Expedited Health Review

Page

TABLE OF CONTENTS -

Continued

TABLE OF AUTHORITIES

Page

C ASES

Alaska Airlines, Inc. v.

Brock

........................................... 10, 22

Alaska v. U.S. Dept. of

Transp.

1989) .................................... 7

Alfred L. Snapp & Sons

v. Puerto Rico ex rel. Barez

458 U.S. 592 (1982) ................................................... 7

Carter v. Carter Coal Co. , 298 U.S. 238 (1936)

........................................... 17, 18

Child Labor Tax Case , 259 U.S. 20 (1922)

............................................... 9, 19

Commonwealth of Virginia,

ex rel. Cuccinelli v. Sebelius

702 F. Supp. 2d 598 (E.D. Va. 2010) ................... 1, 10

Dep't of Rev. of Mont. v.

Kurth Ranch

................................................... 9

Diamond v. Charles , 476 U.S. 54 (1986)

..................................................... 7

Florida v.

United States Dep't of Health and Human Servs.

285683, No. 3:10cv91

Gonzales v. Raich , 545 U.S. 1 (2005)

....................................................... 6

Gratz v. Bollinger , 539 U.S. 244 (2003)

........................................... 17, 18

TABLE OF

AUTHORITIES--Continued

Page

In re: Leckie Smokeless

Coal Co. v. United Mine Workers of America

....................................... 8

Liberty

University v. Geithner

Maine v. Taylor , 477 U.S. 131 (1986) ...................................................

7

Mistretta v. United States , 488 U.S. 361 (1989)

........................................... 16, 19

New Haven Inclusion Cases , 399 U.S. 392 (1970)

........................................... 16, 18

New York v. United States , 505 U.S. 144 (1992)

................................................... 7

Ohio v. USDOT , 766 F.2d 228 (6th Cir.

1985) ..................................... 7

Porter v. Dicken , 328 U.S. 252 (1946)

................................................. 17

Printz v. United States , 521 U.S. 898 (1997)

................................................... 7

Railroad Retirement Board

v. Alton R. Co.

........................................... 17, 18

Regional Rail

Reorganization Act Cases

419 U.S. 102 (1974) ................................................... 8

Rodriguez de Quijas v.

Shearson

................................................. 19

TABLE OF AUTHORITIES--Continued

Page

South Carolina v. Regan , 465 U.S. 367 (1984)

................................................... 8

St. Louis, Kansas City

& Col. R.R. Co. v. Wabash R.R. Co.

217 U.S. 247 (1910) ................................................. 17

State of Florida v. United

States Department of Health and Human Services

(N.D. Fla. 2010) .................... 11

Stolt-Nielsen S.A. v.

AnimalFeeds Int'l Corp.

130 S. Ct. 1758 (2010) ............................................... 8

Tex. Ofc. of Pub. Util.

Counsel v. FCC

1999) ..................................... 7

Thomas More Law Center v.

Obama

Mich. 2010) ....... 10, 17, 20

United States v. Bankers

Trust Co.

................................................. 18

United States v. Butler , 297 U.S. 1 (1936)

....................................................... 9

United States v. LaFranca , 282 U.S. 568 (1931)

................................................... 9

United States v. Lopez , 514 U.S. 549 (1995)

................................................... 6

United States v. Morrison , 529 U.S. 598 (2000)

................................................... 6

United States v.

Reorganized (F&I) Fabricators of Utah, Inc.

................................................... 9

Page

United

States v. United Mine Workers

of

America

Wickard v. Filburn , 317 U.S. 111 (1942) ...................................................

6

Wyoming ex rel. Crank v.

United States

2008) ................................. 7

Youngstown Sheet & Tube

Co.

................................................. 18

C ONSTITUTIONAL P ROVISIONS

S TATUTES 26 U.S.C. § 4980H(a)

.................................................. 15 26 U.S.C. § 5000A

................................................... 3, 21 26 U.S.C. § 7421(a)

..................................... 8, 11, 12, 20 28 U.S.C. § 347(a)

....................................................... 20 28 U.S.C. § 1254(1)

................................................. 2, 20 28 U.S.C. § 2101(e)

....................................................... 2 28 U.S.C. § 2201

........................................................... 8 28 U.S.C. §

2201(a) ....................................................... 8 28 U.S.C. §

2201(e) ....................................................... 2 29 U.S.C. §

218a ......................................................... 15 42 U.S.C. §

18001 ....................................................... 14

TABLE OF

AUTHORITIES--Continued

Health

Care and Education Reconciliation Act of 2010

Patient Protection and

Affordable Care Act of 2010

P.L.

111-148, 124 Stat. 119 (2010) ... 2, 3, 4, 5, 6, 8, 10, 11, 12, 13, 14, 15, 16,

18, 22, 23 PPACA § 1501

............................................................... 6

Code § 2.2-507

................................................ 5

Virginia Code § 2.2-513

................................................ 5

...................................... 4

R ULES Sup. Ct. R.

11............................ 2, 12, 13, 16, 17, 18, 19

O THER A UTHORITIES Congressional Budget Office

Memorandum,

The

Budgetary Treatment of an Individual Mandate to Buy Health Insurance

1994 .............................................................. 4

TABLE OF

AUTHORITIES--Continued

Requiring Individuals to

Obtain Health

Insurance: A Constitutional

Analysis

PETITION FOR WRIT OF

CERTIORARI BEFORE JUDGMENT

---------------------------------♦--------------------------------­

OPINION

BELOW

The opinion of the district court denying the

Secretary's Motion to Dismiss is reported as

Sebelius, 702 F. Supp. 2d 598 (E.D.

Va. 2010). That decision and the Memorandum Opinion granting summary judgment

to Virginia are reprinted in the Appendix ("App.") at App. 1-53.

---------------------------------♦--------------------------------­

JURISDICTION

The judgment of the district court was entered

on December 13, 2010. Notices of appeal were timely filed within 60 days of

judgment by the Secretary and by the Commonwealth of Virginia on January 18,

2011. The appeals were consolidated and docketed in the court of appeals on

January 20, 2011 as

Kathleen Sebelius, No. 11-1057. Accordingly,

the jurisdiction of this Court is invoked under 28 U.S.C. §§ 1254(1) and

2101(e), and Rule 11 of this Court.

---------------------------------♦--------------------------------­

CONSTITUTIONAL

AND STATUTORY PROVISIONS

---------------------------------♦--------------------------------­

STATEMENT

OF THE CASE

1 Section

1501 is now codified at 26 U.S.C. § 5000A.

Meanwhile,

at the 2010 Regular Session of the Virginia General Assembly, the Virginia

Health Care Freedom Act,

Code § 38.2-3430.1:1, had been

enacted with the assent of the Governor. (App. at 116). That act provides in

pertinent part:

2 Jennifer

Staman & Cynthia Brougher, Congressional Research Service,

Obtain Health Insurance: A Constitutional Analysis, July 24, 2009 at 3, 6. See also Congressional Budget

Office Memorandum, The Budgetary Treatment of

an Individual Mandate to Buy Health Insurance, August 1994 ("A mandate requiring all

individuals to purchase health insurance would be an unprecedented form of

federal action.").

The

Attorney General of Virginia has the duty to defend the legislative enactments

of the Commonwealth.

the President signed PPACA on March 23, 2010, the validity of both the Federal

and State enactments were drawn into question. If PPACA was supported by an

enumerated power, then it would prevail under the Supremacy Clause. If not, the

Health Care Freedom Act would be a valid exercise of the police powers reserved

to the States. In order to resolve this conflict, Virginia filed a Complaint in

the United States District Court for the Eastern District of Virginia for

Declaratory and Injunctive Relief. (App. at 54-55).

Virginia demonstrated below

that since

Court has reached no further than to hold that Congress can regulate

(3) " activities that

substantially affect interstate commerce."

549, 558-59 (1995) (emphasis added). Section 1501 of PPACA seeks to regulate inactivity affecting

interstate commerce, a claimed power well in excess of the affirmative outer

limits of the Commerce Clause heretofore recognized, even as executed by the

Necessary and Proper Clause. See Gonzales v. Raich , 545 U.S. 1 (2005). This claimed power also violates the

negative outer limits of the Commerce Clause identified in Lopez and in United

States v. Morrison, 529 U.S.

598 (2000). As was so clearly stated in Morrison : "We always have rejected readings of the Commerce Clause and the scope

of federal power that would permit Congress to exercise a police power." Morrison , 529 U.S.

at 618-19 (emphasis in original). See also Morrison , 529 U.S. at 663 (recognizing that heightened scrutiny might

be justified where Congress acted in haste without taking "a hard look" at

federalism issues or if it otherwise followed questionable procedures.)

(Breyer, J., dissenting).

With

respect to standing, Virginia argued that states suffer a sovereign injury and

have standing to claim that the national government is acting in excess of its

enumerated powers whenever their code of laws is attacked or whenever they are

otherwise commanded to give way.

e.g., Printz v. United States,

521 U.S. 898 (1997); New York v. United States , 505 U.S. 144, 155 (1992);

Maine v. Taylor , 477

U.S. 131, 137 (1986) ("a

State clearly has a legitimate interest in the continued enforceability of its

own statutes");

(1986) ("a State has standing to defend the constitutionality of its statute");

Alfred L. Snapp & Sons

v. Puerto Rico ex rel. Barez,

458 U.S. 592, 601 (1982) ("[T]he power to create and enforce a legal code, both

civil and criminal" is a core State function); Wyoming ex rel. Crank v.

United States, 539 F.3d 1236, 1242 (10th

Cir. 2008) (State has standing to defend the efficacy of its expungement

statute from pre-emption threatened by a federal agency's interpretation of

federal law); Tex. Ofc. of Pub. Util.

Counsel v. FCC, 183 F.3d 393, 449 (5th

Cir. 1999) (" 'States have a sovereign interest in the power to create and

enforce a legal code.' ") (citing Alfred

L. Snapp & Sons); Alaska v. U.S. Dept. of Transp. , 868 F.2d 441, 443-45

(D.C. Cir. 1989) ("pre-emptive effect [of federal regulations] is the injury"

sufficient to confer Article III standing); Ohio v. USDOT , 766 F.2d

With

regard to the Anti-Injunction Act, 26 U.S.C. § 7421(a), and its parallel tax

provisions in the Declaratory Judgment Act, 28 U.S.C. § 2201(a), Virginia noted

that these statutes establish a "pay and sue" rule whereby assessed taxes must

be paid before being challenged. Virginia argued that this Court has made it

clear that the Anti-Injunction Act does not apply to non-taxpayer States.

proposition necessitates the conclusion that there is similarly no bar under

the Declaratory Judgment Act, 28 U.S.C. § 2201. In re: Leckie Smokeless

Coal Co. v. United Mine Workers of America, 99 F.3d 573, 583-84 (4th Cir. 1996) (on this

proposition, the acts are coextensive).

Virginia further argued

that considerations of ripeness are no bar because the collision between PPACA

and the Virginia enactment are patent. "Where the inevitability of the

operation of a statute against certain individuals is patent, it is irrelevant

to the existence of a justiciable controversy that there will be a time delay

before the disputed provisions will come into effect."

AnimalFeeds Int'l Corp.,

130 S. Ct. 1758, 1767 n.2 (2010), quoting Regional Rail Reorganization Act Cases , 419 U.S. 102, 143 (1974).

On

the tax issue, the threshold problem for the Secretary is that there is a

justiciable difference between a tax and a penalty.

" 'A tax is an enforced contribution to provide for the support of government;

a penalty . . . is an exaction imposed by statute as punishment for an unlawful

act.' " United States v.

Reorganized (F&I) Fabricators of Utah, Inc., 518 U.S. 213, 224 (1996)

(citation omitted). A penalty not supporting a tax is not a tax penalty but a

naked penalty requiring an enumerated power other than the taxing power to

support it. Furthermore, even if the penalty were a tax "there comes a time in

the extension of the penalizing features of the so-called tax when it loses its

character as such and becomes a mere penalty with the characteristics of a

regulation and punishment." Dep't

of Rev. of Mont. v. Kurth Ranch,

511 U.S. 767, 779 (1994). See

also United States v. Butler,

297 U.S. 1, 68 (1936); Child

Labor Tax Case, 259 U.S. 20, 38 (1922).

Because at this point the penalty requires a supporting enumerated power

independent of the taxing power--and the only possible one would be the Commerce

Clause--the tax argument collapses back into the Commerce Clause argument.

Based upon these

authorities and considerations the district court denied the motion to dismiss

on August 2, 2010.

Sebelius, 702 F. Supp. 2d 598 (E.D.

Va. 2010). (App. at 89).

On

August 16, 2010, the Secretary filed her Answer. (App. at 207). On September 3,

2010 the parties filed cross-motions for summary judgment. (App. at 2). They

were supported or opposed in twelve briefs amicus curiae, including briefs

filed on behalf of former Attorneys General Barr, Meese, and Thornburgh, and in

briefs filed on behalf of eighteen law professors. (App. at 209-22). On the

threshold and merits issues, Virginia argued in conformity with its positions

at the motion to dismiss stage. With respect to remedy, Virginia argued that

under the legislative bargain prong of

Airlines, Inc. v. Brock,

480 U.S. 678 (1987), the mandate and penalty, if unconstitutional, are not

severable from the remainder of PPACA. On the second prong of Alaska Airlines , which turns on the

ability of remaining provisions to function without the stricken parts, the

Secretary conceded that changes in insurance regulation, such as guaranteed

issue and community rating, were not severable from the mandate and penalty.

(App. at 148-49, 151). Indeed, the Secretary asserted that the changes in

insurance would collapse that industry without the mandate and penalty. (App.

at 148-49). Virginia argued in the alternative that at least all means of

financing the PPACA scheme, including Medicare and Medicaid changes, had been

intended to work together and could not be severed from the mandate and

penalty. (App. at 46).

On October 7, 2010, the

United States District Court for the Eastern District of Michigan in

Obama, 720 F. Supp. 2d 882 (E.D.

Mich. 2010), found that the private party plaintiffs that were before it had

standing, found that their claims were ripe, found that the penalty was not a

tax triggering the Anti-Injunction Act and ruled that PPACA is a constitutional

exercise of power under the Commerce Clause. The Secretary filed her Notice of

Supplemental Authority on October 8, 2010 bringing that decision to the

attention of the district court in the Eastern District of Virginia. (App. at

221).

On October 14, 2010, the

United States District Court for the Northern District of Florida in

States Department of Health and Human Services, 716 F. Supp. 2d 1120

(N.D. Fla. 2010), denied the motion to dismiss filed by the United States. In

the course of its decision that court held that PPACA could not be sustained

under the taxing power. Id. at 1139-40. Virginia filed

its Notice of Supplemental Authority the same day bringing that decision to the

attention of the district court. (App. at 223).

On November 30, 2010, the

United State District Court for the Western District of Virginia in

Geithner, 2010 WL 4860299, No.

6:10cv15 (W.D. Va. Nov. 30, 2011), found that the claims of Liberty University

and two individuals conferred standing upon them and were ripe for

adjudication. The mandate and penalty were found not to trigger the

Anti-Injunction Act and PPACA was upheld as a constitutional exercise of

Congressional Commerce Clause power. The Secretary filed her Notice of Supplemental

Authority on December 3, 2010 bringing this decision to the attention of the

district court. (App. at 225).

On

January 26, 2011, the Secretary and Virginia filed a Joint Motion to Expedite

Briefing and to Schedule Oral Argument for May 2011. (Case 11-1057 Doc. 13).

The Motion was Granted the same day, (Case 11-1057 Doc. 15), and oral argument

is tentatively scheduled for the May 10-13 session, to be conducted

24).

On January 28, 2011, the

Secretary filed her non-binding Statement of Issues on appeal. (Case 11-1057

Doc. 17 at 3). That statement is repeated

as Questions Presented No. 1 and No. 2.

---------------------------------♦--------------------------------­

REASONS

FOR GRANTING THE PETITION

A. This Case Is of Imperative National

Importance Requiring Immediate Determination in this Court.

Despite these developments,

the States, citizens and the economy remain mired in uncertainty. Because the

changes effected by PPACA are so massive, the States are forced to devote

considerable resources now to meet the requirements of a congressional enactment

that this Court may find invalid. In Virginia, some of the key agencies

involved with PPACA include the Office of the Secretary of Health and Human

Resources, the Department of Medical Assistance Services, the Department of

Health, the Bureau of Insurance, and the state medical teaching hospitals.

Virginia must assess whether to develop a high risk pool or default to the

federal government, overhaul its insurance laws, and create a health benefit

exchange.

risk pools); 18031 (health benefit exchanges). The latter entails the

administrative costs associated with creating an entirely new agency, expanding

an existing agency, or providing support for an independent entity. The General

Assembly of Virginia is presently considering complex bills on a variety of

PPACA-related issues. 3  All 50 states

3 See House Bills 1928, 1958,

(both overhauling various aspects of Virginia insurance law in light of PPACA);

2434 (creating a Health Benefit Exchange), and Senate Bill 1366 (same).

Information about these bills is available at the General Assembly's website,

http://leg1.state.va.us/lis.htm

4 26 U.S.C.

§ 4980H(a). 5

U.S.C. §§ 18021, 18022.

There is a palpable consensus in this country

that the question of PPACA's constitutionality must be and will be decided in

this Court. Under these circumstances, the issues presented here should be

considered to be at least as important as those presented in many of the cases

where immediate review has been permitted under Rule 11 or its predecessors.

Such cases include challenges to the legality of the Federal Sentencing

Guidelines,

reorganization of two railroads, New

Haven Inclusion Cases, 399 U.S. 392, 418 (1970),

a coal strike, United States v. United

Mine Workers of America,

330 U.S.

8  http://www.hhs.gov/ociio/regulations/approved_applications_

for_waiver.html (noting that 711 waivers that must be renewed annually were

issued for FY 2011).

258, 269 (1947), a denial

of the power of a federal court to enforce rent control,

U.S. 252 (1946), a

constitutional challenge to the Bituminous Coal Conservation Act,

constitutional challenge to the Railroad Retirement Act, Railroad Retirement Board

v. Alton R. Co., 295 U.S. 330, 340 (1935),

and the effect of a railroad dispute on the economy of St. Louis, Missouri. St. Louis, Kansas City

& Col. R.R. Co. v. Wabash R.R. Co.,

217 U.S. 247, 250-51 (1910).

Rule

11 also has been employed to enable this Court to gather a number of cases so

as to permit it to make a constitutional assessment in a wider range of

circumstances.

(2003). It should be so employed here. In both Thomas More Law Center and in the Liberty University cases, the Department of

Justice failed to independently cross appeal standing. Because that issue is

jurisdictional, it is not waivable and may be asserted by a party at anytime or

by this Court sua sponte . As a consequence, it

cannot be known prior to decision whether those cases provide a good vehicle

for reaching the constitutional merits. Sovereign standing, on the other hand,

is more categorically established than is individual standing, which in any

specific case turns on the particular facts of that case. Granting certiorari

in this case will ensure a good vehicle for merits review. Granting certiorari

in this case and then expanding it to reach all merits decisions pending in the

courts of appeal would serve the aggregation interest recognized in Gratz , 539 U.S. at 259-60.

B. The Imperative Public Importance of the

Constitutionality of PPACA and the Proper Scope of Severance Justify Deviation

The paradigm cases for the grant of Rule 11

review are challenges to federal power involving significant national economic

impact.

Inclusion Cases, 399 U.S. 392; Youngstown Sheet & Tube

Co., 343 U.S. 579, 584-85

(1952); United Mine Workers of Am. , 330 U.S. 258; Carter Coal Co. , 298 U.S. 238; Alton R. Co. , 295 U.S. 330; United States v. Bankers

Trust Co., 294 U.S. 240, 243 (1935).

The pending case shares both aspects of those cases: constitutional questions

and significant national economic effect. Furthermore, the presence of pure

issues of constitutional law on the merits ensures that normal appellate

practice will not further focus the controlling issues, which, in any event,

are bottomed on decisions of this Court. Indeed, because the constitutionality

of PPACA can only be resolved by determining whether and to what extent this

Court will enlarge the existing affirmative and negative outer limits of the

Commerce Clause, or overrule the Child

Labor Tax Case, it is not clear to what

extent the courts of appeal are even entitled to engage in independent legal

development in the face of binding precedent from this Court. See Rodriguez de Quijas v.

Shearson/ American Express , 490 U.S. 477, 484 (1989)

(this Court has the exclusive prerogative to reverse its own cases). 9

C.

This Case Is "Cert. Worthy" In its Own Right and Is a Good Vehicle for

This Court has deemed a split among district

courts in different circuits as a factor weighing in favor of granting

certiorari under Rule 11.

v. United States, 488 U.S. 361, 371 (1989).

Such a split

9 The

district courts in Virginia and Florida expressly recognized this point.

Court's cases to reject the argument that the "penalty" is a tax, while

recognizing that the line of cases has been criticized by some scholars); Florida v. United States

Dep't of Health and Human Servs.,

2011 WL 285683, No. 3:10cv91, slip op. 43 (N.D. Fla. Jan. 31, 2011) ("existing

case law thus extends only to those 'activities' that have a substantial

relationship to, or substantially affect, interstate commerce. I am required to

interpret this law as the Supreme Court presently defines it. Only the Supreme

Court can redefine or expand it further.").

exists

here and has merely been deepened by the Florida decision.

States Dep't of Health and Human Servs.,

2011 WL 285683.

This

case is a particularly good vehicle for resolving the split because all of the

issues raised by the Department of Justice--standing, the Anti-Injunction Act,

ripeness, and the limits of the Commerce Clause and of the Taxing Power--have

been raised here where they have been exhaustively developed. Although it

appears from the non-binding Statement of Issues in the Secretary's Docketing

Statement that she does not intend to appeal the Anti-Injunction Act or

ripeness, she is pursuing standing. Because the Secretary has not appealed

standing in the

reliable vehicles by themselves for assuring merits review because standing is

a jurisdictional issue that could be re-raised or raised sua sponte. Granting certiorari in

this case will ensure that the issue will arrive fully briefed in this court.

The

fact that Virginia was the prevailing party below is no barrier to a grant of

certiorari. 28 U.S.C. § 1254(1) provides that "any party to any civil or

criminal case" may petition for certiorari from "[c]ases in the courts of

appeals" both "before and after rendition of judgment or decree."

Workers of America, 330 U.S. at 269 (former

28 U.S.C. § 347(a), now 28 U.S.C. § 1254(1), "authorizes a petition for

certiorari by any party and the granting of certiorari prior to judgment in the

Circuit Court of Appeals."). Furthermore, Virginia's claim of error with

respect to severance is derivative of and closely connected with the Secretary's

appellate issues.

However,

the Secretary's concession should have been the beginning of the severance

review and not the end. Because all financing provisions, including Medicare

and Medicaid changes, were intended to operate together, they should all fall

together as well. Indeed, under the legislative bargain prong of

should have been stricken in its entirety because it is as certain as such a

thing ever could be that PPACA would not have passed at all without the

unconstitutional mandate and penalty.

---------------------------------♦--------------------------------­

CONCLUSION

For the foregoing reasons

the petition for writ of certiorari before judgment in the court of appeals

should be

include all PPACA litigation pending in the courts of appeals.

K ENNETH T. C UCCINELLI , II C HARLES E. J AMES ,J R . Attorney General of

Virginia Chief Deputy Attorney General