The atmosphere in the chamber on Monday as the Supreme Court Justices began hearing oral arguments on the Patient Protection and Affordable Care Act was “electric” says James Napoli, an employee benefits lawyer for Proskauer, who attended the proceedings. He’s also the counsel of record for the amicus brief filed on behalf of the American Benefits Council concerning the severability of the individual mandate. In this exclusive interview with EBN, Napoli shares his thoughts on what happened at the Supreme Court yesterday and where he thinks things are headed on the second day of arguments Tuesday.

EBN: What was the mood in the courtroom?

Napoli: The first thing that was really noticeable when you first walked in was the atmosphere. There was a lot of electricity for a case of this nature, and particularly [for] the issue that was being heard today [Monday, March 26]. It was obvious that something big was about to happen. That was interesting to see how electric it was. I’ve been to more than a few of these now, and the justices were all very animated and very much into the proceedings and were really asking the good questions.

EBN: What are your impressions of what went on?

Napoli: The impression I was left with is that the justices will not hold that the Anti-Injunction Act bars them, or the lower courts, from hearing the constitutional issues. I say that because, just looking at the questions [the justices] asked and the manner in which they were asked, I just got the sense that’s where the justices are going to be.

Justice Ginsberg, I think, really tried to set up an ‘out,’ if you will, for the justices by asking the question, ‘If the Court were to find that the penalty under health care reform, the Affordable Care Act, is just that — a penalty — and not a tax, wouldn’t it be true that the Court would not have to go into the more thorny jurisdictional issues that were raised and argued today with respect to the Anti-Injunction Act?’ And the litigants seemed to agree that was the case — that if the Court were to find that the Affordable Care Act penalty is a penalty that’s where the Court could stop, at that point, because the Anti-Injunction Act only bars pre-emptive litigation with respect to taxes.

To me, the key issue for the justices to rule on that issue in a favorable way — favorable meaning the Anti-Injunction Act would not bar the litigation — is a question that was asked very early on in the litigation this morning and that was, “How does the federal government square the fact that they are arguing, for purposes of the Anti-Injunction Act, that the penalty is a penalty whereas for purposes of constitutional analysis the argument that will be heard tomorrow [Tuesday, March 27] [will be that] the penalty under the Affordable Care Act is a tax?’

That’s a key question, because unless the justices are comfortable in their minds that a distinction can be made — such that you can find the penalty to be a penalty for one purpose and a tax for another purpose — then I think the argument is lost.

That being said, it does appear that distinction can be made. And the easy answer is it’s not a tax for purposes of the Anti-Injunction Act because Congress said it wasn’t a tax; Congress said in the Affordable Care Act that this was a penalty. As a matter of fact, they even have a provision that the penalty should be collected as taxes are. Now, on the one hand, the proponents of [applying] the Anti-Injunction Act would argue, “See? Therefore it’s a tax.” But as one of the justices said, just because it says to collect something as you would a tax doesn’t make it a tax. And, personally, that would be my read. If I’m collecting something as though it were a tax, isn’t that kind of indicating that it’s not? Otherwise I’d just say, “Collect the tax.”

So I think that’s were the Court will potentially find its comfort on that issue of distinguishing how can you reconcile the penalty being a penalty for the purposes of the Anti-Injunction Act and a tax for the purposes of the constitutional argument.

EBN: What was in the amicus brief you filed with the Supreme Court on behalf of the American Benefits Council?

Napoli: Our issue is a severability issue and that will be argued on Wednesday [March 28]. We basically argued that if the individual mandate is found unconstitutional, then the employer mandate ought to be struck as well because the individual mandate is not severable from the employer mandate. They are intertwined and connected.

EBN: What’s next?

Napoli: [Monday] was a big day from a procedural point of view. [Tuesday] is going to be big from a substantive point of view. [Tuesday] is the constitutional argument: Is the individual mandate constitutional or unconstitutional? It should be a very interesting and intriguing argument. Again, we’re going to hear questioning about whether the penalty is a tax or not. That goes to Congress’ taxing authority under the Constitution.

We’re going to hear more discussion about whether Congress can force individuals into commerce in an effort to regulate those individuals. And we have two cases on the commerce clause in particular. One is the farmer who grew his own wheat for the purposes of feeding his family and the Wheat Subsidy Act, an act of Congress, said he could only grow a certain amount. He challenged [the law] and it was held that even though he was growing the wheat, [it affected] interstate commerce. And the other was a marijuana case where an individual was growing medicinal marijuana in their own home and similar principles applied.

How the opponents are trying to distinguish those cases is by saying that the individuals Congress is attempting to regulate are not engaged in commerce right now. They don’t have health insurance. So, they’re not growing the wheat, so to speak. Congress is forcing them to gain insurance, forcing them to grow the wheat, if you will. So, it’s that [issue of], can you force them to grow the wheat? Can you force the individual to purchase insurance? Can you put them in commerce so that you can then regulate them in commerce?

And then the third day [March 28] — assuming the individual mandate is found unconstitutional — focuses on what happens to the rest of [PPACA].

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