Taking liberties with law and word — a surreply to Rob Weiner (w/ update)

August 22

Rob Weiner has taken the time to reply to my critique of his recent post on Halbig.  Here I return the favor. In his reply Weiner continues to make errors and propagate erroneous interpretations of the PPACA.  Some errors of interpretation are understandable given the complexity of the statute, but they are errors nonetheless. His reading of the PPACA takes us down a rabbit hole where “state” doesn’t mean “state,” a “requirement” is in fact a “definition,” and inconvenient statutory provisions simply cease to exist.

Weiner writes:

[C]ontrary to Professor Adler’s claim, when Congress referred in the ACA to insurance exchanges (as opposed to, say, exchanges of information or cash), it did not use the term “exchange” to mean one thing in one place and something else in another. Congress defined the word “Exchange” three times, as an “Exchange established by the State,” and it used that word — with a capital “E” to signify that it is a defined term — 280 times in the statute. Congress slipped only twice, using “exchange,” un-capitalized, in the Table of Contents and in section 6005, dealing with transparency for pharmacy benefit managers. Neither instance is significant. When Congress goes to the trouble of defining a term three times, and then capitalizes that defined term throughout the statute, it is fair to conclude that this was done on purpose. Given the definition of an Exchange as one “established by the State,” section 1321 is meaningless — how does the Secretary establish an Exchange established by the State? — and almost nothing else in the statute works,unless a State fulfills its obligation to establish an Exchange by passing that obligation to the Federal Government.

I am glad to see that Weiner thinks statutory definitions are important, as the Section 1304 of the PPACA expressly defines “State”: “the term ‘State’ means each of the 50 States and the District of Columbia.” (Note what’s missing.)  Yet for some reason Weiner wishes to ignore this provision to conclude that when an exchange is “established” by HHS it is, instead, “established by the State.” Claiming that the state has, in such instances, “fulfill[ed] its obligation to establish an Exchange by passing that obligation to the Federal Government” is simply nonsensical, for federal law cannot impose such an obligation on a state. It can neither require a state to create an exchange of its own nor force it to formally pass this on to the federal government. All a statute can do is seek to encourage state cooperation by providing incentives for a state to act, as the PPACA does in multiple ways.  Should a state fail to create an exchange, or fail to establish one that meets the federal government’s requirements, the law provides that HHS will “establish” the exchange. As the D.C. Circuit noted in Halbig, eligibility for subsidies is dependent upon, among other things, who “establishes” the exchange.

It is quite creative to claim, as Weiner does here and in the amicus brief he submitted on behalf of Families USA, that the PPACA contains three definitions of exchange. That claim is nonsense, as my co-author Michael Cannon explains here. There is only one express definition of the word “exchange” in the statute: “The term ‘Exchange’ means an American Health Benefit Exchange established under section 1311 of the Patient Protection and Affordable Care Act.” The other provisions Weiner cites are not definitions at all, and the one that purportedly defines all exchanges as “established by the State,” is a “requirement” for Section 1311 exchanges, and is labeled as such. (Conversely, both the definition of exchange cited above and the definition of state are expressly labeled as definitions.)  This provision requires that such exchanges be either state agencies or non-profits established by the state; for-profits and non-state entities need not apply.  To read this provision as a definition is to make a hash of the statute, generate needless surplusage in the text, and generate real absurdities, as Cannon further illustrates here.  But even were we to set this argument aside, in the Section 1401 of the Act, Congress still chose to modify the term “exchange” with the phrase “established by the State,” and it did so repeatedly.  Under Weiner’s interpretation, we must pretend as if these words do not exist.

Weiner continues:

Adler attacks my suggestion that almost everyone earning less than 400% of the federal poverty level gets a subsidy, because some people get Medicaid and Medicare or other benefits. This hair-splitting regarding subsidies and other forms of health benefits is irrelevant.

Again Weiner ignores the relevant point. It is not only the beneficiaries of other government programs who are ineligible for subsidies, but also those who earn less than 100 percent of the FPL. That is, under the plain text of the PPACA the poorest of the working poor are ineligible for tax credits and subsidies to assist them in the purchase of insurance. Under the interpretation of the PPACA Weiner has consistently advanced, such a limitation cannot be, and yet there it is, clear as day.

Weiner claims that it would make no sense for Congress to provide that, in general, individuals should  get tax credits and later provide qualifications and limitations on the credits, yet Section 1401 indisputably does that. Section 1401 limits who can receive tax credits based on their income (between 100 percent and 400 percent of FPL), what type of insurance they buy (a qualifying health insurance plan), and where they buy it (on an exchange).  Weiner does not seem to object to any of these limitations, but finds it incomprehensible that tax credits are only authorized on exchanges “established by the State.”

Weiner says that “If Congress wanted to provide that people in States with Federal Exchanges do not get credits or subsidies, it could have said just that. It didn’t.” This gets it backward. The IRS can only issue tax credits where Congress has authorized it to do so. The PPACA authorizes such tax credits for exchanges “established by the State,” and (unlike other health care reform proposals that did not pass) nowhere authorizes such credits for federal exchanges (or, for that matter, private for-profit exchanges). And, to this day, neither Weiner nor anyone else has been able to identify a single contemporaneous statement making the very simple claim that tax credits are available in federal exchanges. Not a one. Members of Congress who promised Americans that if they liked their insurance plan they could keep it now claim they always intended to provide tax credits in federal exchanges, yet this is not what their draft health care reform bills always provided and they have yet to offer direct evidence of their supposed intent to contradict the plain text.

Weiner also challenges my account of how I read the text from the beginning of 2011 to the present, but does so by ignoring my public remarks and published work at the time. Yes, Michael Cannon and I called the provision a “glitch” in the Wall Street Journal, and it is a “glitch” insofar as the relevant provisions of the PPACA may not produce the result that many PPACA supporters had desired. It is also a “glitch” in that it allows non-consenting states to hamstring portions of the law’s operation. Such provisions are hardly unheard of; indeed they are common. What is unusual here is not that Congress relied upon state cooperation to achieve its goals, but that so many states refused to play along. And here, as with the Medicaid expansion, it means that the PPACA does not operate as some had hoped. This was not a drafting error.  Senate Democrats included this provision failing to anticipate how states would act, and House Democrats passed this provision into law, despite their misgivings about relying upon states, because the alternative was to pass no bill at all.

Weiner also takes after the Halbig  plaintiffs’ brief in opposition to rehearing the case en banc. There’s not much new here that I have not covered before.  Weiner harps on the fact that FRAP 35 identifies the creation of a circuit split as one possible reason a given case may present a question of “exceptional importance.”  Yet the rule does not require appellate courts to grant rehearing en banc on this basis and, as I have noted before (and Weiner has failed to address), the D.C. Circuit rarely grants en banc rehearing on this basis.  There are reasonable arguments one can make for why the D.C. Circuit should depart from its traditional practice.  I noted several here.  Yet these are not the arguments made by Weiner.

Since I’m taking the time to respond to Weiner’s latest post, I figured I would also note that he has not retracted or corrected his erroneous claim about the D.C. Circuit’s standard practice with regard to the disposition of cases pending the submission of petitions for rehearing. Here’s a quick recap. In his first post on the subject he wrote:

In making its ruling, the D.C. Circuit panel simultaneously issued an order on its own initiative making clear that its judgment was not effective until the full Court of Appeals decided whether to reconsider the case. The panel perhaps recognized that the other judges on the Court might view the decision as out of step with the Circuit’s precedents. A decision by the en banc Court to reconsider will automatically vacate the panel opinion. If the majority of the Court then concludes that the panel decision was wrong, they will issue an opinion reflecting the correct result.

I reacted with some surprise at this claim. Specifically, I wrote:

As I’m sure any D.C. lawyer of Weiner’s accomplishments should know, this is standard practice under FRAP 41 and the D.C. Circuit’s own internal procedures. As a general rule, the court’s mandate does not issue until after the deadline for filing a petition for rehearing has passed, and the filing of such a petition (or a petition for certiorari with the Supreme Court) will further stay issuance of the mandate until the resolution of such proceedings. So that the court did what it almost always does suggests nothing at all about the merits, let alone the en-banc-worthiness, of this case.

[I could also have noted that it is not the case that “a decision by the en banc Court to reconsider will automatically vacate the panel opinion. D.C. Circuit Rule 35 expressly provides to the contrary: “If rehearing en banc is granted, the panel’s judgment, but ordinarily not its opinion, will be vacated . . .”. But for now let’s stick to the question at hand.]

Instead of acknowledging his error or letting the matter drop, Weiner dug in. His first point in reply to me was as follows:

Professor Adler accuses me of “sleight of hand” in calling attention to the DC Circuit’s sua sponte order staying the judgment in Halbig until disposition of any request for rehearing. He notes that under Federal Rule of Appellate Procedure 41(b), the mandate of the Court does not issue until the time for filing a petition for rehearing has passed or the full Court has acted on a petition. Precisely. That is why it was unnecessary for the Court to issue an order to that effect. In my experience, such orders are not standard practice, and therefore this one raises the plausible inference that the panel majority anticipated the likely demise of its aberrant decision.

As I noted in my update to this post, this claim is simply amazing. I can’t speak to Weiner’s “experience,” but it is routine for the D.C. Circuit to issue orders staying the mandate – a fact one may readily confirm by consulting the D.C. Circuit rules or quickly perusing case dockets in PACER.

D.C. Circuit Rule 41(a)(1) is clear: “the court ordinarily will include as part of its disposition an instruction that the clerk withhold issuance of the mandate until the expiration of the time for filing a petition for rehearing or a petition for rehearing en banc and, if such petition is timely filed, until 7 days after disposition thereof.”  Accordingly, the entry on the Halbig docket (“CLERK’S ORDER filed [#] withholding issuance of the mandate”[#]) is identical to that regularly entered on the docket on the day that opinions issue. We see the same entry in the docket for U.S. v. Henry, a sentencing appeal decided on the very same day as Halbig, as well as in the docket for SEC v. SIPC, another case challenging a federal agency action, albeit one decided unanimously by an ideologically diverse panel just the week before. Perusal of the docket for other recent decisions finds much the same thing.

That Weiner would assert the contrary – and persist in his position when called upon it – is all too indicative of how many have engaged the Halbig debate. While there are a fair share of thoughtful and insightful Halbig critics (Sam Bagenstos, Nicolas Bagley, and David Ziff all come to mind), there are others who seem willing to embrace any argument over any issue, facts be damned, in a desperate attempt to make their case. It seems to me that Weiner is working hard to place himself in the latter camp.

I obviously have a stake in this litigation. The plaintiffs’ claims are based, in part, on my work with Michael Cannon. We have been advocates for our position, and have occasionally made mistakes.  Yet I hope we have been responsive to critiques and intellectually honest throughout.  That has certainly been our aspiration.

UPDATE: Weiner seeks the last word, and I’ll let him have it.  There’s nothing in his post that has not already been addressed.  I would note, however, that Weiner finally acknowledges that he did not know what he was talking about when he made repeated, categorical claims about the rules and practice of the D.C. Circuit.  That’s something.

Jonathan H. Adler teaches courses in constitutional, administrative, and environmental law at the Case Western University School of Law, where he is the inaugural Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation.
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