Supreme Court held that he was born in Kenya, or if the federal tax code were held unconstitutional, or if people could immunize themselves from the law by declaring themselves “sovereign citizens.” If the mere fact that a plaintiff raises a potentially disruptive legal argument were grounds for removing all obstacles to immediate Supreme Court review, then the Court’s docket would be clogged with cases brought by birthers, tax protesters and sovereign citizens.

The reason why this doesn’t happen is that the justices typically use the lower courts as a mechanism to screen the few cases raising issues that are difficult enough to warrant Supreme Court review from the vast bulk of cases that do not. This is one reason why the justices tend to hear cases where two courts of appeals disagree — because that disagreement is a sign that the case is sufficiently challenging that it requires a definitive ruling from the nation’s highest Court. When the full DC Circuit announced they would rehear the case, by contrast, that was an indication that the two Republicans who blocked the subsidies may be outliers who reached an idiosyncratic result in an easy case. The fact that all six of the other judges who have considered the Obamacare subsidies have also upheld them also lends credence to this view.

Perhaps recognizing that their legal arguments against further DC Circuit review were not likely to carry the day, Obamacare’s opponents turned to the conservative press to litigate their case in the media. A full hearing by a federal appeals court, what is known as an “en banc” hearing, is an unusual proceeding. But the Federal Rules of Appellate Procedure provide for en banc review when a case “involves a question of exceptional importance.” The plaintiffs in this case admit that “[t]here is no doubt that this case is of great national importance” in their most recent brief to the court — so they actually admit that this case warrants en banc review.

Additionally, the official commentary on the federal rule dealing with en banc hearings explains that “[i]ntercircuit conflict is cited as one reason for asserting that a proceeding involves a question of ‘exceptional importance,’” so that is a second reason why this case was a prime candidate for en banc review.

Yet you would never guess these facts if you read the conservative Wall Street Journal’s opinion page, which claims that “if the D.C. Circuit rehears the case en banc, it would be a sharp break from history.” Nor would you learn it from the National Review, which suggests that “the recent D.C. Circuit panel decision on Obamacare exchange subsidies in Halbig v. Burwell doesn’t meet the D.C. Circuit’s very high standard for en banc review.” Or if you read the Volokh Conspiracy, a popular libertarian legal blog read by many judges and their law clerks, which claims that “the bar on en banc rehearing in the D.C. Circuit has been higher than the bar for certiorari in the Supreme Court.”

The subject of how a federal appeals court should handle the purely discretionary question of whether or not they wish to rehear a particular case rarely makes national headlines. Nor do opinion writers of any kind normally dive into arcane rules of federal appellate procedure. It is difficult to read the conservative media’s protests regarding en banc review as anything other than an attempt to paint the court’s decision to rehear the case as a partisan decision — rather than what it is, a decision that is clearly consistent with the federal rules governing these circumstances. Indeed, the Wall Street Journal op-ed quoted above it quite explicit in its claim that a decision to grant an en banc rehearing would be a partisan decision — “Those who claim that the D.C. Circuit will rehear the case en banc do no service to the court’s judges, who know the threat that overtly politicized en banc rehearings pose to the court’s collegiality.”

Now that the DC Circuit has ignored these attempts to scare them off with accusations of partisanship, this case no longer meets the usual criteria for Supreme Court review.