D.C. Circuit to Reconsider Key ACA Subsidy Provision En Banc, Any Possible Review by SCOTUS Unlikely Until 2015 at the Earliest

by Leonardo M. Tamburello

As we discussed approximately six weeks ago, two separate federal appeals courts reached opposite conclusions regarding a key provision of the Affordable Care Act (ACA) that makes subsidies available to individuals who purchase coverage through federally-run exchanges in thirty-six states.  Opponents of the ACA have argued that the tax credits and other subsidies are only authorized in exchanges “established by the State,” not the federal government.

On July 22, 2014, in Halbig v. Burwell, the D.C. Circuit Court of Appeals agreed with the challengers’ position, concluding that “the ACA “unambiguously restricts” the section 36B subsidy to insurance purchased on Exchanges ‘established by the State.’”    Later that same day, the Fourth Circuit Court of Appeals issued a unanimous contradictory ruling in King v. Burwell, a separate case that raised the same challenge to subsidies provided through federally-run exchanges.  In King, the court remarked that challengers could not “rely on our help to deny to millions of Americans desperately-need health insurance through a tortured, nonsensical construction of a federal statute whose manifest purpose, as revealed by the wholeness and coherence of its test and structure, could not be more clear.”

On September 4, 2014, the D.C. Circuit Court of Appeals granted the Government’s request that the entire eleven-judge panel (composed of seven Democratic and four Republican appointees) rehear the case.  Argument is scheduled for December 17, 2014.  A decision can be expected sometime in early/mid-2015.  In addition to Halbig and King, identical challenges to the ACA subsidy provision are before courts in Oklahoma and Indiana.

This recent order by the D.C. Circuit diminishes the immediate likelihood of a review by the Supreme Court, which is unlikely to intervene unless there is an obvious clash among Courts of Appeals.  If the D.C. Circuit aligns itself with the Fourth Circuit, there would be no obvious reason for the Supreme Court to take up this issue unless the other cases raising this challenge to the ACA create a split with the Seventh (which includes Indiana) or Tenth (which includes Oklahoma) Circuit.  On the other hand, if the D.C. Circuit affirms its earlier ruling sometime in the first half of 2015, that issue would not likely reach the Supreme Court this term which ends June 30, 2015, but might be considered during the 2015-2016 Term.  This has the potential to once again propel the ACA into the spotlight just in time for the November 2016 Presidential election.