Oral argument: March 26, 2012<\/p>\n
Appealed from: United States Court of Appeals for the Eleventh Circuit<\/a> (Aug. 12, 2011)<\/p>\n One issue that the Supreme Court will resolve regarding the Patient Protection and Affordable Care Act (“Health Care Act”) is the Tax Anti-Injunction Act\u2019s (\u201cAIA\u201d) applicability to the challenge against the minimum coverage provision. The Tax Anti-Injunction Act<\/a> (\u201cAIA\u201d) bars suits seeking to restrain the assessment<\/a> or collection of any tax<\/a>. Though not a specific argument from any party, the Court has shown interest due to the impact that AIA applicability may have on challenges to the health care law, as well as the effect of any decision on the AIA\u2019s scope. While the parties agree that the AIA only applies to taxes, and the minimum coverage provision provides for a penalty, the parties disagree on the scope of the AIA\u2019s application. Court-appointed amicus Robert Long argues that the minimum coverage provision falls within the ordinary meaning of a \u201ctax.\u201d The government believes the AIA applies to states and private parties\u2019 claims because it is jurisdictional and is implicated by the mandate\u2019s potential tax collection consequences. Private parties, several states, and National Federation of Independent Business rejoin by noting that the AIA is not jurisdictional and their claims only run to the constitutionality of the minimum coverage provision, not its penalty.<\/p>\n Beginning in 2014, the minimum coverage provision of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029, will require non-exempted individuals to maintain a minimum level of health insurance or pay a tax penalty. 26 U.S.C.A. 5000A. The question presented is:<\/p>\n 1. Whether Congress had the power under Article I of the Constitution to enact the minimum coverage provision.<\/p>\n Petitioners also suggest that the Court direct the parties to address the following question:<\/p>\n 2. Whether the suit brought by respondents to challenge the minimum coverage provision of the Patient Protection and Affordable Care Act is barred by the Anti-Injunction Act, 26 U.S.C. 7421(a).<\/p>\n IN ADDITION TO QUESTION 1 PRESENTED BY THE PETITION, THE PARTIES ARE DIRECTED TO BRIEF AND ARGUE THE FOLLOWING QUESTION: \u201cWHETHER THE SUIT BROUGHT BY RESPONDENTS TO CHALLENGE THE MINIMUM COVERAGE PROVISIONS OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT IS BARRED BY THE ANTI-INJUNCTION ACT, 26 U.S.C. \u00a77421(A).\u201d<\/p>\n top<\/a><\/p>\n Does the Anti-Injunction Act bar courts from considering the merits of a constitutional challenge to the Patient Protection and Affordable Care Act\u2019s minimum coverage provision, which mandates individuals to obtain minimum health insurance coverage and permits the Internal Revenue Service to collect a penalty for failure to comply?<\/p>\n top<\/a><\/p>\n On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act<\/a> (\u201cHealth Care Act\u201d), an immense piece of health care reform that, among other things, reshaped aspects of the private and public health insurance sectors, lowered the costs of Medicare<\/a>, and generally expanded health care access. Few other portions of the law have drawn the same level of attention as the minimum coverage provision<\/a> within the individual mandate. The individual mandate is an addition to the Internal Revenue Code<\/a> that requires all individuals to maintain a minimum level of health insurance coverage or suffer a \u201cpenalty\u201d that is administered by the Internal Revenue Service<\/a> (\u201cIRS\u201d) and appended to each malfeasant\u2019s tax return. See <\/em><\/strong>26 U.S.C. \u00a7 5000A<\/strong><\/a>.<\/p>\n Soon after the Health Care Act passed, private claimants Mary Brown and Kaj Ahlburg, twenty-six states, and the National Federation of Independent Business<\/a> (collectively \u201cNFIB\u201d) brought suit in the U.S. District Court for the Northern District of Florida<\/a> challenging the Health Care Act\u2019s constitutionality and, in particular, the individual mandate\u2019s constitutionality. See <\/em><\/strong>Florida v. Dep’t of Health & Human Servs.<\/em><\/strong><\/a>, 716 F. Supp. 2d 1120 (2011)<\/strong>. The district court found against the Department of Health and Human Services<\/a>, Treasury Department<\/a>, and Labor Department<\/a> (collectively \u201cHHS\u201d) and determined the individual mandate was beyond Congress\u2019s authority under the taxing power<\/a>, the Commerce Clause<\/a>, and the Necessary and Proper Clause<\/a>. See <\/em><\/strong>id.<\/em><\/strong><\/a> <\/em><\/strong>at 1162\u201364<\/strong>. The district court refused to identify the individual mandate as a \u201ctax,\u201d thus removing the challenge from the purview of the Tax Anti-Injunction Act<\/a> (\u201cAIA\u201d). See <\/em><\/strong>id.<\/em><\/strong><\/a> at 1143\u201344<\/strong>. HHS appealed to the United States Court of Appeals for the Eleventh Circuit<\/a>; however, the Eleventh Circuit affirmed that the individual mandate exceeds congressional power. See <\/em><\/strong>Florida v. Dep’t of Health & Human Servs.<\/em><\/strong><\/a>, 648 F.3d 1235, 1311, 1317 (11th Cir. 2011)<\/strong>. The Eleventh Circuit did not address the issue of the applicability of the AIA. The Supreme Court<\/a> granted certiorari<\/a> on November 14, 2011. See <\/em><\/strong>Dep’t of Health & Human Servs. v. Florida<\/em><\/strong><\/a>, 132 S. Ct. 604 (2011).<\/strong><\/p>\n Though the focal point of this case is the Health Care Act\u2019s constitutionality, the Supreme Court instructed the parties to argue an issue that was abandoned during the appeals process\u2014whether the AIA bars the challenge against the individual mandate. See <\/em><\/strong>Dep’t of Health & Human Servs. v. Florida<\/em><\/strong><\/a>, 132 S. Ct. 604 (2011).<\/strong> The AIA blocks any court, with a few exceptions, from hearing challenges brought to \u201crestrain[] the assessment<\/a> or collection of any tax\u201d before the government has attempted such assessment or collection. See <\/em><\/strong>26 U.S.C. \u00a7 7421<\/strong><\/a>. <\/strong>The AIA\u2019s applicability was settled in 1962 when the Supreme Court determined that the statute\u2019s purpose was to facilitate effective tax assessment and to avoid time-consuming pre-enforcement suits. See <\/em><\/strong>Enochs v. Williams Packing & Navigation Co.<\/em><\/strong><\/a>, 370 U.S. 1, 7\u20138 (1962)<\/strong>. The AIA was first implicated in the district court when, in response to NFIB\u2019s arguments that the individual mandate represents an unconstitutional tax, HHS contended that the suit itself would be barred in such a scenario. See <\/em><\/strong>Florida v. Dep’t of Health & Human Servs.<\/em><\/strong><\/a>, 716 F. Supp. 2d 1120, 1130 (2011). <\/strong>As noted above, the district court refused to call the individual mandate a tax. See <\/em><\/strong>id.<\/em><\/strong><\/a> at 1143\u201344.<\/strong> On appeal, neither the parties nor the court revived the AIA argument.<\/p>\n top<\/a><\/p>\n This dispute concerns the applicability and potential effect of the Tax Anti-Injunction Act<\/a> (\u201cAIA\u201d) on the challenge to the Patient Protection and Affordable Care Act<\/a>\u2019s (\u201cHealth Care Act\u201d) minimum coverage provision<\/a> within the individual mandate. The Supreme Court<\/a>\u2019s finding could halt all <\/em>judicial proceedings regarding the individual mandate until the government attempts to implement the penalty provision.<\/p>\n What Effect will AIA Application have on the Court System?<\/em><\/p>\n The Cato Institute<\/a> points out that the majority of courts to face this issue have concluded that the AIA does not apply to suits attempting to enjoin the individual mandate\u2019s penalty provision. See <\/em><\/strong>Brief of Amicus Curiae Cato Institute<\/strong><\/a> in Support of Respondents at 22\u201323. <\/strong>The Center for the Fair Administration of Taxes (\u201cCFAT\u201d) contends that, if the Court were to rule that the AIA does apply to the individual mandate\u2019s penalty, the decision would open the floodgates for taxpayer cases challenging penalties assessed against them. See <\/em><\/strong>Brief of Amicus Curiae Center for the Fair Administration of Taxes<\/strong><\/a> Opposing Vacatur at 21\u201322. <\/strong>CFAT argues that the same flood of individual mandate-related challenges would occur if the Court allowed Executive Branch to waive AIA application in situations such as this, where the Health Care Act would otherwise bar suit. See <\/em><\/strong>id.<\/em><\/strong><\/a> <\/em><\/strong>at 22\u201323. <\/strong>The States urge the Supreme Court to decide on the individual mandate\u2019s constitutionality regardless of AIA applicability because Congress, by labeling the individual mandate as a penalty, should have to defend the constitutionality of such a decision. See <\/em><\/strong>Reply Brief for State Respondents<\/strong><\/a> at 22\u201323. <\/strong><\/p>\n Mortimer Caplin and Sheldon Cohen, former IRS Commissioners, argue that if the AIA does not apply here, it would create an exception that would allow a mass of different claims against the individual mandate, clogging the courts and causing delays. See <\/em><\/strong>Brief of Amici Curiae Mortimer Caplin and Sheldon Cohen Urging Vacatur<\/strong><\/a> in Support of Neither Side at 27, 36. <\/strong>This flood of lawsuits, Caplin and Cohen contend, would begin because taxpayers could challenge individual mandate assessments in court, rather than availing themselves of tax code administrative procedures. See <\/em><\/strong>id.<\/em><\/strong><\/a> <\/em><\/strong>at 27\u201328<\/strong>. Robert Long<\/a>, a court-appointed amicus curiae, notes that the AIA\u2019s application here will prevent this premature judicial interference with the prompt administration of the tax system. See <\/em><\/strong>Brief of Court-Appointed Amicus Curiae Robert A. Long<\/strong><\/a> in Support of Vacatur at 26\u201328. <\/strong>Long also contends that the AIA applies to lawsuits challenging \u201cany\u201d tax, and therefore its application is not foreclosed by the fact that no taxes have been levied under the individual mandate to date. See <\/em><\/strong>id.<\/em><\/strong><\/a> at 34\u201335. <\/strong>Finally, Long argues that, as a general policy matter, courts should avoid deciding constitutional issues unless they prove unavoidable, a goal facilitated in this case by AIA application. See <\/em><\/strong>id.<\/em><\/strong><\/a> at 58.<\/strong><\/p>\n What Effect will AIA Application have on the AIA\u2019s Purpose and the Tax Law?<\/em><\/p>\n The American Center for Law and Justice<\/a> (\u201cACLJ\u201d) points out that this challenge to the individual mandate\u2019s constitutionality does not justify AIA application because the suit poses no interference to the efficient administration of the tax system. See <\/em><\/strong>Brief of Amicus Curiae American Center for Law & Justice<\/strong><\/a> in Support of Respondents at 11\u201312. <\/strong>Citing the \u201cunique restrictions\u201d that Congress placed on the government\u2019s ability to collect proceeds from the individual mandate\u2019s penalty, CFAT asserts that Congress did not intend the AIA to apply to penalty challenges; therefore, allowing the challenge to go forward would not damage the AIA\u2019s credibility or effectiveness. See <\/em><\/strong>id.<\/em><\/strong><\/a> <\/em><\/strong>at 11\u201312, 15<\/strong>. ACLJ further notes that Congress\u2019s intended result vis-\u00e0-vis the individual mandate is to create effective health insurance markets, a goal that should not implicate the AIA. See <\/em><\/strong>Brief of ACLJ<\/strong><\/a> <\/em><\/strong>at 8\u20139. <\/strong>The States, along a similar vein, argue that Congress purposely used the label \u201cpenalty\u201d because, rather than raise revenue, Congress hoped to reach widespread health coverage and punish those who fail or refuse to comply. See <\/em><\/strong>Reply Brief for State Respondents<\/strong><\/a> at 22<\/strong>.<\/p>\n Caplin and Cohen assert that if the individual mandate does not fall into the AIA\u2019s purview, this would interfere with the orderly collection of taxes and circumvent the AIA\u2019s very purpose. See <\/em><\/strong>Brief of Caplin and Cohen<\/strong><\/a> at 19\u201322. <\/strong>Various tax law professors reiterate the argument that the function of the AIA is to facilitate the \u201cpay first, litigate later\u201d tax regime that allows for the efficient administration of the tax system. See <\/em><\/strong>Brief of Amici Curiae Tax Law Professors<\/strong><\/a> in Support of Vacatur at 21<\/strong>. The tax law professors also note that AIA inapplicability at the outset <\/em>would leave the IRS with a slim arsenal of collection tools as compared to the scenario in which the taxpayer first paid the penalty and then sued. See id.<\/a><\/em><\/strong> at 28, 30\u201331. <\/strong>The Department of Health and Human Services<\/a>, Department of the Treasury<\/a>, and Department of Labor<\/a> (collectively \u201cHHS\u201d) contend that the relevant distinction for AIA purposes lies in the consequences flowing from a provision; therefore, the AIA applies regardless of the term employed (tax or penalty) because the individual mandate operates in conjunction with the penalty provision and creates \u201conly tax consequences.\u201d See<\/em><\/strong> <\/strong>Brief for Petitioners<\/strong><\/a> at 40\u201341.<\/strong><\/p>\n top<\/a><\/strong><\/p>\n The Tax Anti-Injunction Act<\/a> (\u201cAIA\u201d) bars suits seeking to restrain the assessment<\/a> or collection of any tax<\/a>. See<\/em><\/strong> <\/strong>26 U.S.C. \u00a7 7421<\/strong><\/a>.<\/strong> The minimum coverage provision within the individual mandate of the Patient Protection and Affordable Care Act<\/a> requires individuals to obtain qualified health insurance or pay a penalty on their annual tax returns. See<\/em><\/strong> 26 U.S.C. \u00a7 5000A<\/a>.<\/strong> The parties to this case all argue that the AIA does not apply to the individual mandate, but there is disagreement on the scope of the AIA and the reason why it does not apply. Robert Long<\/a>, an amicus curiae appointed by the Supreme Court<\/a>, argues that the AIA does apply and that it limits the Court\u2019s jurisdiction<\/a> to hear the underlying case.<\/p>\n Is the Individual Mandate\u2019s Penalty Provision a Tax<\/em>?<\/em><\/p>\n The Department of Health and Human Services<\/a>, Department of the Treasury<\/a>, and Department of Labor<\/a> (collectively \u201cHHS\u201d) argue that the AIA only applies to cases involving taxes<\/a>, whereas the individual mandate provides for a penalty<\/a>. See<\/em><\/strong> <\/strong>Brief for Petitioners<\/strong><\/a> at 20.<\/strong> HHS contends that while labeling may not be determinative when resolving constitutional questions, Congress\u2019s choice to refer to a statutory provision as a tax or penalty should control whether the AIA applies to challenges involving that statute. See <\/em><\/strong>id.<\/em><\/strong><\/a> at 21\u201322. <\/strong>Private Respondents, two individual citizens and the National Federation of Independent Business<\/a> (collectively \u201cNFIB\u201d), add that \u201ctaxes\u201d and \u201cpenalties\u201d are treated as distinct legal concepts throughout the tax code. See<\/em><\/strong> <\/strong>Brief for Private Respondents<\/strong><\/a> at 29\u201330. <\/strong>The States assert that the individual mandate\u2019s penalty must be something other than a tax because Congress specifically directed the IRS to collect the penalty in the same manner as a tax, language that Congress would not have included if the penalty itself was intended as a tax. See<\/em><\/strong> <\/strong>Brief for State Respondents<\/strong><\/a> at 52\u201353.<\/strong><\/p>\n Long counters that the penalty at issue is a tax subject to the AIA because the provision falls within the broad ordinary meaning of \u201ctax,\u201d which Congress intended and the Court has previously recognized. See <\/em><\/strong>Brief of Court-Appointed Amicus Curiae Robert A. Long<\/strong><\/a> in Support of Vacatur at 37\u201339. <\/strong>Long contends that the penalty also falls under the tax category of \u201cassessable penalties,\u201d which are penalties included under the definition of a tax for the purpose of assessment and collection. See <\/em><\/strong>HEALTH CARE, ANTI-INJUNCTION ACT, PPACA, JURISDICTION, TAX LAW<\/h2>\n
Questions presented<\/h2>\n
Issue<\/h2>\n
Facts<\/h2>\n
Discussion<\/h2>\n
Analysis<\/h2>\n