The state, Warren County and four universities named in the lawsuit paid more than $6.2 million, under protest, for the transitional reinsurance program fee in 2015. They — and other state and local governments with self-funded health insurance plans overseen by third-party administrators — are also expected to pay the fee in 2016 and 2017.
In addition to raising constitutional challenges, the lawsuit claims the law fails to specify that state and local government workers should be included in the group taxed to fund the program, with 20 percent to go for other federal expenses.
“The courts could agree on this point, even without ruling on the important constitutional issues we have raised,” Tierney said.
Challenging the Affordable Care Act
DeWine, Warren County, the University of Akron and Bowling Green, Shawnee, Youngstown state universities filed the lawsuit in late January in federal court in Cincinnati, challenging the section of Obamacare charging state and local governments to help fund a transitional reinsurance program.
Rebecca Zietlow, the Charles W. Fornoff Professor of Law and Values at the University of Toledo, and Joanne Brant, a professor of law at Ohio Northern University, both said the challenge was weak on constitutional grounds.
Brant, who teaches constitutional law at the Ohio Northern law school, also said the statutory case was likely to be won by the federal government.
“The statutory argument is weaker still. The ACA defines group heath plans and covered employers very broadly. The failure to explicitly identify states as potential employers or self-insurers is unlikely to persuade a court that they are exempt from its provisions,” she said in an email.
The three constitutional law experts said the part of the case brought on constitutional grounds relied on obscure doctrines, while two described the constitutional arguments as “weak.”
UD law school Dean Paul McGreal agreed on the obscurity of the key constitutional issues, but he hesitated to predict an outcome in light of the makeup of the U.S. Supreme Court and the doctrines used in the constitutional claims.
“Some of the Supreme Court cases that are important to deciding this case are old enough that they were decided before many of the current justices joined the court,” McGreal said.
This newspaper reached out to constitutional law experts as well as lawyers who have studied Obamacare and challenges to it.
The new lawsuit claims Obamacare violates the 10th Amendment’s Anti-Commandeering Clause, as well as the Intergovernmental Immunity Doctrine. It also claims the law fails to specifically identify state or local government employees as part of the group to be taxed.
“To put this simply, governments don’t tax other governments,” DeWine said during a press conference in Warren County to announce the suit. “This illegal taxation is another example of the Obama’s administration’s refusal to operate within the boundaries of federalism.”
Zietlow described the lawsuit as part of a broader “death by a thousand cuts” strategy designed to kill Obamacare.
While this lawsuit only involves a small section of the law, Zietlow said a decision in another challenge, King v. Burwell, involving subsidies to as many as 10 million people, scheduled for Supreme Court review in March, would be more far-reaching, if successful.
“The other case would entirely derail the Affordable Care Act,” she said. “The whole system would fall apart.”
Shana Alex Charles, director of Health Insurance Studies at the UCLA Center for Health Policy Research, also said the Ohio lawsuit was not a threat to the law.
“From a policy perspective, this looks like an administrative issue with the HHS interpretation of the law, rather than a dispute over the fundamentals of the law itself. It requires negotiations, certainly, but isn’t a threat to the overall health of the Affordable Care Act,” she said in an email.
Zietlow said the constitutional arguments were weak, but declined to predict how the Supreme Court would rule on the case.
“The Supreme Court has moved in a lot of ways I never would have dreamed of, especially with regard to the attacks on the Affordable Care Act,” said Zietlow, who published an article in favor of the law.
In NFIB v. Sebelius, the landmark case the Supreme Court heard on Obamacare, the court upheld the law but wrote, “The framers created a federal government of limited powers, and assigned to this court the duty of enforcing those limits.”
While agreeing with Zietlow and Brant on problems with the constitutional arguments, McGreal said the decision would be less clear if there were too many exempted groups.
“That’s going to be the key question in deciding the case. If a court says the federal law is directing or commanding states to apply or enforce this ACA, that would be commandeering. If however the court decides that all the states are doing is complying with federal law just like private insurers have to, that would not be commandeering,” McGreal said.
Public costs of lawsuit
Kyle Duncan — lead counsel in the Hobby Lobby case, which struck down the section of Obamacare requiring closely held corporations to offer contraception to employees through their health plans — will join state and Warren County lawyers.
While legal costs will be limited to travel and other expenses for federal, state and county lawyers, Duncan is to be paid as much as $160,000 by Warren County — $10,000 for his work in preparing the initial lawsuit.
“The attorney general is statutory litigation counsel for state officers, agencies, and departments and has further authority with regard to certain criminal matters, debt collections, and the like, but we do not represent units of local governments as plaintiffs suing in cases like this,” Tierney said.
The AG paid the $400 filing fee from funds budgeted for litigation. Otherwise the costs to the public for state lawyers and the Warren County Prosecutor’s Office should be minimal as they are staff members already paid for their work, Tierney said.
“The only additional costs would be from court costs and filing fees. Of course, if successful, the litigation will save Ohio millions of dollars,” he said.
Although they could be subject to the transitional reinsurance fees too, no other states, universities, counties or local governments had joined the lawsuit, according to Tierney and Young.
Wright State University and the University of Toledo will not be joining the lawsuit, officials said.
“It’s really up to the AG’s office as the attorney for all state agencies. We’re not sure why the other schools would add their names since he represents all state agencies anyway,” Seth Bauguess, spokesman for Wright State, said in an email.
In response, Tierney said, “We do represent all state agencies, and where appropriate we will file suit on the direction of a client agency or institution. We are hopeful that a favorable ruling in this case will be useful precedent for all self-insured state agencies.”
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