Court Strikes Down IRS Rule in CEI’s Obamacare Case


Annie Dwyer, 202-331-2765,
Christine Hall, 202-331-2258

Federal Appeals Court Strikes Down IRS Obamacare Rule; Protects “Refusenik” States from ObamaCare Mandates and Penalties

Washington, July 22 – Today's decision by the U.S. Court of Appeals for the D.C. Circuit in Halbig v. Burwell is a landmark victory for the rule of law. It is also a victory for states’ rights and for individuals and companies in the approximately 36 “refusenik” states who chose to opt-out of establishing ObamaCare insurance exchanges.

In a 2-1 ruling, the court struck down an IRS rule that extended Obamacare’s insurance subsidies to all states, regardless of whether they had chosen to set up their own insurance exchanges. The court invalidated the rule as contrary to the underlying congressional law, which allowed states to opt out of the insurance subsidy program and its accompanying mandates and penalties.

“Today’s court decision is welcome relief to the individuals, small businesses and employees who live in the approximately 36 states that opted out of ObamaCare. This illegal rule would have cost employers crippling fines, destroyed jobs, and forced Americans to pay for insurance they didn’t want or need,” said Sam Kazman, general counsel for the Competitive Enterprise Institute, the organization responsible for coordinating and funding the lawsuit.

“The court’s decision puts an end to the power grab that the IRS rule represented,” said Kazman, “and more importantly it reaffirms the fact that we are a nation of laws enacted by Congress rather than rules issued by agenda-driven agencies. Despite all the political calls for the country to ‘get with the program and support Obamacare’, it’s the Framers of the Constitution who have the last word.”

The lawsuit was originally filed in May 2013 by a group of small business owners and individuals in six states. The lead attorney in the case is Michael A. Carvin of Jones Day.

Note: This case was formerly known as Halbig v. Sebelius prior to the resignation of U.S. Secretary of Health and Human Services Kathleen Sebelius.