The first merits decision in the Obamacare tax subsidy litigation has been handed down, and it is a big victory for the federal Government. Judge Paul Friedman (D.D.C.) has upheld the IRS’s rule implementing the Affordable Care Act, and making its tax subsidies available to consumers purchasing insurance on exchanges operated by the federal government, as well as to consumers purchasing insurance on exchanges operated by states. My previous post here described the main arguments on both sides, which centered around some very sloppy drafting by Congress with respect to these provisions.
The reason the opinion is such a big victory for the Government is that Judge Friedman did not even go to Chevron deference, as some had expected. Instead, the Judge found the ACA clear, despite the bad drafting. Looking to the text in question; the legislative history; the many other provisions of the statute implicating the subsidies; and the Congressional Budget Office’s estimates during the drafting process (which I blogged about here), the Judge found no ambiguity in the statute and upheld the rule on that basis. (He references Chevron deference as an alternative, but not necessary, basis for the holding in a footnote.)
Another point of interest in the opinion for Chevron aficionados: The Supreme Court has never resolved the question whether Chevron deference is available for multiple agencies. Much recent writing (including work by Jody Freeman and Jim Rossi; Jacob Gersen, and my recent empirical work with Lisa Bressman) has focused on the increasing frequency with which Congress delegates to multiple agencies at once, so this is very much a live question. The plaintiffs here had invoked a 2003 case from the D.C. Circuit implying that, when multiple implementers are in the picture, there might not be Chevron deference for anyone (a conclusion that our recent empirical study finds inconsistent with congressional expectations). Judge Friedman rejected that conclusion here, arguing that Congress’s intent to delegate to both HHS and IRS, and to take advantage of both agencies’ expertise, was clear. That’s even more good legal fodder for the courts in other Circuits still deciding parallel cases and for the D.C. Circuit, which almost surely will be asked by the plaintiffs to hear an appeal on this one.
[Cross posted at Balkinization]