The Obama administration on Friday formally asked the full D.C. Circuit Court of Appeals to overturn a three-judge panel’s “erroneous interpretation” of the law when they ruled to prohibit Obamacare subsidies through the federal exchange.
The Justice Department filed a petition (available in full below) with the court arguing that the overall text of the Affordable Care Act, as well as its legislative history and intent, make amply clear that the subsidies are permitted for residents of every state.
“In sum, the statutory text—particularly when considered, as it must be, “with reference to the statutory context, ‘structure, history, and purpose,’”—makes clear that Congress intended an Exchange to operate effectively in each State; intended each State to have a real choice between alternative ways to establish the same Exchange; and intended tax credits to serve their necessary and intended function throughout the country,” Assistant Attorney General Stuart F. Delery wrote in the brief.
The math of a full bench ruling favors the White House, and legal experts say there’s a strong chance the ruling in Halbig v. Burwell be reversed. The rehearing will feature eight Democratic-appointed judges and five Republican-appointed judges.
“I think it’s very likely” that the full D.C. Circuit court will overturn the ruling, said Nicholas Bagley, a professor at the University of Michigan Law School.
On July 22, two Republican-appointed judges dealt a major blow to the law upon deciding that the plain text of the statute unambiguously restricts the provision of premium tax credits — a centerpiece of the law — to state-run exchanges and not the HealthCare.gov federal exchange, which serves residents of 36 states that didn’t build their own.
“[A] federal Exchange is not an ‘Exchange established by the State,’ and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges,” Judge Judge Thomas B. Griffith wrote for the court.
The White House quickly said it would appeal the ruling to the full court — known as en banc — which comprises all 11 active judges and the senior judges who served on the original panel, according to the rules of the court. In this case, that means 13 judges (the 11 active judges and the two senior judges on the panel).
The D.C. Circuit rules reserve en banc hearings for questions of “exceptional importance” — a criterion the White House said is easily met in this case, given that health insurance subsidies for millions of Americans are at stake. A majority of active judges have to agree to rehear the case in order for it to happen.
The Justice Department brief cited the dissent by Democratic-appointed Judge Harry T. Edwards, as well as the Fourth Circuit Court of Appeals ruling in which three Democratic-appointed judges decided unanimously — on the same day as the D.C. Circuit ruling — that federal exchange subsidies were valid.
The Obama-friendly math of the D.C. Circuit Court of Appeals can be traced back to Senate Majority Leader Harry Reid’s (D-NV) historic decision in November to eliminate the 60-vote threshold for most nominees. It paved the way for Obama to quickly appoint three new judges to the court, all of whom would have a say in the Halbig rehearing.
“I think it’s unlikely that a Democratic-appointed judge will rule against the government,” said Bagley, chalking it up to the differing views of statutory construction among the average Democratic appointee and the average Republican appointee.
The court is unlikely to rehear the case before this fall. The challengers who lost at the Fourth Circuit Court of Appeals have appealed directly to the Supreme Court. The likelihood of the Supreme Court taking the case would lessen, legal experts say, if the D.C. Circuit ruling is overturned en banc. Four justices would have to agree to take it.
“Today, the government asked for a full review of a 2-1 decision in the Halbig case, as we said we would do last week,” a senior administration official told TPM. “We believe that this decision is an outlier and the full Circuit Court will agree with Congress and commonsense, and the Fourth Circuit’s contrary ruling on the same issue. This litigation should be seen for what it is – another partisan attempt to undermine the Affordable Care Act.”