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Virginia Federal Judge Deals Heavy Blow to New Healthcare Legislation

Last month we reported on several challenges  to the Patient Protection and Affordable Care Act (PPACA) being brought in Federal court.  This week, a U.S. Federal District Judge in Virginia found that a portion of the healthcare legislation is unconstitutional. 

Part of PPACA requires that all individuals have health insurance or else pay a penalty.  The issue in this case was whether forcing someone to buy health insurance is the regulation of activity or inactivity.  Congress can regulate activity affecting interstate commerce, but it does not have the power to regulate inactivity.  Virginia’s Attorney General argued the law unlawfully regulates the “inactivity” of those who do not want to buy health insurance.  The federal government responded by arguing the decision by an individual not to buy health insurance is an “active” decision, because the individual is choosing to pay out of pocket for any medical expenses. 

Judge Henry E. Hudson of the U.S. District Court for the Eastern District of Virginia disagreed with the federal government’s definition of activity, finding that if that definition were applied, Congress would basically be allowed to regulate everything.  He, therefore, found Congress exceeded its power.  However, instead of striking the entire bill, Judge Hudson struck only the portion having to do with the individual mandate.

Decisions in these cases seem to be divided along political ideological lines.  Two other Federal judges have come to the opposite conclusion, holding the individual mandate is constitutional.  Those judges were appointed by President Bill Clinton, whereas the judge in the Virginia case was appointed by President George W. Bush.  There are a number of other cases pending around the country challenging this healthcare legislation and the one thing most judges are sure of is that these issues will end up being decided by the U.S. Supreme Court. 

The question is: what can employers do until then?  For now, employers should follow those provisions of the healthcare bill already in effect, including the grandfathering regulations.  We will continue to keep an eye on the legal battles.  Hopefully, we will all have an answer soon as to what the future holds for employer-sponsored healthcare. 

Brody and Associates regularly advises management on complying and remaining up to date with state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.