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Barbara Goudy-Bachman and Gregory v. United States Department of Health and Human Services

September 13, 2011

BARBARA GOUDY-BACHMAN AND GREGORY BACHMAN PLAINTIFFS,
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, KATHLEEN SEBELIUS, IN HER OFFICIAL CAPACITY AS THE SECRETARY OF THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; UNITED STATES DEPARTMENT OF THE TREASURY, AND TIMOTHY F. GEITHNER, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE UNITED STATES DEPARTMENT OF THE TREASURY DEFENDANTS



The opinion of the court was delivered by: (Judge Conner)

MEMORANDUM

One of the benefits of the myriad challenges to the constitutionality of the Patient Protection and Affordable Care Act (hereinafter "Health Care Act" or 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, is the distillation of relevant issues. As a threshold matter, I emphasize, as Judge Vinson emphasized in Florida v. U.S. Department of Health & Human Services, --- F. Supp. 2d ---, 2011 WL 285683 (N.D. Fla. 2011), that this case is not about whether the Health Care Act merely treats the symptoms or cures the disease which has so clearly afflicted our health care system. Nor is it about the exhaustive efforts of Congress to document and to project the increasing costs of health care services or to pinpoint discriminatory practices associated with pre-existing conditions.

Rather, this case concerns the precise parameters of Congress's enumerated authority under the Commerce Clause of the United States Constitution. Specifically, the issue is whether Congress can invoke its Commerce Clause power to compel individuals to buy insurance as a condition of lawful citizenship or residency. The court concludes that it cannot. The power to regulate interstate commerce does not subsume the power to dictate a lifetime financial commitment to health insurance coverage. Without judicially enforceable limits, the constitutional blessing of the minimum coverage provision, codified at 26 U.S.C. § 5000A, would effectively sanction Congress's exercise of police power under the auspices of the Commerce Clause, jeopardizing the integrity of our dual sovereignty structure.

I. STATEMENT OF FACTS

The court set forth relevant facts in its January 24, 2011 decision, GoudyBachman v. U.S. Department of Health and Human Services, 764 F. Supp. 2d 684 (M.D. Pa. 2011), familiarity with which is presumed. Nevertheless, in the context of cross-motions for summary judgment, certain facts deserve reiteration and emphasis.*fn1

Plaintiffs Barbara Goudy-Bachman and Gregory Bachman, a married couple with two children, reside in Etters, York County, Pennsylvania. (Doc. 47-2 ¶¶ 1-3; Doc. 50 ¶ 7). They instituted this suit to challenge the constitutionality of the requirement to maintain minimum essential coverage (hereinafter either "the minimum coverage provision" or "the individual mandate").*fn2 Barbara is 48 years old, and Gregory is 56 years old. (Doc. 50 ¶¶ 8-9). They are self-employed and do not carry health insurance. (Doc. 47-2 ¶ 10; Doc. 50 ¶ 16). Neither currently qualifies for Medicaid and neither will qualify for Medicare before January 1, 2014, when the individual mandate takes effect. (Doc. 50 ¶ 8; see also Doc. 47-2 ¶ 4). Barbara and Gregory are also not members of any group that is exempt from the individual mandate and, hence, they will be subject to the mandate when it takes effect on January 1, 2014. (Doc. 47-2 ¶¶ 2, 5-7; Doc. 50 ¶¶ 10-13).

The Bachmans do not dispute that there is a health care crisis that is national in scope. To the contrary, the Bachmans' personal financial decisions exemplify the Hobson's choice of family budgets across the country that lies at the very core of the health care crisis. They dropped all health insurance coverage in 2001 because their insurance premiums exceeded their mortgage payments. (Tr. at 10-11). The insurance that the Bachmans had maintained was of limited use in that it covered only eighty percent (80%) of qualified expenses and imposed a twenty percent (20%) deductible per occurrence. (Id.) Since terminating their health insurance coverage, the Bachmans have incurred medical expenses for various health care services, and have paid these expenses in full out of current assets.

II. PROCEDURAL HISTORY

On April 12, 2010, the Bachmans filed the instant action facially challenging the constitutionality of 26 U.S.C. § 5000A, the individual mandate. The Bachmans seek a declaration that the individual mandate specifically, and the entire Act as a whole, violate Article I, § 8 of the United States Constitution. They seek to enjoin enforcement of the individual mandate.

On June 14, 2010, the government filed a motion to dismiss (Doc. 11) asserting jurisdictional and merits-based grounds for dismissal. On January 24, 2011, the court issued a Memorandum and Order denying the government's motion to dismiss on jurisdictional grounds. (Doc. 37). The court concluded that the Bachmans adequately alleged standing to bring the challenge and that the action was not barred by the Anti-Injunction Act.*fn3 (Doc. 37). The court indicated that a separate opinion would issue addressing the government's merits-based contention that the Bachmans fail to state a claim upon which relief can be granted. Prior to issuance of that opinion, the parties stipulated to the modification of the government's motion to dismiss with a motion, in the alternative, for summary judgment. (Doc. 41). The court approved the joint stipulation on June 10, 2011 (Doc. 42), and on June 21, 2011, the government filed a motion for summary judgment (Doc. 43) with numerous exhibits. (See Doc. 45, Exs. 1-24; Doc. 46, Exs. 25-51). The Bachmans filed a cross-motion for summary judgment (Doc. 47) on July 6, 2011. The court heard oral argument on the cross motions on July 21, 2011.

Subsequent to oral argument, the parties filed supplemental briefing on the most recent opinion from the Eleventh Circuit in Florida ex rel. Attorney General v. U.S. Department of Health & Human Services, --- F. 3d ---, 2011 WL 3519178, at *24-35 (11th Cir. 2011). (See Docs. 59, 60). The motions have been fully briefed and are now ripe for disposition.*fn4

III. STANDARD OF REVIEW*fn5

Through summary adjudication the court may dispose of those claims that do not present a "genuine dispute as to any material fact" and for which a jury trial would be an empty and unnecessary formality. See FED. R. CIV. P. 56(a). The burden of proof is upon the non-moving party to come forth with "affirmative evidence, beyond the allegations of the pleadings," in support of its right to relief. Pappas v. City of Lebanon, 331 F. Supp. 2d 311, 315 (M.D. Pa. 2004); FED. R. CIV. P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This evidence must be adequate, as a matter of law, to sustain a judgment in favor of the non-moving party on the claims. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-89 (1986); see also FED. R. CIV. P. 56(a), (c), (e). Only if this threshold is met may the cause of action proceed. Pappas, 331 F. Supp. 2d at 315.

The court is permitted to resolve cross-motions for summary judgment concurrently. See Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008) (citing Rains v. Cascade Indus. Inc., 402 F.2d 241, 245 (3d Cir. 1968)); 10A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 2720 (3d ed. 1998). When doing so, the court is bound to view the evidence in the light most favorable to the non-moving party with respect to each motion. FED. R. CIV. P. 56; see also Lawrence, 527 F.3d at 310. In the instant matter, the challenge to the individual mandate presents a pure question of law appropriately addressed through summary adjudication.

IV. DISCUSSION

A. Guiding Principles

Congress undoubtedly has the power to regulate the national health care services and health insurance markets. See United States v. S.E. Underwriters Ass'n, 322 U.S. 533, 552-53 (1944). At issue is the means by which Congress has chosen to regulate and reform those markets. Fundamentally, the Health Care Act presents novel questions about the scope of Congress's power under the Commerce Clause and how that power conflicts with the principles of federalism upon which this nation was founded. The individual mandate represents an unprecedented use of Commerce Clause powers. However, the unprecedented nature of the individual mandate does not render it constitutionally suspect ab initio. To the contrary, the court, according "[d]ue respect for the decisions of a coordinate branch of Government," begins with the presumption that the Act, passed by Congress, is constitutional. United States v. Morrison, 529 U.S. 598, 607 (2000); id. (stating that a court should "invalidate a congressional enactment only upon a plain showing that Congress has exceeded its constitutional bounds"); see also United States v. Whited, 311 F.3d 259, 266 (3d Cir. 2002); United States v. Bishop, 66 F.3d 569, 576 (3d Cir. 1995) ("[The court] . . . must give substantial deference to a Congressional determination that it had the power to enact particular legislation."). But see Va. Office for Prot. and Advocacy v. Stewart, --- U.S. ---, 131 S. Ct. 1632, 1641 (2011) ("Lack of historical precedent can indicate a constitutional infirmity." (citing Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., --- U.S. ---, 130 S. Ct. 3138, 3159-60 (2010))); Printz v. United States, 521 U.S. 898, 905, 907-08, 918 (1997) (stating that an absence of power might reasonably be inferred from the utter lack of statutes imposing similar obligations).

The Bachmans raise a facial challenge to the individual mandate provision of the Act. Their burden is substantial. To succeed, the Bachmans must establish that "no set of circumstances exist under which the Act would be valid." United States v. Salerno, 481 U.S. 739, 745 (1987); see also Wash. State Grange v. Wash. State Republican Party, 552 U.S. 442, 449 (2008).*fn6

B. Relevant Commerce Clause Jurisprudence

Article I, Section 8 of the United States Constitution delegates to Congress the power "[t]o regulate Commerce with foreign Nations, among the several States, and with the Indian Tribes." U.S. CONST. art. I, § 8, cl. 3. The Supreme Court has delineated three areas to which Congress's Commerce Clause power extends:

(1) Congress may regulate the channels of interstate commerce; (2) Congress may regulate and protect the instrumentalities of interstate commerce and persons or things in the stream of interstate commerce; and, (3) Congress may regulate activities that have a substantial effect on interstate commerce. See Perez v. United States, 402 U.S. 146, 150 (1971); see also United States v. Lopez, 514 U.S. 549, 558 (1995); Whited, 311 F.3d at 265. The first two categories prove relatively uncontroversial. It is the third category-the category at issue in the matter sub judice-where the "outer limits" of Congress's Commerce Clause authority are challenged. See Lopez, 514 U.S. at 557.

The court's task when analyzing a statute passed pursuant to Congress's Commerce Clause power is a modest one. The court need only satisfy itself that Congress had a rational basis to conclude that the regulated activity substantially affects interstate commerce. Gonzales v. Raich, 545 U.S. 1, 22 (2005); Bishop, 66 F.3d at 577 ("[The court's] job . . . is not to second-guess the legislative judgment of Congress that [the regulated activity] substantially affects interstate commerce, but rather to ensure that Congress had a rational basis for that conclusion."); see also United States v. Kukafka, 478 F.3d 531, 536 (3d Cir. 2007); Whited, 311 F.3d at 267.

The history and evolution of Commerce Clause jurisprudence has been well documented by the United States Supreme Court and, more recently, by federal courts considering challenges to the Act. See Lopez, 514 U.S. at 552-59; id. at 568-74 (Kennedy, J., concurring); id. at 585-600 (Thomas, J., concurring); Florida, --- F. Supp. 2d at ---, 2011 WL 285683, at *11-20; see also Florida ex rel. Atty. Gen., --- F. 3d ---, 2011 WL 3519178, at *24-35 (11th Cir. 2011). The court will not belabor its discussion with that well-documented history and jurisprudence.*fn7 Instead, the court will review the four Supreme Court Commerce Clause cases that form the heart of the parties' arguments. The court stresses that these decisions loosely circumscribe Congress's enumerated power under the Commerce Clause. These cases serve only to animate, not resolve, the debate.

In Wickard v. Filburn, 317 U.S. 111 (1942), the Supreme Court held that the Commerce Clause permitted Congress to regulate the production of wheat grown by a farmer solely for personal use and consumption on his farm. The case stemmed from an amendment to the Agricultural Adjustment Act of 1938, which established wheat quotas and penalties for the production of wheat in excess of the allotted amount. In 1941, Roscoe Filburn, the owner of a small farm, exceeded his wheat quota and was assessed a penalty. He filed a constitutional challenge to the wheat quota provisions. Id. at 113-14. The Court rejected Filburn's argument, finding that Congress's reach under the Commerce Clause power extends to local activity that has a substantial economic effect on interstate commerce. Id. at 125. The court explained that wheat grown for personal consumption "supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market. Home-grown wheat in this sense competes with wheat in commerce." Id. at 128. That Filburn's "own contribution to the demand for wheat may be trivial by itself is not enough to remove him from the scope of federal regulation, where, as here, his contribution, taken together with that of many others similarly situated, is far from trivial." Id. at 127-28. Congress could therefore properly conclude that regulation of home-grown wheat was essential to its regulation of the entire wheat market for the purpose of stabilizing the price of wheat. Id.

Subsequent to the Court's expansive interpretation of the Commerce Clause in Wickard, limits on Congress's Commerce Clause power appeared virtually nonexistent. Not until United States v. Lopez, 514 U.S. 549 (1995), did the Supreme Court affirm any bounds to the extensive reach of Congress's Commerce Clause power. Lopez presented the Court with a challenge to the Gun Free School Zone Act of 1990, which designated the possession of a firearm in a school zone a federal crime. Confirming that the Commerce Clause power "is subject to outer limits" the Court explained that the scope of the power "must be considered in the light of our dual system of government and may not be extended so as to embrace effects upon interstate commerce so indirect and remote that to embrace them, in view of our complex society, would effectually obliterate the distinction between what is national and what is local and create a completely centralized government."

Id. at 556-57 (quoting Jones & Laughlin Steel, 301 U.S. at 37).

In striking down the law as exceeding Congress's authority under the Commerce Clause, the Court explained that possession of a firearm "has nothing to do with 'commerce' or any sort of economic enterprise." Id. at 561. The statute's other failures included the absence of a jurisdiction element to ensure that it would affect interstate, and not purely intrastate, commerce and the lack of congressional findings linking handgun violence and interstate commerce. Id. at 562-63. Moreover, the Court explained that, as an isolated provision of the criminal code, the Gun Free School Zone Act was "not an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated." Id. at 561. In light of the tenuous connection between interstate commerce and the possession of a gun in a school zone, the Court refused to "pile inference upon inference" to establish a link and justify the law. Id. at 567.*fn8

A few years later, the Court again identified certain boundaries of Commerce Clause authority. In United States v. Morrison, 529 U.S. 598 (2000), the Court invalidated a portion of the 1994 Violence Against Women Act as exceeding the scope of Congress's Commerce Clause power. The invalidated provision of the Act created a federal civil cause of action for victims of gender-motivated violence. The Court emphasized that "thus far in our Nation's history our cases have upheld Commerce Clause regulation of intrastate activity only where that activity is economic in nature." Id. at 613; see also id. at 611 (stating that Commerce Clause case law demonstrates that in all cases where the court sustained federal regulation of intrastate activity on basis of the activity's substantial effect on interstate commerce, the regulated activity "has been some sort of economic endeavor"). The Court highlighted in its analysis the fact that "[g]ender-motivated crimes of violence are not, in any sense of the phrase, economic activity." See id. at 613. Also pertinent, and similar to the statute in Lopez, the provision lacked a jurisdictional element. Id. However, unlike the Gun Free School Zone Act of 1990, Congress made numerous findings linking gender-motivated crimes of violence to interstate commerce. The Court considered the congressional findings relevant but not dispositive. Id. at 614 ("[T]he existence of congressional findings is not sufficient, by itself, to sustain the constitutionality of Commerce Clause legislation."). Ultimately, the Court concluded that the link between gender-motivated crimes of violence and interstate commerce was simply too attenuated. Id. at 615-16 (rejecting "cost of crime" and "national productivity" arguments). Congress cannot, under the auspices of its Commerce Clause authority, "regulate non-economic, violent criminal conduct based solely on that conduct's aggregate effect on interstate commerce." Id. at 617.

Most recently, in Gonzales v. Raich, 545 U.S. 1 (2005), the Supreme Court upheld Congress's authority under the Commerce Clause to prohibit the possession of home-grown marijuana intended solely for personal use. Noting the numerous congressional findings linking the market for controlled substances with interstate commerce, see id. at 13 n.20, the Court concluded that the Controlled Substance Act regulates "quintessentially economic" activity-the production, distribution and consumption of commodities. Id. at 25-26. The Court recognized that Commerce Clause jurisprudence "firmly establishes Congress' power to regulate purely local activities that are part of an economic 'class of activities' that have a substantial effect on interstate commerce." Id. at 17 (citing Perez, 402 U.S. at 151; Wickard, 317 U.S. at 128-29); see also id. at 18 ("Congress can regulate purely intrastate activity that is not itself 'commercial' . . . if it concludes that failure to regulate that class of activity would undercut the regulation of the interstate market in that commodity.").

Noting striking similarities to Wickard, the Court concluded that the regulation was "squarely within Congress' commerce power." Congress had a rational basis to conclude that the production of marijuana for home consumption, just as the production of wheat for home consumption, substantially affects supply and demand in the national market. Id. at 19, 22. Unlike Lopez and Morrison, in which the parties claimed the challenged statutes fell outside Congress's authority in their entirety, the respondents in Raich sought the excision of individual applications of an admittedly valid statute. Id. at 23. The Court deemed the distinction "pivotal" given the Court's longstanding refusal to excise trivial individual instances of a properly regulated class of activities. Id.; see also id. at 17 ("When Congress decides that the total incidence of a practice poses a threat to a national market, it may regulate the entire class," and "the de minimis character of individual instances arising under that statute is of no consequence." (internal citations and quotations omitted)). Moreover, regulation of the intrastate manufacture and possession marijuana was but one of many parts of a larger regulatory scheme that would be undercut unless the intrastate activity were regulated. Id. at 22, 24-25.

C. Summary of Parties' Respective Arguments

The government directs the court to Wickard and Raich and asserts that Congress can regulate economic decisions, such as the decision to carry (or not carry) health insurance, when those decisions, taken in the aggregate, substantially affect interstate commerce. (Doc. 13, at 28; Doc. 30, at 21; Doc. 44, at 17, 21). The government asserts that the decision to purchase health insurance or to "self-insure" is, in actuality, a decision on how to finance future health care costs-a quintessentially economic decision that substantially affects interstate commerce. (Doc. 13, at 34; Doc. 44, at 20; see also Tr. at 46-47). The government also asserts that the market for health care services is unique: "individuals cannot make a personal choice to eliminate the current or potential future consumption of the commercial product at issue, health care services." (Doc. 30, at 26). Thus, the government contends that the Bachmans cannot "opt out" of the market, that is, they are currently active participants in the health care services market. (Doc. 13, at 38). "Individuals who forego health insurance coverage do not thereby forego health care." (Doc. 13, at 35). This reality presents itself against a backdrop of federal law guaranteeing a minimum level of health care regardless of an individual's ability to pay. (Doc. 13, at 35; Doc. 30, at 22; Tr. at 50-51); see also Emergency Medical Treatment and Labor Act, 42 U.S.C. § 1395dd.

The Bachmans argue that Congress's enactment of the individual mandate is an attempted exercise of police power inconsistent with the Framers' design of dual sovereigns. They direct the court to Morrison and Lopez and assert that Congress's Commerce Clause power "is the power to regulate, that is, to prescribe the rule by which commerce is to be governed." Lopez, 514 U.S. at 552-53. They argue that the commerce power is cabined by the predicate of commercial conduct that has a substantial impact on interstate commerce. The Bachmans assert that the "Commerce Clause does not comprehend the power to command individuals to engage in commerce in the first instance." (Doc. 57, at 3). The individual mandate, they argue, is a command to enter commerce, i.e. compelled market participation in the form of a lifetime commitment to minimum health insurance coverage. The Bachmans acknowledge that their decision not to purchase health insurance is a choice with an economic dimension. They argue, however, that a mere financial choice, without more, is not commerce subject to congressional control under theauspices of the Commerce Clause. In support of this argument they rely on the observation of Justice Kennedy in Lopez: "In a sense, any conduct in our interdependent world of ours has an ultimate commercial original or consequence, but we have not yet said the commerce power may reach so far . . . ." Lopez, 514 U.S at 563.

Given the unique factual circumstances of this case, both the Bachmans and the government can effectively distinguish Commerce Clause jurisprudence that appears unsupportive of their respective positions. Therefore, the Supreme Court decisions in Wickard, Lopez, Morrison, and Raich provide only limited guidance for the court's analysis. Quite simply, this is a case of first impression. Of ...


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