David KING; Douglas Hurst; Brenda Levy; Rose Luck, Plaintiffs-Appellants, v. Sylvia Matthews BURWELL, in her official capacity as U.S. Secretary of Health and Human Services; United States Department of Health & Human Services; Jacob Lew, in his official capacity as U.S. Secretary of the Treasury; United States Department of the Treasury; Internal Revenue Service; John Koskinen, in his official capacity as Commissioner of Internal Revenue, Defendants-Appellees.
No. 14-1158
United States Court of Appeals, Fourth Circuit
July 22, 2014
Argued: May 14, 2014.
4.
The complaint finally alleges state law claims in Counts IV and V for obstruction of justice, false imprisonment, malicious prosecution, and conspiracy. The district court dismissed Massey‘s obstruction of justice claim in reliance on our decision in Evans, where we recognized that,
[e]ven though North Carolina courts have interpreted common-law obstruction of justice to include fabrication of evidence, ... we have not found—and plaintiffs have not offered—any case from any jurisdiction recognizing a common-law obstruction of justice claim against a police officer for his actions relating to a criminal proceeding.
703 F.3d at 658 (citation omitted). We therefore deemed it unrealistic that North Carolina would uphold an obstruction of justice claim in that context. Id. There has been a dearth of North Carolina case law developed since Evans was decided. Therefore, Evans controls this case as well.
Massey‘s other state law claims fail under the same rationale as their federal counterparts. To sustain a malicious prosecution claim, a plaintiff must establish, inter alia, that the defendant lacked probable cause to initiate the proceeding against the plaintiff. See Best v. Duke Univ., 337 N.C. 742, 448 S.E.2d 506, 510 (1994). False imprisonment also calls for the absence of probable cause. See Moore v. Evans, 124 N.C.App. 35, 476 S.E.2d 415, 422 (1996). As previously shown, the officers possessed ample probable cause to arrest Massey, even absent the fabricated evidence. Thus, Massey has not pleaded the elements essential to a malicious prosecution or false imprisonment claim under North Carolina law. Furthermore, without sufficiently alleged wrongful acts, the conspiracy claim cannot survive. See State ex rel. Cooper v. Ridgeway Brands Mfg., 362 N.C. 431, 666 S.E.2d 107, 115 (2008). We therefore affirm the district court‘s dismissal of the state claims alleged in Counts IV and V of the complaint.
III.
Pursuant to the foregoing, we affirm the judgment as to Officers Ojaniit and Esposito, and we dismiss the appeal as to Officer Ledford.
AFFIRMED IN PART AND DISMISSED IN PART.
Commonwealth of Virginia; America‘s Health Insurance Plans; American Cancer Society; American Cancer Society Cancer Action Network; American Diabetes Association; American Heart Association; Public Health Deans, Chairs, And Faculty; Members of Congress And State Legislatures; American Hospital Association; Economic Scholars; Families USA; AARP; National Health Law Program, Amici Supporting Appellees.
Before GREGORY and THACKER, Circuit Judges, and DAVIS, Senior Circuit Judge.
Affirmed by published opinion. Judge GREGORY wrote the opinion, in which Judge THACKER and Senior Judge DAVIS joined. Judge DAVIS wrote a concurring opinion.
GREGORY, Circuit Judge:
The plaintiffs-appellants bring this suit challenging the validity of an Internal Revenue Service (“IRS“) final rule implementing the premium tax credit provision of the Patient Protection and Affordable Care Act (the “ACA” or “Act“). The final rule interprets the ACA as authorizing the IRS to grant tax credits to individuals who purchase health insurance on both state-run insurance “Exchanges” and federally-facilitated “Exchanges” created and operated by the Department of Health and Human Services (“HHS“). The plaintiffs contend that the IRS‘s interpretation is contrary to the language of the statute, which, they assert, authorizes tax credits only for individuals who purchase insurance on state-run Exchanges. For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS‘s determination, however, we uphold the rule as a permissible exercise of the agency‘s discretion. We thus affirm the judgment of the district court.
I.
In March of 2010, Congress passed the ACA to “increase the number of Americans covered by health insurance and decrease the cost of health care.” Nat‘l Fed‘n of Indep. Bus. v. Sebelius, — U.S. —, 132 S.Ct. 2566, 2580, 183 L.Ed.2d 450 (2012) (NFIB). To increase the availability of affordable insurance plans, the Act provides for the establishment of “Exchanges,” through which individuals can purchase competitively-priced health care coverage. See
Section 1311 of the Act provides that “[e]ach State shall, not later than January 1, 2014, establish an American Health Benefit Exchange.”
Eligibility for the premium tax credits is calculated according to
In addition to the tax credits, the Act requires most Americans to obtain “minimum essential” coverage or pay a tax penalty imposed by the IRS.
The IRS has promulgated regulations making the premium tax credits available to qualifying individuals who purchase health insurance on both state-run and federally-facilitated Exchanges. See
The statutory language of section 36B and other provisions of the Affordable Care Act support the interpretation that credits are available to taxpayers who
obtain coverage through a State Exchange, regional Exchange, subsidiary Exchange, and the Federally-facilitated Exchange. Moreover, the relevant legislative history does not demonstrate that Congress intended to limit the premium tax credit to State Exchanges. Accordingly, the final regulations maintain the rule in the proposed regulations because it is consistent with the language, purpose, and structure of section 36B and the Affordable Care Act as a whole.
77 Fed.Reg. at 30,378.
The plaintiffs in this case are Virginia residents who do not want to purchase comprehensive health insurance. Virginia has declined to establish a state-run Exchange and is therefore served by the prominent federally-facilitated Exchange known as HealthCare.gov. Without the premium tax credits, the plaintiffs would be exempt from the individual mandate under the unaffordability exemption. With the credits, however, the reduced costs of the policies available to the plaintiffs subject them to the minimum coverage penalty. According to the plaintiffs, then, as a result of the IRS Rule, they will incur some financial cost because they will be forced either to purchase insurance or pay the individual mandate penalty.
The plaintiffs’ complaint alleges that the IRS Rule exceeds the agency‘s statutory authority, is arbitrary and capricious, and is contrary to law in violation of the Administrative Procedure Act (“APA“),
II.
We must first address whether the plaintiffs’ claims are justiciable. The defendants make two arguments on this point: (1) that the plaintiffs lack standing; and (2) that the availability of a tax-refund action acts as an independent bar to the plaintiffs’ claims under the APA.
A.
We review de novo the legal question of whether plaintiffs have standing to sue. Wilson v. Dollar General Corp., 717 F.3d 337, 342 (4th Cir.2013). Article III standing requires a litigant to demonstrate “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (quoting Whitmore v. Arkansas, 495 U.S. 149, 155 (1990)). The plaintiffs premise their standing on the claim that, if they were not eligible for the premium tax credits, they would qualify for the unaffordability exemption in
We agree that this represents a concrete economic injury that is directly traceable to the IRS Rule. The IRS Rule forces the plaintiffs to purchase a product they otherwise would not, at an expense to them, or
The defendants’ argument against standing is premised on the claim that the plaintiffs want to purchase “catastrophic” insurance coverage, which in some cases is more expensive than subsidized comprehensive coverage required by the Act. The defendants thus claim that the plaintiffs have acknowledged they would actually expend more money on a separate policy even if they were eligible for the credits. Regardless of the viability of this argument, it rests on an incorrect premise. The defendants misread the plaintiffs’ complaint, which, while mentioning the possibility that several of the plaintiffs wish to purchase catastrophic coverage, also clearly alleges that each plaintiff does not want to buy comprehensive, ACA-compliant coverage and is harmed by having to do so or pay a penalty. The harm in this case is having to choose between ACA-compliant coverage and the penalty, both of which represent a financial cost to the plaintiffs. That harm is actual or imminent, and is directly traceable to the IRS Rule. The plaintiffs thus have standing to present their claims.
B.
The defendants also argue that the availability of a tax-refund action bars the plaintiffs’ claims under the APA. The defendants assert that the proper course of action for the plaintiffs is to pay the tax penalty and then present their legal arguments against the IRS Rule as part of a tax-refund action brought under either
The defendants’ arguments are not persuasive. First, they fail to point to a single case in which a court has refused to entertain a similar suit on the grounds that the parties were required to first pursue a tax-refund action under
It is clear, then, that the alternative forms of relief suggested by the defendants would not afford the plaintiffs the complete relief they seek. This is simply not a typical tax refund action in which an individual taxpayer complains of the manner in which a tax was assessed or collected and seeks reimbursement for wrongly paid sums. The plaintiffs here challenge the legality of a final agency action, which is consistent with the APA‘s underlying purpose of “remov[ing] obstacles to judicial review of agency action.” Bowen v. Massachusetts, 487 U.S. 879, 904 (1988). Requiring the plaintiffs to choose between purchasing insurance and thereby waiving their claims or paying the tax and challenging the IRS Rule after the fact creates just such an obstacle. We therefore find that the plaintiffs’ suit is not barred under the APA.
III.
Turning to the merits, “we review questions of statutory construction de novo.” Orquera v. Ashcroft, 357 F.3d 413, 418 (4th Cir.2003). Because this case concerns a challenge to an agency‘s construction of a statute, we apply the familiar twostep analytic framework set forth in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). At Chevron‘s first step, a court looks to the “plain meaning” of the statute to determine if the regulation responds to it. Chevron, 467 U.S. at 842-43. If it does, that is the end of the inquiry and the regulation stands. Id. However, if the statute is susceptible to multiple interpretations, the court then moves to Chevron‘s second step and defers to the agency‘s interpretation so long as it is based on a permissible construction of the statute. Id. at 843.
A.
At step one, “[i]f the statute is clear and unambiguous ‘that is the end of the matter, for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.‘” Bd. of Governors of the Fed. Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 368 (1986) (quoting Chevron, 467 U.S. at 842-43). A statute is ambiguous only if the disputed language is “reasonably susceptible of different interpretations.” Nat‘l R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. Co., 470 U.S. 451, 473 n. 27 (1985). “The objective of Chevron step one is not to interpret and apply the statute to resolve a claim, but to determine whether Congress‘s intent in enacting it was so clear as to foreclose any other interpretation.” Grapevine Imports, Ltd. v. United States, 636 F.3d 1368, 1377 (Fed.Cir.2011). Courts should employ all the traditional tools of statutory construction in determining whether Congress has clearly expressed its intent regarding the issue in question. Chevron, 467 U.S. at 843 n. 9,
1.
In construing a statute‘s meaning, the court “begin[s], as always, with the language of the statute.” Duncan v. Walker, 533 U.S. 167, 172 (2001). As described above,
The plaintiffs assert that the plain language of both relevant subsections in § 36B is determinative. They contend that in defining the terms “coverage months” and “premium assistance amount” by reference to Exchanges that are “established by the State under [§] 1311,” Congress limited the availability of tax credits to individuals purchasing insurance on state Exchanges. Under the plaintiffs’ construction, the premium credit amount for individuals purchasing insurance through a federal Exchange would always be zero.
The plaintiffs’ primary rationale for their interpretation is that the language says what it says, and that it clearly mentions state-run Exchanges under § 1311. If Congress meant to include federally-run Exchanges, it would not have specifically chosen the word “state” or referenced § 1311. The federal government is not a “State,” and so the phrase “Exchange established by the State under [§] 1311,” standing alone, supports the notion that credits are unavailable to consumers on federal Exchanges. Further, the plaintiffs assert that because state and federal Exchanges are referred to separately in § 1311 and § 1321, the omission in
There can be no question that there is a certain sense to the plaintiffs’ position. If Congress did in fact intend to make the tax credits available to consumers on both state and federal Exchanges, it would have been easy to write in broader language, as it did in other places in the statute. See
However, when conducting statutory analysis, “a reviewing court should not confine itself to examining a particular statutory provision in isolation. Rather, [t]he meaning—or ambiguity—of certain words or phrases may only become evident when placed in context.” Nat‘l Ass‘n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 666 (2007) (internal citation and quotation marks omitted). With this in mind, the defendants’ primary counterargument points to
As noted, § 1311 provides that “[e]ach State shall, not later than January 1, 2014, establish an American Health Benefit Exchange (referred to in this title as an ‘Exchange‘)[.]” It goes on to say that “[a]n Exchange shall be a governmental agency or nonprofit entity that is established by a State,” apparently narrowing the definition of “Exchange” to encompass only state-created Exchanges.
Of course, § 1311‘s directive that each State establish an Exchange cannot be understood literally in light of § 1321, which provides that a state may “elect” to do so. Section 1321(c) provides that if a state fails to establish an Exchange by January 1, 2014, the Secretary “shall ... establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements.” (emphasis added). The defendants’ position is that the term “such Exchange” refers to a state Exchange that is set up and operated by HHS. In other words, the statute mandates the existence of state Exchanges, but directs HHS to establish such Exchanges when the states fail to do so themselves. In the absence of state action, the federal government is required to step in and create, by definition, “an American Health Benefit Exchange established under [§] 1311” on behalf of the state.
Having thus explained the parties’ competing primary arguments, the court is of the opinion that the defendants have the stronger position, although only slightly. Given that Congress defined “Exchange” as an Exchange established by the state, it makes sense to read § 1321(c)‘s directive that HHS establish “such Exchange” to mean that the federal government acts on behalf of the state when it establishes its own Exchange. However, the court cannot ignore the common-sense appeal of the plaintiffs’ argument; a literal reading of the statute undoubtedly accords more closely with their position. As such, based solely on the language and context of the most relevant statutory provisions, the court cannot say that Congress‘s intent is so clear and unambiguous that it “foreclose[s] any other interpretation.” Grapevine Imports, 636 F.3d at 1377.
2.
We next examine two other, less directly relevant provisions of the Act to see if they shed any more light on Congress‘s intent. Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132-33 (2000) (“A court must ... interpret the statute as a symmetrical and coherent regulatory scheme, and fit, if possible, all parts into a harmonious whole.“) (citation and internal quotation marks omitted). First, the defendants argue that reporting provisions in § 36B(f) conflict with the plaintiffs’ interpretation and confirm that the premium tax credits must be available on federally-run Exchanges. Section 36B(f)—titled “Reconciliation of credit and advance credit“—requires the IRS to reduce the amount of a taxpayer‘s end-of-year premium tax credit by the amount of any advance payment of such credit. See
(A) The level of coverage described in section 1302(d) of the Patient Protection and Affordable Care Act and the period such coverage was in effect.
(B) The total premium for the coverage without regard to the credit under this section or cost-sharing reductions under section 1402 of such Act.
(C) The aggregate amount of any advance payment of such credit or reductions under section 1412 of such Act.
(D) The name, address, and TIN of the primary insured and the name and TIN of each other individual obtaining coverage under the policy.
(E) Any information provided to the Exchange, including any change of circumstances, necessary to determine eligibility for, and the amount of, such credit.
(F) Information necessary to determine whether a taxpayer has received excess advance payments.
The defendants argue, sensibly, that if premium tax credits were not available on federally-run Exchanges, there would be no reason to require such Exchanges to report the information found in subsections (C), (E), and (F). It is therefore possible to infer from the reporting requirements that Congress intended the tax credits to be available on both state- and federally-facilitated Exchanges. The plaintiffs acknowledge that some of the reporting requirements are extraneous for federally-run Exchanges, but note that the other categories of reportable information, i.e., subsections (A), (B), and (D), remain relevant even in the absence of credits. The plaintiffs suggest that Congress was simply saving itself the trouble of writing two separate subsections, one for each type of Exchange, by including a single comprehensive list.
The second source of potentially irreconcilable language offered by the defendants concerns the “qualified individuals” provision under
The plaintiffs acknowledge that this would be untenable, and suggest that the residency requirement is only applicable to state-created Exchanges. They note that § 1312 states that a “qualified individual“—“with respect to an Exchange“—is one who “resides in the State that established the Exchange.”
Having considered the parties’ competing arguments on both of the above-referenced sections, we remain unpersuaded by either side. Again, while we think the defendants make the better of the two cases, we are not convinced that either of the purported statutory conflicts render Congress‘s intent clear. Both parties offer reasonable arguments and counterarguments that make discerning Congress‘s intent difficult. Additionally, we note that the Supreme Court has recently reiterated the admonition that courts avoid revising ambiguously drafted legislation out of an effort to avoid “apparent anomal[ies]” within a statute. Michigan v. Bay Mills Indian Cmty., — U.S. —, 134 S.Ct. 2024, 2033, 188 L.Ed.2d 1071 (2014). It is not especially surprising that in a bill of this size—“10 titles stretch[ing] over 900 pages and contain[ing] hundreds of provisions,” NFIB, 132 S.Ct. at 2580— there would be one or more conflicting provisions. See Bay Mills, 134 S.Ct. at 2033 (“Truth be told, such anomalies often arise from statutes, if for no other reason than that Congress typically legislates by parts....“). Wary of granting excessive analytical weight to relatively minor conflicts within a statute of this size, we decline to accept the defendants’ arguments as dispositive of Congress‘s intent.
3.
The Act‘s legislative history is also not particularly illuminating on the issue of tax credits. See Philip Morris USA, Inc. v. Vilsack, 736 F.3d 284, 289 (4th Cir.2013) (considering legislative history at Chevron step one). But see Nat‘l Elec. Mfrs. Ass‘n, 654 F.3d at 505 (noting that, “in consulting legislative history at step one of Chevron, we have utilized such history only for limited purposes, and only after exhausting more reliable tools of construction“). As both parties concede, the legislative history of the Act is somewhat lacking, particularly for a bill of this size.2 Several floor statements from Senators support the notion that it was well understood that tax credits would be available for low- and middle-income Americans nationwide. For example, Senator Baucus stated that the “tax credits will help to ensure all Americans can afford quality health insurance.” 155 Cong. Rec. S11,964 (Nov. 21, 2009). He later estimated that “60 percent of those who are getting insurance in the individual market on the exchange will get tax credits....” 155 Cong. Rec. S12,764 (Dec. 9, 2009). Similarly, Senator Durbin stated that half of the “30 million Americans today who have no health insurance ... will qualify for ... tax credits to help them pay their premiums so they can have and afford health insurance.” 155 Cong. Rec. S13,559 (Dec. 20, 2009). These figures only make sense if all financially eligible Americans are understood to have access to the credits.
However, it is possible that such statements were made under the assumption that every state would in fact establish its own Exchange. As the district court stated, “Congress did not expect the states to turn down federal funds and fail to create and run their own Exchanges.” King v. Sebelius, No. 3:13-cv-630, 997 F.Supp.2d 415, 430-31, 2014 WL 637365, at *14
Although the plaintiffs offer no compelling support in the legislative record for their argument,3 it is at least plausible that Congress would have wanted to ensure state involvement in the creation and operation of the Exchanges. Such an approach would certainly comport with a literal reading of
Having examined the plain language and context of the most relevant statutory sections, the context and structure of related provisions, and the legislative history of the Act, we are unable to say definitively that Congress limited the premium tax credits to individuals living in states with state-run Exchanges. We note again that, on the whole, the defendants have the better of the statutory construction arguments, but that they fail to carry the day. Simply put, the statute is ambiguous and subject to at least two different interpretations. As a result, we are unable to resolve the case in either party‘s favor at the first step of the Chevron analysis.
B.
Finding that Congress has not “directly spoken to the precise question at issue,” we move to Chevron‘s second step. 467 U.S. at 842. At step two, we ask whether the “agency‘s [action] is based on a permissible construction of the statute.” Id. at 843. We “will not usurp an agency‘s interpretive authority by supplanting its construction with our own, so long as the interpretation is not ‘arbitrary, capricious, or manifestly contrary to the statute.‘” A construction meets this standard if it “‘represents a reasonable accommodation of conflicting policies that were committed to the agency‘s care by the statute.‘” Philip Morris, 736 F.3d at 290 (quoting Chevron, 467 U.S. at 844, 845). We have been clear that “[r]eview under this
As explained, we cannot discern whether Congress intended one way or another to make the tax credits available on HHS-facilitated Exchanges. The relevant statutory sections appear to conflict with one another, yielding different possible interpretations. In light of this uncertainty, this is a suitable case in which to apply the principles of deference called for by Chevron. See Scialabba v. Cuellar de Osorio, — U.S. —, 134 S.Ct. 2191, 2203, 189 L.Ed.2d 98 (2014) (“[I]nternal tension [in a statute] makes possible alternative reasonable constructions, bringing into correspondence in one way or another the section‘s different parts. And when that is so, Chevron dictates that a court defer to the agency‘s choice....“) (plurality opinion); Nat‘l Elec. Mfrs. Ass‘n, 654 F.3d at 505 (“[W]e have reached Chevron‘s second step after describing statutory language as ‘susceptible to more precise definition and open to varying constructions.‘“) (quoting Md. Dep‘t of Health and Mental Hygiene v. Centers for Medicare and Medicaid Servs., 542 F.3d 424, 434 (4th Cir.2008)).4
What we must decide is whether the statute permits the IRS to decide whether the tax credits would be available on federal Exchanges. In answering this question in the affirmative we are primarily persuaded by the IRS Rule‘s advancement of the broad policy goals of the Act. See Vill. of Barrington v. Surface Transp. Bd., 636 F.3d 650, 666 (D.C.Cir.2011) (“[W]hen an agency interprets ambiguities in its organic statute, it is entirely appropriate for that agency to consider ... policy arguments that are rationally related to the [statute‘s] goals.” (internal quotation marks and citation omitted)); Ariz. Pub. Serv. Co. v. EPA, 211 F.3d 1280, 1287 (D.C.Cir.2000) (“[A]s long as the agency stays within [Congress‘s] delegation, it is free to make policy choices in interpreting the statute, and such interpretations are entitled to deference.“) (quotation marks omitted). There is no question that the Act was intended as a major overhaul of the nation‘s entire health insurance market. The Supreme Court has recognized the broad policy goals of the Act: “to increase the number of Americans covered
Several provisions of the Act are necessary to achieving these goals. To begin with, the individual mandate requires nearly all Americans to have health insurance or pay a fine. Increasing the pool of insured individuals has the intended side-effect of increasing revenue for insurance providers. The increased revenue, in turn, supports several more specific policy goals contained in the Act. The most prominent of these are the guaranteed-issue and community-rating provisions. In short, these provisions bar insurers from denying coverage or charging higher premiums because of an individual‘s health status. See
Congress understood that one way to avoid such price increases was to require near-universal participation in the insurance marketplace via the individual mandate. In combination with the individual mandate, Congress authorized broad incentives—totaling hundreds of billions of dollars—to further increase market participation among low- and middle-income individuals. A Congressional Budget Office report issued while the Act was under consideration informed Congress that there would be an “an influx of enrollees with below-average spending for health care, who would purchase coverage be- cause of the new subsidies to be provided and the individual mandate to be imposed.” J.A. 95. The report further advised Congress that “[t]he substantial premium subsidies available in the exchanges would encourage the enrollment of a broad range of people“; and that the structure of the premium tax credits, under which federal subsidies increase if premiums rise, “would dampen the chances that a cycle of rising premiums and declining enrollment would ensue.” J.A. 108-109. As the defendants further explain, denying tax credits to individuals shopping on federal Exchanges would throw a debilitating wrench into the Act‘s internal economic machinery:
Insurers in States with federally-run Exchanges would still be required to comply with guaranteed-issue and community-rating rules, but, without premium tax subsidies to encourage broad participation, insurers would be deprived of the broad policy-holder base required to make those reforms viable. Adverse selection would cause premiums to rise, further discouraging market participation, and the ultimate result would be an adverse-selection “death spiral” in the individual insurance markets in States with federally-run Exchanges.
Br. of Appellees, at 35; see also Amicus Br. of America‘s Health Insurance Plans, at 3-6; Amicus Br. for Economic Scholars, at 3-6.5
It is therefore clear that widely available tax credits are essential to fulfilling the Act‘s primary goals and that Congress was aware of their importance when drafting the bill. The IRS Rule advances this understanding by ensuring that this essential component exists on a sufficient-
It is thus entirely sensible that the IRS would enact the regulations it did, making Chevron deference appropriate. Confronted with the Act‘s ambiguity, the IRS crafted a rule ensuring the credits’ broad availability and furthering the goals of the law. In the face of this permissible construction, we must defer to the IRS Rule. See Scialabba, 134 S.Ct. at 2213 (“Whatever Congress might have meant in enacting [the statute], it failed to speak clearly. Confronted with a self-contradictory, ambiguous provision in a complex statutory scheme, the Board chose a textually reasonable construction consonant with its view of the purposes and policies underlying immigration law. Were we to overturn the Board in that circumstance, we would assume as our own the responsible and expert agency‘s role.“); Nat‘l Elec. Mfrs. Ass‘n, 654 F.3d at 505 (“[W]e defer at [Chevron‘s] step two to the agency‘s interpretation so long as the construction is a reasonable policy choice for the agency to make.“) (second alteration in original).
Tellingly, the plaintiffs do not dispute that the premium tax credits are an essential component of the Act‘s viability. Instead, as explained above, they concede that Congress probably wanted to make subsidies available throughout the country, but argue that Congress was equally concerned with ensuring that the states play a leading role in administering the Act, and thus conditioned the availability of the credits on the creation of state Exchanges. The plaintiffs argue that the IRS Rule exceeds the agency‘s authority because it irreconcilably conflicts with Congress‘s goal of ensuring state leadership. For the reasons explained above, however, we are not persuaded by the plaintiffs’ “coercion” argument and do not consider it a valid basis for circumscribing the agency‘s authority to implement the Act in an efficacious manner.
The plaintiffs also attempt to avert Chevron deference by arguing that
Finally, the plaintiffs contend that a rule of statutory construction that requires tax exemptions and credits to be construed narrowly displaces Chevron deference in this case. However, while the Supreme Court has stated that tax credits
Rejecting all of the plaintiffs’ arguments as to why Chevron deference is inappropriate in this case, for the reasons explained above we are satisfied that the IRS Rule is a permissible construction of the statutory language. We must therefore apply Chevron deference and uphold the IRS Rule.6
Accordingly, the judgment of the district court is affirmed.
AFFIRMED
DAVIS, Senior Circuit Judge, concurring:
I am pleased to join in full the majority‘s holding that the Patient Protection and Affordable Care Act (the Act) “permits” the Internal Revenue Service to decide whether premium tax credits should be available to consumers who purchase health insurance coverage on federally-run Exchanges. Maj. Op. at 373. But I am also persuaded that, even if one takes the view that the Act is not ambiguous in the manner and for the reasons described, the necessary outcome of this case is precisely the same. That is, I would hold that Congress has mandated in the Act that the IRS provide tax credits to all consumers regardless of whether the Exchange on which they purchased their health insurance coverage is a creature of the state or the federal bureaucracy. Accordingly, at Chevron Step One, the IRS Rule making the tax credits available to all consumers of Exchange-purchased health insurance coverage,
Although the Act expressly contemplates state-run Exchanges,
Enter the premium tax credits, essentially a tax subsidy for the purchase of health insurance. The amended tax code,
Appellants contend that the language “enrolled in through an Exchange established by the State” precludes the IRS from providing premium tax credits to consumers who purchase health insurance coverage on federal Exchanges. To them, “established by the State” in the premium tax credits calculation subprovision is the sine qua non of this case. An Exchange established by the State is not an Exchange established by the federal government, they argue; thus, the equation for calculating the amount of the premium tax credit is wholly inapplicable to all consumers who purchase health insurance coverage on federally-run Exchanges (the amount would be zero, according to Appellants).
I am not persuaded and for a simple reason: “[E]stablished by the State” indeed means established by the state—except when it does not, i.e., except when a state has failed to establish an Exchange and when the Secretary, charged with acting pursuant to a contingency for which Congress planned,
That disposes of the Appellants’ contention. This is not a case that calls up the decades-long clashes between textualists, purposivists, and other schools of statutory interpretation. See Abbe Gluck, The States As Laboratories of Statutory Interpretation: Methodological Consensus and the New Modified Textualism, 119 Yale L.J. 1750, 1762-63 (2010). The case can be resolved through a contextual reading of a few different subsections of the statute. If there were any remaining doubt over this construction, the bill‘s structure dispels it: The contingency provision at
The majority opinion understandably engages with the Appellants and respectfully posits they could be perceived to advance a plausible construction of the Act, i.e., that Congress may have sought to restrict the
In fact, Appellants’ reading is not literal; it‘s cramped. No case stands for the proposition that literal readings should take place in a vacuum, acontextually, and untethered from other parts of the operative text; indeed, the case law indicates the opposite. National Association of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 666 (2007). So does common sense: If I ask for pizza from Pizza Hut for lunch but clarify that I would be fine with a pizza from Domino‘s, and I then specify that I want ham and pepperoni on my pizza from Pizza Hut, my friend who returns from Domino‘s with a ham and pepperoni pizza has still complied with a literal construction of my lunch order. That is this case: Congress specified that Exchanges should be established and run by the states, but the contingency provision permits federal officials to act in place of the state when it fails to establish an Exchange. The premium tax credit calculation subprovision later specifies certain conditions regarding state-run Exchanges, but that does not mean that a literal reading of that provision somehow precludes its applicability to substitute federally-run Exchanges or erases the contingency provision out of the statute.
That Congress sometimes specified state and federal Exchanges in the bill is as unremarkable as it is unrevealing. This was, after all, a 900-page bill that purported to restructure the means of providing health care in this country. Neither the canons of construction nor any empirical analysis suggests that congressional drafting is a perfectly harmonious, symmetrical, and elegant endeavor. See generally Abbe Gluck & Lisa Schultz Bressman, Statutory Interpretation from the Inside: An Empirical Study of Congressional Drafting, Delegation, and the Canons: Part I, 65 Stan. L.Rev. 901 (2013). Sausage-makers are indeed offended when their craft is linked to legislating. Robert Pear, If Only Laws Were Like Sausages, N.Y. Times, Dec. 5, 2010, at WK3. At worst, the drafters’ perceived inconsistencies (if that is what they are at all) are far less probative of Congress’ intent than the unqualified and broad contingency provision.
Appellants insist that the use of “established by the State” in the premium tax credits calculation subprovision is evidence of Congress’ intent to limit the availability of tax credits to consumers of state Ex-
The real danger in the Appellants’ proposed interpretation of the Act is that it misses the forest for the trees by eliding Congress’ central purpose in enacting the Act: to radically restructure the American health care market with “the most expansive social legislation enacted in decades.” Sheryl Gay Stolberg & Robert Pear, Obama Signs Health Care Overhaul Into Law, With a Flourish, N.Y. Times, March 24, 2010, at A19. The widespread availability of premium tax credits was intended as a critical part of the bill, a point the President highlighted at the bill signing. Transcript of Remarks by the President and Vice President at Signing of the Health Insurance Reform Bill, March 23, 2010 (“And when this exchange is up and running, millions of people will get tax breaks to help them afford coverage, which represents the largest middle-class tax cut for health care in history. That‘s what this reform is about.“). Appellants’ approach would effectively destroy the statute by promulgating a new rule that makes premium tax credits unavailable to consumers who purchased health coverage on federal Exchanges. But of course, as their counsel largely conceded at oral argument, that is their not so transparent purpose.
Appellants, citizens of the Commonwealth of Virginia, do not wish to buy health insurance. Most assuredly, they have the right, but not the unfettered right, NFIB, 132 S.Ct. at 2566, to decline to do so. They have a clear choice, one afforded by the admittedly less-than-perfect representative process ordained by our constitutional structure: they can either pay the relatively minimal amounts needed to obtain health care insurance as provided by the Act, or they can refuse to pay and run the risk of incurring a tiny tax penalty. Id. What they may not do is rely on our help to deny to millions of Americans desperately-needed health insurance through a tortured, nonsensical construction of a federal statute whose manifest purpose, as revealed by the wholeness and coherence of its text and structure, could not be more clear.
As elaborated in this separate opinion, I am pleased to concur in full in Judge Gregory‘s carefully reasoned opinion for the panel.
No. 13-40807.
United States Court of Appeals, Fifth Circuit
July 7, 2014.