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Employer health mandate upheld (UPDATED)

UPDATED Friday 12:15 p.m.   Lawyers for Liberty University have announced that they will seek to take the case back to the Supreme Court.   Their press release is here.


Giving the Obama administration a major new legal victory for the often-besieged federal health care law, the Fourth Circuit Court ruled on Thursday that Congress had clear authority to impose the requirement that larger employers provide adequate health insurance for their workers or pay a financial penalty to the government.   This was the first major ruling on the employer mandate’s constitutionality since the Supreme Court last year upheld a different mandate in the 2010 law,  requiring individuals to obtain health coverage or pay a penalty.

The Circuit Court’s decision in favor of the employer mandate came just nine days after the federal government put off for a year, until January 1, 2015, that requirement, which applies to employers with more than 50 employees.  If such employers do not have coverage by the deadline, they face penalties of up to $2,000 for each employee.

The new ruling came in the case of Liberty University v. Lew (Treasury Secretary), in Circuit docket 10-2347.   The Supreme Court had sent the case back to the Fourth Circuit to rule on constitutional challenges that the Justices did not decide when they ruled on major parts of the health care law a year ago.  The Supreme Court decision said nothing about the validity of the employer mandate.

Even though the Supreme Court had upheld the individual mandate under Congress’s taxing power, five of the Justices declared that Congress did not have the authority to pass that part of the law under its Commerce Clause powers.  The Fourth Circuit, however, based its decision in favor of the employer mandate directly on the lawmakers’ sweeping power to regulate commercial activity among the states.

Business firms are engaged in commerce, the Circuit Court said, and so the employer mandate did not create economic activity in order for the government to regulate it.   That was the argument that the five Justices used in their rejection of the Commerce Clause defense of the individual mandate.

The Circuit Court declared: “The employer mandate is no monster” — a word that four Justices had used last year to describe the individual mandate.  Rather, the Circuit Court said, the employer mandate “is simply another example of Congress’s longstanding authority to regulate employee compensation offered and paid for by employers in interstate commerce….All employers are, by their very nature, engaged in economic activity.”

In addition, the Circuit Court said, the employer mandate does not require firms’ management to buy an unwanted product.   They can self-insure instead of buying coverage elsewhere, and many do, the opinion noted.

The decision went on to say that the financial penalty that employers who fail to provide health insurance for their workers is, like the financial penalty for individuals who fail to obtain insurance for themselves, a form of tax that is constitutional.   For that part of its ruling, the panel relied upon reasoning the Supreme Court had used last year regarding the penalty on individuals.

In the concluding parts of the Fourth Circuit decision, it rejected claims by Liberty University that both the individual and employer mandates violate the First Amendment religious freedom rights of the university and of its workers who object to being required to have health insurance.   Those claims also were based upon a federal law, the Religious Freedom Restoration Act.   The mandates do not impose a significant burden on the challengers’ religious views, the panel declared.

And it rejected an argument that, because the mandates have some exceptions, their application to Liberty University and its employees discriminates against them.

The Circuit Court treated as a belated claim, and thus did not rule on it, a challenge by Liberty University and its employees to federal regulations that require employers — with some exceptions — to provide birth control services and birth-preventive services, including abortion, as part of their health plans for their workers.   The challengers did not mention that, the court said, in their first appeal to the Circuit Court, or in their appeal to the Supreme Court.   When the Supreme Court sent this case back to the Fourth Circuit for further review, the panel said, the Justices did not mention this issue at all.

The Circuit Court’s fifty-two-page opinion was written jointly by Circuit Judges Diana Gribbon Motz, Andre M. Davis, and James A. Wynn, Jr.  Liberty University and its employees have the option of asking the full Circuit Court to  reconsider the case en banc, and the separate option of seeking review again at the Supreme Court.



Recommended Citation: Lyle Denniston, Employer health mandate upheld (UPDATED), SCOTUSblog (Jul. 11, 2013, 5:28 PM),