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Margaret Peggy Lee Mead, et al v. Eric H. Holder

February 22, 2011


The opinion of the court was delivered by: Gladys Kessler United States District Judge


Plaintiffs Margaret Peggy Lee Mead, Charles Edward Lee, Susan Seven-Sky, Kenneth Ruffo, and Gina Rodriguez bring this action against Defendants Eric H. Holder, Jr., Kathleen Sebelius, and Timothy F. Geithner in their official capacities and Defendants United States Department of Health and Human Services and United States Department of the Treasury. Plaintiffs seek a declaration pursuant to 28 U.S.C. §§ 2201-2202 that the individual insurance mandate of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act, Publ. L. No. 111-152, 124 Stat. 1029 (2010) ("Affordable Care Act" or "ACA") is unconstitutional on its face. Plaintiffs also seek injunctive relief against enforcement of the mandate.

This matter is presently before the Court on Defendants' Motion to Dismiss Plaintiffs' Amended Complaint [Dkt. No. 15] pursuant to Federal Rule of Civil Procedure 12(b)(6).*fn1 On January 31, 2011, oral argument was heard on Defendants' Motion. Upon consideration of the Motion, Opposition, Reply, the arguments presented by the parties in open court, and the entire record herein, and for the reasons set forth below, the Motion to Dismiss is granted.

The present litigation is one of many similar lawsuits challenging the Affordable Care Act in United States District Courts around the country. The controversy surrounding this legislation is significant, as is the public's interest in the substantive reforms contained in the Act. It is highly likely that a decision by the United States Supreme Court will be required to resolve the constitutional and statutory issues which have been raised. Needless to say, this Court's personal views on the necessity, prudence, or effectiveness of the Affordable Care Act are of no moment whatsoever. The only issues concerning the ACA presently before this Court are those raised by the parties: namely, whether § 1501 passes muster under the Constitution of the United States, and whether it violates the Religious Freedom Restoration Act of 1993, 42 U.S.C. § 2000bb et seq. ("RFRA").

I. Background

On March 23, 2010, President Barack Obama signed the Affordable Care Act into law in an effort to curb rising health care costs and to provide greater coverage for the more than 45 million Americans who were uninsured during 2009. See Cong. Budget Office, Key Issues in Analyzing Major Health Insurance Proposals 1 (2008), available at doc9924/12-18-keyissues.pdf. The ACA contains many provisions designed to improve access to the national health care market, reduce health care costs, and increase coverage for those who now lack protection. For example, the ACA (1) creates state-operated health benefit exchanges which enable individuals and small businesses to obtain price-competitive health insurance, see ACA §§ 1311, 1321, (2) expands Medicaid coverage, see ACA § 2001, (3) prohibits insurance companies from denying or increasing the price of coverage to individuals with pre-existing medical conditions, from limiting the amount of coverage available, and from rescinding coverage when an individual becomes sick, see ACA §§ 1001, 1201,(4) requires that large employers offer health insurance to their employees, see ACA § 1511, and (5) waives all Medicare coinsurance and copayment fees for a multitude of preventive services, including screening for depression, colon cancer, breast cancer, and cervical cancer, see ACA § 4104.

Plaintiffs challenge § 1501 of the Affordable Care Act, entitled "Requirement to Maintain Minimum Essential Coverage." See ACA § 1501 (adding 26 U.S.C. § 5000A) ("individual mandate"); id. § 10106 (amending findings in § 1501). Section 1501 requires "individuals," as defined under the ACA,*fn2 "for each month beginning after 2013 [to] ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month." 26 U.S.C. § 5000A(a). If an individual fails to obtain such minimum essential coverage, he or she must include with their annual federal tax payment a "shared responsibility payment," which is a "penalty" consisting of a fixed dollar amount. Id. §§ 5000A(b), (c).

In short, § 1501 establishes a requirement that, beginning in 2014, each individual obtain health care coverage or pay a monetary penalty. This individual mandate is a critical element in Congress's comprehensive plan to reduce the spiraling health care costs that this country has experienced and is expected to experience in the future. Indeed, Congress specifically concluded that "[t]he requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold." ACA § 1501(a)(2)(I), as amended by § 10106. Thus, the individual mandate provision must be viewed not as a stand-alone reform, but as one piece of a larger package of reforms meant to revamp the national health care market by creating new procedures and institutions to reduce overall costs. See ACA § 1501(a)(2)(H), as amended by § 10106. Put differently, many of the reforms contained in the Affordable Care Act rely on the individual mandate--or, more specifically, the reduction in health insurance premiums that the mandate is intended to produce--to help support their own financial viability.

Plaintiffs are individual federal taxpayers who specifically allege that they can afford health insurance coverage, but that they have chosen not to purchase it in the past and do not wish to purchase it in the future. Plaintiff Mead is a sixty-two year-old, self-employed resident of North Carolina who has not had health insurance for approximately eighteen years. Am. Compl. ¶¶ 11-14 [Dkt. No. 10]. Plaintiff Lee is a sixty year-old, unemployed resident of Texas who has not had health insurance for approximately twenty-two years, although he could obtain coverage under the plan held by his wife, who is employed. Id. ¶¶ 23-26. Plaintiff Seven-Sky is a fifty-three year-old, self-employed resident of New York who has not had health insurance for at least six years. Id. ¶¶ 37-39. Plaintiff Ruffo is a forty-nine year-old, self-employed resident of Texas who has not had health insurance for at least five years. Id. ¶¶ 51-54. Finally, Plaintiff Rodriguez is a thirty-six year-old resident of Texas who is a stay-at-home mother of three children and who has not had health insurance for approximately ten years. Id. ¶¶ 63-75.

According to Plaintiffs, they are all "generally in good health." Id. ¶¶ 12, 25, 39, 53, 65. While Plaintiffs Ruffo and Rodriguez do intend to consume medical services in the future, they object to § 1501 because they would prefer to pay for those services out of pocket. Plaintiffs Mead, Lee, and Seven-Sky, on the other hand, allege that they will continue to refuse all medical services for the remainder of their lives.

None of the Plaintiffs currently qualify for Medicare or Medicaid, and Plaintiffs Mead, Lee, and Seven-Sky have stated that they will not enroll in Medicare once they do qualify. Id. ¶¶ 11, 24, 38, 52, 64. Plaintiffs contend that they also do not qualify for any of the exemptions under the ACA, and that it is thus "highly likely" that they will be required to either purchase health insurance or make an annual shared responsibility payment beginning in 2014. Id. ¶¶ 14, 27, 41, 55, 67.

Plaintiffs strenuously object to the Act's individual mandate because they believe that the federal government lacks the constitutional authority to require them either to purchase health insurance or pay a substantial penalty. According to Plaintiffs, the individual mandate provision will impose annual shared responsibility payments through 2020 costing Plaintiffs Mead, Lee, Seven-Sky, and Ruffo a minimum of $3,895 each and Plaintiff Rodriguez a minimum of $11,685, for a total cost to Plaintiffs of $27,265 in this period. Plaintiffs claim that anticipation of these costs has compelled them to "adjust their fiscal affairs" in the present. Id. ¶ 4.

Plaintiffs also object to the individual mandate on religious grounds. Plaintiffs Mead, Lee, and Seven-Sky believe that God will provide for their physical, spiritual, and financial well-being, and that "[b]eing forced to buy health insurance conflicts with [their] religious faith because [they] believe[] that [they] would be indicating that [they] need[] a backup plan and [are] not really sure whether God will, in fact, provide for [their] needs." Id. ¶¶ 16, 29, 43. Plaintiffs Ruffo and Rodriguez do not wish to purchase health insurance because it is contrary to their beliefs in a holistic approach to medicine. Id. ¶ 56, 68. Rodriguez specifically objects on the ground that health insurance would not cover many of the medical services and health products she currently pays for out of pocket.*fn3 Id. ¶ 69.

Based on these objections, Plaintiffs assert in their Amended Complaint that the Act's individual mandate and its related enforcement provisions exceed Congress's power under Article I of the Constitution and, consequently, that these provisions are unconstitutional and unenforceable. In the alternative, Plaintiffs argue that the individual mandate violates their rights as set forth in RFRA.

On August 20, 2010, Defendants filed the present Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6).*fn4 The Government argues that the Amended Complaint fails to state a claim because Congress does have authority under the Commerce Clause and the General Welfare Clause of Article I of the Constitution to enact § 1501, and because § 1501 does not violate RFRA.

II. Standard of Review

Under Rule 12(b)(6), a plaintiff need only plead "enough facts to state a claim to relief that is plausible on its face" and to "nudge[] [his or her] claims across the line from conceivable to plausible." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "[A] complaint [does not] suffice if it tenders naked assertions devoid of further factual enhancement." Iqbal, 129 S.Ct. at 1949 (internal quotations omitted) (citing Twombly, 550 U.S. at 557, 127 S.Ct. 1955). Instead, the complaint must plead facts that are more than "merely consistent with" a defendant's liability; "the pleaded factual content [must] allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1940.

"[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 563, 127 S.Ct. 1955. Under the standard set forth in Twombly, a "court deciding a motion to dismiss must . . . assume all the allegations in the complaint are true (even if doubtful in fact) . . . [and] must give the plaintiff the benefit of all reasonable inferences derived from the facts alleged." Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 18 (D.C. Cir. 2008) (internal quotations marks and citations omitted); see also Tooley v. Napolitano, 586 F.3d 1006, 1007 (D.C. Cir. 2009) (declining to reject or address the government's argument that Iqbal invalidated Aktieselskabet). Of course, if a claim does not rest on sound legal conclusions, it does not state "a plausible claim for relief," regardless of the facts alleged. Iqbal, 129 S.Ct. at 1950.

III. Analysis

The Court will first address its subject matter jurisdiction over this case, before turning to the parties' legal arguments concerning Plaintiffs' substantive claims.

A. Article III Subject Matter Jurisdiction

On January 21, 2011, Defendants gave notice to this Court of their intent not to pursue their arguments that the Amended Complaint should be dismissed under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. Although Defendants have waived these arguments, every federal court must satisfy itself of its own subject matter jurisdiction, which is limited by Article III of the Constitution. See FW/PBS, Inc. v. Dallas, 493 U.S. 215, 230-31, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990). Therefore, this Court must determine whether it has jurisdiction.

Article III of the United States Constitution limits federal jurisdiction to actual cases and controversies. "Three inter-related judicial doctrines--standing, mootness, and ripeness--ensure that federal courts assert jurisdiction only over" such disputes. Worth v. Jackson, 451 F.3d 854, 855 (D.C. Cir. 2006). Two of those doctrines formerly asserted by Defendants, standing and ripeness, have been the topic of extended discussion in the district court opinions deciding motions to dismiss in similar challenges to the ACA made across the country,*fn5 and will now be considered in the context of this case.

1. Standing

In Lujan v. Defenders of Wildlife, the Supreme Court established the following three requirements for Article III standing:

First, the plaintiff must have suffered an injury in fact-an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of--the injury has to be fairly ... trace[able] to the challenged action of the defendant, and not ... th[e] result [of] the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal quotations and citations omitted). In this case, the issues regarding standing relate only to the first element, namely the requirement that Plaintiffs suffer an injury in fact.

Plaintiffs allege two separate injuries arising from the individual mandate provision of the ACA in their Amended Complaint. First, Plaintiffs allege a future injury based on the Act's requirement that, beginning in 2014, they make annual shared responsibility payments for having failed to obtain minimum essential coverage. Second, Plaintiffs allege that the ACA is causing actual injury now by forcing them to rearrange their finances at this time in order to prepare for enforcement of the individual mandate in 2014. The question before this Court is whether either of these claimed injuries establishes Plaintiffs' standing in this case.

a. Future Injury

The Court will first consider whether Plaintiffs' alleged threat of future injury in the form of shared responsibility payments is "actual or imminent," and not "conjectural and hypothetical." Id. at 560, 112 S.Ct. 2130 (internal quotations and citations omitted). Specifically, the Court must decide whether Plaintiffs have demonstrated that the individual mandate will apply to them in 2014, given the possibility that intervening events could result in their exemption from the minimum coverage requirement. Of course, if Plaintiffs are found to be exempt from the minimum coverage requirement in 2014, their claimed injury--payment of the penalty--will not occur.

For example, Plaintiff Mead may not be subject to the individual mandate in 2014 because she will likely be eligible for Medicare Part A by that time. See Defs.' Mot. at 11 ("Plaintiff Mead . . . will likely be subject to automatic entitlement to Medicare Part A by 2014, thus satisfying the minimum coverage requirement."). In addition, the other Plaintiffs "might find employment by 2014 that provides adequate health [care] coverage, find that their economic situation has deteriorated to the point where they qualify for Medicaid or a financial hardship exemption, or discover that they have changed their minds about the necessity of health insurance due to such possible life events as a serious illness." Id. at 11-12 (internal citation and footnote omitted). In short, the argument is that the facts alleged in the Amended Complaint may change between now and 2014, and therefore this Court risks "deciding a case in which no injury would have occurred at all." Lujan, 504 U.S. at 564 n.2, 112 S.Ct. 2130.

Section 1501 of the ACA provides that Medicare Part A will satisfy the minimum coverage requirement. See 26 U.S.C. § 5000A(f)(1)(A). Thus, if Plaintiff Mead is covered under Medicare Part A in 2014, it appears that she would not be subject to the Act's penalty provision. However, Mead alleges that she will nevertheless refuse to enroll in Medicare once she qualifies.

The Social Security Act provides that "[e]very individual who has attained age 65 and is entitled to monthly [Social Security] benefits . . . shall be entitled to hospital insurance benefits under Part A of [the Medicare Act]." 42 U.S.C. § 426(a). To be entitled to Social Security benefits, Mead must file an application. See 42 U.S.C. § 402. If Mead does apply for Social Security benefits, her enrollment in Medicare Part A becomes automatic. In addition, she may not opt out of Medicare Part A and still maintain her Social Security benefits; if she chooses to maintain her Social Security benefits, she will remain enrolled in Medicare Part A. See Social Security Administration, POMS Section HI 00801.002 Waiver of HI Entitlement by Monthly Beneficiary, available at; Hall v. Sebelius, 689 F.Supp.2d 10, 15-16 (D.D.C. 2009) (rejecting in part a challenge to Social Security Administration requirement that individuals who receive Social Security benefits must also receive Medicare Part A coverage).

The Amended Complaint states that Mead will refuse to enroll in Medicare Part A, but it does not allege that she will forgo her Social Security benefits. See Am. Compl. ¶ 11. In the absence of such an allegation, the Court is not persuaded that there is a substantial probability that she will reject her monthly Social Security checks and therefore not be covered under Medicare Part A in 2014. Thus, it is unlikely that Plaintiff Mead will be subject to § 1501's penalty provision in 2014, which compels the conclusion that she lacks standing in this case.

Still, if just one of the other Plaintiffs has standing to raise the claims alleged in the Amended Complaint, this Court has subject matter jurisdiction. Watt v. Energy Action Educ. Found., 454 U.S. 151, 160, 102 S.Ct. 205, 70 L.Ed.2d 309 (1981). As discussed above, the other Plaintiffs' circumstances could also change before 2014 so that they either are no longer subject to the minimum essential coverage requirement or they satisfy it. However, this Court agrees with Judge Vinson in McCollum that:

Such 'vagaries' of life are always present, in almost every case that involves a pre-enforcement challenge. If the defendants' position were correct, then courts would essentially never be able to engage in pre-enforcement review. Indeed, it is easy to conjure up hypothetical events that could occur to moot a case or deprive any plaintiff of standing in the future.

McCollum, 716 F.Supp.2d at 1147 (emphasis in original). Indeed, as our Court of Appeals has made clear, a plaintiff need only establish the elements of standing by a "substantial probability," not with certainty. Sierra Club v. EPA, 292 F.3d 895, 899 (D.C. Cir. 2002).

The possible changes in the facts of this case are by no means certain, or even likely to occur. By the same token, there is a substantial probability that Plaintiffs will remain subject to 26 U.S.C. § 5000A(a) in 2014. In addition, whether Plaintiffs will be subject to the individual mandate in the future does not depend on such future contingencies as third-party actions. This case is therefore distinguishable from cases in which the alleged future injuries are truly speculative. See, e.g., Public Citizen, Inc. v. NHTSA, 489 F.3d 1279, 1290 (D.C. Cir. 2007);*fn6 Gulf Restoration Network, Inc. v. Nat'l Marine Fisheries Serv., 730 F.Supp.2d 157, 165-67 (D.D.C. 2010). Consequently, Plaintiffs have alleged facts sufficient to show a substantial probability that they will remain without health insurance coverage in 2014 and that they will thereafter be required by the ACA to make annual shared responsibility payments.

A separate issue, however, is whether Plaintiffs' alleged future injury is imminent. It first bears noting that, unlike the plaintiffs in Lujan, Plaintiffs in this case have given a definite point in time by which their injury will occur, namely 2014, the effective date of the Act's individual mandate provision. Thus, injury is not alleged at "some indefinite future time," which would indicate a lack of imminence. Lujan, 504 U.S. at 2139 n.2, 112 S.Ct. 2130.

Still, Plaintiffs' alleged injuries are temporally remote. In McConnell v. FEC, the Supreme Court concluded that an FEC regulation which would not affect the plaintiff Senator until five years in the future was "too remote temporally to satisfy Article III standing." 540 U.S. 93, 226, 124 S.Ct. 619, 157 L.Ed.2d 491 (2003); see also Shays v. FEC, 414 F.3d 76, 122-23 (D.C. Cir. 2005) (noting that directly regulated parties do not have automatic standing absent showing of imminent injury). Thus, McConnell suggests that an injury which is several years in the future may not be imminent, and therefore insufficient to establish standing.

As the Court noted in Lujan, however, imminence is an "elastic concept" that does not lend itself to mathematical precision. Lujan, 504 U.S. at 564 n.4, 112 S.Ct. 2130. In addition, it is significant that our Circuit held, in a case decided shortly after McConnell,*fn7 that temporal remoteness alone does not automatically defeat standing. In Village of Bensenville v. FAA, our Court of Appeals found standing where the plaintiffs were challenging a fee scheduled to be collected thirteen years in the future because "[t]he FAA's order is final and, absent action by us, come 2017 Chicago will begin collecting the passenger facility fee; accordingly, 'the impending threat of injury [to the municipalities] is sufficiently real to constitute injury-in-fact and afford constitutional standing.'" 376 F.3d 1114, 1119 (D.C. Cir. 2004) (quoting Wyo. Outdoor Council v. United States Forest Serv., 165 F.3d 43, 51 (D.C. Cir. 1999)). In this case, the ACA's individual mandate provision is similarly final and, absent action by the courts or Congress, the federal government will begin to impose penalties on qualifying individuals who refuse to obtain minimum essential coverage in 2014.

Although it cannot be said with absolute certainty that Plaintiffs will qualify as individuals subject to the minimum essential coverage requirement in 2014, such a conclusion is not required. All that is required is that Plaintiffs allege a substantial probability that they will be subject to the ACA's requirement to maintain minimum essential coverage in 2014. Sierra Club, 292 F.3d at 899 (stating that plaintiff need not prove merits of case, but only demonstrate that there is a "substantial probability that local conditions will be adversely affected and thereby injure a member of the organization") (citation and internal quotations omitted). Because the Court finds that Plaintiffs have met this standard, it concludes that they have demonstrated a concrete, particularized, and imminent future injury: payment of a penalty under 26 U.S.C. § 5000A(b) for having failed to satisfy section § 5000A(a)'s requirement.

b. Actual Injury

As noted above, in addition to alleging future injury, Plaintiffs also allege actual injury: the requirement that they adjust their finances now by setting aside money to pay the anticipated penalties. It is established that the taking of current measures to ensure future compliance with a statute can constitute an injury: "The present or near-future costs of complying with a statute that has not yet gone into effect can be an injury in fact sufficient to confer standing." Liberty Univ., 2010 WL ...

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