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Court Grants Rehearing of Case Limiting Health Law Subsidies

By John Reichard, CQ Roll Call

September 9, 2014 -- The full U.S. Court of Appeals for the District of Columbia recently granted an Obama administration petition to rehear a case that threw into doubt the legality of subsidies for millions of Americans buying insurance coverage on the federal website

The decision vacated an order by a three-judge panel on the court that struck down an Internal Revenue Service regulation allowing subsidies in all states, regardless of whether they create their own insurance exchanges or rely on the federal marketplace.

Plaintiffs in the case pressed by the libertarian Cato Institute, Halbig v. Burwell, argued that the text of the health care law (PL 111-148, PL 111-152) only permits subsidies in the 16 states plus the District of Columbia that have established their own exchanges, not in the 34 that use

The recent order approved by the majority of the 11 judges on the D.C. Circuit scheduled oral arguments for the full "en banc" review for Dec. 17, which sets the stage for a ruling upholding the subsidies nationwide next winter or spring.

The majority of the 11 judges on the full panel were appointed by Democratic presidents. That has led analysts to predict the full court will overturn the three-judge panel's earlier ruling and erase a split with another circuit court on the legality of the law's insurance subsidies. The differing rulings raised the possibility that the U.S. Supreme Court would take up the issue.

Supreme Court review remains a possibility, however. Michael A. Carvin of the law firm, Jones Day, also the lead plaintiffs' attorney in the Halbig case, petitioned the Supreme Court July 31 to overturn a ruling by a panel of the 4th Circuit Court of Appeals in Richmond, Va., that upheld subsidies nationally.

That petition in King v. Burwell says it "is the only vehicle that would allow [the Supreme Court] to resolve this matter within the October 2014 term."  If the Supreme Court does grant certiorari in that case, a final ruling resolving the fate of the subsidies could come as soon as early next summer.

Both the Halbig and King challenges are funded by the Competitive Enterprise Institute.

Cato Institute analyst Michael Cannon said that last week's order for en banc review "is unwise and unfortunate. It has the appearance of a political decision, and will likely only delay Supreme Court review."

Cannon said that administration's strategy is to delay "this litigation as long as possible, which would tend to prejudice the courts because delay further entrenches the subsidies that the Halbig ruling declared illegal, and increases the disruption that will be caused by eliminating those subsidies."

"The D.C. Circuit rarely grants en banc review," said Washington and Lee Law School professor Timothy Jost, a health law supporter. "The fact they did here is testimony to the devastating effect this misguided decision would have had on millions of Americans and the fact that the decision is wrong on the law."

Jost added that "this also means the Supreme Court is very unlikely to grant certiorari in the companion 4th Circuit King decision, since there is no longer a split of decisions among the circuits."

The case is Halbig v. Burwell (No. 14-5018).

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