Healthcare Business News

Supreme Court lets university's reform law challenge proceed

By Joe Carlson
Posted: November 26, 2012 - 3:15 pm ET

The U.S. Supreme Court on Monday revived a legal challenge to the Patient Protection and Affordable Care Act dealing with issues that weren't addressed in the landmark June 28 ruling that upheld the constitutionality of the healthcare reform law.

Legal experts said Liberty University v. Timothy Geithner (PDF) does not appear to threaten striking down the law, as could have happened with the prior litigation. But the revived challenge could potentially have wide ramifications for how the government forces employers to offer healthcare coverage for workers.

Liberty University, a private college founded in Lynchburg, Va., by evangelist Jerry Falwell Sr., sued Treasury Secretary Geithner on March 23, 2010, to overturn the healthcare reform law that was signed by President Barack Obama earlier that day.

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But Liberty's lawsuit was blocked by the 4th U.S. Circuit Court of Appeals in Richmond, Va., in 2011 after judges ruled that a complex jurisdictional statute called the Anti-Injunction Act prevented courts from hearing the case.

The Supreme Court eventually decided that the reform law was constitutional, but in the process of rendering that decision, the high court ruled that the Anti-Injunction Act did not bar challenges to it.

On Monday, the court ordered the 4th Circuit (PDF) to reopen the Liberty University lawsuit to hear challenges to two parts of the law that were not resolved in the June 28 decision: whether the federal government can force businesses with more than 50 employees to offer health insurance to workers, and whether the government can dictate that insurance cover services that they oppose on religious grounds, including abortion.

Cate Stetson, an attorney with Hogan Lovells who has followed the case, said the Obama administration has filed arguments with the Supreme Court saying it had no objections to the process of reviewing Liberty's claims, though it believes the lawsuit is meritless.

“What's at stake has to do with the remaining cluster of issues that the 4th Circuit hasn't yet taken up,” she said. “I think it is way in front of the curve to talk about any future review in the Supreme Court of the employer mandate.”

Edward White III, an attorney with the American Center for Law & Justice, a firm that has filed lawsuits opposing the reform law, said a decision in the Liberty case involving the mandate for employers to provide coverage could prove significant. “If the 4th Circuit says that's unconstitutional, that would carve out a big section of the law, because a lot of employers are covered by it,” he said.

He said it will be interesting to see whether Liberty University tries to use the litigation to oppose the definition of minimum essential coverage promulgated by HHS earlier this year.

More than 40 lawsuits are already pending in courts across the country challenging minimum essential coverage, which requires insurers to pay for contraceptives and sterilizations to which some businesses and religious organizations object. However, those rules didn't exist in March 2010 when Liberty's lawsuit was filed.

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