Constitutional Standing in the Latest Individual Mandate Decision

Daniel Becker

The Affordable Care Act’s individual mandate has been a source of continued trouble for the law. NFIB v. Sebelius found that that the individual mandate was constitutional, but only if the Court recast the individual mandate’s penalties as a tax. The Republican Congress then zeroed out that tax with the passage of the Tax Cuts and Jobs Act of 2017. Finally, on December 14, 2018, the Northern District of Texas found the individual mandate unconstitutional and inseverable from the rest of the law, causing the Judge to find the entire Affordable Care Act unconstitutional. While other authors have discussed some of the odder features of this opinion, this particular article will focus solely on the opinion’s analysis of the individual plaintiffs’ standing. Those plaintiffs may not have met the constitutional standing requirements and, consequently, should have had their case dismissed.

The district court states the three elements of Constitutional standing: 1) there must be a concrete, particularized injury; 2) that is traceable to the defendant’s conduct; and 3) the court’s decision can redress the injury. In this case, the plaintiffs claimed they had a choice between purchasing health insurance or paying a tax. Without that choice, they would not have purchased health insurance at all. Thus, the court found that the plaintiffs were objects of a regulation, the individual mandate, which gave them standing to challenge the mandate. However, the court’s analysis here seems incorrect. The plaintiffs appear to have failed two aspects of the standing requirements: the plaintiff’s injury is not traceable to the defendant’s conduct, and the court is unable to redress the injury.

First, the plaintiff’s injury is not traceable to the defendant’s conduct. As the district court states, an object of regulation normally has standing to challenge a regulation because the injury is directly traceable to the government’s regulation. In other cases—including the one the court cites—the failure to comply with a regulation results in penalties. In that cited case, Contender Farms, LLP v. USDA, the plaintiffs were subject to penalties if they did not comply with the USDA regulations on horse soring. Those penalties included suspension from Horse Industry Organizations (HIOs) and the imposition of mandatory minimum fines for violations of the USDA’s regulation. Here, it is not clear what the plaintiff’s penalties were because the penalty for failing to purchase health insurance was a tax of zero dollars. While the court notes that a showing of economic injury is not required for plaintiffs to succeed, there is little evidence of any other injury. Plaintiffs allege the regulation creates a burden on their constitutional rights, but the court never explains how the plaintiffs’ constitutional rights were burdened through a regulation that carries no penalties.[1]

Second, and closely related, the district court’s decision does not relieve the plaintiffs from their alleged injury. Typically, redressability of a regulatory injury is easily foreseeable. The plaintiffs are currently subject to a regulatory burden. If the court finds the regulation illegal or unconstitutional, would the plaintiffs’ injury be redressed? If yes, then the redressability prong is met. If not, the plaintiffs lack standing. Here, the court found that declaring the individual mandate unconstitutional would redress the individual plaintiffs’ injuries. This redress includes allowing the individuals to forego purchasing health insurance altogether, which they were always free to do, or purchase health insurance below the government-set minimum standard. Yet, eliminating the minimum standard would not necessarily result in health insurance offerings below that standard. It is just as possible that health insurance would still be offered at or above that standard because so few people would purchase what they consider substandard health insurance, even in the absence of government enforcement.

The district court’s reluctance to make policy is well-founded. An equally applicable canon is to avoid constitutional questions where possible. The court may have had an opportunity to avoid making policy by looking closely at standing and finding the plaintiffs had none. Though the court did not take that opportunity, it may arise again when the case is appealed to the Fifth Circuit.

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[1] Note that this could also mean the plaintiffs did not adequately plead their non-economic injury, which could raise Twombly pleading issues. The Court cannot give relief if the plaintiffs did not adequately plead their injury.