Thursday, November 14, 2013

National Federation of Independent Business v. Sebelius case brief

National Federation of Independent Business v. Sebelius case brief summary
132 S.Ct. 2566 (2012)

Plaintiffs, including 26 states, sued defendants, including the Secretary of Health and Human Services, challenging the constitutionality of the Patient Protection and Affordable Care Act of 2010. The district court struck down the Act. The U.S. Appeals for the Eleventh Circuit reversed in part, finding that 26 U.S.C.S. § 5000A was invalid but severable and that 42 U.S.C.S. § 1396c was valid. The U.S. Supreme Court granted certiorari.

Plaintiffs challenged the individual mandate provision of 26 U.S.C.S. § 5000A, which imposed a “shared responsibility payment” on individuals who failed to maintain health insurance. The Court declined to uphold the individual mandate under the Commerce Clause, U.S. Constitutional Article I, § 8, clause 3, or the Necessary and Proper Clause, U.S. Constitutional Article I, § 8, clause 18. However, the mandate was a valid exercise of the taxing power under U.S. Constitutional Article I, § 8, clause 1. Although § 5000A’s characterization of the shared responsibility payment as a “penalty” prevented the Anti-Injunction Act, 26 U.S.C.S. § 7421(a), from barring the suit, that description was not binding for constitutional purposes. Factors such as the manner of collection indicated that the payment was a tax rather than a penalty. Plaintiffs also challenged the Act’s Medicaid expansion provisions.


  • In a split decision, the Court held that 42 U.S.C.S. § 1396c could not constitutionally be applied to withdraw existing Medicaid funds from a state for failure to comply with the expanded coverage requirements. 
  • The remedy was to bar the federal government from imposing such a sanction, without striking down other portions of the Act.

The court of appeals’ judgment was reversed insofar as it struck down § 5000A and permitted withdrawal of all Medicaid funding under § 1396c. The judgment was otherwise affirmed. 5-4 Decision; 3 opinions; 1 concurrence in part and dissent in part; 2 dissents.

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