A Second Federal Court Green-Lights Lawsuit Against Obamacare

A Second Federal Court Green-Lights Lawsuit Against Obamacare

Richmond Court Fast-Tracks CEI-Assisted Lawsuit Challenging IRS Attempt to Impose Employer Mandate in States Outside Obamacare Exchanges
October 31, 2013

WASHINGTON, Oct. 31 – A second federal judge Thursday has ruled a lawsuit that challenges a major IRS Obamacare regulation could proceed despite the government’s objections. A ruling by a judge in Richmond today mirrored that of a federal judge in the District of Columbia last week. (View the complaint in King v. Sebelius)

The judge denied plaintiffs’ request for a preliminary injunction, he ordered briefs filed by the first week of December, which would allow him to issue a decision by the end of the year. Plaintiffs in both lawsuits have sued over an IRS regulation imposed under the Affordable Care Act that will subject them to penalties and force them to cut back employees’ hours, even though they are located in states that have refused to set up their own insurance exchanges.

The Obamacare statute authorizes health insurance subsidies to qualifying individuals in states that created their own healthcare exchanges. These subsidies trigger the employer mandate – a $2,000-per-employee penalty for companies that don’t provide government-approved health coverage to workers – and expose more people to the individual mandate, which requires individuals to purchase insurance or pay a fine.

But without authorization from Congress, the IRS vastly expanded those subsidies to cover the 34 “refusenik” states that have decided not to set up such exchanges. The statute plainly says businesses in these nonparticipating states should be free of the employer mandate, and the scope of the individual mandate should be reduced as well. The IRS rule expands both mandates and deprives states of the power given to them by Congress to exempt their residents and businesses from these requirements.

The complaint and preliminary injunction filings can be viewed at cei.org/obamacare.

CEI general counsel Sam Kazman had earlier expressed hope that the forthcoming rulings will “invalidate the attempt by the IRS to eliminate the distinction between states that participate in the insurance exchange program and those that do not.”

Mike Carvin, a partner at Jones Day, argued on behalf of plaintiffs in this case and the D.C. case, Halbig v. Sebelius.