Response by Professor Richard J. Pierce, Jr.
Geo. Wash. L. Rev. Docket (Oct. Term 2014)
King v. Burwell, 575 U.S. ___ (2015).
Docket No. 14-114; March 4, 2015; June 25, 2015
Slip Opinion | New York Times | SCOTUSblog
In King v. Burwell, a six-Justice majority held that The Patient Protection and Affordable Care Act (ACA) requires IRS to provide refundable tax credits to low income individuals in the thirty-six states that have declined to create state exchanges and have instead opted to allow their citizens to buy a health insurance plan on the federal exchange. The majority had a difficult task because the ACA states that the tax credit is available to individuals who buy a health insurance plan through “an Exchange established by the State.”
The majority supported its holding by taking three steps. First, the majority concluded that neither Chevron nor Skidmore deference to an agency is appropriate in this situation even though IRS, the agency with responsibility to implement the relevant provision of the statute, had issued a rule in which it interpreted the provision to require provision of tax credits to individuals who buy health insurance plans on the federal exchange. That part of the majority’s reasoning has major implications that will be discussed after discussion of the second and third steps.
In the second step, the majority concluded that the statutory language is ambiguous and does not have a plain meaning because “when deciding whether the language [of a statute] is plain we must read the words in their context and with a view to their place in the statutory scheme.” The majority then discussed at length the context and purpose of the ACA and the tax credit. The majority concluded that it is “possible” that the statutory language “an Exchange established by the State” “refers to all exchanges-both State and Federal.” This is an unusual and highly contestable method of applying the plain meaning rule.
The majority defended its idiosyncratic method of finding an ambiguity in language that seems plain by referring to the unusual way in which the ACA was enacted: “Congress wrote key parts of the Act behind closed doors, rather than through the traditional legislative process. . . . And Congress passed much of the Act, using a complicated budgetary procedure known as reconciliation, which limited opportunity for debate and amendment, and bypassed the Senate’s normal 60-vote filibuster requirement.” According to the majority, this process created an Act that “contains more than a few examples of inartful drafting” and “does not reflect the type of care and deliberation that one might expect of such significant legislation.” It is unusual for a court to include harsh criticism of the procedures Congress used to enact a statute in an opinion in which the court interprets the statute.
In the third step, the majority resolved the ambiguity that it found in the second step by using the context and purpose of the ACA and the tax credit to support the majority’s interpretation of the “ambiguous” language to refer to individuals who buy insurance plans on all exchanges and not just to individuals who buy insurance on State exchanges. This is a common method of resolving an ambiguity in a statute, and the majority does a good job of explaining why the alternative interpretation would be inconsistent with the purposes of the ACA. Of course, this method of interpretation is typically used only when the statute is ambiguous, and the majority’s reasoning in the part of its opinion in which it reaches that conclusion is uncommon and unconvincing.
The holding of the case has obvious implications for the ACA. An alternative interpretation would have had disastrous effects. It is not at all clear that the entire complicated system of providing healthcare created by the ACA would have survived if the statute had been interpreted to provide generous subsidies to the citizens of fourteen states and to deprive the citizens of thirty-six states of those subsidies.
The holding also has major political effects. Even though many Republican politicians have been harshly critical of the ACA, a judicial decision that deprived individuals in thirty six-states of a large tax credit would have placed them in a difficult political situation. They would have been required to choose between allowing the unpopular decision to stand or implicitly endorsing a healthcare plan that they and many of their constituents dislike by voting to amend the ACA. Conversely, many Democratic politicians were secretly hoping for such a court decision because it would place Republicans in that predicament.
The part of the opinion that is likely to have the greatest effect is the reasoning in the first part in which the Court holds that deference is not due the IRS interpretation of the Act. For those without an administrative law background, courts accord one of two types of deference to the vast majority of agency interpretations of agency-administered statutory provisions on the theory that Congress intended to delegate the power to interpret an ambiguous statutory provision to the agency charged with implementing the provision. The majority called this one of the “extraordinary cases [in which] there may be reason to hesitate before concluding that Congress has intended such an implicit delegation. . . . The tax credits are among the Act’s key reforms . . . . Whether these credits are available on Federal Exchanges is thus a question of deep economic and social significance that is central to this statutory scheme; had Congress wished to assign this question to an agency, it surely would have done so expressly. . . . It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort.”
This reasoning has one clear effect. By adopting the interpretation itself as an issue of law, rather than upholding the agency interpretation as a permissible exercise of the agency’s discretion, the majority has rendered it impossible for an agency in an Administration that is hostile to the ACA to change the interpretation. The reasoning also has another potential unintended effect. In National Federation of Independent Businesses v. Sebelius, 567 U.S. ___(2012), the Court upheld the ACA as a permissible exercise of congressional power to tax but rejected the argument that it was a permissible exercise of congressional power under the Commerce Clause. That holding creates a situation in which Congress is likely to increase the role of IRS in implementing regulatory statutes in order to increase the likelihood that courts will uphold the statutes. That, in turn, is likely to lead to the strange situation in which the courts will have to say repeatedly that Congress could not have intended to delegate interpretive discretion to IRS because IRS has no relevant expertise.
The dissenting opinion for three Justices was a predictable and relatively straightforward application of the plain meaning rule. It has only one notable characteristic: It seems to take the language the Justices use to describe each other to a new level. Unlike most dissenting opinions it omits the phrase “I respectfully dissent.” It then uses particularly harsh language to characterize the majority opinion as, inter alia, “quite absurd.”
Reader Comment:
“…The Court in King, as Professor Pierce explains, applied a “highly contestable” version of the Plain Meaning Rule. One could further argue that in King, the Court really just ignored the Plain Meaning Rule altogether. Surely few commentators suppose that the Plain Meaning Rule should be done away with. Yet, the Court articulated no workable principle to limit use of its “highly contestable” version of the Plain Meaning Rule in future cases. The Court’s only gesture at a limiting principle is that where Congress drafts a bill “behind closed doors” and passes it through reconciliation (which cuts off debate), it will relax the Rule Against Surplusage. King v. Burwell, No. 14-114, slip op. at 14 (June 25, 2015). The Rule Against Surplusage overlaps with the Plain Meaning Rule and prohibits, inter alia, reading out words or phrases in a law. Yet, Congress’s very words and phrases are likely the best evidence of its intent if its intent cannot otherwise manifest in floor debate and public hearings. The Court’s gestured-at limiting principle, therefore, does the reverse of what it should: it raises the risk that the Court will rewrite the plain words of Congress contrary to Congress’s actual intent…”
–Sean Ross Callaghan | Practitioner; Student | George Washington Law | Bar Admission Pending in PA & DC
Read the Entire Comment Here
Recommended Citation
Richard J. Pierce, Jr., Response, King v. Burwell, Geo. Wash. L. Rev. Docket (June 25, 2015), http://www.gwlr.org/king-v-burwell/.
