On August 12, 2011, in State of Florida v. United States Department of Health and Human Services, the Court of Appeals for the Eleventh Circuit held that the provision in the Patient Protection and Affordable Care Act (PPACA) that requires individuals to buy health insurance or pay a tax penalty (the so-called “individual mandate”) is unconstitutional. In so ruling, the Eleventh Circuit stated that the federal government cannot mandate “that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.” The Eleventh Circuit’s decision is in conflict with a ruling handed down in June 2011 by the Court of Appeals for the Sixth Circuit in Thomas More Law Center v. Obama, which upheld the constitutionality of the mandate.

Now that two of the highest courts in the land have reached contrary decisions on the matter, the case is poised for review by the United States Supreme Court. However, the conflict between the circuits does not ensure that the Supreme Court will review the matter; the Supreme Court has the discretion to decide which cases it will hear. Some prominent court watchers predict the Supreme Court will delay consideration of the constitutionality of the individual mandate until other appeals courts have had a chance to render an opinion.

Importantly, the Eleventh Circuit did not declare the entire health care reform law unconstitutional. The court disagreed with the plaintiffs, which included 26 states, two individuals and the National Federation of Independent Business, who argued that because the mandate is so integral to PPACA, the entire law should be declared unconstitutional if the court should rule that the individual mandate is unconstitutional. If the Eleventh Circuit’s analysis gains traction, popular provisions (like the age-26 dependent coverage mandate and first dollar coverage of preventive care services) will survive future challenges but so will the law’s most controversial provisions, such as the so-called employer mandate.

Until the issue is finally resolved through legislative action or Supreme Court decree, plan sponsors should make every effort to comply with PPACA. Some court watchers believe the Supreme Court would uphold the law, but even if the Supreme Court were to rule that the individual mandate is unconstitutional, it could follow the Eleventh Circuit’s analysis and uphold the rest of the law. Hopefully, this matter will be decided well in advance of the January 1, 2014 effective date.