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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 1 of 22

IN THE UNITED STATES DISTRICT COURT


FOR THE EASTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION

PETER D. KINDER, et al., )


)
Plaintiffs )
)
v. ) Civil Action No. 1:10-cv-00101-RWS
)
TIMOTHY F. GEITHNER, et al. )
)
Defendants )
____________________________________)

MEMORANDUM OF POINTS AND AUTHORITIES


IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS
Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 2 of 22

TABLE OF CONTENTS

TABLE OF AUTHORITIES .......................................................................................................... ii

INTRODUCTION .......................................................................................................................... 1

STATEMENT ................................................................................................................................. 2

ARGUMENT .................................................................................................................................. 4

I. Plaintiffs Lack Standing To Assert Their Count I, A Claim That Missouri


Is Being Commandeered Into Enforcing Federal Law ....................................................... 4

II. Plaintiffs Lack Standing As To Their Claim (Count Two) That The ACA Constrains
Missouri’s Choices Of Health Insurance To Be Offered Its Constitutional Officers,
And The ACA Does Not Do So In Any Event ................................................................... 5

III. Plaintiffs Lack Standing As To Their Claim (Count Three) That Section 1302 Of The
ACA Imposes An Unconstitutional Tax On Missouri, And The Claim Is Unripe In Any
Event ................................................................................................................................... 7

IV. Plaintiffs Lack Standing To Assert Count Four, Which Speculates That The State Of
Missouri Might In The Future Violate Its Constitution ...................................................... 9

V. No Plaintiff Is Affected By Or Has Standing To Challenge The ACA Minimum


Coverage Requirement Challenged In Counts Five, Six, and Nine .................................. 10

VI. Count Seven, Which Challenges A Repealed Section Of The ACA, Should Be
Dismissed .......................................................................................................................... 12

VII. Count Eight, Which Challenges Panels Authorized To Make Recommendations, Should
Be Dismissed .................................................................................................................... 14

CONCLUSION ............................................................................................................................. 15

i
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TABLE OF AUTHORITIES

CASES

Banner v. United States,


303 F. Supp. 2d 1 (D.D.C. 2004), aff'd, 428 F.3d 303 (D.C. Cir. 2005) .............................. 13

Bolling v. Sharpe,
347 U.S. 497 (1954) .............................................................................................................. 13

DaimlerChrysler Corp. v. Cuno,


547 U.S. 332 (2006) .................................................................................................... 1, 2, 7, 9

Florida ex rel McCollum v. United States Dep't of Health & Human Services,
716 F. Supp. 2d 1116 (N.D. Fla. 2010) ................................................................................... 4

Frothingham v. Mellon, decided with Massachusetts v. Mellon,


262 U.S.447 (1923) ................................................................................................................. 7

McDonald v. City of Chicago,


130 S. Ct. 3020 (2010) .......................................................................................................... 13

Metropolitan Life Ins. Co. v. Massachusetts,


471 U.S. 724 (1985) .............................................................................................................. 11

Minnesota Senior Federation v. United States,


273 F.3d 805 (8th Cir. 2001) .......................................................................................... 12, 13

Motor Vehicles Mfgs. Ass’n v. State Farm Mutual Auto Ins. Co.,
463 U.S. 29 (1983) ............................................................................................................... 12

Nolles v. State Comm. for Reorg. of School Dists.,


524 F.3d 892 (8th Cir. 2008) .................................................................................................. 9

Tennessee Electric Power Co. v. TVA,


306 U.S. 118 (1939) ........................................................................................................ 1, 4, 5

Thomas v. Union Carbide Agric. Prods. Co.,


473 U.S. 568 (1985) ................................................................................................................ 9

United States v. Carolene Products Co.,


304 U.S. 144 (1938) ............................................................................................................. 12

United States v. Hacker,


565 F.3d 522 (8th Cir.), cert. denied, 130 S. Ct. 302 (2009) .............................................. 4, 5

ii
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United States v. Lebman,


464 F.2d 68 (5th Cir. 1972) .................................................................................................. 13

United States v. South-Eastern Underwriters Ass'n,


322 U.S. 533 (1944) .............................................................................................................. 11

FEDERAL AND STATE STATUTES

26 U.S.C. § 4980H ......................................................................................................................... 6

26 U.S.C. § 5000A ...................................................................................................................... 10

26 U.S.C. § 5000A(e) ................................................................................................................. 10

26 U.S.C. § 5000A(f)(1)(A) ........................................................................................................ 10

26 U.S.C. § 5000A(f)(1)(A)(I) .................................................................................................... 10

26 U.S.C. § 5000A(f)(1)(B) .................................................................................................... 6, 10

26 U.S.C. § 5000A(f)(2) ............................................................................................................... 6

26 U.S.C. § 5000A(f)(2)(A) ........................................................................................................ 10

26 U.S.C. § 7421 ............................................................................................................................ 7

28 U.S.C. § 2201(a) ...................................................................................................................... 7

29 U.S.C. § 1002 ............................................................................................................................ 6

29 U.S.C. § 1185 .......................................................................................................................... 11

29 U.S.C. § 1185c ........................................................................................................................ 11

42 U.S.C. § 1395w-23(n)(2)(B) ................................................................................................... 14

42 U.S.C. § 300gg-91(d)(8) ........................................................................................................... 6

Pub. L. No. 111-148, 124 Stat. 119 (2010) .................................................................................... 1

§ 1302(b)(1) ..................................................................................................................... 8-9


§ 1302(e)(1)(B)(ii) ............................................................................................................ 11
§ 1302(e)(2) ...................................................................................................................... 11
§ 1501 ............................................................................................................................ 6, 10

iii
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§ 1513 ........................................................................................................................... 6, 11
§ 1513(a) ............................................................................................................................. 6
§ 1513(b) ............................................................................................................................. 6
§ 1513(d) ............................................................................................................................. 5

Pub. L. No. 111-152, 124 Stat. 1029 (2010) .................................................................................. 1

§ 1003 .................................................................................................................................. 6
§ 1102 ................................................................................................................................ 13
§ 1102(b) ........................................................................................................................... 13

Mo. Rev. Stat. § 26.015 ................................................................................................................ 5

Mo. Rev. Stat. § 27.060 ................................................................................................................ 5

iv
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INTRODUCTION

Plaintiffs’ challenges to an assortment of provisions of the Patient Protection and

Affordable Care Act (“ACA” or “the Act”)1 are misguided.

Counts One and Two challenge ACA provisions that are alleged to violate the sovereign-

ty interests of the State of Missouri. None of the plaintiffs is the State of Missouri (see Amended

Complaint (“Am. Comp.”) at page 2), and none has standing to assert any claims Missouri might

have against these provisions. See Tennessee Electric Power Co. v. TVA, 306 U.S. 118 (1939).

Plaintiffs similarly lack standing to assert Counts Three and Four, both of which argue that the

ACA will impose expenses on Missouri and that, as taxpayers, plaintiffs share in that alleged

injury. See DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006).

In counts Five, Six, and Nine plaintiff Samantha Hill alleges that the minimum coverage

provision of the ACA will, beginning in 2014, require her to buy more health insurance than the

catastrophic coverage insurance she has and desires to retain. However, Hill admits that she is

only 21 years old, Am. Comp. ¶ 18, and section 1302(e) of the ACA expressly provides that a

catastrophic coverage policy can satisfy the minimum coverage requirement for anyone under

30.

In Count Seven, plaintiffs Dale Morris, Robert Osborn, and Geraldine Osborn challenge

the ACA because (they argue) it extends special treatment with respect to Medicare Advantage

benefits to similarly situated Medicare recipients in parts of Florida. As amended by the

HCERA, the ACA does no such thing.

1
The ACA, Pub. L. No. 111-148, 124 Stat. 119, was amended by the Health Care and
Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (“HCERA”).
Unless otherwise stated, all citations in this memorandum to the ACA are to that Act as amended
by the HCERA.
Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 7 of 22

In Count Eight, plaintiffs challenge the ACA because (they argue) it establishes panels

that will prohibit them from receiving medical treatment that they and their physicians decide

upon unless the panels agree. Here too, the ACA does no such thing, and plaintiffs have

demonstrated no injury from the provisions Congress actually did enact.

The defects in plaintiffs’ standing to challenge the ACA should not be overlooked merely

because the constitutional issues they seek to raise are important:

We have been asked to decide an important question of constitutional law


concerning the Commerce Clause. But before we do so, we must find that
the question is presented in a “case” or “controversy” that is, in James
Madison's words, “of a Judiciary Nature.” 2 Records of the Federal
Convention of 1787, p. 430 (M. Farrand ed.1966). That requires
plaintiffs, as the parties now asserting federal jurisdiction, to carry the
burden of establishing their standing under Article III.

DaimlerChrysler, 547 U.S. at 342. The plaintiffs here have not carried that burden.

STATEMENT

Plaintiffs are six Missouri residents. One plaintiff is the Lieutenant Governor of

Missouri, but he “is not bringing this case on behalf of Missouri as a state.” Am. Comp. at 2.

In Count One, plaintiffs argue that Missouri’s rights as a sovereign are violated because

Missouri’s officers are “commandeer[ed]” by the ACA to enforce a federal regulatory health-

care scheme. Am. Comp. ¶ 67. “[F]or example,” section 1341 of the ACA is alleged to require

Missouri to maintain a reinsurance program. Id. ¶ 68.

In Count Two, plaintiffs argue that section 1513 of the ACA will “interfere[ ] with the

unique prerogatives of state sovereignty” by superseding the State of Missouri’s determination of

what health benefits to offer to Missouri’s constitutional officers. Am. Comp. ¶ 73.

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In Count Three, plaintiff Julie Keathley alleges that her son suffers from autism and

would benefit from behavioral therapy that she alleges is required under Missouri law. Id. ¶¶ 94-

95. The amended complaint assumes that behavioral therapy will not be included in the ACA’s

“mandated coverage.” Id. ¶¶ 97-98. If so, plaintiffs argue, the ACA will require that Missouri

pay for the additional premium costs occasioned by Missouri’s requiring such coverage. Id. ¶

97-98. This, plaintiffs argue, is an unconstitutional “direct tax upon Missouri.” Id. ¶ 99.

In Count Four, plaintiffs predict that the ACA will impose “massive additional cost[s]”

on the State of Missouri; that the legislature will in turn “impose[ ] extraordinary tax increases”;

that the legislature will do so without complying with the Missouri Constitution; and that plain-

tiffs as taxpayers and citizens of Missouri will be injured by that predicted future failure of the

Missouri legislature to follow the Missouri Constitution. Id. ¶¶ 122-26.

In Counts Five, Six, and Nine, plaintiff Samantha Hill alleges that she is 21 years old and

that she wants to buy “high deductible ‘major medical’ or ‘catastrophic health care insurance.’”

Am. Comp. ¶ 138; see id. ¶¶ 19-20. She alleges that section 1302(e) of the ACA “allows citizens

to maintain catastrophic plans only if an individual is under 30 years of age and certifies that his

or her premium payment is more than eight percent of his or her household income.” Id. ¶ 140.

She also alleges that she wants to pay for “routine” medical expenses herself. Id. ¶ 20.

In Count Seven, plaintiffs Dale Morris, Robert Osborn, and Geraldine Osborn allege that

they are enrolled in Medicare Advantage plans and that subsidies for such plans are being

reduced in Missouri (and elsewhere) but not in parts of Florida in alleged violation of equal

protection, a right to travel, and the privileges and immunities clause.

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In Count Eight, plaintiffs allege that the ACA establishes panels, that patients and doctors

are “compelled to discuss and resolve questions of medical care only within the bounds that the

federal panels have established,” Am. Comp. ¶ 189, and that doctors and patients may not decide

upon a course of medical care unless the panel agrees, id. ¶ 194.

ARGUMENT

I. Plaintiffs Lack Standing To Assert Their Count I, A Claim That Missouri Is


Being Commandeered Into Enforcing Federal Law

In Count One, plaintiffs argue that the ACA “commandeers Missouri’s” officials into

enforcing federal law. Am. Comp. ¶ 67. This claim would lack merit even if brought by the

State of Missouri itself.2 But none of the plaintiffs is the State of Missouri, and these different

plaintiffs lack standing to assert any claim Missouri might have against its officials being com-

mandeered. Tennessee Elec. Power Co. v. TVA, 306 U.S. 118, 144 (1939) (private parties "ha[d]

no standing to raise any question . . . under the [Tenth A]mendment" "absent the states or their

officers" as parties to the litigation); United States v. Hacker, 565 F.3d 522, 526 (8th Cir.) (“We

now join the majority of circuits and hold that a private party does not have standing to assert

that the federal government is encroaching on state sovereignty in violation of the Tenth

2
One of two “example[s]” of this alleged commandeering given in paragraph 68 of the
amended complaint is a supposed requirement to implement and maintain a “reinsurance” pro-
gram under section 1341 of the ACA. However, this provision applies only to States that choose
to establish an Exchange. Under section 1321(b), States may “elect[ ]” to establish an Exchange
or not. 124 Stat. at 186. Only if they do so elect are they required to comply with the standards
in section 1341(b). The second example plaintiffs give is that the States will have to pay a
penalty if their employees are not offered qualified health benefit plans. Am. Comp. ¶ 68. A
challenge to the ACA by twenty other States on this very ground has already been correctly
dismissed by another district court. Florida ex rel McCollum v. United States Dep’t of Health &
Human Services, 716 F. Supp. 2d 1116, 1151-54 (N.D. Fla. 2010).

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 10 of 22

Amendment absent the involvement of a state or its instrumentalities”), cert. denied, 130 S. Ct.

302 (2009).

It makes no difference that plaintiff Kinder is Missouri’s Lieutenant Governor. The

motion to intervene by Missouri’s Attorney General – who, unlike Kinder, is authorized to assert

claims on behalf of Missouri in court, MO. REV. STAT. § 27.060 – led to amendment of the

complaint to make it clear that Kinder “is not bringing this case on behalf of the State of

Missouri as a state.” Am. Comp. at 2.

II. Plaintiffs Lack Standing As To Their Claim (Count Two) That The ACA
Constrains Missouri’s Choices Of Health Insurance To Be Offered Its
Constitutional Officers, And The ACA Does Not Do So In Any Event

In Count Two, plaintiffs assert that the ACA violates “the unique prerogatives of state

sovereignty” by penalizing Missouri if it does not offer qualified health care coverage to its

constitutional officers (such as its Lieutenant Governor). Am. Comp. ¶ 73. The short and

sufficient response is again that plaintiffs, who are not the State, lack standing to assert that

alleged “unique prerogative[ ]” of the State. Tennessee Electric; Hacker.

It again makes no difference that one of the plaintiffs is the current Lieutenant Governor.

It is doubtful that any Lieutenant Governor would be adversely affected by a federal requirement

encouraging his employer to offer him health care benefits. But, even assuming that some

Lieutenant Governor could claim some personal injury that would confer standing, Kinder is not

the right Lieutenant Governor to be making such a claim. The challenged provision of the ACA

does not go into effect until January 1, 2014. ACA § 1513(d), 124 Stat. at 258. Kinder’s term as

Lieutenant Governor ends in January 2013. See Am. Comp. ¶ 2; MO. REV. STAT. § 26.015.

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Even if the merits were to be reached, Count Two would not state a claim. Plaintiffs mis-

understand what the ACA requires and so end up challenging federal limitations on Missouri’s

options that do not exist. Plaintiffs argue that section 1513 of ACA, the large employer shared

responsibility provision, may result in penalizing Missouri if the State does not offer qualified

health care coverage to its constitutional officers. But Missouri has in fact chosen to offer health

coverage to its officers, Am. Comp. ¶¶ 78-79, and plaintiffs do not even speculate that it will

choose otherwise in the future. Plaintiffs argue instead that the ACA nevertheless constrains

Missouri by “defin[ing] a minimum set of benefits” that the health plan must include that may be

different from the menu of benefits that Missouri has chosen. Am. Comp. ¶¶ 80-84.

Plaintiffs are mistaken. Granted, aspects of the application of section 1513 of the ACA

do vary depending on whether the employer does or does not offer a plan that provides

“minimum essential coverage.” Compare § 1513(a) with § 1513(b). But, where the employer is

a State government, any plan “established or maintained for its employees . . . by the govern-

ment of any State” qualifies as minimum essential coverage.3 Thus, contrary to plaintiffs’ mis-

reading of the ACA, Missouri is free to choose the contours of the coverage it offers employees.4

3
The provision cited by plaintiffs, ACA section 1513 (adding 26 U.S.C. § 4980H), refers
to 26 U.S.C. § 5000A(f)(2) (added by ACA section 1501) for its definition of “minimum
essential coverage.” 124 Stat. at 253, as renumbered by HCERA § 1003, 124 Stat. at 1033.
Section 5000A(f)(2) (read in conjunction with § 5000A(f)(1)(B)) says that the minimum
essential coverage requirement is satisfied by “a governmental plan (within the meaning of
section 2791(d)(8) of the Public Health Service Act).” In turn, section 2791(d)(8) of the Public
Health Service Act, 42 U.S.C. § 300gg-91(d)(8), says that “‘governmental plan’ has the meaning
given such term under section 3(32) of” ERISA. Section 3(32) of ERISA, 29 U.S.C. § 1002(32),
defines “government plan” to “mean[ ],” inter alia, “a plan established or maintained for its
employees. . . by the government of any State.”
4
Plaintiffs’ argument assumes that the “employees” referred to in the ACA include cons-
titutional officers of the State. It is unnecessary for present purposes for defendants to take any

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 12 of 22

III. Plaintiffs Lack Standing As To Their Claim (Count Three) That Section 1302
Of The ACA Imposes An Unconstitutional Tax On Missouri, And The Claim
Is Unripe In Any Event

Like Counts One and Two, Count Three alleges that the ACA will violate alleged rights

of Missouri, in this instance by imposing an allegedly unconstitutional “tax” on the State via

ACA section 1311(d)(3)(B)(ii). Am. Comp. ¶¶ 85-101. Again, plaintiffs are not the State of

Missouri and have no standing to assert the State’s potential claims.5 The Amended Complaint

might be read as alleging that, as individual taxpayers, plaintiffs will be affected by any financial

consequences visited upon Missouri and will thus sustain injury as taxpayers. But any such

alleged injury is one they will share with all the State’s taxpayers and is not the kind of personal

injury that can create a case or controversy. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332

(2006); Frothingham v. Mellon, decided with Massachusetts v. Mellon, 262 U.S. 447, 486-87

(1923) (rejecting taxpayer standing to challenge federal act protecting health of mothers and

children as an alleged infringement on state sovereignty).

Plaintiff Julie Keathley pleads personal circumstances related to Count Three, but not

ones that could give her standing. Keathley has a child affected by autism. Am. Comp. ¶ 95.

Keathley believes that he would benefit from “behavioral therapy.” Id. Missouri law allegedly

will require health insurers to cover such behavioral therapy. Id. ¶¶ 94-95. The Amended

Complaint assumes (whether rightly so we address in the next paragraph) that the ACA will not

position on whether that assumption is correct. Defendants accordingly assume arguendo that
plaintiffs are correct in assuming that constitutional officers are “employees.”
5
If section 1311(d)(3)(B)(ii) actually were a tax (as plaintiffs argue), then a pre-
enforcement claim brought even by Missouri itself would be barred by the Anti-Injunction Act,
26 U.S.C. § 7421, and the tax exception to the Declaratory Judgment Act, 28 U.S.C. § 2201(a).

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 13 of 22

include such behavioral therapy in its definition of what are the “essential health benefits” that,

beginning in 2014, must be offered in the individual health insurance market in which Keathley

apparently seeks to buy coverage. Id. ¶¶ 95, 97, 98.6 Plaintiffs argue that, if they are right both

that Missouri law will require such coverage and that federal law will not require it as part of the

“essential health benefits” package, then section 1311(d)(3)(B)(ii) of the ACA, 124 Stat. at 900,

will require that Missouri pay for the coverage Missouri would be requiring in excess of what the

ACA would be requiring. Am. Comp. ¶ 96. Even if one were to follow that chain of reasoning

to its end, it would not provide Keathley with standing because, if the ACA requires Missouri,

rather than Keathley, to pay for this coverage, that would be a benefit in fact to Keathley, not the

injury in fact that is required to show standing.

In any event, the claim raised by Count Three is not ripe for judicial consideration. One

necessary premise of plaintiffs’ argument is that behavioral therapy for autism is not part of what

must be covered as “essential health benefits” under the ACA beginning in 2014 for new plans in

the individual and small group markets. Am. Comp. ¶¶ 95, 97, 98. Neither plaintiffs nor defen-

dants can know that at this time. Section 1302(b)(1) of the ACA does not itself define what are

“essential health benefits,” but directs “the Secretary [to] define the essential health benefits”

that new plans in the individual and small group markets must cover beginning in 2014. 124

Stat. at 163. The ACA also provides that the Secretary’s definition "shall include at least the

following general categories and the items and services covered within the categories" Id.

These ten general categories include ambulatory patient services; emergency services; hospital-

6
Starting in 2014, new plans sold in the individual and small group markets must cover
"essential health benefits" pursuant to ACA sections 1201 and 1302. Grandfathered plans and
self-insured plans are not subject to this requirement.

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 14 of 22

ization; mental health and substance use disorder services, including behavioral health treatment;

prescription drugs; and rehabilitative and habilitative services and devices. Section 1302(b)(1),

124 Stat. at 164. The Secretary has not yet issued proposed regulations, let alone final regula-

tions, defining what is or is not included in the definition of “essential health benefits.” Whether

behavioral therapy for autism in particular will or will not be included in the Secretary’s defini-

tion of “essential health benefits” is thus not known at this time. Plaintiffs’ contention that the

ACA is unconstitutional because beginning in 2014 it will not require coverage of such

behavioral therapy is not ripe unless and until it becomes known whether the ACA, as

implemented by regulation, will require such coverage. See Thomas v. Union Carbide Agric.

Prods. Co., 473 U.S. 568, 580-81 (1985) (claim not ripe if it rests upon “contingent future events

that may not occur as anticipated, or indeed may not occur at all” (citation and internal quotation

marks omitted)).

IV. Plaintiffs Lack Standing To Assert Count Four, Which Speculates That The
State Of Missouri Might In The Future Violate Its Constitution

In Count Four, plaintiffs speculate that the ACA will on balance cost Missouri more than

it would already have been destined to spend on the rising costs of health care without reform,

that Missouri will eventually raise taxes to pay for that spending, that in doing so Missouri will

violate its own constitution, and that such a violation of the Missouri Constitution by Missouri

will harm plaintiffs as Missouri taxpayers. Such speculation that Missouri might violate its con-

stitution in the future does not give plaintiffs standing as taxpayers to sue the federal government

today. See DaimlerChrysler, 547 U.S. at 343-44 (rejecting claim to taxpayer standing based on

“speculat[ion] that elected officials will increase a taxpayer-plaintiff's tax bill to make up a

deficit”); Nolles v. State Comm. for Reorg. of School Dists., 524 F.3d 892, 901 (8th Cir. 2008)

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 15 of 22

(no standing where “claimed injury” was “the potential for increased property taxes without a

hearing”).

V. No Plaintiff Is Affected By Or Has Standing To Challenge The ACA


Minimum Coverage Requirement Challenged In Counts Five, Six, and Nine

Counts Five, Six, and Nine assert different legal theories for why plaintiff Samantha

Hill’s rights are violated by a requirement of the ACA that beginning in 2014 she purchase an

insurance policy she does not want to buy.7 Hill misunderstands what the ACA requires.

Hill does not assert that she does not want to buy any health insurance. Instead, she

alleges that she is 21 years old, Am. Comp. ¶ 18, and that she “has (and desires to retain) the

ability to purchase . . . health care plans offering ‘major medical’ insurance coverage, defined as

coverage with a high deductible,” id. ¶ 19, also known as “‘catastrophic’ health insurance

coverage,” id. ¶ 138. This, she assumes, will not satisfy her general obligation, beginning in

2014, to have a minimum level of coverage. She recognizes that, under section 1302(e) of the

ACA, buying a catastrophic plan can satisfy this requirement. Am. Comp. ¶ 140. But she

misreads that provision as applying “only if an individual is under 30 years of age and certifies

that his or her premium payment is more than eight percent his or her household income.” Id.

(emphasis supplied). That is not what the statute says. The ACA instead provides that purchase

7
The Amended Complaint does not appear to assert these claims on behalf of any plain-
tiffs other than plaintiff Hill. The other plaintiffs would lack standing in any event. These
counts challenge the general requirement of 26 U.S.C. § 5000A (added by ACA § 1501) that
non-exempt individuals maintain minimum essential coverage. Plaintiffs Dale Morris, Robert
Osborn, and Geraldine Osborn are all entitled to Medicare, Am. Comp. ¶¶ 10, 15, which satisfies
the requirement to maintain minimum essential coverage. 26 U.S.C. § 5000A(f)(1)(A)(I).
Plaintiff Kinder has coverage provided by the State to its employees, Am. Comp. ¶ 4, which
satisfies the requirement, 26 U.S.C. §§ 5000A(f)(1)(B), (f)(2)(A). Whether plaintiff Keathley
has health insurance today is unclear, but what is clear is that she wants coverage that provides
more than what she fears will be the minimum required by federal law. Am. Comp. ¶ 95.

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 16 of 22

of a qualifying catastrophic care plan will meet the essential health benefits package require-

ments if an individual is under 30 years of age or meets the tests of 26 U.S.C. § 5000A(e) with

respect to affordable coverage or financial hardship. ACA § 1302(e)(2), 124 Stat. at 168.

Because Hill will be under 30 when the requirement takes effect in 2014 and for several years

thereafter, she will thus be under no obligation to have any insurance policy other than a major

medical plan, which she desires to have.8

Hill also alleges that she does want to pay out of pocket for “routine medical expenses

that would not be covered by a major medical health-insurance plan.” Am. Comp. ¶ 21. The

ACA will require, however, that major medical plans sold on a health insurance Exchange cover

at least three primary care visits beginning in 2014. ACA § 1302(e)(1)(B)(ii), 124 Stat. at 168.

It is hard to see how Hill sustains any injury in fact as a result of this change in whether she pays

directly for these visits herself or does so through insurance. But, assuming that Hill does have

standing to challenge this regulation of what major medical plans must cover, such regulation of

the health insurance market is constitutional. Congress may regulate the insurance marketplace.

United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533 (1944). “Mandated-benefit

laws, that require an insurer to provide a certain kind of benefit to cover a specified illness or

procedure whenever someone purchases a certain kind of insurance” are a commonplace of any

such regulation. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 728 (1985). Indeed,

8
The amended complaint does not even allege that Hill’s income in 2014 will not be low
enough that she could not also meet the affordable coverage/hardship prong of the disjunctive
test in section 1302(e). Predicting what income someone will be making in three years at the age
of 24 is notoriously difficult, so the silence of the amended complaint on this point may reflect
Hill’s genuine uncertainty about what her financial circumstances will be in three years. This
uncertainty about Hill’s future circumstances provides all the more reason why there is no case
or controversy today over whether the ACA will unconstitutionally limit Hill’s choices in 2014.

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 17 of 22

by 1985, every State had imposed some coverage requirements on health insurance policies, id.

at 729, and Congress has done so as well long before the ACA, 29 U.S.C. §§ 1185-1185c. There

is nothing constitutionally novel or suspect about this further modest regulation of what

insurance contracts must cover.9

VI. Count Seven, Which Challenges A Repealed Section Of The ACA, Should Be
Dismissed

In Count Seven, the three plaintiffs (Geraldine Osborn, Dale Morris, and Robert Osborn)

who participate in Medicare Part C (also known as Medicare Advantage) argue that their rights

to equal protection and under the privileges and immunities clause are violated by a provision

they call “Gator-Aid,” Am. Comp. ¶ 174. According to the Amended Complaint, the ACA

singles out a few counties in Florida for more favorable treatment under the Medicare Advantage

program than the rest of the country. Id.

The ACA does no such thing. Plaintiffs identify the “Gator-Aid” provision as part of

section 3201 of the ACA. Am. Comp. ¶ 172-73. But that section as originally enacted was

repealed in its entirety by section 1102 of the HCERA without ever having taken effect. 124

Stat. at 1040. Section 1102 does not contain a provision, dubbed “Gator-Aid” (Am. Comp.

¶ 174) or otherwise, that singles out Florida counties for special treatment.

9
Such requirements that products sold in interstate commerce meet minimum
requirements are commonplace. For example, it is within the authority of Congress under the
Commerce Clause to require that automobiles be sold only with seatbelts, see Motor Vehicles
Mfgs. Ass’n v. State Farm Mutual Auto Ins. Co., 463 U.S. 29 (1983), or that milk offered for sale
must contain certain nutrients, see United States v. Carolene Products Co., 304 U.S. 144 (1938),
even though some consumers might prefer the option to buy less expensive products without
those mandated features. Congress may similarly require that health insurance policies meet
minimum requirements.

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 18 of 22

There remain geographic differences in the federal payments for Medicare Advantage

plans, but Minnesota Senior Federation v. United States, 273 F.3d 805 (8th Cir. 2001), makes it

clear that any challenge to those differences as a denial of equal protection is without merit. As

Minnesota Senior explained, 273 F.3d at 807, prior to the reforms introduced by the HCERA, the

government subsidies of a Medicare Part C plan in a given locality depended in part on what

traditional Medicare (Medicare Parts A and B) spent on average in that locality, so that a Medi-

care Advantage plan in a high-Medicare-expense locality would receive more money than a

similar plan in an area where Medicare spent less. Minnesota Senior squarely rejected an equal

protection challenge to that geographic disparity similar to the challenge raised by plaintiffs

here.10 The passage of the HCERA gives no reason to resurrect such claims because the HCERA

reduces the kind of geographic disparity at issue in Minnesota Senior, evening out to some extent

the rate of payment for Medicare Part C plans among areas of high and low traditional Medicare

expenditures. See HCERA § 1102, 124 Stat. at 1040-47.11 If there was no basis for an equal

10
The Fourteenth Amendment’s requirement that “[n]o state shall make or enforce any
law which shall abridge the privileges or immunities of citizens of the United States,” adds
nothing to plaintiffs’ equal protection arguments. The privileges and immunities clause
addresses actions by States, not by the federal government. United States v. Lebman, 464 F.2d
68, 73-74 n.13 (5th Cir. 1972) (Wisdom, J.). Plaintiffs recognize that the “Fourteenth Amend-
ment by its terms applies to the States,” but argue that “Bolling v. Sharpe, 347 U.S. 497, 490-99
(1954), has held the federal government to essentially the same standard under the Fifth Amend-
ment.” Am. Comp. ¶ 161. However, Bolling addressed only the equal protection clause of the
Fourteenth Amendment, not the privileges and immunities clause. Banner v. United States, 303
F. Supp. 2d 1, 25-26 (D.D.C. 2004), aff’d, 428 F.3d 303 (D.C. Cir. 2005). Even as against the
States, the privileges and immunities clause protects only a narrow set of rights – e.g., to transact
business with the federal government or establish a residence in a different state – and thus is not
implicated by the kinds of concerns raised by plaintiffs. See McDonald v. City of Chicago, 130
S. Ct. 3020, 3028-31 (2010).
11
Subject to various transition rules, one geographical variable element of the payment to
Medicare Part C plans will still be “benchmark[ed]” on underlying Medicare expenditures, but

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 19 of 22

protection or similar claim before the HCERA – and Minnesota Senior establishes that there was

not – there is even less of a basis now.

VII. Count Eight, Which Challenges Panels Authorized To Make


Recommendations, Should Be Dismissed

The Amended Complaint alleges that section 4003 of the ACA “establishes certain

‘panels,’” Am. Comp. ¶ 187; that these panels “interfere with the doctor-patient relationship, in

that they direct and require treatment – or non-treatment – in a mandated manner without regard

for the patient or the patient’s doctor,” id. ¶ 188; and that “[d]octors and patients are not allowed

to make decisions free from intervention, but are instead compelled to discuss and resolve

questions of medical care only within the bounds that the federal panels have established,” id. ¶

189. These are distorted characterizations of the provision plaintiffs purport to discuss.

Section 4003 does indeed discuss “certain ‘panels,’” viz., the Preventive Services Task

Force and the Community Preventive Services Task Force. The ACA did not "establish" these

"panels;"; the U.S. Preventive Services Task Force was first convened in 1984, and the

Community Preventive Service Task Force was established in 1996.12 The duties of the U.S.

Preventive Services Task Force include reviewing "the scientific evidence related to the

effectiveness, appropriateness, and cost-effectiveness of clinical preventive services for the

purpose of developing recommendations for the health care community." Section 4003. The

the benchmark will then be adjusted by varying percentages, with the areas of higher expendi-
tures being multiplied by lower percentage rates, which will have the effect of reducing that
source of geographic variation in payments to Medicare Part C plans. 42 U.S.C.
1395w–23(n)(2)(B), as added by HCERA § 1102(b).
12
See http://www.uspreventiveservicestaskforce.org/intro.htm and
http://www.thecommunityguide.org/about/history.html.

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 20 of 22

duties of the Community Preventive Services Task Force involve include developing, updating,

and disseminating "recommendations," and providing assistance "to those health care pro-

fessionals, agencies, and organizations that request help in implementing" those

recommendations. Id.

These powers of recommendation bear no resemblance to the powers alleged by the

amended complaint. There is no provision that would, in the words of amended complaint ¶ 194,

mandate that “even when a patient and physician determine the best medical treatment, and even

if the patient is willing to pay for the cost of treatment herself, she is not allowed to receive the

medical treatment her physician deems appropriate unless it is also agreed to by the government

panel.” That patient and physician are free to ignore any panel recommendation in that

circumstance.

Nor does the task forces’ authority to make recommendations shut down any one’s free

speech right to disagree or to make her own recommendations. Indeed, like most processes that

involve recommendations, the ACA relies upon a vigorous interchange of ideas. Far from giving

the task forces authority to prohibit doctors from reaching and acting on their own conclusions

and offering their own advice, section 4003 expressly directs the task forces to seek

recommendations and opinions from doctors and patients in a process that anticipates that the

recommendations will be reviewed and updated in an ongoing process. 124 Stat. at 542, 543.

CONCLUSION

For the reasons stated above, defendants’ motion to dismiss should be granted.

Respectfully submitted,

TONY WEST
Assistant Attorney General

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 21 of 22

RICHARD G. CALLAHAN
United States Attorney

SHEILA M. LIEBER
Deputy Branch Director

/s/ Brian G. Kennedy


BRIAN G. KENNEDY (D.C. Bar No. 228726)
United States Department of Justice
Civil Division
Federal Programs Branch
20 Massachusetts Ave., N.W.
Washington, D.C. 20530
Tel.: (202) 514-3357 Fax: (202) 616-8470
Email: Brian.Kennedy@usdoj.gov

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Case 1:10-cv-00101-RWS Document 31 Filed 01/18/11 Page 22 of 22

CERTIFICATE OF SERVICE

I hereby certify that on January 18, 2011, the foregoing was filed

electronically with the Clerk of Court to be served by operation of the Court’’s

electronic filing system upon the following:

Mark F. (““Thor””) Hearne, II


Lindsay S.C. Brinton
1050 Connecticut Avenue, NW
Washington, DC 20036-5339
Phone: (202) 857-6000
Fax: (202) 857-6395
thornet@ix.netcom.com
brinton.lindsay@arentfox.com

Robert C. O’’Brien
Steven A. Haskins
555 West Fifth Street, 48th Floor
Los Angeles, CA 90013
obrien.robert@arentfox.com
haskins.steven@arentfox.com

Attorneys for Plaintiffs

/s/ Brian G. Kennedy


Brian G. Kennedy

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