Health-law battle may play out in Muskogee
BY WAYNE GREENE World Senior Writer
Saturday, December 22, 2012
12/22/12 at 7:15 AM
Read the Tulsa World continuing coverage of the health care law.
The future of the federal health-care law - Obamacare - could be played out in an obscure legal setting, Muskogee.
In a case that seemingly grows more complex by the day, U.S. District Judge Ronald White could be in line to determine the legality of key elements of the Affordable Care Act: its ability to enforce health-care mandates and tax penalties against employers who refuse to live by them.
In the case's latest development, federal attorneys are seeking to block a Texas restaurant chain's attempts to enter the case in part because it would strengthen the case against Obamacare and in part because the companies don't do business in Oklahoma.
The case was initiated by Oklahoma Attorney General Scott Pruitt. Like cases brought by other states around the country, the original premise was the law should be thrown out because its individual mandate - the requirement that practically every American buy health insurance - violated the state and federal constitutions.
But the case sat unresolved while that issue was being determined in other courthouses.
When the U.S. Supreme Court ruled that the individual mandate was constitutional, Pruitt recast the case, adopting a new, complicated argument first put forward by the Cato Institute.
The Affordable Care Act - so the argument goes - sets up a series of tax penalties against large companies that don't offer qualifying health coverage to their workers. Those penalties are only triggered when an employee gets a federal subsidy to purchase insurance through a state health insurance exchange.
The key word there is "state." The law is specific on that point, Pruitt argues.
Because Oklahoma hasn't established a state exchange and Gov. Mary Fallin has made it clear that it isn't going to do so, Pruitt argues there can be no federal subsidies in Oklahoma, therefore no tax penalties against companies that don't offer their workers insurance.
So, Pruitt's case is based on the fact that Oklahomans will be denied access to federal funding to pay for health insurance by a state policy decision. If Oklahoma workers can't get a piece of the federal funding, their employers can't be force to pay for it, which would essentially cripple Obamacare financially.
It also would mean that the state's high uninsured population - 17 percent, according to the U.S. Census Bureau - remains unchecked.
The federal government has responded that the Affordable Care Act provides for the federal government authority to create exchanges - which are electronic marketplaces for consumers to compare and purchase insurance - for states refusing to create their own. Those federally "facilitated" exchanges are legally identical to state exchanges, therefore the same mandates and penalties apply - or so the federal government's argument goes.
In other words, eligible Oklahomans would be able to go to the federal exchange, shop for insurance and purchase a plan that works for them with an immediate federal tax credit kicking in to pay much of the bill. Once that subsidy is paid, the IRS would be legally required to go after the workers' employer for the taxes to pay for much of the costs.
The case's latest turn started when the San Antonio-based GC Restaurants asked to be part of Oklahoma's case.
The restaurants - several of which operate under the name Lion & Rose British Restaurant & Pub - do not offer many of their employees health insurance and don't intend to do so. The company pays a high portion of its workers at the minimum wage, the company's filings say.
The company doesn't do business in Oklahoma but argues that because Texas also doesn't have a state exchange, and isn't going to establish one, it should be allowed to join Oklahoma's lawsuit.
If the Texas restaurants are allowed to join the Oklahoma case, they arguably would strengthen it in a peculiar way. Federal attorneys had argued that Oklahoma's state employees receive good health benefits, and there was no reason to think the federal tax penalties would ever be levied against the state.
If the state isn't subject to the tax penalties, it has no standing to argue against the law, the federal attorneys argue.
Because the restaurants don't insure their workers and would be subject to the penalties, one problem in Pruitt's case is shored up, but that's precisely why federal attorneys don't want the restaurants involved.
Federal court rules prevent the addition of a litigant to a suit if the initial plaintiffs don't have standing, the latest federal filings argue.
Even if the Texas restaurants survive that challenge, the federal attorneys argue neither they nor the state have the standing to make arguments against the taxes at this point.
Federal law says a tax can't be challenged in court until after the tax has been levied and paid, which won't occur until 2014 in the case of the Affordable Care Act.
The filing also argues that because the Texas restaurants don't do business in the court's jurisdiction, some key people involved in the outcome of the case - the employees of the restaurant - would be effectively excluded from litigation.
Wayne Greene 918-581-8308