Wednesday, July 23, 2014

A Tale of Two Courts

With news of federal appeals court decision out of Washington, DC, in the morning on July 22nd, I thought, "this is the best of times."  By the time the day had ended, and word came of another appeals court's decision on the same issue out of Richmond, Virginia, I thought "this is the worst of times." 

As it turns out, the two decisions are a quite potent tutor on the importance of the kinds of people that are put, by our votes, in Congress, and in the White House.  As you will see if you read on, the political identity of Presidents that appoint judges provides a nearly perfect predictor of judicial philosophy. Allow me to explain:

Two federal appeals courts issued decisions regarding a contentious issue arising from the Obama administration's interpretation and application of an aspect of the Obamacare statute.   In one decision, from the US Court of Appeals for the District of Columbia Circuit, two out of three judges concluded that the IRS overstepped legal bounds when it adopted a rule permitting a insurance premium tax credit be allowed in instances where the consumer purchased health insurance through the federal health insurance exchange.  In the other decision, from the US Court of Appeals for the Fourth Circuit in Richmond, Virginia, three judges concluded that the exact same IRS rule was a reasonable interpretation of the text of the Affordable Care Act.

Briefly, Congress set up a two tiered system to accomplish its goal.  A charitable construction of Congress' goal would be to obtain the widest possible inclusion of Americans within health insurance coverages.  Until Obamacare became the law, health insurance was, virtually entirely, a question of state law and state regulation.  When the Democratic Party controlled Congress adopted the Obamacare laws, at least a thin skin of pretense required Congress and the President to pretend to respect the traditional, constitutionally affirmed, role of States in such matters.  To do that, Obamacare provides for State health insurance exchanges to be set up in States willing to do so.

Moreover, to encourage widest possible participation in those State exchanges, Congress included a provision that has the effect of subsidizing the cost of health insurance premiums by granting a tax credit for payments on such premiums.  Congress also created a federal health insurance exchange because, with more than a majority of State legislative bodies in Republican Party control, there was a reasonably predictable possibility that many States would not create such exchanges.

The Congress that enacted Obamacare, we must presume, knew how to draft legislative language creating a health insurance exchange.  After all, they employed such language twice:  in creating the State exchange program, and in creating the federal exchange program.  The Congress that enacted Obamacare, we must ALSO presume, knew how to draft legislative language providing that a health insurance premium tax credit would be available to certain taxpayers (based on income).  After all, Congress employed such language once:  in authorizing the allowance of a health insurance premium tax credit for eligible subscribers who purchased their health insurance through the State-created health care exchanges.

And therein, as they say, lies the rub.  Because the Congress that knew how to create exchanges, the Congress that knew how to authorize the IRS to allow for health insurance premium tax credits for certain income-based subscribers, that very same Congress, legislating through that very same exact bill, DID NOT authorize the IRS to allow for health insurance premium tax credits for certain income based subscribers who purchased their insurance through the federal exchange in their State because the State had chosen not to set up such an exchange.  (As it turned out, Congress was not entirely myopic.  More than half the States declined the invitation in Obamacare to set up a State exchange.)

Despite the absence of Congressional authorization to do so, the IRS announced, took comments on, and made final a rule allowing for a health insurance premium tax credit for income-qualified purchasers whose health insurance was bought through the federal exchange in those States without a State health care exchange.  That rule has the effect of spending federal tax monies.  But neither the Affordable Care Act, nor subsequent authorizations legislation, nor subsequent appropriations, have authorized those expenditures of federal funds by the IRS.

Remember that in the progressive/Democrat mindset, money in the hands of another as a result of a tax credit is an expenditure of federal funds.  That very reasoning is why, in every discussion regarding taxes and spending, Democrats insist that tax credits funded by such enactments must be funded through other taxes.  In other words, they argue, if you are going to give a tax credit that has the effect of reducing the total federal tax haul by, say, 1 billion dollars, then that "purchase" must be offset by other tax increases to cover the billion dollar loss.

But, setting aside the highly political nature of the seemingly intractable dispute over Obamacare, judges and lawyers ARE REQUIRED to accord a kind of respect to a legislative body's language choices.  For example, if a statute stated,  "No Motor Vehicle Operator Permit or License is to be issued to a person unless, first, the Department of Motor Vehicles obtains a copy of a birth document certified by the Department of Vital Statistics to be a true and correct copy of the original," then courts and judges, following hundreds of years of legal history and development, would know that the DMV could not accept a hand drawn, with crayon, reasonable facsimile of a birth certificate unless it bore a certification that it was a true and correct copy of an original birth certificate.  Neither courts, nor lawyers, nor governors, nor legislators, NOR EVEN PRESIDENTS, have any legal justification for pretending that a statute includes language it omits, nor omits language it includes.  Certainty in the law requires that this be so.

Returning to the appeals courts decisions and the impact of political identity of presidents making such appointments, there remains this to be said.  Six different judges participated in the making of the two appeals court decisions yesterday.  Four of those judges were appointed by Presidents who are Democrats; two of those judges were appointed by Presidents who are Republicans.  All three judges in the Fourth Circuit majority, and one judge, the dissenting judge in the DC Circuit decision, were appointed by Democrats.  Two judges, the majority in the DC Circuit decision, were appointed by Republicans.

As they say, elections have consequences.

It is not every day, however, that one consequence of elections is that potentially criminal conduct by the President or his administration will be given a wink and a nod from the bench.  But yesterday was one of those days in Richmond, Virginia, and in Washington, DC, where the dissenting judge was willing to give the wink and the nod, but failed to garner a majority.

And while some will say that raising the specter of criminality is hyperbolic,  I disagree for a well-founded reason.  For more than a century, a federal law known as the AntiDeficiency Act expressly bars federal agents and agencies from spending unappropriated funds.  That statute is direct and clear:  "An officer or employee of the United States Government or of the District of Columbia government may not ... make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation[.]"  Violation of that statute is, itself, a crime:  "An officer or employee of the United States Government or of the District of Columbia government knowingly and willfully violating [that] section [] shall be fined not more than $5,000, imprisoned for not more than 2 years, or both."

Thus, not only is the IRS rule unauthorized by the Affordable Care Act, it puts the Commissioner of the IRS and IRS employees in the position of violating the Antideficiency Act.  Unlike other federal executive adventures outside the law, such as the alleged violations by the Reagan administration of the Boland Amendment, violations of the Antideficiency Act are, expressly, criminal acts subject to prosecution, and conviction carries the risk of fines and imprisonment.  The decisions of the DC Circuit and the Fourth Circuit directly conflict with each other, invite uncertainty as to the meaning and application of the Affordable Care Act, and raise the twin specters of judicial disregard for statutory language and IRS administrative disregard for Congressionally authorized appropriations.

Ultimately, these cases, one or both, will come to the Supreme Court of the United States.  The "losers" in either case can, of course, apply to the same appeals court for reconsideration.  In fact, because of the OTHER COURT'S DECISION, there are better than normal prospects in both cases that the decisions by panels of the DC Circuit and the Fourth Circuit will be reconsidered by the entire court of appeals in each case.  After all, conflicts between courts of appeals on a question of federal law are a justifiable reason for such en banc review by the whole court of a panel decision.  But there is little doubt that the Supreme Court will have the opportunity, and may have the need, to review these cases.

The opportunity will arise if any party below is dissatisfied by the outcome they got at the appeals court in their case; that outcome is assured.  The need will arise in either of two possible circumstances.  First, if, at the end of the day, the decisions of these two courts remain in conflict as to the meaning and application of the Affordable Care Act, then Supreme Court review is always helpful in insuring that a single rule of law governs throughout the United States.  Second, if, at the end of the day, the Supreme Court, in evaluating requests for hearings, concludes that one of the courts, or both, have incorrectly construed and applied the language of the Act.  For now, the uncertainty created by the Obama Administration's lawless extension of the State Exchange health insurance premium tax credit to federally operated health exchanges is compounded by the uncertainty of the conflicting decisions yesterday.

Legal observers are often invited to make predictions of future actions by courts.  And this takes me back to the topic of this post.  Since taking office, Obama has now appointed enough appeals court judges so that Democrat-appointed judges constitute majorities of the active judges in both the DC Circuit and Fourth Circuit.  Given that party of appointment is, at present glance, a direct predictor of judicial outcome, I will make this prediction:  if either appeals court grants rehearing by the whole court, then it is likely that the whole court will uphold the IRS renegade rule.  And that is a certainty that benefits no one.