June 2015

Supreme Court Issues Two Key Opinions This Week

This was a big week in Washington as the United Supreme Court handed down a number of important decisions. Two of these opinions are of particular importance to our audience and we review them for you here. On Monday, the Court said that the federal government had violated the Fourth Amendment rights of raisin growers and handlers by requiring them to relinquish a percentage of their crops to the USDA pursuant to a 66-year-old marketing order.

This morning, the court issued its long awaited decision on whether premium tax credits can be granted to consumers enrolling in health plans through a federally-facilitated exchange. The language of the enabling statute had stated that these credits were available on exchanges "established by the state." The Court ruled 6-3, through a Roberts-authored opinion, that this language was ambiguous and did not prevent the Administration from allowing credits to issue from an exchange established by the federal government. There was no shortage of controversy as Scalia wrote a scathing dissent, at one point stating, "We should start calling this law SCOTUScare." In upholding the Administration's application of the law, the majority stated, "Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them."

United States Supreme Court Says Raisin Marketing Order Effected Unconstitutional Taking

For more than a decade, California raisin growers have been warring with the federal government over a 66-year-old marketing order. The lead plaintiff in the case is a California raisin grower that packs and sells the raisins that he grows.  Despite the arguable obscurity of the specific order at issue, the June 22, 2015, United States Supreme Court opinion striking down the order as an unconstitutional physical taking of private property has broader implications for property rights in general and other agricultural marketing orders in particular.

The Agricultural Marketing Agreement Act (AMAA) of 1937 regulates the handling of agricultural commodities in interstate or foreign commerce.  The AMAA authorizes the United States Department of Agriculture (USDA) to fix the minimum prices of certain agricultural products, when the handling of such products occurs “in the current of interstate or foreign commerce or . . . directly burdens, obstructs or affects interstate or foreign commerce in such commodity or product thereof.”  The purported idea behind the AMAA was to use marketing Orders to insure that consumers receive an adequate supply of commodity at a stable price.  Read the full article here. 

Supreme Court Says Premium Assistance Tax Credits Are Available To Persons Acquiring Health Insurance Via A Federal Exchange

The U.S. Supreme Court has upheld the U.S. Court of Appeals for the Fourth Circuit in holding in a 6-3 decision (C.J. Roberts writing the majority decision) that the premium assistance tax credit (PATC) created by the 2010 health care law and contained in I.R.C. §36B is available to persons that acquire their health insurance through an exchange establish by the federal government.   The Court’s decision involved a Treasury Regulation (Treas. Reg. §1.36B-2(a)(1)) that interpreted the statutory language which specifies that the credit is only available to persons that acquire their insurance through “an exchange established by the state”  to mean “state or federal government.”  The lower courts were split on the validity of the regulation, with the D.C. Circuit striking the regulation and the Fourth Circuit upholding it. 

The IRS developed a regulation that allows taxpayers to claim the PATC even if they bought their health insurance via a federal exchange.  On its face, that is contrary to what the health care law says.  The law states that the PATC is only available to taxpayers that are enrolled in “an Exchange established by the State under 1311…”.  Section 1311 of the health care law sets forth the assistance to be given to the states to establish health care exchanges.  Read the full article here.