NFIB: KTB American Government and Civics Series
NFIB v. Sebelius (2012) is one of the landmark Supreme Court cases featured in the KTB Prep American Government and Civics series designed to acquaint users with the origins, concepts, organizations, and policies of the United States government and political system. The goal is greater familiarization with the rights and obligations of citizenship at the local, state, national, and global levels and the history of our nation as a democracy. While there is overlap, these landmark cases are separated into cases addressing:
- Foreign Policy
- Public Safety
- Death Penalty
- Speech, Press, and Protest
- Criminal Justice
- Politics, Society, Freedom, and Equality
The Supreme Court
The Supreme Court is the highest court in the United States. Article III of the U.S. Constitution created the Supreme Court and authorized Congress to pass laws establishing a system of lower courts. The Constitution elaborated neither the exact powers and prerogatives of the Supreme Court nor the organization of the Judicial Branch as a whole. Thus, it has been left to Congress and to the Justices of the Court through their decisions to develop the Federal Judiciary and a body of Federal law.
The number of Justices on the Supreme Court changed six times before settling at the present total of nine in 1869. Since the formation of the Court in 1790, there have been only 17 Chief Justices* and 102 Associate Justices, with Justices serving for an average of 16 years. On average a new Justice joins the Court almost every two years.
The Supreme Court of the United States hears about 100 to 150 appeals of the more than 7,000 cases it is asked to review every year. That means the decisions made by the 12 Circuit Courts of Appeals across the country and the Federal Circuit Court are the last word in thousands of cases.
Court of Appeals
In the federal court system’s present form, 94 district level trial courts and 13 courts of appeals sit below the Supreme Court. The 94 federal judicial districts are organized into 12 regional circuits, each of which has a court of appeals. The appellate court’s task is to determine whether or not the law was applied correctly in the trial court. Appeals courts consist of three judges and do not use a jury.
The appellate courts do not retry cases or hear new evidence. They do not hear witnesses testify. There is no jury. Appellate courts review the procedures and the decisions in the trial court to make sure that the proceedings were fair and that the proper law was applied correctly.
A court of appeals hears challenges to district court decisions from courts located within its circuit, as well as appeals from decisions of federal administrative agencies. In addition, the Court of Appeals for the Federal Circuit has nationwide jurisdiction to hear appeals in specialized cases, such as those involving patent laws, and cases decided by the U.S. Court of International Trade and the U.S. Court of Federal Claims.
The nation’s 94 trial courts are called U.S. District Courts. At a trial in a U.S. District Court, witnesses give testimony and a judge or jury decides who is guilty or not guilty — or who is liable or not liable. District courts resolve disputes by determining the facts and applying legal principles to decide who is right.
Trial courts include the district judge who tries the case and a jury that decides the case. Magistrate judges assist district judges in preparing cases for trial. They may also conduct trials in misdemeanor cases.
There is at least one district court in each state, and the District of Columbia. Each district includes a U.S. bankruptcy court as a unit of the district court.
Federal courts have exclusive jurisdiction over bankruptcy cases involving personal, business, or farm bankruptcy. This means a bankruptcy case cannot be filed in state court. Bankruptcy Appellate Panels (BAPs) are 3-judge panels authorized to hear appeals of bankruptcy court decisions. These panels are a unit of the federal courts of appeals, and must be established by that circuit. Five circuits have established panels: First Circuit, Sixth Circuit, Eighth Circuit, Ninth Circuit, and Tenth Circuit.
National Federation of Independent Business (NFIB) v Sebelius (2012)
In March 2010, President Barack Obama signed the Patient Protection and Affordable Care Act (PPACA or ACA) into law. The National Federation of Independent Business (NFIB), claimed that the sweeping reform law was unconstitutional for various reasons.
The state of Florida filed a lawsuit against the United States Department of Health and Human Services. (HHS). On January 31, 2011, the district court ruled that the mandatory health insurance “individual mandate”—the provision of Internal Revenue Code section 5000A imposing a “shared responsibility penalty” on nearly all Americans who fail to purchase health insurance—was outside the power of Congress. It also held that the mandate could not be severed from the rest of the Affordable Care Act and struck down the entire Act.
The HHS appealed to the 11th Circuit Court of Appeals. A three-judge panel issued a 2–1 ruling affirming Judge Vinson’s findings in part and reversing in part. The court affirmed the District Court’s holding that the individual mandate was unconstitutional, but, contrary to the District Court’s view, it held that the individual mandate could be severed, leaving the rest of the law intact. The government decided to not seek en banc review from the full Circuit and instead petitioned the United States Supreme Court to review the Eleventh Circuit’s rulings.
The Supreme Court granted certiorari on the issues of the constitutionality of the individual mandate and the severability of any unconstitutional provisions, on the issue of whether review was barred by the Anti-Injunction Act, and on the matter of the constitutionality of the Medicaid expansion.
Q: Is the suit brought by the respondents to challenge the minimum coverage provision of the Patient Protection and Affordable Care Act barred by the Anti-Injunction Act, 2 U.S.C. 7421(a)?
A: No. The Anti-Injunction Act does not bar consideration of the individual mandate issue.
Q: Does Congress have power under Article 1, Section 8 of the Constitution, specifically under the Commerce Clause or the Taxing and Spending Clause, to require most Americans to purchase health insurance?
A: Yes. While the Commerce Clause does not empower Congress to legislate the individual mandate, the Taxing and Spending clause does.
Q: Is the individual mandate severable from the ACA?
A: Unanswered. The individual mandate was ruled constitutional.
Q: Did Congress exceed its enumerated powers and violate principles of federalism when it pressured states into accepting conditions that Congress could not impose directly by threatening to withhold all federal funding under Medicaid, the single largest grant-in-aid program?
A: Yes. The ACA’s threat to withdraw all Medicaid support to the states is unconstitutionally coercive. Absent the threat to withdraw Medicaid support, the Medicaid expansion remains permissible.
5-4 decision ruling Congress had the power to enact most provisions of the Patient Protection and Affordable Care Act (ACA), commonly called Obamacare, including a requirement for most Americans to have health insurance by 2014.
The individual mandate to buy health insurance is a constitutional exercise of Congress’s taxing power. The Obamacare penalty is a tax and therefore regulated by Congress. Payment for non-compliance as tax was not intended by Congress, but the individual mandate penalty is not severe, not limited to willful violations, and collected by the IRS; therefore, it can be characterized as a tax. The question of activity versus inactivity is undefined and moot for everyone participates in the healthcare marketplace (known as substantial effects test). However, the mandate was not a proper use of Congress’s Commerce Clause or Necessary and Proper Clause powers as individuals can’t be compelled to participate in commerce.
A significant expansion of Medicaid, was not a valid exercise of Congress’s spending power as it would coerce states to either accept the expansion or risk losing existing Medicaid funding.