Fourth Circuit Flags Possible Procedural Problem In Health Care Litigation

A little over a week ago, the Sixth Circuit issued an order hinting that they were likely to dismiss a challenge to the Affordable Care Act on procedural grounds without reaching the question of whether the law is constitutional. This afternoon, the Fourth Circuit issued a similar order requiring the parties in two health care cases to brief a different set of procedural questions which could have the same effect of dismissing the case without a decision on the merits:

1. When applicable, does the Anti-Injunction Act, 26 U.S.C. § 7421(a), deprive a federal court of subject-matter jurisdiction? See J.L. Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 5–8 (1962). If so, does it divest federal courts of jurisdiction in this case? See Bob Jones University v. Simon, 416 U.S. 725, 736–48 (1974).

2. Can a court determine that a challenged exaction qualifies as a “tax” for purposes of the Anti-Injunction Act without reaching the question of whether the exaction qualifies as a “tax” for purposes of Art. I, § 8, cl. 1? Compare Bailey v. George, 259 U.S. 16 (1922), with Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922).

3. Assuming the Anti-Injunction Act does apply in this case, does a plaintiff have the ability to challenge the exaction provided by § 5000A in a refund suit or otherwise? See 26 U.S.C. § 7422(a); 28 U.S.C. §§ 1331, 1340, 1346.

The Tax Anti-Injunction Act forbids a court from “restraining the assessment or collection of any tax.” In essence, it provides that a court may not prevent a state or federal government from collecting a tax, although it does permit courts to order the government to refund a taxpayer who is required to pay an unlawful tax.


This law is relevant here because the Affordable Care Act requires most Americans to either carry health insurance or pay slightly more income taxes. Because this tax does not take effect until 2014, however, no one has actually paid it and thus no one has the right sue to have this portion of their taxes refunded. Thus, if the Anti-Injunction Act will not allow anyone to sue to keep from having to pay the ACA’s tax in the first place, no one will be able to challenge health reform for several years.

The court’s concern over whether the Anti-Injunction Act “deprive[s] a federal court of subject-matter jurisdiction” is also an interesting window into the court’s thinking. If the Anti-Injunction Act applies here, but it somehow does not deprive the Fourth Circuit of jurisdiction, than the judges may nonetheless be able to reach the merits of whether the ACA is constitutional.

Even so, this order, like the Sixth Circuit’s order before it, highlights the very serious procedural flaws in the anti-health reform team’s litigation strategy. If both the Fourth and the Sixth Circuit dismiss this case on procedural grounds, it becomes very unlikely that the merits of this litigation will be resolved until long after the ACA has gone into effect.