Outside on the downtown streets of Cincinnati yesterday, the city was alive with political and legal debates, including a spirited protest by members of the Cincinnati tea party.  That’s because inside Cincinnati’s federal courthouse, in a standing room only courtroom, the Sixth Circuit heard oral argument in the high-profile appeal involving a constitutional challenge to the mandate requiring individuals to purchase health insurance under the recently enacted Patient Protection and Affordable Care Act, Public Law 111-148See Thomas More Law Center, et al. v. Obama, et al. (Sixth Circuit, Case No. 10-2388). 

In unusual fashion, the oral argument was separated into two segments (motion to dismiss and merits), and it was conducted very informally.  As Judge Martin quipped (to the delight of the packed courtroom), “I feel like I’m back in the Jefferson Circuit Court in Louisville, Kentucky.  I just love this.”  (Don’t be misled if you listen to the audio from the oral argument.  Parties ordinarily should not expect to encounter the same sort of informality during oral argument before the Sixth Circuit.)

For highlights of the parties' arguments, continue reading.

The panel first heard arguments on the government’s May 27, 2011 motion to dismiss (PDF) seeking to dismiss plaintiffs’ appeal based on standing grounds.  The mp3 audio link to these arguments is available here (30 minutes).  Acting Solicitor General Neal Katyal argued first for the government.  (It is unusual to have the SG argue a case in the Sixth Circuit, but his presence shows the importance of this appeal.)  General Katyal contended that one of the plaintiffs recently purchased health insurance and has had it during the pendency of her appeal, and thus she now lacks standing to challenge the health care statute.  As a result, the plaintiff cannot show that the individual mandate will cause her any economic injury, much less that such injury is imminent.  General Katyal argued that, at a minimum, the case has to be remanded to the district court for additional fact-finding on the standing issue.

Robert Muise, the lawyer for the Thomas More Law Center, countered that the government’s arguments ignore that the district court also found that several of the other plaintiffs had established standing in this case, and thus standing was not dependent on one plaintiff alone.   Mr. Muise argued that standing exists because the individual mandate imposes a governmental burden on individuals who do not have insurance: “They are feeling economic pressure now because this individual mandate is imposing this requirement on them.  This is what all the plaintiffs are presently feeling.”  In responding to a ripeness inquiry from Judge Sutton, Mr. Muise stated that it is “better to have judicial review now rather than later because this is an exceedingly broad and encompassing statute [and] the government needs to know sooner rather than later whether an essential component of it—the individual mandate—is itself constitutional.”

Judge Sutton, in particular, was very active during the motion to dismiss arguments, and the panel appeared to struggle with some of the standing issues that had been raised.  The overall impression, however, is that the panel will conclude that the plaintiffs have standing, and thus the government’s motion to dismiss will be denied.

The panel then turned to the merits of the appeal.  Judge Martin began by directing Mr. Muise to address whether the plaintiffs’ challenge to the health care statute was precluded by the Anti-Injunction Act, which is a federal law that precludes suits to restrain the collection of any tax.  Mr. Muise argued that when Congress passed the health care statute, it did not impose a tax, but instead imposed a penalty pursuant to the Commerce Clause, and thus the Anti-Injunction Act did not apply.  General Katyal confirmed that the government was not advancing an Anti-Injunction Act argument. 

Turning to the Commerce Clause issue, Mr. Muise began by addressing Judge Martin’s inquiry regarding the activity vs. inactivity distinction raised in the briefing (PDF).  Mr. Muise argued that “there is not a single controlling case that this Court can point to where Congress has had the authority under the Commerce Clause to regulate non-activity.”  Mr. Muise noted that if Congress seeks to regulate the activity of purchasing, it certainly can do so, but that is not what the health care statute does.  As Mr. Muise argued, “They’re mandating someone to engage in commerce” and “are effectively regulating inactivity.”  Mr. Muise contended that Congress can only regulate activity that is economic in nature, which is defined as the consumption, distribution, or production of a commodity.  Judge Martin questioned, however, why “economic” activity also does not include the transfer of wealth.  Judge Sutton, in turn, asked whether the distinction between activity and inactivity even makes sense when considering the concept of risk “because it is really hard to think of risk as inaction.”  Mr. Muise responded that “one of the main problems is that there is no constitutionally significant limiting principle that can be applied for this broad power. . . . There is virtually no limit to Congress’ power.”  Mr. Muise argued that this case transcends health care because to allow Congress to regulate non-activity turns the Constitution on its head, and instead of a federal government with limited and enumerated powers, the federal government will have unlimited authority with police powers properly reserved for the states.  Shifting focus, Judge Sutton inquired whether a facial challenge to the health care statute would fail to the extent it is concluded that Congress has the authority to regulate the activities of individuals who already have health insurance  Mr. Muise responded by simply stating that if Congress does not have the authority under the Commerce Clause to enact the individual mandate, then the individual application of the statute does not matter because the law is “legally stillborn.”

General Katyal began his argument by identifying the three findings made by Congress which he contended provide three independent bases to uphold the health care statute: (1) the minimum coverage requirement regulates commercial and economic activity that substantially affects interstate commerce, (2) the requirement is an essential part of the federal government’s broader regulation of the health care market, and (3) the statute will reduce the federal deficit.  General Katyal added that these three bases become even weightier when the Court considers the “strong presumption of constitutionality” that applies to all acts of Congress.  Judge Martin interjected and asked whether the entire health care statute must be invalidated if the individual mandate is declared unconstitutional given that the statute does not contain a severability clause.  (You’ll note that, as we reported back in February, Florida District Judge Roger Vinson ruled that “[b]ecause the individual mandate is unconstitutional and not severable, the entire Act must be declared void.”)  General Katyal responded that the case law recognizes that a severability clause is unnecessary, and thus the entire statute would not need to be invalidated.  His main point was that Congress clearly has the power to enact the individual mandate in light of the broad principles of "economic practicality" that underlie the commerce power.  Judge Sutton questioned, however, about the limits of congressional power, stating that “it is just not proper to make people buy things.  That’s the real point.  It is hard to see this limit.”  Judge Graham also weighed in to express skepticism over whether Congress can “force someone into the market.”  General Katyal responded by arguing that the ultimate test is whether Congress is regulating an activity that affects interstate commerce, and here Congress made a specific finding that it does.  He contended that the real debate is not whether Congress can regulate “inactivity.”  Rather, the real question is: “Can Congress regulate in a market in which it knows everyone is participating (that is, the health care market)?”  Judge Graham weighed in again and noted that he was having difficulties seeing how there is any limit to the commerce power as General Katyal was defining it given that every human activity ultimately has economic consequences and can be aggregated to have a substantial effect on interstate commerce.  Judge Graham inquired about the limits on congressional power and whether Congress could “require someone to purchase a product or service that they do not want.”  General Katyal responded that there clearly are limits on the commerce power, as recent U.S. Supreme Court cases make clear.  He argued that in this case, Congress is not regulating the failure to buy something, but rather is exercising its power to secure financing for something that everyone will need to buy, and thus the health care statute is constitutional.

The overall impression from the oral argument is that Judge Martin favors upholding the individual mandate, Judge Graham is leaning toward striking it down, and Judge Sutton is looking for ways to write a narrow opinion that avoids having to address many of the issues raised.  That puts this appeal in the “too close to call” category.  Let us know if you agree or disagree.  The mp3 audio link to the merits argument is available here (65 minutes).