State AG Watch: Five States Win $839 Million Obamacare Lawsuit
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Texas Attorney General Ken Paxton is leading a five-state coalition that on Thursday won an $839 million judgment against the federal government in an Obamacare lawsuit, a massive blow to the Obama administration’s namesake legislation.
The Affordable Care Act (ACA, better known as Obamacare) requires medical providers to pay a Health Insurance Provider Fee (HIPF). Even though the ACA exempts states from paying that fee when providing health care, the U.S. Department of Health and Human Services (HHS) during the Obama era created a regulation requiring states to pay the fee anyway, a fee that is styled as a tax on the states.
Paxton sued in federal court, joined by Indiana, Nebraska, Kansas, and Louisiana. The five states’ lawsuit argues that this tax/fee is illegal under the Administrative Procedure Act (APA) because the ACA clearly exempts states from this payment and also that even if the statute did allow it, such taxes would violate the Tenth Amendment of the Constitution when imposed on sovereign states.
Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas agreed on the statutory issue (the APA claim), striking down the Obama HHS rule because it violates the plain language of the ACA law. O’Connor ordered the federal government to pay Texas the $305 million that the Lone Star State had paid in HIPF fees, as well as the fees of the other states, for a total of $839 million.
“Obamacare is unconstitutional, plain and simple,” Paxton said after Thursday’s ruling. “We all know that the feds cannot tax the states, and we’re proud to return this illegally collected money to the people of Texas.”
Having struck down the HIPF tax on statutory grounds, the court did not even need to reach the constitutional claim. Under the doctrine of constitutional avoidance, federal courts are supposed to issue constitutional rulings only if there is no lesser law upon which to grant plaintiffs the relief they seek. There is no reason to doubt that the states would have won on their constitutional argument if necessary, however, because the federal government cannot tax states under the Tenth Amendment’s intergovernmental tax immunity doctrine.
Surprisingly, it appears that Texas media are ignoring this monumental win for the Lone Star State and the other states also. There has been scant national coverage, as well.
The media silence is all the more unusual because of the national political implications of this court decision. In addition to being an important victory for the states in question, Thursday’s ruling supports President Trump’s contention that parts of Obamacare are illegal and should be repealed; a decision will become even more important if it goes up on appeal, until it reaches the point that even the most biased media outlets cannot ignore it.
The case is Texas v. United States, No. 7:15-cv-151, in U.S. District Court for the Northern District of Texas.
Ken Klukowski is senior legal editor for Breitbart News, where this article originally was published.
Senior Counsel, Schaerr Jaffe LLP
Ken Klukowski is senior counsel at the law firm Schaerr Jaffe, focusing on constitutional, administrative, and election law, and the federal courts. He has served in politically appointed positions in the U.S. government, including senior counsel in the Civil Division of the U.S. Department of Justice, and prior to that in the White House as special counsel in the Office of Management and Budget. He was also the constitutional rights advisor on the Presidential Transition Team of President Donald J. Trump. In the private sector, he has worked as a senior fellow of the American Constitutional Rights Union, senior counsel at First Liberty Institute, and a legal journalist. He litigates constitutional cases in the U.S. Supreme Court and lower federal courts, and contributes to media coverage of the nation’s highest court and legal issues. Earlier in his career, Klukowski served as special deputy attorney general of Indiana, and worked on faculty at Liberty University School of Law. His academic works have been published by journals such as the Federalist Society’s Harvard Journal of Law & Public Policy, and his columns have appeared in the Wall Street Journal and other national publications. His amicus briefs and nine law review articles have been cited by various federal courts and top legal journals. He has participated in numerous Supreme Court cases, and lectured and debated at 100 law school events nationwide. Klukowski received his bachelor’s degree from the University of Notre Dame, studied history at Arizona State University, earned his law degree from Scalia Law School at George Mason University, and served as a law clerk to Chief Judge Alice Batchelder on the U.S. Court of Appeals for the Sixth Circuit.