Coons et al v. Geithner et al

Filing 84

ORDER that Defendants' 42 Motion to Dismiss is granted in part and denied in part. Plaintiffs will have fourteen (14) days from the date of this Order to submit a brief of no longer than seven (7) pages addressing whether Counts IV, V, and VIII survive given the Supreme Court's interpretation of the Act in Nat'l Fed'n of Indep. Bus. 132 S.Ct. 2566. Defendants will have fourteen (14) days from the date Plaintiffs submit their brief to submit a seven (7) page response. Plaintiffs' 48 Motion to Treat Defendants' Motion to Dismiss as a Motion for Summary Judgment in Part is granted in part and denied in part. Plaintiffs' 49 Motion for Partial Summary Judgment is denied. Defendants' 65 Motion for Summary Judgment is granted in part and denied in part. Plaintiffs' 73 Motion to Strike is denied as moot. Plaintiffs' 75 Motion for Leave to file a Sur Reply is granted. Signed by Judge G Murray Snow on 8/31/12.(DMT)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Nick Coons, et al.,
Plaintiffs,

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vs.

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Timothy Geithner, et al.,
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Defendants.
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No. CV-10-1714-PHX-GMS
ORDER

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Pending before the Court are Defendants’ Motion to Dismiss (Doc. 42), Plaintiffs’

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Motion to Treat Defendants’ Motion to Dismiss as a Motion for Summary Judgment in Part

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(Doc. 48), Plaintiffs’ Motion for Partial Summary Judgment (Doc. 49), Defendants’ Motion

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for Summary Judgment (Doc. 65), Plaintiffs’ Motion to Strike Defendants’ Statement of

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Facts (Doc. 73), and Plaintiffs’ Motion for Leave to file a Sur Reply. (Doc. 75). For the

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reasons stated below, Counts I, II, III, VI, and VII are dismissed, and Plaintiffs are invited

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to submit a 7-page supplemental brief regarding Counts IV, V, and VIII.

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BACKGROUND

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Plaintiffs challenge the constitutionality of the Patient Protection and Affordable Care

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Act of 2010 (“PPACA”), Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the

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Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029

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(2010) (“HCERA”). Plaintiffs are Nick Coons and two members of the United States House

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of Representatives, Jeff Flake and Trent Franks. (Doc. 35).

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The complaint includes six active primary counts, namely (I) the PPACA exceeds

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Congress’s power under the Commerce Clause, (Doc. 35 ¶¶ 26–52), (II) it exceeds the

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implied power granted by the necessary and proper clause (id. ¶¶ 53–65), (III) it exceeds the

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federal government’s taxing power, (id. ¶¶ 66–77), (IV) it violates the Fifth and Ninth

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Amendments by restricting Plaintiffs’ medical autonomy (id. ¶¶ 78–85), (V) it violates the

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Fourth, Fifth and Ninth Amendments by violating their privacy (id. ¶¶ 86–91),1 and (VII) it

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violates the doctrine of the separation of powers by establishing the Independent Payment

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Advisory Board “IPAB” (id. ¶¶ 114–126), and one alternate count, namely that (VIII) the Act

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does not pre-empt Arizona state health care legislation. (Id. ¶¶ 127–134). On January 17,

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2012, this Court stayed the proceedings pending the outcome of a facial challenge to the

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PPACA at the United States Supreme Court. (Doc. 81). On June 28, 2012, the Supreme

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Court issued its opinion in Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566 (2012). In

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that opinion, the Court upheld all portions of the PPACA that are challenged in this lawsuit,

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and limited the application of certain provisions that are not challenged here. See id.
DISCUSSION

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I.

Legal Standard

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“A facial challenge to a legislative Act is, of course, the most difficult challenge to

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mount successfully, since the challenger must establish that no set of circumstances exists

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under which the Act would be valid.” U.S. v. Salerno, 482 U.S. 739, 745 (1987). “[W]here

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an otherwise acceptable construction of a statute would raise serious constitutional problems,

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the Court will construe the statute to avoid such problems.” Edward J. DeBartolo Corp. v.

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Florida Gulf Coast Bldg. and Constr. Trades Council, 485 U.S. 568, 575 (1988). In passing

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the PPACA, “it is reasonable to construe what Congress has done as increasing taxes on

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those who have a certain amount of income, but choose to go without health insurance,” and

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Plaintiffs voluntarily dismissed Count VI of their Amended Complaint (Doc. 51 at

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“[s]uch legislation is within Congress’s power to tax.” Nat’l Fed’n of Indep. Bus. 132 S.Ct.

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at 2608.

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II.

Discussion

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A.

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The Supreme Court’s ruling completely resolves three of Plaintiffs’ remaining seven

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counts. According to that ruling, “the individual mandate cannot be upheld as an exercise of

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Congress’s power under the Commerce Clause,” and also cannot “be sustained under the

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Necessary and Proper Clause as an essential component of the insurance reforms.” Nat’l

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Fed’n of Indep. Bus., 132 S. Ct. at 2592, 2608, at Nevertheless, PPACA may be construed

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as a tax on those who fail to obtain health insurance and are not otherwise exempted, and is

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thereby a constitutional exercise of Congress’s taxing power. Id. at 1608. Therefore, Count

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III is dismissed on the merits and Counts I and II are dismissed as moot.

Commerce Clause, Necessary and Proper Clause, and Taxing Power

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B.

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Plaintiffs next argue that the Congress improperly delegated its legislative authority

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in violation of Article I of the United States Constitution by passing the Act. See U.S. CONST.

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art. I, § 1. (“All legislative Powers herein granted shall be vested in a Congress of the United

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States.”). The anti-delegation doctrine requires only that Congress provide an “intelligible

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principle” when enacting legislation, and “[i]n the history of the Court we have found the

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requisite ‘intelligible principle’ lacking in only two statutes, one of which provided literally

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no guidance for the exercise of discretion, and the other of which conferred authority to

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regulate the entire economy on the basis of no more precise a standard than stimulating the

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economy by assuring ‘fair competition.’” Whitman v. American Trucking Ass’n, 531 U.S.

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457, 474 (2001). To survive an anti-delegation challenge, Congress need only “clearly

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delineate[] the general policy, the public agency which is to apply it, and the boundaries of

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this delegated authority.” Mistretta v. U.S., 488 U.S. 361, 372–73 (1989) (quoting American

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Power & Light Co. v. SEC, 329 U.S. 90, 105 (1946)); see generally 42 U.S.C. § 1395kkk.

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It has met that test here. Plaintiffs offer a number of criticisms of the PPACA, but it is not

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Anti-Delegation

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the job of this court to weigh in on the wisdom of legislation so long as it is constitutional.

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See Nat’l Fed’n of Indep. Bus., 132 S. Ct. at 2608. (“Under the Constitution, that judgement

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is reserved to the people.”).

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C.

Substantive Due Process and Pre-emption

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In Count Four, Plaintiff Coons claims that the Act violates his “right to medical

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autonomy by forcing him to apply limited financial resources to obtaining a health care plan

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he does not desire.” (Doc. 35 at 20). In Count Five, Plaintiffs allege that the Act violates the

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Fourth, Fifth, and Ninth Amendments because it compels individuals to “authorize access

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to personal medical records and information to health insurance issuers.” (Doc. 35 at 22). In

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Count VIII, Plaintiffs argue that the individual mandate and penalty provisions of the

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PPACA, “even if constitutional, are preempted by the Arizona Constitution and the state’s

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Health Care Freedom Act.” (Doc. 49 at 2). See Ariz. Rev. Stat. (“A.R.S.”) § 36-1301; ARIZ.

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CONST. XXVII, § 2(A).2

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The Court notes that all of these counts depend upon reading the statute as mandating

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the purchase of health insurance. Construed under the taxing power, the Act does not directly

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compel people to purchase health insurance, and does not penalize them for paying for health

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care directly. Those who forgo purchasing insurance must pay a tax, but, “if someone

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chooses to pay rather than obtain health insurance, [he has] fully complied with the

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law.”Nat’l Fed’n of Indep. Bus..132 S. Ct. at 2597. Since, construed as a tax, the provisions

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that Plaintiffs have cited do not mandate the purchase of health insurance, it is not clear that

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they mandate the violation of Plaintiffs’ “medical autonomy,” compel disclosure of medical

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information, or conflict with Arizona laws that permit people to choose not to purchase

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health insurance. Nevertheless, since Plaintiffs have not had an opportunity to brief the

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question of whether the Act denies them a substantive due process right or conflicts with

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As a matter of law, state laws or constitutions cannot pre-empt federal laws. See
Arizona v. United States, 132 S. Ct. 2492, 2501 (2012) (“[S]tate laws are preempted when
they conflict with federal law.”).

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Arizona state law when construed as a tax, they will be granted the opportunity to do so now.

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CONCLUSION

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In light of the Supreme Court’s decision upholding the constitutionality of the Patient
Protection and Affordable Care Act, Counts I, II, III, VI and VII are dismissed.

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IT IS HEREBY ORDERED:

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1.

Defendants’ Motion to Dismiss (Doc. 42) is granted in part and denied in part.

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2.

Plaintiffs will have fourteen (14) days from the date of this Order to submit

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a brief of no longer than seven (7) pages addressing whether Counts IV, V, and VIII survive

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given the Supreme Court’s interpretation of the Act in Nat’l Fed’n of Indep. Bus. 132 S.Ct.

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2566.
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Defendants will have fourteen (14) days from the date Plaintiffs submit their

brief to submit a seven (7) page response.
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Plaintiffs’ Motion to Treat Defendants’ Motion to Dismiss as a Motion for

Summary Judgment in Part (Doc. 48) is granted in part and denied in part.

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5.

Plaintiffs’ Motion for Partial Summary Judgment (Doc. 49) is denied.

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6.

Defendants’ Motion for Summary Judgment (Doc. 65) is granted in part and

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denied in part.

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7.

Plaintiffs’ Motion to Strike (Doc. 73) is denied as moot.

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8.

Plaintiffs’ Motion for Leave to file a Sur Reply (Doc. 75) is granted.

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DATED this 31st day of August, 2012.

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