Federal Judge Rules Against Obamacare Subsidies

Start your day with TPM.
Sign up for the Morning Memo newsletter

A federal judge in Oklahoma ruled Tuesday that Obamacare subsidies provided on the federal HealthCare.gov exchange are invalid, agreeing with a ruling by a three-judge panel on the D.C. Circuit Court of Appeals against the subsidies.

“The court holds that the IRS Rule is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law … in excess of statutory jurisdiction, authority, or limitations, or short of statutory right … or otherwise is an invalid implementation of the ACA, and is hereby vacated,” U.S. District Court Judge Ronald A. White wrote in his opinion.

White, appointed by George W. Bush in 2003, put his ruling on hold pending an expected appeal at the 10th Circuit Court of Appeals by the Obama administration. That means Obamacare subsidies will continue to flow, for now.

An Obama administration official criticized the ruling and vowed to appeal it.

“The district judge in the Oklahoma case made a decision that is inconsistent with the text of the statute, the clear intent of Congress, common sense, and the Fourth Circuit panel’s unanimous contrary ruling on the same issue,” the official said. “[The Justice Department] has indicated that it will be appealing the decision. For people getting premium tax credits today, nothing has changed: tax credits remain available.”

The ruling in Pruitt v. Burwell marks the first victory for the challengers in a district court; two other federal judges sided with the government. The administration won the case at the 4th Circuit Court of Appeals and is preparing for a full court hearing on Halbig v. Burwell at the D.C. Circuit (which vacated the three-judge panel’s ruling) in December, where the White House has an edge.

The opponents of the law have asked the Supreme Court to review the case, which would happen if four justices agree to hear it. If the 10th Circuit Court of Appeals also rules against the federal subsidies, it would set up a split in circuit courts, which typically makes the Supreme Court likelier to hear a case.

If the lawsuit ultimately succeeds, it would strike a potentially crippling blow to Obamacare as the federal exchange serves residents of 36 states which declined to build their own. The Obamacare statute is less than iron-clad on the question of whether premium tax credits are allowed through the federal exchange, but the Democratic authors roundly insist that was always their intention and say the law as a whole makes that clear.

Pruitt v. Burwell District Court Ruling

This article has been updated to include a response from the Obama administration.

Latest DC
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Associate Editor:
Editor at Large:
General Counsel:
Head of Product:
Director of Technology:
Associate Publisher:
Front End Developer:
Senior Designer: