Halbig v. Sebelius
2014 U.S. Dist. LEXIS 4853
D.D.C.2014Background
- IRS issued final rule on May 23, 2012 interpreting ACA premium tax credits to apply on both state-run and federally-facilitated Exchanges.
- Plaintiffs allege the Rule exceeds the statute by authorizing credits for Federally-facilitated Exchanges and contrary to the statutory text.
- The case is a cross-motions for summary judgment in the DC District Court; oral argument occurred December 3, 2013; Judge Paul L. Friedman presiding.
- ACA provisions create Exchanges, mandate minimum coverage, and authorize premium tax credits; cross-referenced provisions link the tax credits to the Exchange framework, including both state and federal Exchanges.
- Plaintiffs reside in states that declined to establish Exchanges and contend credits should be limited to state-established Exchanges; Defendants contend the statute and cross-referenced provisions authorize credits on both types of Exchanges.
- Court holds that the IRS Rule is consistent with the text, structure, and purpose of the ACA, and denies Halbig’s summary judgment motion while granting Defendants’ motion for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the IRS Rule exceeds the ACA by limiting credits to state Exchanges | Halbig: credits confined to state Exchanges | Sebelius: cross-referenced text authorizes credits on federal Exchanges | Rule consistent; credits available on federal Exchanges |
| Whether there is an adequate alternative remedy to APA review | Halbig: APA review appropriate; tax refund suits are inadequate | Sebelius: tax refund action adequate alternative | APA review not precluded; tax refund not adequate substitute for prospective relief |
| Whether employer claims are barred by the Anti-Injunction Act | Innovare et al. seek to enjoin §4980H assessments | Sebelius: AIA bars such pre-enforcement actions for taxes | Employer claims barred; dismiss employed plaintiffs; individual claims proceed |
Key Cases Cited
- National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012) (affordable care act subsidies nationwide; cross-reference and structure relevant to interpretation)
- Bowen v. Massachusetts, 487 U.S. 879 (1988) (statutory interpretation and availability of alternative review; hospitable view of APA)
- Garcia v. Vilsack, 563 F.3d 519 (D.C. Cir. 2009) (APA review with regard to agency actions; deference considerations)
- Cohen v. United States, 650 F.3d 717 (D.C. Cir. 2011) (tax refund remedy vs. APA review; adequacy of alternative remedies)
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) (two-step framework for reviewing agency interpretations of statutes)
- Duncan v. Walker, 533 U.S. 167 (2001) (contextual statutory interpretation guidance)
- National Cable & Telecommunications Ass'n v. FCC, 551 U.S. 644 (2007) (examines statutory interpretation in regulatory schemes)
- Korte v. Sebelius, 735 F.3d 654 (7th Cir. 2013) (discussion of AIA applicability to tax-like exactions)