Thursday, July 19, 2012

States, People, and Coercion: The Supreme Court's Puzzling Belief that State Governments Are Too Weak to Face Tough Choices

-- Posted by Neil H. Buchanan

Remember the Affordable Care Act case? The one that seemed like it was going to completely rewrite the political and Constitutional map for years to come? Well, the decision came and went, and now the Republicans are apparently trying to figure out why the public is bored with their attempts to continue to make a huge deal of Obama's (and Romney's) health care reform law. Who knew that the public's short attention span could be so good for the political conversation?

I, for one, continue to find the Supreme Court's decision fascinating. In my Verdict column two weeks ago, I discussed the dissent's elevation of form over substance regarding the taxing power. Then, in my Dorf on Law post the same day, I explored the dissenters' concession that even they would have said that Congress could impose a mandate (taking away people's freedom), so long as the mandate had been explicitly labeled a tax. In my new Verdict column today, I look at the part of the decision that the Obama Administration lost: the Court's invalidation of the provision in the ACA that states had to choose between expanding Medicaid or losing all federal funding for their existing Medicaid plans.

Although I note in the column the truly odd reasoning of the 7-Justice majority -- a different kind of form-over-substance approach, that would presumably have allowed Congress simply to end Medicaid, and then enact a new law (Medicade?) combining all of the old Medicaid provisions with the new Medicaid provision in the ACA -- my focus is on a different puzzler in the majority's position. Specifically, their holding is based on the idea that the choice that Congress gave the states was so one-sided that it was really no choice at all. The Court held, in fact, that this decision amounted to "coercion" and "compulsion," which the Constitution forbids.

Let us concede up front that the choice would have been one-sided, and that Congress meant for it to be so. The lawmakers in any given state would have been choosing between enacting a law that they might not otherwise have wished to enact (at minimal expense, but not zero expense starting in the fourth year) or losing all future Medicaid funding. Would we predict that most state governments would do what Congress was trying to get them to do? Absolutely.

But is this "compulsion" or "coercion"? The nature of human volition, and the law's treatment of that difficult notion, has long fascinated me. Economists often have an absurdly narrow notion of "choice." For example, at an academic session discussing low-wage work that I once attended, a feminist sociologist was talking about how people were being forced to work in dangerous conditions. An economist at the back of the room suddenly yelled out (without being called on): "Excuse me, but exactly who was it that held the gun to their heads?"

I have always enjoyed studying how the law answers this question, because coercion is such a nuanced issue, and (unlike so many of my economist colleagues) lawyers are inclined to see the shades of gray that real life presents when people are making "free" choices.

Even though the law does recognize that choices are often constrained, however, it is difficult to think of any area of the law in which the line separating coercion from non-coercion is -- shall we say -- forgiving. In my Verdict column, for example, I note the Court's invocation in the ACA case of the term "undue influence," to describe Congress's violation of a state's ability to make a free choice. I refer to a classic contract law case, Odorizzi v. Bloomfield Sch. Dist. (Cal. App. 1966), which (although it finds in favor of the coerced party) laid out in brutally clear terms just how extreme the coercion must be in order to constitute undue influence. Some language from that case is instructive:

"Undue influence ... is a shorthand legal phrase used to describe persuasion which tends to be coercive in nature, persuasion which overcomes the will without convincing the judgment. The hallmark of such persuasion is high pressure, a pressure which works on mental, moral, or emotional weakness to such an extent that it approaches the boundaries of coercion. In this sense, undue influence has been called overpersuasion. ... By statutory definition undue influence includes 'taking an unfair advantage of another's weakness of mind, or ... taking a grossly oppressive and unfair advantage of another's necessities or distress' " (citations omitted).

This is, of course, a state court decision based on a statute, but it is hardly unique in American law. I note in my column the blithe attitude that our legal system takes toward police coercion, coercion in immigration proceedings, and so on. And in cases where the stakes are economic and not custodial, the standards are even more extreme. Some judges and scholars reject outright the notion of "economic coercion," on grounds that bear more than a passing resemblance to that blunt question: "Who exactly was it that held a gun to their heads?"

Even those who accept that there ought to be a legal category of economic coercion (usually labeled "economic duress"), moreover, have generally limited the doctrine to the most extreme kinds of situations, where the freedom to choose is nothing more than the freedom to do what the other side wants or to lose everything. In the case of businesses, the standard generally amounts to this: "If the business would go bankrupt by not accepting the terms of the deal, then the deal MIGHT BE too coercive."

Whatever else one might say about the choice the Congress gave the states, it falls far short of that standard. What would a state do, if it turned down Congress's offer? Would it be forced into bankruptcy? Hardly. As in note in my column, the state has essentially three choices: (1) Continue to run its Medicaid program -- and now with the freedom to ignore the other restrictions that Congress has imposed over the years -- on a scaled-down basis (because the average state receives slightly more than half of its Medicaid funding from the federal government); (2) Raise taxes; or (3) Decide that Medicaid is a higher priority than other spending, and reallocate funds.

No, that is not a pleasant set of choices. And yes, there is a non-trivial definition of "coercion" that could cover that situation. What I find more than a bit surprising, however, is just how different one's definition of coercion must be -- compared to the definitions of coercion in any other area of U.S. law, at any level of government -- to call the ACA's choice "not really a choice."

What could explain this Supreme Court's embrace here of the importance of recognizing differences in bargaining power and other nuances of undue influence? This is, after all, a group of Justices that happily allows the most extreme types of "choices" to be imposed on real human beings all the time. This term's case regarding ineffective assistance of counsel in plea bargaining, for example, saw the four arch-conservative justices united in their contempt for the idea that real people might be coerced unfairly. Justice Scalia read his angry dissent in the case from the bench.

What was at stake in the ACA's Medicaid provision, of course, was federal-state interactions as a matter of federalism. I understand that this Court takes state sovereignty quite seriously (much more so than I think is warranted), which could put them in a much more forgiving mood, when it comes to claims that "I don't want to be forced into doing this!" But really, do the Justices think that the states have no spines at all? Why is the prediction, "I bet no state would turn down that offer," automatically read to mean, "Every state would be impermissibly forced to take that offer"?

Even if one has great solicitude toward states' prerogatives, why treat them as if their are delicate flowers who cannot face up to tough choices? More pointedly, if federalism's deeper purpose is to protect individual freedom by preventing the federal government from taking away effective choice, then why does that deeper purpose not show up when we are dealing directly with individuals and their freedom? Getting to the majority's position in the ACA case, after all, is not a matter of putting one's thumb on the scale for states, when it comes to defining coercion. It requires adding a 2-ton block of concrete. The Court's justification for adding that extra weight is, pardon the pun, a bit light.