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  • CEI Sues TSA for Violating Federal Law and Court Order on Body Scanners

    July 16, 2015 1:15 PM

    Yesterday, July 15, 2015, CEI filed a petition for writ of mandamus with the D.C. Circuit Court of Appeals. Our suit requests the court enforce its July 15, 2011, decision that found the TSA’s deployment of body scanners in violation of the Administrative Procedure Act. The 2011 court ordered the TSA to “promptly” open a rulemaking proceeding and produce a final rule. Yesterday was the four-year anniversary of the court order and we still do not have a final rule to evaluate and potentially challenge. In fact, given that TSA has been rolling out body scanners since 2007, they have been violating the APA for eight years.

    Other than CEI, petitioners are the National Center for Transgender Equality, The Rutherford Institute, CEI President Lawson Bader, and yours truly, in our capacity as private individuals. CEI’s attorneys are representing the petitioners.

    Our primary interest in this case is ensuring the TSA is forced to follow the law. However, results of a classified Department of Homeland Security Inspector General audit were leaked to and publicized by ABC News on June 1. The failure rate was an astounding 96 percent. So, not only is the TSA violating the law by deploying these machines, the machines likely don’t even work as advertised, as we and others have alleged in the past.

    So far, USA TodayThe Washington ExaminerReason magazine have covered the lawsuit, with a small blurb in The New York Times.

    The summary of our argument can be found here. The full complaint is here. For more from CEI on TSA’s illegal body scanner policy, see our 2013 comments to the agency and a 2012 op-ed by former American Airlines CEO Robert L. Crandall and myself summarizing our amicus brief in EPIC v. DHS.

  • Supreme Court Rewrites Obamacare, Again

    June 25, 2015 2:40 PM

    This morning, the U.S. Supreme Court ruled for the Obama administration in King v. Burwell, upholding the legality of health insurance tax credits for people in the 36 states that haven’t set up insurance exchanges under Obamacare. Chief Justice John Roberts wrote for the Court, while Justice Antonin Scalia dissented, joined by Justices Alito and Thomas.

    Unlike the major Obamacare case decided by the Supreme Court in 2012, NFIB v. Sebelius, today’s decision in King doesn’t concern the law’s constitutionality. Instead, the case challenged an IRS regulation interpreting the meaning of the Affordable Care Act (ACA)—better known as Obamacare. The law says that many low- and middle-income Americans can get “premium assistance” to help them pay for health insurance. This assistance comes in the form of income tax credits, hence the IRS’s involvement.

    But according to the ACA provision that explains how the IRS calculates which taxpayers are eligible for tax credits, a person cannot get a tax credit unless she’s enrolled in a health care plan offered by “an Exchange established by the State.” This may sound like a technicality, but it’s actually a very big deal, because Obamacare lets each state (and the District of Columbia) decide whether to set up a health insurance exchange. Only 14 states and D.C. have established their own exchange; in the remaining 36 states, individual health insurance is available through Healthcare.gov, an exchange run by the federal government.

    Despite the plain language of the law, the Court decided that an “Exchange established by the State” actually means “Exchange established by the State or the Federal Government.” The majority reasoned that Congress couldn’t possibly have intended to deny health insurance subsidies—or the individual coverage mandate—in states that opted not to set up their own exchanges. Otherwise, the Court feared that in the 36 states where the federal government runs the exchange, the absence of subsidies would lead to a “death spiral.” Healthy people would forego costlier health insurance, while sicker and older people would keep paying, sending prices higher and higher.

    If a state were worried about such a death spiral, however, all it would need to do is establish its own exchange—for which the subsidies would offer an incentive. But the Court rejected the notion that Congress might have actually designed Obamacare to work this way, siding instead with the administration’s position that lawmakers never intended to encourage states to set up their own exchanges by linking them with valuable health insurance subsidies. So the Court rewrote the law, much as it did in NFIB v. Sebelius, which held that the “penalty” Obamacare imposes on people who fail to buy health insurance is actually a “tax.” (Never mind that a bill with the word “tax” in it may not have passed Congress.)

    The Court’s explanation for why Congress didn’t really mean what it wrote regarding who can get tax credits is unpersuasive. The majority points to several parts of the Act that would supposedly make no sense if subsidies were available only in states that established their own exchange. But the majority’s version of the law creates irregularities of its own. The dissent identifies several obligations imposed on “an Exchange established by the State” that cannot logically apply to states where the federal government operates the exchange. Instead of reading the law to mean what it says, the Court rewrote the Act’s plain language to avoid some minor oddities.

    Moreover, the subsidy provision doesn’t seem to be an accident. As the dissent notes, the very phrase the Court rewrote—“an Exchange established by the State under section 1311”—appears in the Affordable Care Act not once, but seven times. In other parts of the Act, only the word “Exchange” is used. The Court dismissed this aspect of the law as the byproduct of “inartful drafting,” and thus replaces the text Congress actually wrote with words that make more sense to the six Justices in the majority.

  • The IRS, Obamacare, and the English Language

    June 17, 2015 11:06 AM

    In the days just before the March 4 Supreme Court hearing in King v. Burwell, I got a number of calls from total strangers who had read about the case and who wanted to be plaintiffs in it. I explained to them that it was too late to join the case then, but listened to their stories of cancelled insurance policies and jobs jeopardized by Obamacare. One call stood out in particular. It was from a woman in California who had moved to the U.S. years ago from the Ukrainian city of Donetsk. After explaining her health care predicament, she asked me: Do you understand how crazy this is? I left a totally dysfunctional country to come here, and now I find myself trapped in this insanity!

    That’s an interesting contrast to the disaster stories that we’ve been hearing for months, about what will happen if the Supreme Court rules in our favor in King. At issue in the case is an IRS rule that provides nationwide health insurance subsidies. The question for the Court is whether that rule is legal, since the underlying statute authorizes subsidies only in those states that set up their own health insurance exchanges—something only 14 states have done. We argue that the IRS rule is contrary to the clear language of the law Congress enacted. The government argues that invalidating the rule will frustrate Congress’s alleged purpose of making health care available to everyone. 

    This is where the disaster stories come in—about how, without nationwide subsidies, millions of people will be left uninsured and without medical treatment. But the Obamacare insurance subsidies aren’t some long-established fixture of medical care; they only took effect in 2014. And for several years before then Obamacare was delayed by purely political decisions made by the White House. Where were the cries of disaster back then? There weren’t any, in large part because we had a sizable array of medical entitlements aimed at preventing such disasters. We still have them. To the extent that state or federal fixes are necessary to ease transition problems that might be caused by a court ruling, nothing would stand in their way. States that chose not to set up exchanges could, for example, change their mind.

    One thing the disaster stories leave out is the fact that, for millions of Americans, Obamacare itself has been a disaster. These victims of Obamacare—yes, victims—include people who, like the woman from Donetsk, can no longer buy low-priced catastrophic insurance, or who find that the cost of their current policies have increased steeply, or who can’t keep their doctors. They include workers pushed into part-time status by companies trying to avoid Obamacare’s dictates, and companies that shelve their expansion plans due to its regulatory burdens. They include the taxpayers who foot the bill.

  • Coming Up: King Plaintiffs’ Day in Court

    February 13, 2015 5:20 PM

    Oral arguments before the U.S. Supreme Court in King v. Burwell will be held on March 4, 2015. The Competitive Enterprise Institute is coordinating this case, which challenges an IRS regulation that illegally distributes subsidies in states that refused to establish state-based health insurance exchanges. The IRS regulation is illegal because it is contrary to the plain language of the law passed by Congress.

    The four plaintiffs involved are individuals who are harmed by this regulation because it makes them subject to Obamacare’s individual mandate, which requires people to enroll in comprehensive healthcare coverage or pay a tax penalty. Both lower courts unanimously agreed that the individual plaintiffs have standing and the Justice Department expressly abandoned any challenge to their standing before the Supreme Court.  

  • Gruber Testifies Before Congress on Obamacare Transparency Issues

    December 9, 2014 11:12 AM

    Today, the Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner and MIT economist Jonathan Gruber are testifying before the House Oversight and Government Reform Committee on repeated transparency failures and enrollment issues surrounding the Affordable Care Act. CEI General Counsel Sam Kazman explains what this hearing could mean for ongoing Obamacare litigation efforts.

    Sam Kazman, CEI general counsel:

    “Regardless of what happens at the hearing, Jonathan Gruber has already had a major impact on the ongoing Obamacare litigation, as in CEI’s King v. Burwell and Halbig v. Burwell cases. This is due to both the content of his 2012 video, where Gruber refers to the subsidy issue saying if states don’t set up exchanges then citizens won’t get tax credits, and to how the government dropped nearly all mention of Gruber and his three-legged stool analogy from the court briefs following the video’s rise in popularity.

    “And according to a recent CEI report by Scot Vorse, we see that Gruber isn’t the only thing the administration flip-flopped on. Based on a trail of government documents, we find that actions taken by the HHS, Treasury, and IRS to implement the law, especially when it comes to developing a tax-credit calculator, show the administration was only focused on providing subsidies on the state exchanges, not the federal exchange.”

    >> View CEI report by Scot Vorse: “Beyond Gruber: How HHS Flip-Flopped on Federal Exchange Subsidies

  • Michael Mann Case Is about First Amendment, Not Global Warming

    November 25, 2014 3:07 PM

    This morning the D.C. Court of Appeals heard oral arguments in Michael E. Mann v. Competitive Enterprise Institute, National Review, et al. CEI General Counsel Sam Kazman gave the following comments about the case:

    Regardless of where one stands on global warming, this case is about the First Amendment. Michael Mann’s defamation lawsuit is an unfounded attempt to chill speech on a major issue of public concern. Professor Mann is a high-profile figure in the global warming debate, and he himself is responsible for much of the overheated rhetoric in that debate. His complaint about CEI’s criticism of his statistical methods belongs in the arena of public discussion and scientific inquiry, not in the courts.

    This is precisely the type of First Amendment lawsuit that the District of Columbia’s Anti-SLAPP law was designed to stop at the outset, and it is for this reason that CEI and National Review’s position is supported by a wide range of amici, including the Reporters’ Committee for Freedom of the Press, the Electronic Frontier Foundation, the Cato Institute, and dozens of other organizations. We are hopeful that the Court of Appeals will agree.

    Legal briefs in the case can be found at cei.org/michaelmann.

  • Liberals and Conservatives Challenge Overreach of Dodd-Frank's FSOC on MetLife

    November 18, 2014 2:18 PM

    As CEI brings suit before the D.C. Circuit Court of Appeals tomorrow challenging the constitutionality of unaccountable bureaucracies created by the Dodd-Frank “financial reform” law of 2010, it looks like we may have some high-profile company in litigation against Dodd-Frank’s Financial Stability Oversight Council (FSOC).

    The FSOC is a secretive, unaccountable task force of financial bureaucrats of various agencies created to designate banks and other financial firms “systemically important,” or too-big-to-fail. In September, the FSOC preliminarily decreed insurer MetLife a “systemically important financial institution,” or SIFI.

    As CEI argues in our legal challenge to the Dodd-Frank Act (including the FSOC’s role of identifying risk), the SIFI designation confers on a firm a strong competitive advantage, as investors and creditors know the government won’t let it fail. That’s why big banks and MetLife competitor American International Group (AIG), which have already received billions in taxpayer bailouts, have eagerly embraced their SIFI status.

    But MetLife, to its credit, has publicly stated that it is not too big to fail and does not want the special privileges that come with SIFI status, nor the regulatory costs. MetLife chairman and CEO Steven A. Kandarian declared last year, “I do not believe that MetLife is a systemically important financial institution.”

    Now, The Wall Street Journal reports that “MetLife Inc. doesn’t want to be tagged as “systemically important” and is preparing to possibly take the U.S. government to court to avoid it, people familiar with the matter said.” The insurance firm has hired Eugene Scalia, attorney with Gibson, Dunn & Crutcher, who has put forth successful suits against other provisions of Dodd-Frank.

  • Gruber’s “Speakola” Virus and Pelosi’s Selective Memory

    November 14, 2014 3:32 PM

    Obamacare supporters say that when deciding King v. Burwell and the related Halbig v. Burwell, challenges to the law that the Competitive Enterprise Institute helped fund and coordinate, there is really no need for courts to narrowly confine themselves to the language of specific provisions. Instead, they should look at the broad purposes of the law, as explained by its key architects. But one problem with this approach is these architects of the law—both in Congress and outside—seem to have selective memories about the structure of the Patient Protection and Affordable Care Act of 2010, aka Obamacare

    Until very recently, one of the key sources that Obamacare supporters have relied on to establish that purpose are statements and writings by the key architects of the law. For example, MIT Professor Jonathan Gruber’s writings on Obamacare were extensively cited by the government, and by supporting amici, in the early briefs in these cases. In fact, Gruber’s “three-legged stool” metaphor for Obamacare was expressly incorporated into a central portion of the dissent in Halbig, which argued that the Obamacare rule should be upheld.

    Gruber was an outside expert who has advised Congress, the Department of Health and Human Services, and many states on the law and its implementation (and has been paid handsomely by taxpayers for much of this advice). In July of this year, Gruber told Chris Matthews of MSNBC that interpreting the law as barring federal subsidies in states that didn’t set up their was “crazy.”

    Yet a couple days later, my Competitive Enterprise Institute colleague Ryan Radia—with props to Volokh Conspiracy commenter Rich Weinstein—unearthed a clip of Gruber relaying an audience in 2012 what was basically the same “crazy” interpretation. “If you're a state and you don’t set up an exchange, that means your citizens don't get their tax credits,” Gruber said.

    Gruber responded that this was a “speak-o,” a speaking version of a typo. But since then, many more speak-os of Gruber have surfaced, suggesting that he has a condition that could be called the “Speakola virus.”  

  • Obamacare: Cert Granted on Friday, and Gruber III on Saturday

    November 11, 2014 12:00 AM

    It was very good news, delivered in a very surprising way. Shortly after noon last Friday, the Supreme Court announced that it would review our Fourth Circuit Obamacare challenge, King v. Burwell

    Ever since we filed the case with the Supreme Court this past July, we’d been hopeful that the Court would take the case. The likelihood of the Court accepting any case is extremely low, but there were several major factors in our favor. 

    First, the question involved is extremely important to millions of Americans, be they taxpayers, health insurance policyholders, or workers. (In most cases, they’ll be all three.) The issue is whether Obamacare health insurance subsidies are available nationwide, as the White House claims, or whether they are limited to the minority of states that have set up their own insurance exchanges, as indicated by the language of the statute. Riding on this issue are billions of dollars in taxpayer funds, insurance choices made by millions of individuals and hundreds of thousands of employers, and the huge penalties that such subsidies can trigger for companies in nonparticipating states.

    Second, only the Supreme Court could resolve the issue both quickly and definitively. True, the companion case that we had wonHalbig v. Burwell, is now up before the D.C. Circuit for en banc review; the government argued that the Supreme Court should wait for the en banc circuit ruling because it might eliminate the need for any Supreme Court action whatsoever. But even if that court were to overturn the Halbig panel’s ruling, there would still be ongoing challenges in other circuits. Oklahoma’s victory on the issue is now on expedited appeal in the Tenth Circuit, and Indiana just argued its challenge in district court in the Seventh Circuit. In short, while the lack of a split between the D.C. and Fourth Circuits might remove one technical reason for Supreme Court review, it might well do so only temporarily, and Supreme Court inaction at this point would only prolong the uncertainty and multiply the impact of an adverse ruling.

  • The Long National Nightmare of Dodd-Frank Is Almost Over

    November 10, 2014 3:14 PM

    One of the prime reasons for the continuing economic uncertainty that bedevils so many ordinary Americans is the presence in law of the Dodd-Frank Act of 2010, which was meant to solve the problems of the financial crisis. In fact, by giving unelected bureaucrats Czar-like power over the financial system, it has caused the stagnation of that system, reducing the free flow of money through the economy and stopping businesses and citizens getting access to the credit that they desperately need.

    On November 19, however, a three-judge panel of the D.C. Circuit will hear arguments in a case brought by CEI and others challenging the constitutionality of this new bureaucracy. If the judges rule in our favor, Main Street and Wall Street should both breathe a sigh of relief.

    The grounds for our case are simple. CEI and our co-plaintiffs believe that the Consumer Financial Protection Board (CFPB) and the Financial Stability Oversight Council (FSOC) violate the Constitution in a number of ways. Most importantly, the CFPB has no checks or balances to its power, making it unaccountable to Congress, the Administration, the courts, or the people in general:

    • Congress exercises no “power of the purse” over the CFPB, because the agency’s budget – administered essentially by one person – comes from the Federal Reserve, amounting to approximately $400 million that Congress cannot touch or regulate.
    • The President cannot carry out his constitutional obligation to “take care that the laws be faithfully executed,” because the President cannot remove the CFPB Director except under limited circumstances. It is probable that neither the current President nor his successor will be able to remove Director Cordray until his term ends in 2018. Dodd-Frank goes beyond the "for cause" standard for removal from most independent agencies, and says the president may only remove the director "for inefficiency, neglect of duty, or malfeasance in office."
    • Judicial review of the CFPB’s actions is limited, because Dodd-Frank requires the courts to give extra deference to the CFPB’s legal interpretations.

    Our basic claim is that Dodd-Frank gives an agency of unelected government bureaucrats unrestrained power. We argue this unaccountable power over the daily lives of the American people results in a lack of public accountability, creating a power grab over every U.S. citizen.

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