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Litigation Lowdown Redux

Earlier this year we gave you the “Litigation Lowdown” on health care reform cases moving through the federal courts. The question now is not IF the Supreme Court will rule on the constitutionality of the Patient Protection and Affordable Care Act (PPACA), but WHEN.

After the several conflicting rulings from appellate courts, it is almost inevitable that the Supreme Court will take up the case, and likely it will happen in SCOTUS’s 2011-2012 term. The Eleventh Circuit court struck down the individual mandate in Florida v. HHS, the Sixth Circuit court upheld the PPACA as constitutional in Thomas More Law Center v. Obama, and the Fourth Circuit court ruled that the plaintiffs lacked standing in Liberty University v. Geithner, arguing that it was too early to make a judgment about whether the mandate is harmful. The Fourth Circuit cited to the Anti-Injunction Act, rejecting Virginia’s challenge to PPACA on the basis that it cannot sue about a tax (like the individual mandate tax penalty) until the tax has been assessed (in this case, not until April 15, 2015).

Last week, the Department of Justice (DOJ) filed a petition asking the Supremes to hurry up and rule on the constitutionality of the mandate. Specifically, the DOJ petitioned for a writ of certiorari on Florida v. HHS, the Eleventh Circuit case involving 26 states and the National Federation of Independent Business (NFIB). The Supreme Court could make a decision on the case in the spring or summer of 2012.

Can’t wait until 2012? Don’t worry, there is plenty of health law intrigue to keep us all busy in the interim. Earlier this week, the Supreme Court heard oral arguments on Douglas v. Independent Living Center of Southern California. Douglas represents a number of cases brought by providers and beneficiaries in California in opposition to the state’s Medicaid provider payment cuts. The Supreme Court is taking the case to answer narrow, but very significant, question – under the Constitution’s Supremacy Clause, do individuals have the right to sue a state because of the way it administers its Medicaid? (The Supremacy Clause says federal laws take precedence over state laws.)

Douglas is drawing a lot of attention from the health policy world, because no matter which way SCOTUS rules, it will complicate things for the Medicaid program. Adding to the drama, the Obama Administration (via then-Solicitor General Neal Katyal) surprised everyone this summer by siding with the state of California, against the protests of Health and Human Services (HHS) Secretary Kathleen Sebelius and, more recently, a number of Congressional Democrats. The Administration wants to leave Medicaid oversight largely in the hands of HHS.

If SCOTUS rules in favor of the plaintiffs, it could set a precedent for a flood of lawsuits over Medicaid to hit the courts. On the other hand, if SCOTUS sides with California, it might give states way more leeway to ignore certain provisions of the PPACA, most significantly the requirement that all states expand Medicaid eligibility up to 133% of the federal poverty level in 2014. States will be under less pressure to swiftly implement new Medicaid provisions if state residents can’t easily sue them over it. HHS’s primary means to force state compliance – to cut off state Medicaid funding entirely – is a far less flexible tool. A ruling against the plaintiffs could also impact implementation of federal health policies more broadly, by mitigating the constant threat of injunction – good news for state seeking greater flexibility to trim spending on Title X and Planned Parenthood.

For more background on the PPACA cases headed to the Supreme Court, click here.

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