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Barbara Goudy-Bachman and v. United States Department of

January 24, 2011


The opinion of the court was delivered by: Christopher C. Conner United States District Judge

Judge Conner


Presently before the court is a challenge to the Patient Protection and Affordable Care Act ("the Act"), Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Affordability Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029. It is one of many actions filed across the country challenging the constitutionality of the Act. Plaintiffs, Barbara GoudyBachman and Gregory Bachman ("the Bachmans"), allege that § 1501 of the Act ("the individual mandate"), which requires all individuals (subject to certain exclusions), beginning January 1, 2014, to purchase and maintain qualifying health insurance, is an unconstitutional exercise of Congress's authority under the Commerce Clause of the United States Constitution. The Bachmans institute this action against the United States Department of Health and Human Services, the Secretary of the Department of Health and Human Services, Kathleen Sebelius, in her official capacity, the United States Department of the Treasury, and the Secretary of the Department of the Treasury, Timothy F. Geithner, in his official capacity (collectively "the government"), as those individuals and governmental bodies responsible for the administration and enforcement of the Act.

The government filed the instant motion to dismiss (Doc. 11) for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), and failure to state a claim upon which relief may be granted pursuant to Rule 12(b)(6). FED. R. CIV. P. 12(b)(1), (b)(6). The government avers that plaintiffs lack standing to challenge the individual mandate, that the challenge is not ripe for adjudication, that plaintiffs are barred from asserting a pre-enforcement challenge against the individual mandate by the Anti-Injunction Act, and that Congress lawfully exercised its Commerce Clause powers. The court will proceed in two parts. In this opinion, the court will address the jurisdictional challenges raised by the government. A separate opinion will issue with respect to the Rule 12(b)(6) challenge.


On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act. Pub. L. No. 111-148, 124 Stat. 119 (2010). The lofty goals of the law are to mend the nation's broken health care system and curtail the spiraling costs of health care, to provide affordable health insurance, and to reduce the number of uninsured individuals. To underscore the urgent need for this legislation, Congress made numerous findings with respect to health insurance and health services markets, with particular emphasis on the rising costs associated with health care. For example, Congress found that national health expenditures in 2009 represented 17.6 percent of the economy, and such expenditures will increase dramatically within the next ten years. See id. §§ 1501(a)(2)(B), 10106(a). In 2008, the uncompensated medical costs of the uninsured amounted to $43 billion dollars. Id. § 10106(a). Health care providers pass on these unpaid costs to insurers, who in turn, pass on the cost to the insured in the form of higher premiums. Id. §§ 1501(a)(2)(F), 10106(a). The resulting higher premiums increases the number of uninsured individuals. See CONG. BUDGET OFFICE, KEY ISSUES IN ANALYZING MAJOR HEALTH INSURANCE PROPOSALS 11 (2008) (projecting that the number of uninsured will rise from at least 45 million in 2009 to 54 million by 2019), available at

Reforms that will be ushered in by the new law include expansion of Medicaid, Pub. L. No. 111-148, § 2001, tax incentives for small businesses to purchase insurance for their employees, id. § 1421, and health benefits exchanges. Id. §§ 1311, 1321. Core among the changes are those relating to the availability of health insurance: insurers are prohibited from denying coverage or increasing the price of coverage for individuals with pre-existing medical conditions, insurers are prohibited from rescinding coverage or declining to renew coverage based on health status, and insurers are prohibited from capping the amount of coverage available to a policyholder. See id. §§ 1001, 1201. Congress also enacted § 1501 (hereinafter the "individual mandate"). As one of the backbone provisions of the Act, § 1501 mandates that all individuals, subject to certain exceptions,*fn2 shall maintain "minimum essential coverage" beginning January 1, 2014, or be subject to a penalty included with a taxpayer's tax return. Id.§ 1501. By reducing the number of uninsured, Congress found, the individual mandate, together with other Act provisions, "will lower health insurance premiums." Id. § 1501(a)(2)(I). According to Congress, the mandate is essential given the prohibition against the denial of coverage because "if there were no [individual mandate], many individuals would wait to purchase health insurance until they needed care," thus creating an adverse selection problem or moral hazard. Id. §§ 1501(a)(2)(I), 10106(a). Healthy individuals would wait until they became ill to purchase insurance, at which point, under the Act, insurers would be unable to deny coverage, potentially resulting in implosion of the health care market. Accordingly, Congress concluded that "[the individual mandate] is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold." Id.

Plaintiffs Barbara Goudy-Bachman and Gregory Bachman ("the Bachmans"), residents of Etters, Pennsylvania, (Doc. 1 ¶ 34), instituted this action challenging the individual mandate. The Bachmans are self-employed and currently do not retain health insurance. (Id. ¶¶ 38, 39). Since 2001, the Bachmans have successfully paid all medical expenses incurred and have no outstanding medical bills. (Id. ¶ 43). The Bachmans aver that they do not currently qualify for Medicaid, will not qualify for Medicare before the effective date of the individual mandate, and do not otherwise satisfy an exception to the individual mandate. (Id. ¶¶ 35, 36, 37). The Bachmans allege that they will not purchase health insurance before they are required to do so under the Act (id. ¶ 40), but they intend to comply with all valid laws in effect regarding health care insurance. (Id. ¶ 45). They will not voluntarily choose to break federal law, thus they will not be subject to the penalty provision of the individual mandate. (Id. ¶ 46).

The Bachmans aver that they began shopping for a new automobile on or about March 27, 2010 and subsequently identified three suitable vehicle models. (Id. ¶¶ 59-61). They are unable to afford a three-year financing plan on any of the three vehicles because the respective monthly payments would exceed their current monthly disposable income of $450. (See id. ¶¶ 58, 62(a), 64(a), 66(a)). However, the Bachmans claim that they are currently able to afford the monthly payments associated with a five-year financing plan. (Id. ¶¶ 62(b), 64(b), 66(b)). The Bachmans further claim that as of January 1, 2014, when the individual mandate goes into effect, they will no longer be able to satisfy their payment obligations under a five-year financing plan because they will be compelled use their disposable income to purchase qualifying healthcare insurance. (Id.) Hence, the Bachmans allege that "solely as a result of the Individual Mandate's reduction of their disposable monthly income after January 1, 2014" they are unable to purchase a new vehicle. (Id. ¶¶ 63, 65, 67).

On April 12, 2010, the Bachmans filed the instant action facially challenging the constitutionality of § 1501 of the Patient Protection and Affordable Care Act, the individual mandate. The Bachmans seek a declaration that the individual mandate specifically, and the Act as a whole, violate Article I, § 8 of the United States Constitution. They further pray to enjoin enforcement of the individual mandate and the Act against them by the government. The government filed the present motion to dismiss (Doc. 11) on June 14, 2010. The motion has been fully briefed and is now ripe for disposition.


Federal Rule of Civil Procedure 12(b) enumerates several potential bases for dismissal of an action: lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, insufficiency of process or service of process, failure to state a claim upon which relief may be granted, and failure to join an indispensable party. FED. R. CIV. P. 12(b). When a motion is premised on both lack of subject matter jurisdiction and another Rule 12(b) ground, mootness concerns dictate that the court address the issue of jurisdiction first. Tolan v. United States, 176 F.R.D. 507, 509 (E.D. Pa. 1998).

Motions under subsection (b)(1), asserting lack of subject matter jurisdiction, take one of two forms. Parties may levy a "factual" attack, arguing that, although the pleadings facially satisfy jurisdictional prerequisites, one or more of the allegations is untrue, rendering the controversy outside of the court's jurisdiction. Id.; see also Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). In contrast, a "facial" attack assumes the veracity of the allegations in the complaint but argues that the pleadings fail to present an action within the court's jurisdiction. Tolan, 176 F.R.D. at 510. The court should grant such a motion only if it appears with certainty that assertion of jurisdiction would be improper. Id.; Carpet Group Int'l v. Oriental Rug Importers Ass'n, Inc., 227 F.3d 62, 69 (3d Cir. 2000). If the complaint is merely deficient as pleaded, the court should grant leave to amend before dismissal with prejudice. See Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir. 2000).

The plaintiffs bear the burden to establish the court's subject matter jurisdiction over the matter, however the burden is much lower than that of a Rule 12(b)(6) motion. See Gould Electronics Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000). "A claim may be dismissed under Rule 12(b)(1) only if it 'clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction' or is 'wholly insubstantial and frivolous.'" Id. (quoting Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)). In the present matter, the government's motion presents a facial challenge to subject matter jurisdiction under subsection (b)(1) and an objection to the sufficiency of the complaint under subsection (b)(6). The court will consider the issue of jurisdiction first. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998).


Article III, Section 2 of the United States Constitution confers upon the federal courts the power to adjudicate "Cases" and "Controversies." U.S. CONST. art. I, § 2. "No principle is more fundamental to the judiciary's proper role in our system of government than th[is] constitutional limitation of federal-court jurisdiction . . . ." Raines v. Byrd, 521 U.S. 811, 818 (1997) (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 37 (1976)) (internal quotations omitted). Absent a case or controversy, the court cannot proceed and must dismiss the action. See Ex parte McCardle, 7 Wall. 506, 514 (1868) ("Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.").

A. Standing

To satisfy the bedrock case-or-controversy requirement, and thus confer jurisdiction upon this court, plaintiffs must have standing. See Valley Forge Christian Coll. v. Am. United for Separation of Church and State, Inc., 454 U.S. 464, 471, 472 (1982); Common Cause of Pennsylvania v. Pennsylvania, 558 F.3d 249, 258 (3d Cir. 2009). Standing is a blend of constitutional and prudential considerations. Valley Forge, 454 U.S. at 471 (citing Warth v. Seldin, 422 U.S. 490, 498 (1975)). Essentially, the court must be satisfied that 'the plaintiff has alleged such a personal stake in the outcome of the controversy as to warrant his invocation of federal-court jurisdiction.' Summers v. Earth Island Inst., 129 S. Ct. 1142, 1149 (2009) (quoting Warth, 422 U.S. at 498-99 (1975)) (internal quotations omitted). Generalized grievances are not adjudicable. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 573-74 (1992) ...

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