Two federal appeals courts this week issued conflicting opinions on Obamacare.
King v. Burwell, US 4th Cir. (7/22/14)
Health Law, Tax Law
Plaintiffs filed suit challenging the validity of an IRS final rule implementing the premium tax credit provision of the Patient Protection and Affordable Care Act (ACA), 26 U.S.C. 36B. The final rule interprets the Act 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 HHS. The court found that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, the court upheld the rule as a permissible exercise of the agency’s discretion. Accordingly, the court affirmed the judgment of the district court.
Halbig v. Burwell, US DC Cir. (7/22/14)
Health Law, Tax Law
Appellants challenged the IRS’s interpretation of 26 U.S.C. 36B, enacted as part of the Patient Protection and Affordable Care Act, under the Administrative Procedure Act (APA), 5 U.S.C. 706(2)(A). The district court held that the ACA’s text, structure, purpose, and legislative history make “clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges.” The district court held that even if the ACA were ambiguous, the IRS’s regulation would represent a permissible construction entitled to Chevron deference. The court concluded, however, that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges “established by the State.” Accordingly, the court reversed the judgment of the district court and vacated the IRS’s regulation.
Read More: Second federal appeals court rules on health-care law, setting up a same-day circuit conflict