Wednesday, February 02, 2011

Severability and Estoppel

By Mike Dorf

In my post yesterday on the severability ruling in Florida v. U.S. Dep't of HHS, I addressed Judge Vinson's determination that the entire Patient Protection and Affordable Health Care Act must fall following the conclusion that its individual mandate is unconstitutional.  As I explained, at least with respect to wholly unrelated provisions, this conclusion seems unwarranted.  Here I want to address the more plausible contention that the provisions of the law that are intertwined with the mandate are non-severable.  I conclude that this contention is weaker than it may at first appear.

The best argument for invalidating the mandate as outside the scope of the Commerce power begins with the proposition that the Court has never sustained the regulation of inactivity.  This is true but misleading; the Court has never faced a challenge to a law on the ground that it regulates inactivity; but Congress has regulated inactivity as commerce; consider the Taft-Hartley Act, which forbids certain kinds of strikes, i.e., which regulates the decision to withhold labor.  In other words, it regulates the inactivity of not working.  Now, if you say that a strike is not merely inactivity because it occurs in the broader context of economic activity, you're right, but the same is true, as the government has repeatedly argued, with respect to the decision not to purchase health insurance when healthy.  But I digress.

Suppose a court is persuaded, as Judge Vinson was, by the argument that Congress may not regulate inactivity, and thinks either that PPAHCA is appreciably different from Taft-Hartley or that they're both unconstitutional.  To reach that conclusion, one would have to reject the government's argument that the mandate is necessary and proper to effectuating the restrictions on insurers' ability to screen customers for pre-existing conditions.  The government says, in defense of the law's validity, that without the mandate, healthy, otherwise uninsured, people will wait to buy health insurance until they get sick, thus undermining the system's ability to function as insurance (because there will be inadequate premiums and reserves to cover the resulting costs).

How might a judge reject that argument?  One way would be to deny the facts.  Perhaps the judge thinks that the other aspects of the law can function perfectly well without the mandate.  After all, the mandate isn't really a mandate anyway, given that the tax penalty for failure to comply with it is relatively small.  And there are other things the government could do to address this problem.  For example, it could subsidize health care for the uninsured.

But a court that accepted this argument would be hoist by its own petard with respect to severability.  As I noted in an earlier post, if the mandate is not sufficiently connected to provisions like the prohibition on screening for pre-existing conditions to fall within the scope of Congressional power under the Commerce and Necessary and Proper Clauses, then it seems clear enough that the mandate can be severed from the Act without fatally undermining such other provisions.

There is another possibility, however.  As I read Judge Vinson's opinion, he says that neither the Commerce Clause nor the Necessary and Proper Clause authorizes Congress to regulate inactivity, full stop.  Even where the regulated inactivity is closely connected to the regulation of economic activity, there is no federal power, according to Judge Vinson.  He then turns around and says that the government, insofar as it argued that the mandate is inextricably connected with various other provisions of the law, has admitted that the mandate is not severable from those other provisions.   Although Judge Vinson does not use the term "estoppel," he essentially estops the government from contesting the mandate's severability from various other core provisions of the Act.  He says:
the defendants concede that [the individual mandate] is absolutely necessary for the Act’s insurance market reforms to work as intended. In fact, they refer to it as an ‘essential’ part of the Act at least fourteen times in their motion to dismiss.
Is that right?  Not having examined the record closely enough, I don't know whether the government literally conceded the severability point.  But I do think that the government did not have to concede the severability point.

Why not?  Because the relatedness threshold for satisfying the Necessary and Proper Clause is lower than the relatedness threshold for saying that a provision of law is non-severable from another provision.  In order to find that some measure satisfies the Necessary and Proper Clause, a court need only find that the provision is "convenient" or "useful" for accomplishing an end that is within an enumerated power such as the regulation of Commerce.  That language doesn't come from some post-New Deal/Warren Court expansion of the scope of federal power, but from the leading case on the scope of Congressional power, CJ John Marshall's 1819 opinion in McCulloch v. Maryland.

By contrast, to find that a provision is non-severable from otherwise valid provisions requires a court to conclude that "the balance of the legislation is incapable of functioning independently."  (That's a quote from Alaska Airlines v. Brock).  That is on its face a tougher test to satisfy than the Necessary and Proper test.  

Thus, the government can consistently argue: 1) that the mandate is sufficiently closely related to the other provisions of the Act that the mandate is necessary and proper to the regulation of the interstate commercial market in health insurance; but 2) that the mandate is not so closely related to those other provisions that they are incapable of functioning without it.

Perhaps the government did not leave itself room to distinguish between these two standards, but it certainly could have--and in the next stage of this litigation, it should.


egarber said...

Good stuff. I apologize ahead for going slightly off-topic.

On the core commerce clause question, is there not a way to blunt criticism that upholding mandates would mean the government can force you to buy anything?

I think so, in that there are degrees of attenuation between behavior and market impact. As an example, it seems pretty easy to differentiate the decision to not purchase health insurance from say, the choice not to buy a car.

In the former, you're deciding to make somebody else pay for your care. There's no such dynamic in the latter case. (I mean, it's not like somebody just gives you a car when you need one in an emergency). So it all comes back to how inherently one is plugged into a market -- i.e., what's the "default setting"?

Making people prop up Detroit automakers by forcing purchases puts a burden on folks too attenuated from ipso facto market participation (I think that's the right use of the shorthand :) ). Not so with health insurance.

It seems to me the courts could draw a line like this on commerce clause grounds to address that slippery slope question.

Joe said...

To answer the first comment, the SC has in recent years has put forth a type of balancing test [which I will not try to summarize here] to determine if the commerce power or power to enforce the 14A is legitimate. "Anything goes" is not the test. Since "inactivity" is artificial (as many note, activity, much of it clearly economic, is being regulated), if there be a limit, that is a poor way to do it.

Of course, the Constitution cites many limits on forcing someone to buy. Buying religious publications. The law itself has a religious exemption. Regulations that wrongly discriminate among races or even states.

Even more when "consumption" is brought up. Political limits, which the Framers found very important, also apply.

Chuck Doberneck said...

Your analysis of the severability question is as flawed as your "critique" of Casey and Rivlin's CORRECT analysis that the individual mandate exceeds the power of Congress under the Commerce Clause. REREAD Judge Vinson's decision and learn something.

AF said...

"The best argument for invalidating the mandate as outside the scope of the Commerce power begins with the proposition that the Court has never sustained the regulation of inactivity. This is true but misleading; the Court has never faced a challenge to a law on the ground that it regulates inactivity; but Congress has regulated inactivity as commerce; consider the Taft-Hartley Act, which forbids certain kinds of strikes, i.e., which regulates the decision to withhold labor."

I think this argument perpetuates a very serious error that is being made by defenders of the mandate.

The phrase "regulation of inactivity" is the invention of the mandate's challengers, and it contains a loaded assumption: that the object regulated by the mandate is the failure to purchase health insurance.

Defenders of the mandate -- and neutral analysts, if any exist -- should reject this assumption. While it is true that the mandate imposes a penalty on those who fail to purchase health insurance, it is properly (and generally) characterized as a mandate, not a prohibition. The object being mandated is not the failure to purchase health insurance but the purchase of health insurance -- which is clearly an activity. Properly characterized, the question is not whether Congress can regulate inactivity (or even whether the failure to purchase health insurance is in fact activity or inactivity), but whether it can regulate activity by means of a mandate.

Though this is a matter of semantics, it matters because the entire argument of the challengers is based on semantics, on a simple play on words: the assertion that the "economic activity" test of Lopez and Morrison means that "inactivity" cannot be regulated. This is wrong because neither Lopez nor Morrison made any distinction between activity and inactivity. They simply used the word "activity" as a convenient way of referring to the object of the regulation in question, which they held must be economic rather than non-economic. This argument should be rejected however the mandate is characterized, but its premise should also be rejected -- namely that the mandate regulates the failure to purchase insurance.

Once this premise is removed, the implausible notion that the challenges to the mandate have any basis in Lopez or Morrison disappears, and all that is left is a free-floating argument that the power to regulate does not include the power to mandate.

Unknown said...

How can the government effectively change its tack on appeal? Oh, sure, it can avoid repeating itself in its appellate briefs, but we can count on the appellees and amici to repeat it in their appellate briefs. Basically, they're stuck with it.

Joe said...

Chuck, briefly, what is so wrong with it?

Crispian said...

As I commented previously, I think Judge Vinson's decision to void the entire law resulted from the lack of guidance provided by Congress in the law. This certainly would have been compounded if the lawyers essentially conceded that the rest of the bill was non-severable.

You're right that the lawyers can (and should) argue the necessity of the mandate to the law and make the case that other provisions are free-standing. But ultimately, shouldn't severability be based on a reading of whether Congress intended the law to be severable rather than whether provisions are merely capable of functioning on their own?

If the latter standard were the test (which you seem to propose), severability clauses and the form of the law would be totally irrelevant. The judge would become a technician, going line by line to determine whether particular provisions can operate independently. It would be something like a line-item veto for judges, raising all the same concerns about undermining a co-equal branch of government. I am troubled by that concept.

Certainly Judge Vinson could have only struck the mandate and left a gaping hole in the bill for Congress to deal with (as Judge Hudson did). Whether such a resulting law would pervert the intent of the bill or create a policy headache may be said to be irrelevant to a judge. I do not recall Judge Hudson's discussion of severability, but I'll assume he found congressional intent (rather than ducked the issue by hiding behind an ideal of deference).

While we might want a deferential judiciary, that deference must be based on respect for the intent of the other branches. Judge Vinson held that the intent of Congress (with respect to severability) was not clear and he was compelled on that basis to strike down the entire law. It will not be sufficient for a lawyer to proclaim that provisions CAN be severed (Vinson acknowledged that), but whether Congress intended the myriad of miscellaneous provisions to stand on their own when the apparent core purpose of the law is removed.

Doug said...

Severability clauses would not be unimportant at all - they would answer the question meaning no need for analysis. The point of a severability clause is to tell courts what to do if one part of a law (or contract) is unenforcable.

As to substance, I'm not sure why it wouldn't be appropriate to sever the law. Take a criminal codification law - if the part of it criminalizing anal sex was overturned (like it was) the courts wouldn't throw out the whole statute (and all of criminal law) even if it was intended as a package (and it was). I can't see any reason not to keep the breastfeeding room provisions and other unrelated parts from being good law. It seems to me that the judge deciding they were a package and throwing them all out is far more presumptuous than doing a proper analysis and carving out the parts that needed to be carved out. At very least he should have outlined the carve-out and then said why it would be too subjective (which it wouldn't have been) rather than just toss his hands up and say it would have been too subjective.

Michael C. Dorf said...

I tend to agree that it would be good if the courts gave more weight to the presence or absence of a severability clause, but in fairness they would have to do so prospectively only. Existing case law establishes a presumption of severability even absent a severability clause--so Congress must be assumed to have legislated against that background expectation.

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