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What is the Fate of ACA? No Answers Yet from the Fifth Circuit.

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As noted in our previous December 2018 blog post, “Texas Judge Declares the Affordable Care Act Unconstitutional – What’s Next?,” and our October 2019 newsletter, “2019 End of Year Plan Sponsor “To Do” List (Part 1) Health & Welfare,” on December 14, 2018, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas ruled the whole of ACA to be unconstitutional in Texas v. United States of America, No. 4:18-cv-00167. The plaintiffs (certain Republican-led states and two individuals) alleged, and Judge O’Connor agreed, that the repeal of the individual mandate “renders legally impossible” the Supreme Court’s prior savings construction of ACA and that the individual mandate is not severable from the rest of ACA. On December 30, 2018, Judge O’Connor granted a stay of his December 14 ruling, and in January 2019, the Department of Justice (“DOJ”) and certain Democratic-led states appealed the decision to the Fifth Circuit.

Fifth Circuit Decision

On December 18, 2019, a three-judge panel of the Fifth Circuit decided that the individual mandate is unconstitutional (because without the penalty, the mandate is a command and not a tax) but did not decide the more important issue — whether the individual mandate is severable from the rest of ACA. Instead the Fifth Circuit remanded the severability issue back to the District Court for two reasons. First, the Fifth Circuit asked the District Court to perform a “finer-toothed comb” analysis regarding which provisions of ACA Congress intended to be inseverable from the individual mandate. Second, the Fifth Circuit asked the District Court to consider the DOJ’s new arguments regarding severability and scope of relief, which were not raised until the decision was on appeal. It appears that the DOJ’s current position is that the relief of this case should only apply toward the plaintiffs (i.e., the plaintiff states and two individuals) and be limited to ACA provisions that injure the plaintiffs.

What does this mean for Employers?

This leaves a couple of important questions for employers:

What happens next?

The case may be headed to the Supreme Court. On January 3, 2020, 21 Democratic-led states and the United States House of Representatives asked the United States Supreme Court to decide the constitutionality of the individual mandate and whether the remainder of ACA is severable from the individual mandate. They also asked the Supreme Court to expedite consideration of their petitions. On January 10, 2020, the Republican-led states, two individual plaintiffs, and the DOJ, asked the Supreme Court to deny such requests.

What should employers do?

As we have stated in previous blogs, ACA remains the law of the land while this case is appealed, and employers should continue with their compliance efforts.