Halbig v. Burwell was not the only important Obamacare decision released today by a federal appellate court — it wasn’t even the only important decision concerning the IRS rule authorizing tax credits in federally established exchanges. Within hours of the D.C. Circuit’s Halbig decision, the U.S. Court of Appeals for the Fourth Circuit released King v. Burwell. In King, a unanimous three-judge panel upheld the IRS rule, concluding that the relevant language of the PPACA was ambiguous and the IRS rule represented a reasonable interpretation of the relevant text. Judge Gregory wrote for the Court joined by Judges Thacker and Davis. Judge Davis also wrote a separate concurring opinion.
A few quick observations. First, while the Fourth Circuit upheld the IRS rule, it rejected the opinion advanced by some (and adopted by the federal district court in D.C.) that the PPACA unambiguously authorizes tax credits in federal exchanges. In other words, whereas Judge Friedman had argued the Administration should win at Chevron step one, the Fourth Circuit ruled for the Administration at Chevron step two. Judge Edwards, dissenting in Halbig, likewise stressed that the Administration had adopted a reasonable interpretation of what he believed was an ambiguous statute.
Second, the Fourth Circuit’s opinion creates a circuit split with the D.C. Circuit. This would seem to make one or both cases obvious candidates for certiorari in the Supreme Court. Aware of this fact (and perhaps buoyed by the lineup of the full D.C. Circuit), the Administration has announced its intent to seek en banc review. Should the D.C. Circuit reverse the Halbig decision en banc, the circuit split would be gone, and with it would go the best argument for Supreme Court review. But en banc rehearing is not a sure thing. The D.C. Circuit is usually reluctant to rehear cases, even where major regulations are at stake. thus the full court refused to rehear a decision striking down the EPA’s cross-state air pollution rule, leaving the case to the Supreme Court. So if tradition holds, these cases may be headed to One First Street sooner rather than later.
Third, it’s worth remembering there are two more cases challenging the IRS rule pending in district courts in Indiana and Oklahoma. The various filings and associated commentary are available here.