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Halbig v Sebelius - Appeal Joint Appellate Appendix

Halbig v Sebelius - Appeal Joint Appellate Appendix

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A group of small business owners (and individuals) in six states filed a lawsuit on May 2, 2013 against the federal government over an IRS regulation imposed under the Affordable Care Act (Obamacare), a regulation that will force the plaintiffs to pay exorbitant fines, cut back employees’ hours, or severely burden their businesses.

This document is the Joint Appellate Appendix.

View more about the case at cei.org/obamacare.
A group of small business owners (and individuals) in six states filed a lawsuit on May 2, 2013 against the federal government over an IRS regulation imposed under the Affordable Care Act (Obamacare), a regulation that will force the plaintiffs to pay exorbitant fines, cut back employees’ hours, or severely burden their businesses.

This document is the Joint Appellate Appendix.

View more about the case at cei.org/obamacare.

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Published by: Competitive Enterprise Institute on Jan 31, 2014
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USCA Case #14-5018 Document #1477680 Filed: 01/30/2014 Page 328 of 366

in open court, the Court will grant the defendants’ motion, deny the plaintiffs’ motion, and enter

judgment for the defendants.1

I. BACKGROUND

A. The Affordable Care Act

On March 23, 2010, Congress enacted the Patient Protection and Affordable Care

Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), with the aim of increasing the number of

Americans covered by health insurance and decreasing the cost of health care. Nat’l Fed’n of

Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2580 (2012).2

Under the ACA, most Americans must

either obtain “minimum essential” health insurance coverage or pay a tax penalty imposed by the

Internal Revenue Service. 26 U.S.C. § 5000A; see Nat’l Fed’n of Indep. Bus. v. Sebelius, 132

S. Ct. at 2580. Uninsured individuals who might otherwise have difficulty obtaining health

1

The papers reviewed in connection with the pending motions include the
following: the complaint (“Compl.”) [Dkt. No. 1]; plaintiffs’ motion for summary judgment
(“Pls.’ SJ Mot.”) [Dkt. No. 17]; declaration of David Klemencic (“Klemencic Decl.”), attached
to plaintiffs’ opposition to defendants’ motion to dismiss [Dkt. No. 24-1]; declaration of Daniel
Kessler, J.D., Ph.D. (“Kessler Decl.”), attached to plaintiffs’ opposition to defendants’ motion to
dismiss [Dkt. No. 24-2]; defendants’ motion for summary judgment and opposition to plaintiffs’
summary judgment motion (“Defs.’ SJ Mot.”) [Dkt. No. 49]; third declaration of Donald B.
Moulds, Acting Assistant Secretary for Planning and Evaluation at the Department of Health and
Human Services (“Third Moulds Decl.”), attached to defendants’ motion for summary judgment
[Dkt. No. 49-2]; plaintiffs’ reply and opposition to defendants’ motion for summary judgment
(“Pls.’ SJ Opp.”) [Dkt. No. 57]; defendants’ reply (“Defs.’ SJ Reply”) [Dkt. No. 62]; Brief of
Amicus Curiae American Hospital Association [Dkt. No. 52]; Brief of Amicus Curiae Families
USA [Dkt. No. 54]; Brief of Amicus Curiae Commonwealth of Virginia [Dkt. No. 60]; Brief of
Amicus Curiae Jonathan H. Adler and Michael F. Cannon [Dkt. No. 61]; October 21, 2013
Transcript of Oral Argument on Motion for Preliminary Injunction and Motion to Dismiss (“Oct.
21, 2013 Tr.”) [Dkt. No. 64]; October 22, 2013 Transcript of Oral Ruling (“Oct. 22, 2013 Tr.”);
and December 3, 2013 Transcript of Oral Argument on Summary Judgment (“Dec. 3, 2013 Tr.”)
[Dkt. No. 65].

2

A week after the Patient Protection and Affordable Care Act was passed,
Congress amended the Act through the Health Care and Education Reconciliation Act of 2010,
Pub. L. 111-152, 124 Stat. 1029 (2010).

Case 1:13-cv-00623-PLF Document 67 Filed 01/15/14 Page 2 of 39

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USCA Case #14-5018 Document #1477680 Filed: 01/30/2014 Page 329 of 366

insurance are provided certain tools to facilitate the purchase of such insurance. Specifically, the

law provides for the establishment of “Exchanges,” through which individuals can purchase

competitively-priced health insurance. See 42 U.S.C. §§ 18031, 18041. The Act also authorizes

a federal tax credit for many low- and middle-income individuals to offset the cost of insurance

purchased on these Exchanges. 26 U.S.C. § 36B. Large employers are expected to share the

costs of health insurance coverage for their full-time employees, and employers who do not

provide affordable health care may be subject to an “assessable payment” or tax. 26 U.S.C.

§ 4980H.

At issue in this case is whether the ACA allows the IRS to provide tax credits to

residents of states that declined to establish their own health insurance Exchanges, that is, in

states where the federal government has stepped in and is running the Exchange. Because this

dispute necessitates a careful examination of certain features of the ACA – in particular, the

Exchanges, the Section 36B tax credits, the minimum insurance requirement for individuals, and

the Section 4980H assessment imposed on some employers – these features are described in

more detail below.

1. The Exchanges

The ACA provides for the establishment of American Health Benefit Exchanges,

or “Exchanges,” to facilitate the purchase of health insurance by private individuals and small

businesses. See 42 U.S.C. § 18031(b)(1); 42 U.S.C. § 300gg-91(d)(21). The Department of

Health and Human Services (“HHS”) has described an Exchange as “a mechanism for

organizing the health insurance marketplace to help consumers and small businesses shop for

coverage in a way that permits easy comparison of available plan options based on price, benefits

and services, and quality.” Centers for Medicare & Medicaid Services, Initial Guidance to

Case 1:13-cv-00623-PLF Document 67 Filed 01/15/14 Page 3 of 39

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