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American Freedom Law Center v. Obama

United States District Court, District of Columbia

May 15, 2015

AMERICAN FREEDOM LAW CENTER, et al., Plaintiffs,
v.
BARACK OBAMA, in his official Capacity as President of the United States, et al., Defendants.

MEMORANDUM OPINION

REGGIE B. WALTON, District Judge.

Plaintiffs American Freedom Law Center and Robert Muise bring this civil action against the United States Departments of Health and Human Services, Treasury, and Labor, as well as a number of government officials in their official capacities, alleging violations of the United States Constitution and the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2) (2012), regarding the defendants' implementation of certain provisions of the Patient Protection and Affordable Care Act ("the Act"), Pub. L. No. 111-148, 124 Stat. 119 (2010). Complaint ("Compl.") ¶¶ 10-19, 52-74. Specifically, the plaintiffs challenge the federal government's "transitional policy" and "hardship exemption, " which permit individuals temporarily to maintain health insurance coverage through plans not compliant with the general requirements of the Act. Id . ¶¶ 34-37. The plaintiffs have moved for a preliminary injunction "to enjoin the executive actions of the [defendants] that unlawfully revise the clear statutory terms of the [Act]." [Plaintiffs'] Notice of Motion and Motion for Preliminary Injunction ("Pls.' Mot. for Inj.") at 1. The defendants oppose the motion, Defendants' Memorandum of Points and Authorities in Opposition to Plaintiffs' Motion for Preliminary Injunction ("Defs.' Opp'n to Inj.") at 3, and have moved to dismiss this matter in its entirety for lack of jurisdiction on standing grounds, Defendants' Memorandum of Points and Authorities in Support of Motion to Dismiss ("Defs.' Mem. to Dismiss") at 1.

The Court conducted a hearing on November 5, 2014, to address the parties' pending motions. Subsequent to this hearing, but prior to the Court's resolution of the motions, the plaintiffs requested the opportunity to engage in additional briefing on the issue of their standing. The Court permitted the supplemental briefing, see ECF No. 19, at 3, and the parties have now had thorough opportunity to present their positions on the matter, see generally Am. Inst. of Certified Pub. Accountants v. IRS, No. 14-cv-1190 (JEB), 2014 WL 5585334, at *3 (D.D.C. Oct. 27, 2014) (explaining that the Court has an "affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority" (internal quotation marks and citation omitted)). Upon careful consideration of the parties' motions and memoranda of law, the Court concludes that it must grant the defendants' motion to dismiss, and deny as moot the plaintiff's motion for a preliminary injunction.[1]

I. BACKGROUND

The Affordable Care Act imposes in certain circumstances a "penalty" on those individuals who fail to "maintain minimum essential coverage." See 26 U.S.C. § 5000A (2012). To meet this obligation, individuals must maintain health insurance coverage through an eligible plan, see id., and the minimum standards for such coverage are set forth in the Act, see Defs.' Opp'n to Inj. at 3. According to the plaintiffs, "a majority of group health plans... lost their grandfather status [under the Act] by the end of 2013, " Compl. ¶ 29, and "millions of Americans received notices that their health insurance was cancelled, " id. ¶ 31, because their plans were no longer compliant with the Act's requirements, see id. ¶ 34. In response to this dilemma, the plaintiffs assert that the defendants implemented "a transitional policy' that would allow... millions of Americans whose insurance companies cancelled their health care coverage to remain in their non-compliant plans, " id. ¶ 34. On March 5, 2014, the defendants extended this transitional policy until October 2016. Id . ¶¶ 38-39.

Also challenged by the plaintiffs is "another directive... which is separate from the... transition policy, ' [and] provides further exemption from the penalty for not having health insurance." Id . ¶ 37. This directive, implemented by the Department of Health and Human Services, provides a "hardship exemption" for individuals who "have been notified that [their] policy will not be renewed." Id . (internal quotation marks omitted). These individuals may apply for "catastrophic coverage" if "the plan options available in the [m]arketplace in [their] area are more expensive than [their] cancelled health insurance polic[ies]." Id . (internal quotation marks omitted).

Plaintiff Muise is Co-Founder and Senior Counsel of co-plaintiff American Freedom Law Center, id. ¶ 12, which is a nonprofit organization with the mission "to fight for faith and freedom through litigation, " id. ¶ 11 (internal quotation marks omitted). Muise is a resident of Michigan, and "receives health insurance for himself and his family through [American Freedom Law Center]." Id . ¶ 12. Following the Act's implementation, the plaintiffs' insurer, Blue Cross Blue Shield of Michigan ("Blue Cross"), informed the plaintiffs by letter that their "current plan [was] changing and [it would] be transitioning [the plaintiffs] into a reform-compliant plan." Pls.' Mot. for Inj., Exhibit ("Ex.") E (Blue Cross Letter) at 1. Blue Cross further noted in the letter that it "responded to the new government mandates by creating an entire portfolio of health plan options that are both comprehensive and compliant with federal requirements" and that the plaintiffs may "select a plan from [Blue Cross's] whole new menu of options." Id.

While American Freedom Law Center expresses its "desire and intention to abide by federal law as validly passed, " Compl. ¶ 45, and to "provide[] its employees with health insurance that is compliant with the [Act] as passed by Congress and signed into law by President, " the plaintiffs nonetheless lament the cost of doing so, id. ¶ 44. Prior to the plaintiffs' transition to an Act-compliant plan, they claim that Muise's monthly health insurance premiums were $1, 349.96, of which Muise contributed $600 and American Freedom Law Center contributed the remaining amount. Pls.' Mem. for Inj. at 10. Under their new plan, the plaintiffs claim that the monthly premiums "will increase to $2, 121.59, " which represents a "[fifty-seven] percent cost increase." Id. at 11.

The plaintiffs suggest that this rise is due, in part, to the defendants' transitional policy and hardship exemption. They argue that

as the pool of "applicable individuals" who are required to purchase "minimum essential coverage" pursuant to the unambiguous language of the Affordable Care Act is reduced, as [the defendants] ha[ve] done through [the hardship exemption and transitional policy], the direct effect of this action is to financially burden those who do maintain "minimum essential coverage" pursuant to the Act, specifically including [the] [p]laintiffs, who are now suffering an economic injury directly related to [the] [d]efendants' unlawful actions.

Compl. ¶ 46. In other words, the plaintiffs contend that "Michigan is a state in which the health insurance risk pool' has been narrowed" due to the challenged policies, "thereby increasing (rather than reducing) administrative costs' and health insurance premiums.'" Pls.' Mot. for Inj., Ex. 1 (Declaration of Robert J. Muise), ¶ 31. And they posit that these assertions are supported by "undisputed congressional findings (and fundamental economic principles)." Pls.' Opp'n to Dismiss at 3.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(1) permits a party to move to dismiss for "lack of subject-matter jurisdiction." Fed.R.Civ.P. 12(b)(1). When a defendant moves to dismiss under Rule 12(b)(1), "the plaintiff[] bear[s] the burden of proving by a preponderance of the evidence that the Court has subject[-]matter jurisdiction." Biton v. Palestinian Interim Self-Gov't Auth., 310 F.Supp.2d 172, 176 (D.D.C. 2004); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). A court considering a Rule 12(b)(1) motion must "assume the truth of all material factual allegations in the complaint and construe the complaint liberally, granting [a] plaintiff the benefit of all inferences that can be derived from the facts alleged.'" Am. Nat'l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011) (quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005)). However, because the plaintiff has the burden of establishing the Court's jurisdiction, a "court must give [a] plaintiff's factual allegations closer scrutiny when resolving a Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a claim." Byrum v. Winter, 783 F.Supp.2d 117, 122 (D.D.C. 2011) (citing Macharia v. United States, 334 F.3d 61, 64, 69 (D.C. Cir. 2003)).

"Although the District Court may in appropriate cases dispose of a motion to dismiss for lack of subject[-]matter jurisdiction under [Federal Rule of Civil Procedure] 12(b)(1) on the complaint standing alone, ' where necessary, the court may consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.'" Coal. for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003) (quoting Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992)). Thus, "the district court may consider materials outside ...


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