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					     Case 2:10-cv-01714-GMS Document 66                Filed 08/10/11 Page 1 of 55



     TONY WEST
 1   Assistant Attorney General
 2   IAN HEATH GERSHENGORN
     Deputy Assistant Attorney General
 3
     DENNIS K. BURKE
 4   United States Attorney, District of Arizona
 5   JENNIFER RICKETTS
     Director
 6
     SHEILA LIEBER
 7   Deputy Director
 8   JOEL McELVAIN
     TAMRA T. MOORE
 9   ETHAN P. DAVIS
     Attorneys
10   United States Department of Justice
     Civil Division, Federal Programs Branch
11   20 Massachusetts Ave. NW
     Washington, D.C. 20001
12   (202) 514-8095
     Tamra.Moore@usdoj.gov
13
     Attorneys for Defendants
14
                           IN THE UNITED STATES DISTRICT COURT
15                             FOR THE DISTRICT OF ARIZONA
16
                                                   )   Case No.: CV-10-1714-PHX-GMS
17   Nick Coons; et al.,                           )
                                                   )   DEFENDANTS’ OPPOSITION TO
18                 Plaintiffs,                     )   PLAINTIFFS’ MOTION FOR
                                                   )   SUMMARY JUDGMENT AND
19         vs.                                     )   CROSS-MOTION FOR SUMMARY
                                                   )   JUDGMENT
20   Timothy Geithner; et al.,                     )
                                                   )
21                 Defendants                      )
22

23

24

25

26

27

28
      Case 2:10-cv-01714-GMS Document 66                                 Filed 08/10/11 Page 2 of 55




 1
                                                  TABLE OF CONTENTS

 2   TABLE OF AUTHORITIES…………………………………………………………….iii
 3
     INTRODUCTION ...............................................................................................................1
 4
     BACKGROUND .................................................................................................................2
 5

 6   ARGUMENT ......................................................................................................................6
 7
         I.        THE MINIMUM COVERAGE PROVISION IS A PROPER EXERCISE
 8                 OF CONGRESS’S CONSTITUTIONAL AUTHORITY TO REGULATE
                   INTERSTATE COMMERCE ............................................................................7
 9

10                 A.           The Minimum Coverage Provision Regulates Payment for
                                Health Care Services, a Class of Economic Activity That
11
                                Substantially Affects Interstate Commerce ..........................................7
12
                                1.         The minimum coverage provision regulates
13
                                           the practice of obtaining health care without
14                                         insurance, a practice that shifts health care costs
                                           to other participants in the health care market .........................9
15

16                              2.         The minimum coverage provision is essential to
                                           the Act’s guaranteed issue and community rating
17                                         insurance reforms ................................................................... 13
18
                     B.        The Minimum Coverage Provision Is a Necessary and Proper
19                             Means of Regulating Interstate Commerce ......................................... 17
20
                              1.           Courts accord broad deference to the means adopted by
21                                         Congress to advance legitimate regulatory goals ................... 17
22
                              2.           The minimum coverage requirement is plainly adapted
23                                         to the unique conditions of the market for health care
                                           services ................................................................................... 19
24

25                            3.           Congress can regulate participants in the national health
                                           care market, even if they do not currently maintain
26
                                           insurance coverage ................................................................. 22
27

28

                                                                     i
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 1
                        4.         Congress’s rational basis for enacting the Affordable
                                   Care Act does not depend upon attenuated links to
 2                                 interstate commerce ................................................................ 27
 3
       II.    CONGRESS ENACTED THE MINIMUM COVERAGE PROVISION
 4            PURSUANT TO ITS INDEPENDENT POWER UNER THE GENERAL
              WELFARE CLAUSE ....................................................................................... 30
 5

 6     III.   THE AFFORDABLE CARE ACT DOES NOT UNCONSTITUTIONALLY
              DELEGATE LEGISLATIVE POWER TO THE INDEPENDENT
 7
              PAYMENT ADVISORY BOARD (IPAB)...................................................... 36
 8
       IV.    THE MINIMUM COVERAGE PROVISION AND THE PROVISIONS
 9
              CREATING THE IPAB ARE SEVERABLE FROM THE ACA’S
10            REMAINING PROVISIONS ........................................................................... 37
11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

                                                           ii
      Case 2:10-cv-01714-GMS Document 66                             Filed 08/10/11 Page 4 of 55




 1
                                              TABLE OF AUTHORITIES

 2                                                            CASES
 3
     Alaska Airlines Inc. v. Brock,
 4      480 U.S. 676 (1987) ..................................................................................................... 40
 5
     Astra USA, Inc. v. Santa Clara County,
 6      131 S. Ct. 1342 2011 WL 1119021 ............................................................................ 39
 7
     Ayotte v. Planned Parenthood of N. New England,
 8      546 U.S. 320 (2006) ..................................................................................................... 38
 9
     Brockett v. Spokane Arcades, Inc.,
10      472 U.S. 491 (1985) ..................................................................................................... 39
11
     Brown Shoe Co. v. United States,
12      370 U.S. 294 (1962) ..................................................................................................... 26
13
     Bryant v. Adventist Health Sys./West,
14      289 F.3d 1162 (9th Cir. 2002) ..................................................................................... 21

15   Cellnet Comm's Inc. v. FCC,
16      149 F.3d 429 (6th Cir. 1998) ....................................................................................... 36

17   In re Chateaugay Corp.,
18
        53 F.3d 478 (2d Cir. 1995)........................................................................................... 34

19   Charles C. Steward Machine Co. v. Davis,
20
       301 U.S. 548 (1937) ............................................................................................... 31, 35

21   Virginia v. Sebelius,
22
        728 F. Supp. 2d 768 (E.D. Va. 2010) .......................................................................... 39

23   Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg.,
24
       485 U.S. 568 (1988) ..................................................................................................... 36

25   Florida v. HHS,
        Nos. 11-11021 (11th Cir.) ............................................................................................ 41
26

27   Florida ex rel Bondi v. HHS,
        2011 WL 285683 (N.D. Fla. Jan. 31, 2011) ................................................................ 39
28

                                                                   iii
      Case 2:10-cv-01714-GMS Document 66                             Filed 08/10/11 Page 5 of 55




 1
     Free Enterprise Fund v. Pub. Co. Accounting Oversight Bd.,
        130 S. Ct. 3138 (2010) ........................................................................................... 38, 39
 2
     Freedom to Travel Campaign v. Newcomb,
 3
        82 F.3d 1431 (9th Cir. 1996) ....................................................................................... 37
 4
     Freilich v. Upper Chesapeake Health, Inc.,
 5
        313 F.3d 205 (4th Cir. 2002) ....................................................................................... 29
 6
     Gonzales v. Raich,
 7
       545 U.S. 1 (2005) .................................................................................................. passim
 8
     Guerrero v. Copper Queen Hosp.,
 9
       537 P.2d 1329 (Ariz. 1975) ......................................................................................... 20
10
     Hodel v. Va. Surface Mining & Reclamation Ass'n, Inc.,
11
       452 U.S. 264 (1981) ..................................................................................................... 18
12
     J.W. Hampton, Jr., & Co. v. United States,
13
        276 U.S. 394 (1928) ..................................................................................................... 31
14
     Knowlton v. Moore,
15     178 U.S. 41 (1900) ........................................................................................... 31, 34, 35
16
     Liberty Univ. Inc. v. Geithner,
17      753 F. Supp. 2d 611 (W.D. Va. 2010) ............................................................. 17, 23, 24
18
     McCulloch v. Maryland,
19     17 U.S. 316 (1819) ....................................................................................................... 18
20
     Mead Corp. v. Tilley,
21     490 U.S. 714 (1989) ..................................................................................................... 40
22
     Mead v. Holder,
23     766 F.Supp. 2d 16, (D.D.C. Feb. 22, 2011) ................................................................. 10
24
     Mead v. Holder,
25     766 F. Supp 2d 36 (D.D.C. 2011) .......................................................................... 22, 29
26
     Nat'l Broad. Co. v. United States,
27      319 U.S. 190 (1943) ..................................................................................................... 38
28

                                                                   iv
      Case 2:10-cv-01714-GMS Document 66                               Filed 08/10/11 Page 6 of 55




 1
     Nelson v. Sears, Roebuck & Co.,
        312 U.S. 359 (1941) ..................................................................................................... 34
 2
     New York v. United States,
 3
       505 U.S. 144 (1992) ..................................................................................................... 38
 4
     New York Cent. Sec. Corp. v. United States,
 5
       287 U.S. 12 (1932) ....................................................................................................... 37
 6
     Oregon Short Line Ry. Co. v. Dep't of Revenue Or.,
 7
        139 F.3d 1259 (9th Cir. 1998) ..................................................................................... 35
 8
     Penn Mut. Indem. Co. v. Comm'r,
 9
        277 F.2d 16 (3d Cir. 1960)........................................................................................... 34
10
     Perez v. United States,
11
        405 U.S. 146 (1971) ..................................................................................................... 12
12
     Printz v. United States,
13
        521 U.S. 898 (1997) ..................................................................................................... 40
14
     Quatry v. United States,
15     170 F.3d 961 (9th Cir. 1999) ....................................................................................... 35
16
     Sabri v. United States,
17      541 U.S. 600 (2004) ............................................................................................... 19, 29
18
     Sonzinsky v. United States,
19      300 U.S. 506 (1937) ............................................................................................... 31, 33
20
     State of Florida et al. v. U.S. Dep't of Health & Human Servs.,
21      No. 11-11021 (11th Cir. filed Apr. 11, 2011) .............................................................. 17
22
     State of Florida v. HHS,
23      No. 3:10-cv-91 (N.D. Fla. filed Nov. 19, 2010) .......................................................... 30
24
     State of Nevada v. Skinner,
25      884 F.2d 445 (9th Cir. 1989) ......................................................................................... 8
26
     Swan v. Peterson,
27     6 F.3d 1373 (9th Cir. 1993) ......................................................................................... 36
28

                                                                   v
      Case 2:10-cv-01714-GMS Document 66                              Filed 08/10/11 Page 7 of 55




 1
     Swift Co v. United States,
        196 U.S. 375 (1905) ..................................................................................................... 26
 2
     Szajer v. City of Los Angeles,
 3
        632 F.3d 607 (9th Cir. 2011) ......................................................................................... 6
 4
     Summit Health, Ltd v. Pinhas,
 5
        500 U.S. 322 (1991) ..................................................................................................... 29
 6
     The Child Labor Tax Case,
 7
        259 U.S. 20 (1922) ....................................................................................................... 33
 8
     Thomas More Law Ctr. v. Obama, et al,
 9
        720 F. Supp. 2d 883 (E.D. Mich. 2010)................................................................ 25, 29
10
     Thomas More Law Ctr. v. Obama et al.,
11
        __F.3d__, 2011 WL 2556039 (6th Cir. June 29, 2011) ........................................ passim
12
     Turner Broad. Sys., Inc. v. FCC,
13
        520 U.S. 180 (1997) ................................................................................................. 8, 11
14
     United States v. Barton,
15      633 F.3d 168 (3d Cir. 2011) .......................................................................................... 8
16
     United States v. Comstock,
17      130 S. Ct. 1949 (2010) ................................................................................................. 18
18
     United States v. Constantine,
19      296 U.S. 287 (1935) ..................................................................................................... 33
20
     United States v. Doremus,
21      249 U.S. 86 (1919) ....................................................................................................... 31
22
     United States v. Five Gambling Devices,
23      346 U.S. 441 (1953) ....................................................................................................... 6
24
     United States v. Gianni,
25      455 F.2d 147 (9th Cir. 1972) ....................................................................................... 31
26
     United States v. Lopez,
27      514 U.S. 549 (1995) ......................................................................................... 19, 27, 28
28

                                                                   vi
      Case 2:10-cv-01714-GMS Document 66                             Filed 08/10/11 Page 8 of 55




 1
     United States v. Morrison,
        529 U.S. 598 (2000) ..................................................................................... 6, 27, 28, 29
 2
     United States v. Nelson,
 3
        277 F.3d 164 (2d Cir. 20002) ...................................................................................... 35
 4
     United States v. New York,
 5
        315 U.S. 510 (1942) ..................................................................................................... 33
 6
     United States v. Rodia,
 7
        194 F.3d 465 (3d Cir. 1999) ........................................................................................ 25
 8
     United States v. Sanchez,
 9
        340 U.S. 42 (1950) ................................................................................................. 31, 33
10
     United States v. Serang,
11
        156 F.3d 910 (9th Cir. 1998) ......................................................................................... 7
12
     United States v. Sotelo,
13
        436 U.S. 268 (1978) ..................................................................................................... 34
14
     United States v. Wrightwood Dairy Co.,
15      315 U.S. 110 (1942) ..................................................................................................... 18
16
     Usery v. Charleston C. School Dist.,
17      558 F.2d 1169 (4th Cir. 1977) ..................................................................................... 36
18
     Veazie Bank v. Fenno,
19      75 U.S. 533 (1869) ................................................................................................. 31, 35
20
     Wash. State Grange v. Wash. State Republican Party,
21     552 U.S. 442 (2008) ....................................................................................................... 6
22
     Wickard v. Filburn,
23      317 U.S. 111 (1942) .............................................................................................. passim
24
     Wilmington Gen. Hosp. v. Manlove,
25      174 A.2d 135 (Del. 1961) ............................................................................................ 20
26
     Woods v. Cloyd W. Miller Co.,
27     333 U.S. 138 (1948) ..................................................................................................... 36
28

                                                                  vii
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 1
                                                             STATUTES
 2
     Fed. R. Civ. P. 56(a) ............................................................................................................ 7
 3

 4   Fed. R. Civ. P. 56(d)(1), (2) ................................................................................................ 1
 5
     26 U.S.C. § 36B ................................................................................................................... 5
 6
     26 U.S.C. § 36B(a) .............................................................................................................. 4
 7

 8   26 U.S.C. § 36B(b) .............................................................................................................. 4
 9
     26 U.S.C. § 45R ................................................................................................................... 3
10
     26 U.S.C. § 4980H .............................................................................................................. 3
11

12   26 U.S.C. § 5000A .............................................................................................................. 4
13
     26 U.S.C. § 5000A(a) ........................................................................................................ 32
14
     26 U.S.C. § 5000A(b)(1) ................................................................................................... 32
15

16   26 U.S.C. § 5000A(b)(2) ................................................................................................... 32

17   26 U.S.C. § 5000A(b)(3) ................................................................................................... 32
18
     26 U.S.C. § 5000A(c)(1) ................................................................................................... 32
19

20
     26 U.S.C. § 5000A(c)(2) ................................................................................................... 32

21   26 U.S.C. § 5000A(d) .......................................................................................................... 5
22
     26 U.S.C. § 5000A(e) .......................................................................................................... 5
23
     26 U.S.C. § 5000A(e)(2) ................................................................................................... 32
24

25   26 U.S.C. § 5000A(f)(1) ...................................................................................................... 5
26
     26 U.S.C. § 5000A(g) ........................................................................................................ 32
27
     26 U.S.C. § 5000A(g)(2) ................................................................................................... 32
28

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 1
     42 U.S.C. § 300gg ................................................................................................... 4, 14, 25
 2
     42 U.S.C. § 300gg-1 ................................................................................................ 4, 14, 25
 3

 4   42 U.S.C. § 300gg-3 ................................................................................................ 4, 14, 25
 5
     42 U.S.C. § 300gg-4(a)............................................................................................ 4, 14, 25
 6
     42 U.S.C. § 300gg-11 .......................................................................................................... 4
 7

 8   42 U.S.C. § 300gg-12 .......................................................................................................... 4
 9
     42 U.S.C. § 1395dd ........................................................................................................... 21
10
     42 U.S.C. § 1395kkk(b)................................................................................................. 6, 36
11

12   42 U.S.C. § 1395kkk(c)(2)(A) ........................................................................................... 37
13
     42 U.S.C. § 1395kkk(c)(2)(B) ........................................................................................... 36
14
     42 U.S.C. § 1395kkk(e)(3)(A) ............................................................................................. 6
15

16   42 U.S.C. §§ 1396a(a)(10)(A)(i)(VIII) ............................................................................... 4

17   42 U.S.C. § 18031 ............................................................................................................... 4
18
     42 U.S.C. § 18071 ............................................................................................................... 4
19

20
     42 U.S.C. § 18081 ............................................................................................................... 5

21   42 U.S.C. § 18091(a)(2)(A) ............................................................................................. 5, 8
22
     42 U.S.C. § 18091(a)(2)(D) ............................................................................................... 16
23

24
     42 U.S.C. § 18091(a)(2)(F) ................................................................................... 5, 8, 9, 26

25   42 U.S.C. § 18091(a)(2)(H) ................................................................................................. 5
26
     42 U.S.C. § 18091(a)(2)(I) ........................................................................................ 5, 9, 14
27
     42 U.S.C. § 18091(a)(2)(J) ........................................................................................... 9, 14
28

                                                                     ix
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 1
     49 U.S.C. § 13906(a)(1) .................................................................................................... 20
 2
     Pub L. No. 111-148, 124 Stat 119 (2010) ......................................................................... 10
 3

 4          § 4204(c) ................................................................................................................... 40
            § 5603 ........................................................................................................................ 40
 5
            § 10104(j)(2) ............................................................................................................. 40
 6          § 6402(h)(2) .............................................................................................................. 40
            § 6411 ........................................................................................................................ 40
 7

 8                                         CONSTITUTIONAL PROVISIONS
 9
     U.S. Const. art. I, § 5 ......................................................................................................... 37
10
     U.S. Const. art. I, § 8, cl. 1 ................................................................................................ 30
11

12   U.S. Const. art. I, § 8, cl. 3 .................................................................................................. 6
13
     U.S. Const. art. I, § 8.cl. 18 ................................................................................................ 6
14
                                               LEGISLATIVE MATERIALS
15

16   47 Million and Counting: Why the Health Care Marketplace is Broken:
        Hearing Before the S.Comm. on Finance, 110th Cong. 52 ................................... 14, 22
17

18
     155 Cong. Rec. S13,581 (Dec. 20, 2009) .......................................................................... 36

19   155 Cong. Rec. S13,751 (Dec. 22, 2009) .......................................................................... 36
20
     155 Cong. Rec. S13,830 (Dec. 23, 2009) .......................................................................... 35
21

22
     156 Cong. Rec. H1824 (Mar. 21, 2010) ............................................................................ 36

23   156 Cong. Rec. H1882 (Mar. 21, 2010) ............................................................................ 35
24
     H.R. Rep. No. 99-241 pt III,
25      reprinted in 1986 U.S.C.C.A.N. 726 .......................................................................... 20
26
     H.R. Rep. No. 99-24 pt 1 (1985),
27      reprinted in 1986 U.S.C.C.A.N. 42 ............................................................................ 21
28

                                                                        x
     Case 2:10-cv-01714-GMS Document 66                               Filed 08/10/11 Page 12 of 55




 1
     H.R. Rep. No. 111-443, pt I (2010) ................................................................................... 30

 2   Making Health Care Work for American Families: Hearing Before the H. Comm.
        on Energy and Commerce, Subcomm. on Health, 111th Cong. 11(2009).................. 15
 3

 4   Hearing Before the S. Comm. on Fin., 110th Cong. 49 (2008)......................................... 15
 5
     Expanding Consumer Choice & Addressing “Adverse Selection” Concerns in
 6      Health Insurance: Hearing Before the Joint Economic Comm.,
        108th Cong. 32 (2004) ................................................................................................... 2
 7

 8   Health Reform in the 21st Century: Insurance Market Reforms:
       Before the H. Comm. on Ways & Means, 111th Cong. 117 (2009)............................. 16
 9

10                                FEDERAL RULES OF CIVIL PROCEDURE
11
     Fed. R. Civ. P. 56(a) ...........................................................................................................6
12
     Fed. R. Civ. P. 56(d)(1) ......................................................................................................1
13

14   Fed. R. Civ. P. 56(d)(2) ......................................................................................................1

15                                                    MISCELLANEOUS
16
     Alan C. Monheit et al., Community Rating & Sustainable Individual Health
17      Insurance Markets in New Jersey, 23 Health Affairs 167 (2004) ............................... 16
18
     Centers for Medicare & Medicaid Services, 2009 National Health
19      Expenditure Data (2011) ................................................................................................ 3
20
     Congressional Budget Office, The Long-Term Budget Outlook (2010) ............................ 3
21

22
     Congressional Budget Office, Key Issues In Analyzing Major
       Health Proposals (2008) ................................................................................................. 3
23
     Centers for Disease Control and Prevention, National Center for Health Statistics,
24
        Health, United States, 2009 (2010) ................................................................................ 3
25
     USA Found., Hidden Health Tax: Americans Pay a Premium 2 (2009) .......................... 10
26

27   Help on the Horizon: Findings from the Commonwealth Fund Biennial
        Health Insurance Survey of 2010 (2011) ....................................................................... 4
28

                                                                    xi
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 1
     International Federation of Health Plans, 2010 Comparative Price Report:
 2       Medical and Hospital Fees by Country.......................................................................... 2
 3
     Interpreting by the Book: Legislative Drafting Manuals and Statutory Interpretation,
 4       120 Yale L.J. 185, 190 (2010) ..................................................................................... 40
 5
     John Holahan, The 2007-09 Recession and Health Insurance Coverage,
 6      30 Health Affairs 145 (2011) ....................................................................................... 14
 7
     Kaiser Family Found., Employer Health Benefits 2010 Annual Survey (2010) .............. 14
 8
     Letter from Douglas W. Elmendorf, Director, CBO, to the Hon. Nancy Pelosi,
 9
        Speaker, U.S. House of Representatives (2010) .......................................................... 33
10
     Mark Hall, An Evaluation of New York's Reform Law, 25 J. Health Politics,
11
       Pol'y & Law 71 (2000)................................................................................................. 16
12
     Stuart Butler, The Heritage Lectures 218: Assuring Affordable Health Care for All
13
        Americans (Heritage Found. 1989) ............................................................................ 210
14
     Sara Rosenbaum, Can States Pick Up the Health Reform Torch?,
15      362 New Eng. J. Med. e29 (2010) ............................................................................... 29
16
     U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the
17      United States: 2009 ...................................................................................................... 14
18

19

20

21

22

23

24

25

26

27

28

                                                                   xii
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 1
                                          INTRODUCTION

 2          Plaintiffs—an individual, a doctor who alleges he participates in the Medicare
 3
     program, and two United States Representatives—seek to invalidate the Patient
 4
     Protection and Affordable Care Act (“ACA” or “Act”). They claim that the minimum
 5

 6   coverage provision of the ACA—which requires all non-exempt Americans to maintain a
 7
     minimum level of health insurance or pay a penalty—exceeds Congress’s Commerce
 8
     Clause authority. And they contend that the Independent Payment Advisory Board
 9

10   (“IPAB”)—which is tasked with finding ways to reduce Medicare costs—is also
11
     unconstitutional. Plaintiffs are wrong on both accounts.
12
            As an initial matter, plaintiffs lack standing to raise their claims. 1 And plaintiffs’
13

14   arguments as to the Act’s alleged unconstitutionality fail as a matter of law. As the Sixth

15   Circuit recently concluded, the minimum coverage provision, which regulates the timing
16
     and method of payment for health care services, falls well within Congress’s Commerce
17

18   1
        Under Local Rule 7.1(d)(2), defendants incorporate by reference the background,
19   standing, and merits arguments addressing plaintiffs’ IPAB, substantive due process,
     personal medical autonomy, and preemption claims contained in their response to
20
     plaintiffs’ motion for preliminary injunction, see Defs.’ Resp. Pls.’ Mot. Prelim. Inj. at 2-
21   20 ECF No. 27, and defendants’ motion to dismiss and reply in support of that motion,
     see Defs.’ Mot. Dismiss at 5-54 ECF No. 42; Defs.’ Reply at 2-6, 23-30 ECF No. 59.
22
     The government’s position is that every count of the complaint is subject to dismissal on
23   its face for lack of jurisdiction. If this Court concludes that the complaint alleges facts
     sufficient to support standing, however, defendants respectfully request that the Court
24   “defer considering the” motions for summary judgment or “allow time . . . to take
25   discovery.” Fed. R. Civ. P. 56(d)(1), (2).
             In addition to moving for summary judgment on Counts I, II, III, and VII of the
26   Second Amended Complaint, defendants move for summary judgment on plaintiffs’
27   remaining claims -- Count IV (personal medical autonomy), Count V (substantive due
     process), and Count VIII (alternative preemption). Plaintiffs voluntarily dismissed Count
28   VI of their Second Amended Complaint, see Pls.’ Mem. at 1, ECF No. 51.
                                                    1
     Case 2:10-cv-01714-GMS Document 66            Filed 08/10/11 Page 15 of 55




 1
     Clause power. See Thomas More Law Center v. Obama, __ F.3d __ (6th Cir. June 29,

 2   2011), 2011 WL 2556039. Indeed, to uphold the provision, the Court need not make new
 3
     law or alter the established allocation of authority between state and federal government;
 4
     it need only apply longstanding principles recognizing congressional authority to regulate
 5

 6   economic conduct that substantially affects interstate commerce.
 7
            Plaintiffs’ claim that the IPAB violates the non-delegation doctrine is equally
 8
     without merit given the detailed statutory requirements concerning its operation. The
 9

10   Supreme Court has upheld far broader delegations couched in far more subjective terms.
11
     Plaintiffs’ other attempts to overturn the ACA—their substantive due process, personal
12
     medical autonomy, and preemption claims—are unavailing for the reasons set forth in
13

14   defendants’ prior briefing, see Mot. to Dismiss at 41-45, 53-54, ECF No. 42; see also
15   Reply Mem. in Supp. of Mot. to Dismiss at 23-26, ECF No. 59.
16
            Plaintiffs may dispute the policy judgments that Congress made in enacting the
17

18   Affordable Care Act. But those judgments are reserved to the legislators elected to make

19   them. In our democratic system, there is a strong presumption that those judgments are
20
     constitutional. Plaintiffs do not and cannot overcome that presumption. The government
21

22
     is therefore entitled to summary judgment.

23                                       BACKGROUND
24
            The Affordable Care Act is a comprehensive reform of our national health care
25
     system. The Act seeks to ameliorate the crisis in the interstate market for health care
26

27   services that accounts for more than 17% of the nation’s gross domestic product. SMF ¶
28

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 1
     1. Millions of people without health insurance consume many billions of dollars worth of

 2   health care services each year. Id. ¶ 12. They fail to pay the full cost of those services
 3
     and shift the uncompensated costs of their care—totaling $43 billion in 2008—to health
 4
     care providers regularly engaged in interstate commerce. Id. ¶ 21. Providers pass on
 5

 6   much of this cost to insurance companies, which also operate interstate. Id. ¶ 23. The
 7
     result is higher premiums that, in turn, make insurance unaffordable to even more people.
 8
     Id. At the same time, insurers use restrictive underwriting practices to deny coverage or
 9

10   charge higher premiums to millions because they have pre-existing medical conditions.
11
     Id. ¶ 16. The Affordable Care Act addresses these national problems through measures
12
     designed to make affordable health care coverage widely available, protect consumers
13

14   from restrictive underwriting practices, and reduce the uncompensated care that is
15   obtained by the uninsured and paid for by other participants in the health care market.
16
            First, the Act builds upon the existing nationwide system of employer-based health
17

18   insurance, the principal private mechanism for health care financing. Congress

19   established tax incentives for small businesses to purchase health insurance for their
20
     employees. 26 U.S.C. § 45R. It also prescribed tax penalties for large employers if the
21

22
     employer does not offer full-time employees adequate coverage and at least one full-time

23   employee receives a tax credit to assist with the purchase of coverage in a health
24
     insurance exchange established under the Act. Id. § 4980H.
25
            Second, the Act provides for the creation of health insurance exchanges to allow
26

27   individuals, families, and small businesses to use their collective buying power to obtain
28

                                                   3
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 1
     prices competitive with those of large-employer group plans. 42 U.S.C. § 18031.

 2         Third, for individuals and families with household income between 133% and
 3
     400% of the federal poverty line who purchase health insurance through an exchange,
 4
     Congress offered federal tax credits to defray the cost of premiums. 26 U.S.C. § 36B(a),
 5

 6   (b). Congress also authorized federal payments to help cover out-of-pocket expenses
 7
     such as co-payments or deductibles for eligible individuals who purchase coverage
 8
     through an exchange. 42 U.S.C. § 18071. In addition, Congress expanded eligibility for
 9

10   Medicaid to cover individuals with income up to 133% of the federal poverty line. Id. §
11
     1396a(a)(10)(A)(i)(VIII).
12
           Fourth, the Act regulates insurers to prohibit industry practices that have prevented
13

14   people from obtaining and maintaining health insurance. The Act bars insurers from
15   refusing coverage because of pre-existing medical conditions, canceling insurance absent
16
     fraud or intentional misrepresentation of material fact, charging higher premiums based
17

18   on a person’s medical history, and placing lifetime dollar caps on benefits. Id. §§ 300gg,

19   300gg-1(a), 300gg-3(a), 300gg-4(a), 300gg-11, 300gg-12.
20
           Fifth, the minimum coverage provision at issue here will require, beginning in
21

22
     2014, that non-exempted individuals maintain a minimum level of health insurance or

23   pay a tax penalty. 26 U.S.C. § 5000A. The requirement may be satisfied through
24
     enrollment in an eligible employer-sponsored plan; an individual market plan, including
25
     one offered through a health insurance exchange; a grandfathered plan; government-
26

27   sponsored programs such as Medicare, Medicaid, or TRICARE; or similar coverage as
28

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 1
     recognized by the Secretary of Health and Human Services (“HHS”) in coordination with

 2   the Treasury Secretary. Id. § 5000A(f)(1). Congress exempted certain groups, id. §
 3
     5000A(d), and made the tax penalty inapplicable to individuals whose household income
 4
     is too low to require them to file a federal income tax return, whose premium payments
 5

 6   would exceed 8% of household income, or who establish (under standards set by the
 7
     HHS Secretary) that they have suffered a hardship with respect to the capacity to obtain
 8
     coverage. Id. § 5000A(e).
 9

10          In enacting the minimum coverage provision, Congress made detailed findings
11
     that establish the foundation for the exercise of its commerce power. Congress found that
12
     the minimum coverage provision “regulates activity that is commercial and economic in
13

14   nature”—how people pay for services in the interstate health care market. 42 U.S.C. §
15   18091(a)(2)(A). Congress found that, as a class, people who “forego health insurance
16
     coverage and attempt to self-insure” fail to pay for the medical services that they
17

18   consume, and shift substantial costs to providers and insured consumers, raising average

19   family premiums by more than $1,000 a year. Id. § 18091(a)(2)(A), (F). In addition,
20
     Congress found that the minimum coverage requirement is “essential” to the Act’s
21

22
     guaranteed issue and community rating reforms that will prevent insurers from relying on

23   medical condition or history to deny coverage or set premiums. Id. § 18091(a)(2)(I).
24
     Congress found that, without the minimum coverage requirement, many people would
25
     exploit these new consumer protections by waiting to purchase health insurance until they
26

27   needed care, which would undermine the effective functioning of insurance markets. Id.
28

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 1
            The ACA also establishes an Independent Payment Advisory Board. Composed

 2   of fifteen members appointed by the President and confirmed by the Senate, the Board
 3
     will be responsible for finding ways to “reduce the per capita rate of growth in Medicare
 4
     spending[.]” 42 U.S.C. § 1395kkk(b). The Secretary of Health and Human Services will
 5

 6   be required to implement the Board’s recommendations on a yearly basis unless Congress
 7
     passes legislation to supersede the Board’s proposals. See 42 U.S.C. § 1395kkk(e)(3)(A).
 8
                                           ARGUMENT
 9

10          A court should grant summary judgment where “there is no genuine dispute as to
11
     any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
12
     P. 56(a); see Szajer v. City of Los Angeles, 632 F.3d 607, 610 (9th Cir. 2011). This case
13

14   presents pure questions of law—primarily, whether Congress acted within its Article I
15   powers in enacting the Affordable Care Act’s minimum coverage provision and the
16
     IPAB-related provisions. Congressional acts are entitled to a “presumption of
17

18   constitutionality,” and will be invalidated only upon a “plain showing that Congress has

19   exceeded its constitutional bounds.” United States v. Morrison, 529 U.S. 598, 607
20
     (2000). This presumption is “not a mere polite gesture” but reflects the substantial
21

22
     deference that a court owes the “deliberate judgment by constitutional majorities of the

23   two Houses of Congress that an Act is within their delegated power.” United States v.
24
     Five Gambling Devices, 346 U.S. 441, 449 (1953).
25
            Moreover, plaintiffs bring a facial challenge to the minimum coverage provision.
26

27   To prevail, plaintiffs must establish that “‘no set of circumstances exists’” under which
28

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 1
     the provision would be valid, “‘i.e., that the law is unconstitutional in all of its

 2   applications.’” Wash. State Grange v. Wash. State Republican Party, 552 U.S. 442, 449
 3
     (2008) (internal citation and quotation marks omitted). Unless plaintiffs can meet this
 4
     heavy burden, defendants are entitled to summary judgment.
 5

 6      I.        THE MINIMUM COVERAGE PROVISION IS A PROPER EXERCISE
                  OF CONGRESS’S CONSTITUTIONAL AUTHORITY TO REGULATE
 7
                  INTERSTATE COMMERCE
 8
             A.     The Minimum Coverage Provision Regulates Payment for Health Care
 9
                    Services, a Class of Economic Activity That Substantially Affects
10                  Interstate Commerce
11
             The Constitution grants Congress the power to “regulate Commerce . . . among the
12

13   several States,” U.S. CONST. art. I, § 8, cl. 3, and to “make all Laws which shall be
14
     necessary and proper” to the execution of that power, id. cl. 18. This grant of authority
15
     allows Congress not only to regulate the channels and instrumentalities of interstate
16

17   commerce, but also to address other conduct that “substantially affect[s] interstate

18   commerce.” Gonzales v. Raich, 545 U.S. 1, 16-17 (2005). In assessing those substantial
19
     effects, Congress’s focus is necessarily on the aggregate impact of a particular class of
20

21
     conduct. Congress need not predict whether and to what extent a particular individual in

22   the class will contribute to that aggregate effect. Id. at 22; Wickard v. Filburn, 317 U.S.
23
     111, 127-28 (1942); see also United States v. Serang, 156 F.3d 910, 913 (9th Cir. 1998).
24

25
             A Court’s task in reviewing the validity of legislation enacted under the commerce

26   power “is a modest one.” Raich, 545 U.S. at 22. The Court “need not determine”
27
     whether the regulated activities, “taken in the aggregate, substantially affect interstate
28

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 1
     commerce in fact, but only whether a ‘rational basis’ exists for so concluding.” Id. This

 2   deferential standard reflects both Congress’s superior capacity to make empirical
 3
     judgments and operational choices and the appropriate structural separation between the
 4
     judicial and legislative powers. The courts owe “Congress’ findings deference in part
 5

 6   because the institution is far better equipped than the judiciary to amass and evaluate the
 7
     vast amounts of data bearing upon legislative questions.” Turner Broad. Sys., Inc. v.
 8
     FCC, 520 U.S. 180, 195 (1997) (internal quotation omitted). “This is not the sum of the
 9

10   matter, however.” Id. The courts “owe Congress’ findings an additional measure of
11
     deference out of respect for its authority to exercise the legislative power,” lest a court
12
     “infringe on traditional legislative authority to make predictive judgments when enacting
13

14   nationwide regulatory policy.” Id. Accordingly, in the context of a Commerce Clause
15   challenge, this Court’s task is to conduct a “narrow” inquiry into whether Congress had a
16
     “‘rational basis’” for concluding that the activity it was regulating affects interstate
17

18   commerce. State of Nevada v. Skinner, 884 F.2d 445, 450 (9th Cir. 1989).

19          The record supports Congress’s express findings that the minimum coverage
20
     provision “regulates activity that is commercial and economic in nature,” 42 U.S.C.
21

22
     § 18091(a)(2)(A), and has an enormous impact on interstate commerce. First, the

23   provision addresses the consumption of health care services without paying for them, an
24
     activity that shifts billions of dollars of costs annually to other participants in the
25
     interstate health care market. 42 U.S.C. § 18091(a)(2)(F). These shifted expenses spread
26

27   across state lines because many insurance companies operate in multiple states. 42
28

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 1
     U.S.C. § 18091(a)(2)(B); see SMF ¶ 28. Second, the provision is instrumental to the

 2   ACA’s guaranteed issue and community rating reforms that take effect in 2014. These
 3
     reforms guarantee that individuals will not be denied insurance because of illness or
 4
     accident, and will not have to pay higher premiums based on their health or medical
 5

 6   history. 42 U.S.C. § 18091(a)(2)(I), (J); see SMF ¶¶ 37-43.
 7
                   1. The minimum coverage provision regulates the practice of
 8                    obtaining health care without insurance, a practice that shifts
                      health care costs to other participants in the health care market
 9

10          Without question, the market for health care services is an interstate market. See
11
     SMF ¶¶ 1, 3, 19-29, 37, 43. “[H]ealth-related spending amounted to 17.6% of the
12
     national economy, or $2.5 trillion, in 2009. . . . Virtually all of this market affects
13

14   interstate commerce, and many aspects of it---medical supplies, drugs, and equipment---
15   are directly linked to interstate commerce.” Thomas More Law Ctr. v. Obama, No. 10-
16
     2388, 2011 WL 2556039, at *24 (6th Cir. June 29, 2011) (Sutton, J.), petition for cert.
17

18   filed, (U.S. July 26, 2011) (No. 11-117); see SMF ¶¶ 1, 28. Moreover, “[t]he medical

19   insurance market is large . . . and is inextricably linked to interstate commerce.” Thomas
20
     More Law Ctr., 2011 WL 2556039, at *24 (Sutton, J.).
21

22
            There is also no doubt that Americans, whether or not they have health insurance,

23   visit doctors and seek medical treatment. See SMF ¶¶ 3-4, 7, 12-15, 19. Indeed, “[f]ew
24
     people escape the need to obtain health care at some point in their lives, and most need it
25
     regularly.” Thomas More, 2011 WL 2556039, at *24 (Sutton, J.). Because health care is
26

27   so expensive that most uninsured individuals cannot afford to pay for all the care they
28

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 1
     receive, however, the uninsured, as a class, do not bear the full cost of their participation

 2   in the health care market, instead passing significant costs on to others. SMF ¶¶ 12-15,
 3
     19-24, 28. Congress’s express statutory findings quantify the effect of this cost-shifting
 4
     on interstate commerce: The uninsured received $43 billion in medical care that they did
 5

 6   not pay for in 2008 alone. 42 U.S.C. § 18091(a)(2)(F); see SMF ¶ 21. Congress’s
 7
     findings also describe how this activity affects the interstate health care market; the costs
 8
     of care that the uninsured receive are passed from providers “to private insurers, which
 9

10   pass on the cost to families” in a direct way, by inflating their insurance premiums “by on
11
     average over $1,000 a year.” Id.; see also FAMILIES USA, HIDDEN HEALTH TAX, at 2, 6.
12
     See Mead v. Holder, 766 F. Supp. 2d 16, 34 n.10 (D.D.C. 2011), appeal pending, No. 11-
13

14   5047 (D.C. Cir.) (“In short, those who choose not to purchase health insurance will
15   ultimately get a ‘free ride’ on the backs of those Americans who have made responsible
16
     choices to provide for the illness we all must face at some point in our lives.”); see also
17

18   SMF ¶¶ 19-24, 27.

19          “The minimum coverage provision regulates activity that is decidedly economic.”
20
     Thomas More, 2011 WL 2556039, at *11 (Martin, J.). “By requiring individuals to
21

22
     maintain a certain level of coverage, the minimum coverage provision regulates the

23   financing of health care services, and specifically the practice of self-insuring for the cost
24
     of care.” Id. “The activity of foregoing health insurance and attempting to cover the cost
25
     of health care needs by self-insuring is no less economic than the activity of purchasing
26

27   an insurance plan.” Id.
28

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 1
            To be sure, not every uninsured person will shift health care costs to others in any

 2   given year. But millions will do so each year, and the cumulative impact of such cost-
 3
     shifting is to impose a multi-billion dollar annual burden on interstate commerce. See
 4
     Thomas More, 2011 WL 2556039, at *12 (Martin, J.) (observing that “[t]he uninsured
 5

 6   cannot avoid the need for health care, and [] consume over $100 billion in health care
 7
     services annually”); see also SMF ¶¶ 19-24. Supreme Court precedent makes clear that
 8
     the validity of a regulation under the Commerce Clause does not turn on a specific
 9

10   person’s actual conduct or circumstance. Nor does Congress have to wait until an
11
     individual engages in particular conduct and then try to deal with the consequences.
12
     Rather, Congress can exercise its commerce power to address the aggregate effect of a
13

14   class of conduct, taking into account the “likelihood” that a particular activity will impact
15   the relevant interstate market, given the way that the particular market operates. Raich,
16
     545 U.S. at 19. In that way, Congress has authority to prevent an individual from
17

18   contributing to the consequences that it has, in its legislative judgment, predicted might

19   occur absent regulation. See Turner Broad. Sys., Inc., 520 U.S. at 195 (“[C]ourts must
20
     accord substantial deference to the predictive judgments of Congress.”).
21

22
            Thus, in Wickard and Raich, the Court did not examine whether any particular

23   plaintiff’s consumption of home-grown wheat or home-grown marijuana, respectively,
24
     had any impact at all on the interstate markets for those commodities; the important
25
     point, in Wickard, was that “rising market prices could draw [home-grown] wheat into
26

27   the interstate market, resulting in lower market prices.” Raich, 545 U.S. at 19 (emphasis
28

                                                  11
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 1
     added) (citing Wickard, 317 U.S. at 128). The parallel concern in Raich was “the

 2   likelihood that the high demand in the interstate market will draw [home-grown]
 3
     marijuana into that market.” Id. (emphasis added). In both cases, the Court recognized
 4
     that these market probabilities could rationally lead Congress to conclude that the
 5

 6   conduct at issue, “when viewed in the aggregate,” would, if left unregulated, have a
 7
     substantial impact on the interstate markets. Id. at 19.
 8
            Congress therefore need not predict, person-by-person, who among the uninsured
 9

10   will receive medical services and fail to pay in a given year. As a class, people who
11
     forego insurance and attempt to “self-insure” pose a threat to the interstate health care
12
     services market. See Thomas More, 2011 WL 2556039, at *31 (Sutton, J.) (explaining
13

14   that “Congress generally has broad authority under the commerce power to choose the
15   class of people it wishes to regulate, see Raich, 545 U.S. at 26-27, permitting it to group
16
     all of the self-insured together, whether they have many assets available for medical care,
17

18   very few, or something in between, particularly since the financial wherewithal of the

19   self-insured is unlikely to stay put”); see also SMF ¶¶ 19-24, 36. The Supreme Court has
20
     repeatedly held that where “Congress decides that the ‘total incidence’ of a practice,”—
21

22
     here, the practice of attempting to pay for health care without insurance—“poses a threat

23   to a national market, it may regulate the entire class.” Raich, 545 U.S. at 17 (quoting
24
     Perez v. United States, 402 U.S. 146, 154-55 (1971)).
25

26

27

28

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 1
                   2. The minimum coverage provision is essential to the Act’s
                      guaranteed issue and community rating insurance reforms
 2
            The minimum coverage provision is also valid Commerce Clause legislation
 3

 4   because it “is an essential part of a broader economic regulatory scheme,” which requires
 5
     that insurers extend coverage and set premiums without regard to pre-existing medical
 6
     conditions or medical history. Thomas More, 2011 WL 2556039, at *12 (Martin, J.).
 7

 8   Congress’s “guaranteed issue” and “community rating” regulations of the health
 9
     insurance industry are, without question, valid exercises of its commerce power. See id.
10
     at *13 (Martin, J.). And learning from the experience of state regulators, Congress
11

12   recognized that these insurance industry regulations could not succeed if participants in
13
     the health care market could wait to buy insurance until an acute medical need arises.
14
     See SMF ¶¶ 37-43. Congress accordingly concluded that its failure to include a
15

16   minimum coverage requirement “would leave a gaping hole” in the regulatory scheme.

17   Raich, 545 U.S. at 22; see Thomas More, 2011 WL 2556039, at *14 (Martin, J.)
18
     (explaining that it “was reasonable for Congress to conclude that failing to regulate those
19

20
     who self-insure would ‘leave a gaping hole’ in the Act”). Thus, even if the means of

21   payment for health care services were not regarded as “commercial,” Congress may
22
     properly regulate based on its conclusion that the “failure to regulate that class of activity
23

24
     would undercut the regulation of the interstate market[.]” Raich, 545 U.S. at 18; see also

25   id. at 37-38 (Scalia, J., concurring in the judgment); Thomas More, 2011 WL 2556039, at
26
     *12 (“[E]ven if self-insuring the cost of health care were not economic activity with a
27
     substantial effect on interstate commerce, Congress could still properly regulate the
28

                                                   13
     Case 2:10-cv-01714-GMS Document 66            Filed 08/10/11 Page 27 of 55




 1
     practice because the failure to do so would undercut its regulation of the larger interstate

 2   markets in health care delivery and health insurance.”) (Martin, J.).
 3
            Although crucial to a consumer’s ability to pay for health care, affordable health
 4
     insurance is in increasingly short supply. SMF ¶¶ 23-26. Between 1999 and 2010,
 5

 6   average premiums for employer-sponsored family coverage increased 138 percent. SMF
 7
     ¶ 25 (citing KAISER FAMILY FOUND., EMPLOYER HEALTH BENEFITS 2010 ANNUAL
 8
     SURVEY 31, tbl 1.11 (2010)). These “[p]remium increases are driving people out of the
 9

10   insurance market.” 47 Million & Counting: Why the Health Care Marketplace Is
11
     Broken: Hearing Before the S. Comm. on Fin., 110th Cong. 49 (2008) (Statement of Prof.
12
     Hall); SMF ¶ 24. As a result, between 2000 and 2009, the portion of the non-Medicare-
13

14   eligible population covered by private insurance slipped from about 3/4 to about 2/3.
15   SMF ¶ 25 (citing John Holahan, The 2007-09 Recession and Health Insurance Coverage,
16
     30 HEALTH AFFAIRS 145, 148 (2011)). More than 50 million Americans went without
17

18   insurance in 2009. See SMF ¶ 12 (citing U.S. CENSUS BUREAU, INCOME, POVERTY, AND

19   HEALTH INSURANCE COVERAGE IN THE UNITED STATES: 2009, at 23, Table 8) (2010).
20
            These trends are largely due to an insurance industry screening process known as
21

22
     “medical underwriting,” a practice that makes health insurance difficult or impossible to

23   obtain for the 50 to 129 million non-elderly Americans who have at least one pre-existing
24
     medical condition. SMF ¶¶ 16-18. Medical underwriting also increases premiums even
25
     for those who do obtain commercial insurance because of the high costs of the
26

27   underwriting process itself. The Act addresses these problems by barring insurance
28

                                                  14
     Case 2:10-cv-01714-GMS Document 66            Filed 08/10/11 Page 28 of 55




 1
     companies from denying coverage or setting premiums based on an individual’s medical

 2   condition or history. 42 U.S.C. §§ 300gg, 300gg-1, 300gg-3(a), 300gg-4(a). But these
 3
     guaranteed issue and community rating requirements would not work in a regulatory
 4
     scheme that permits health care consumers to time their insurance purchases. See SMF
 5

 6   ¶¶ 37-43. Indeed, a “health insurance market could never survive or even form if people
 7
     could buy their insurance on the way to the hospital.” Id. ¶ 43 (quoting 47 Million &
 8
     Counting, 110th Cong. 52 (Prof. Hall)).
 9

10          Congress found that, absent the minimum coverage provision, “many individuals
11
     would wait to purchase health insurance until they needed care.” 42 U.S.C.
12
     § 18091(a)(2)(I). Accordingly, Congress concluded, the minimum coverage requirement
13

14   “is essential to creating effective health insurance markets that do not require
15   underwriting and eliminate its associated administrative costs.” Id. § 18091(a)(2)(J).
16
     The legislative record showed that the absence of a minimum coverage requirement had
17

18   undermined guaranteed issue and community rating reform efforts in states such as New

19   Jersey and New York. SMF ¶¶ 40-41. In these circumstances, many consumers “will go
20
     without insurance when they are healthy, but then have the privilege of throwing
21

22
     themselves on the mercy of community-rated premiums when they fall ill.” Id. ¶ 39

23   (quoting Making Health Care Work for American Families: Improving Access to Care:
24
     Hearing Before the H. Comm. on Energy and Commerce, Subcomm. on Health, 111th
25
     Cong. 11 (2009) (Prof. Reinhardt)). This in turn causes premiums to go up, which results
26

27   in still fewer people getting health insurance. Id. ¶¶ 39-40. Describing the results of the
28

                                                  15
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 1
     New Jersey reforms, Professor Reinhardt explained that “[i]t is well known that

 2   community-rating and guaranteed issue, coupled with voluntary insurance, tends to lead
 3
     to a death spiral of individual insurance.” Id. ¶ 40; see also Alan C. Monheit, et al.,
 4
     Community Rating & Sustainable Individual Health Insurance Markets in New Jersey, 23
 5

 6   HEALTH AFFAIRS 167, 168 (2004).
 7
            In the wake of similar legislation enacted in New York, there was “a dramatic
 8
     exodus of indemnity insurers from New York’s individual market.” Id. ¶ 41 (quoting
 9

10   Mark Hall, An Evaluation of New York’s Reform Law, 25 J. HEALTH POL., POL’Y & L.
11
     71, 91-92 (2000)). And, when Maine enacted similar legislation, most health insurers
12
     withdrew from the state. See id. ¶ 41 (citing Health Reform in the 21st Century:
13

14   Insurance Market Reforms: Hearing Before the H. Comm. on Ways & Means, 111th
15   Cong. 117 (2009) (letter of Phil Caper, M.D., & Joe Lendvai)).
16
            In contrast, Congress found that Massachusetts avoided some of these perils by
17

18   enacting a minimum coverage provision as part of its broader insurance reforms. SMF ¶

19   42. That provision “has strengthened private employer-based coverage: despite the
20
     economic downturn, the number of workers offered employer-based coverage has
21

22
     actually increased.” 42 U.S.C. § 18091(a)(2)(D); see SMF ¶ 42. But Massachusetts itself

23   attests that the “interstate flow of patients (including uninsured patients) [illustrates] that
24
     individual states cannot effectively account for, let alone mitigate, the impact of
25
     healthcare trends felt on the national and interstate levels.” Br. of the Commonwealth of
26

27   Massachusetts as Amicus Curiae in Support of Appellants at 13, State of Florida v. U.S.
28

                                                    16
     Case 2:10-cv-01714-GMS Document 66            Filed 08/10/11 Page 30 of 55




 1
     Dep’t of Health & Human Servs., No. 11-11021 (11th Cir. filed Apr. 11, 2011); see SMF

 2   ¶ 42. The record thus fully supports the congressional finding that, given the national
 3
     insurance reforms that it sought to make, a nationwide minimum coverage provision “is
 4
     essential to creating effective health insurance markets in which improved health
 5

 6   insurance products that are guaranteed issue and do not exclude coverage of pre-existing
 7
     conditions can be sold.” 42 U.S.C. § 18091(a)(2)(I); see Thomas More, 2011 WL
 8
     2556039, at *14 (“Congress had a rational basis for concluding that the minimum
 9

10   coverage requirement is essential to its broader reforms to the national markets in health
11
     care delivery and health insurance.”); see also Liberty Univ., Inc. v. Geithner, 753 F.
12
     Supp. 2d 611, 634 (W.D. Va. 2010), appeal pending, No. 10-2347 (4th Cir.) (same);
13

14   SMF ¶¶ 28-43.
15          B.     The Minimum Coverage Provision Is a Necessary and Proper Means of
16                 Regulating Interstate Commerce

17                 1. Courts accord broad deference to the means adopted by Congress
18                    to advance legitimate regulatory goals

19          Plaintiffs do not dispute Congress’s conclusion that, in general, people who obtain
20
     health care services without insurance shift substantial costs to other market participants.
21

22
     Nor have they disputed the notion that the minimum coverage provision is essential to the

23   Affordable Care Act’s broader regulatory scheme. Nor has any court concluded that
24
     Congress’s findings were irrational. Instead, plaintiffs and others who have opposed the
25
     minimum coverage provision complain of the means that Congress chose to regulate
26

27   payment in the interstate market for health care services. No proper basis exists,
28

                                                  17
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 1
     however, to override Congress’s judgment about the appropriate means to achieve its

 2   legitimate regulatory objectives.
 3
            “The Federal ‘Government is acknowledged by all to be one of enumerated
 4
     powers,’” but, “at the same time, ‘a government, entrusted with such’ powers ‘must also
 5

 6   be entrusted with ample means for their execution.’” United States v. Comstock, 130 S.
 7
     Ct. 1949, 1956 (2010) (quoting McCulloch v. Maryland, 17 U.S. 316, 405, 408 (1819)).
 8
     Accordingly, “where Congress has the authority to enact a regulation of interstate
 9

10   commerce, ‘it possesses every power needed to make that regulation effective.’” Raich,
11
     545 U.S. at 36 (Scalia, J., concurring in the judgment) (quoting United States v.
12
     Wrightwood Dairy Co., 315 U.S. 110, 118-19 (1942)).
13

14          Thus, “the relevant inquiry” under the Necessary and Proper Clause “is simply
15   whether the means chosen are ‘reasonably adapted’ to the attainment of a legitimate end
16
     under the commerce power or under other powers that the Constitution grants Congress
17

18   the authority to implement.” Comstock, 130 S. Ct. at 1957 (quoting Raich, 545 U.S. at 37

19   (Scalia, J., concurring in the judgment)). “[I]n determining whether the Necessary and
20
     Proper Clause grants Congress the legislative authority to enact a particular federal
21

22
     statute,” the Court asks “whether the statute constitutes a means that is rationally related

23   to the implementation of a constitutionally enumerated power.” Comstock, 130 S. Ct. at
24
     1956 (citing Sabri v. United States, 541 U.S. 600, 605 (2004); Raich, 545 U.S. at 22;
25
     United States v. Lopez, 514 U.S. 549, 557 (1995); and Hodel v. Va. Surface Mining &
26

27   Reclamation Ass’n, 452 U.S. 264, 276 (1981)).
28

                                                  18
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 1
                   2.     The minimum coverage requirement is plainly adapted to the
                          unique conditions of the market for health care services
 2
            Contrary to plaintiffs’ assertions, see Pls.’ Mem. at 28, the means chosen by
 3

 4   Congress to effectuate the Affordable Care Act’s regulatory goals are closely tailored to
 5
     the unique features of the market for health care services. SMF ¶¶ 3-18, 28-43.
 6
     Participation in this market is essentially universal. Id. ¶ 3. The need for medical
 7

 8   treatment may arise unexpectedly, and is not a matter of choice. Id. ¶ 4, 7. The cost of
 9
     care, absent insurance, may overwhelm the typical family budget. Id. ¶ 4-7. And—
10
     unlike in other markets, including the markets for transportation or courier services, see
11

12   Pls.’ Mem. at 22—individuals can expect to receive expensive medical services in times
13
     of need without regard to their ability to pay. See Thomas More, 2011 WL 2556039, at
14
     *32 (“Regulating how citizens pay for what they already receive (health care), never
15

16   quite know when they will need, and in the case of severe illnesses or emergencies

17   generally will not be able to afford, has few (if any) parallels in modern life.” (Sutton,
18
     J.)); see also SMF ¶¶ 10-15.
19

20
            A government requirement to purchase insurance in order to avoid the

21   externalization of costs is hardly novel. Indeed, insurance requirements are
22
     commonplace in the United States Code. See, e.g., 49 U.S.C. § 13906(a)(1) (interstate
23

24
     motor carriers). In the case of vehicle insurance, the requirement typically coincides with

25   the obligation to register one’s automobile. But, while it is sensible for the government
26
     to make automobile insurance a condition for use of the highways, it would be entirely
27
     unacceptable to impose a similar requirement on the use of an emergency room. For,
28

                                                  19
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 1
     although “‘society feels no obligation to repair’” the Porsche of the uninsured motorist,

 2   “‘[i]f a man is struck down by a heart attack in the street, Americans will care for him
 3
     whether or not he has insurance,” even if that means “more prudent citizens end up
 4
     paying the tab.’” SMF ¶ 14 (quoting Stuart Butler, The Heritage Lectures 218: Assuring
 5

 6   Affordable Health Care for All Americans, at 6 (Heritage Found. 1989)).
 7
            Even before the enactment of the Emergency Medical Treatment and Labor Act
 8
     (“EMTALA”) in 1986, state courts and legislatures had responded to the changing role of
 9

10   private hospitals and of emergency rooms by creating tort liability for the failure to
11
     provide emergency services. Id. ¶ 13-14. The common law has evolved to preclude
12
     hospitals from turning away patients with emergency needs because they will be unable
13

14   to pay for services. See id. The modern rule is that “liability on the part of [the] hospital
15   may be predicated on the refusal of service to a patient in case of an unmistakable
16
     emergency.” Wilmington Gen. Hosp. v. Manlove, 174 A.2d 135, 140 (Del. 1961). In
17

18   addition to “state court rulings impos[ing] a common law duty on doctors and hospitals to

19   provide necessary emergency care,” by 1985, “at least 22 states [had] enacted statutes or
20
     issued regulations requiring the provision of limited medical services whenever an
21

22
     emergency situation exists[.]” H.R. REP. NO. 99-241, pt. III, at 5, reprinted in 1986

23   U.S.C.C.A.N. 726, 727; see also Guerrero v. Copper Queen Hosp., 537 P.2d 1329, 1331
24
     (Ariz. 1975) (noting that the State of Arizona requires Samaritan and other private health
25
     care providers to provide necessary emergency medical services to all patients regardless
26

27   of their ability to pay).
28

                                                  20
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 1
            These measures were not adequate, however, to prevent hospitals from diverting

 2   patients or discharging them prematurely. Congress thus enacted EMTALA to end the
 3
     practice of “patient dumping” by “ensur[ing] that individuals, regardless of their ability to
 4
     pay, receive adequate emergency medical care,” Bryant v. Adventist Health Sys./West,
 5

 6   289 F.3d 1162, 1165 (9th Cir. 2002); cf. H.R. REP. NO. 99-241, pt. 1, at 27 (1985),
 7
     reprinted in 1986 U.S.C.C.A.N. 42, 605. The federal statute augmented the duties
 8
     imposed under state law by requiring all hospitals that participate in Medicare and offer
 9

10   emergency services to stabilize anyone entering the emergency room with an emergency
11
     condition, without regard to ability to pay. 42 U.S.C. § 1395dd. Of course, after these
12
     individuals are stabilized, they are billed, and people may then go into debt or be driven
13

14   into bankruptcy as a result of this or other expensive treatment, and any unpaid expenses
15   are shifted elsewhere in the market. SMF ¶¶ 15-24.
16
            Congress properly adapted the minimum coverage provision to these practical
17

18   realities of the national health care market. Most significantly, as noted, with health

19   insurance, timing is critical. The societal judgment reflected in both EMTALA and the
20
     common law is that it would be unconscionable to deny emergency medical care to
21

22
     someone without insurance. Congress therefore could not ethically have tied an

23   insurance requirement to the availability of emergency medical care at the time it is
24
     received. 2 Moreover, from a purely economic standpoint, a health insurance market
25
     could never survive “‘if people could simply buy their insurance on the way to the
26
     2
27      Nor could such a requirement work as a practical matter, given the risk that even
     individuals who had insurance might be turned away at the emergency room door if they
28   were required to present proof of insurance and did not happen to have it on their person.
                                                  21
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 1
     hospital.’” Id. ¶ 43 (quoting 47 Million and Counting, 110th Cong. 14 (statement of Prof.

 2   Hall)). Insurance is a means of financing economic risk, and to be practical and ethical, a
 3
     requirement to obtain medical insurance must therefore apply before the medical services
 4
     are actually needed.
 5

 6                 3. Congress can regulate participants in the national health care
                      market, even if they do not currently maintain insurance coverage
 7

 8          Plaintiffs’ claim is that Congress may not force an ostensibly passive individual to
 9
     purchase insurance. Pls.’ Mem. at 25. Their claim disregards the nature of the regulatory
10
     scheme that Congress enacted. Plaintiffs cannot dispute that “the individuals subject to
11

12   [the minimum coverage provision] are either present or future participants in the national
13
     health care market.” Mead, 766 F. Supp. 2d at 36. Indeed, as the Sixth Circuit
14
     concluded, whether individuals decide to purchase private health insurance or self-insure,
15

16   “[n]o one is inactive when deciding how to pay for health care.” Thomas More, 2011

17   WL 2556039, at *29 (Sutton, J.). Accordingly, Congress may regulate the economic
18
     conduct of participants in the health care market, even if at a given moment those
19

20
     participants are not signed up to finance their health care expenses through insurance.

21          Plaintiffs’ theory restates arguments that have been repeatedly rejected by the
22
     Supreme Court. In Raich, the Court upheld the application of the Controlled Substances
23

24
     Act to the possession of marijuana that was grown at home for personal use. The

25   Supreme Court found it irrelevant that the plaintiffs were not engaged in commercial
26
     activity and that they did not buy, sell, or distribute any portion of the marijuana that they
27
     possessed. The regulation was proper, the Court held, because “Congress had a rational
28

                                                   22
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 1
     basis for concluding that leaving home-consumed marijuana outside federal control

 2   would . . . affect price and market conditions.” Raich, 545 U.S. at 19. And that rational
 3
     basis did not rest on the plaintiffs’ own conduct but on the market’s structural forces that
 4
     created a “likelihood” that the plaintiffs would be drawn into an interstate market
 5

 6   regardless of their stated intent. Id. at 18. Under that structure, the plaintiffs’ marijuana
 7
     was “never more than an instant from the interstate market.” Id. at 40 (Scalia, J.,
 8
     concurring in judgment). In the aggregate, the failure to regulate home consumption such
 9

10   as the plaintiffs’ would have a “substantial effect on supply and demand in the national
11
     market for that commodity.” Id. at 19.
12
            Raich reflected principles established more than half a century earlier in Wickard,
13

14   which upheld the federal regulation of wheat that was grown and consumed on a family
15   farm as part of a program to control the volume and price of wheat moving in interstate
16
     commerce. The Supreme Court sustained that exercise of the commerce power even
17

18   though the wheat at issue was not “sold or intended to be sold,” Wickard, 317 U.S. at

19   119, even though the home consumption of wheat by any individual “may be trivial by
20
     itself,” id. at 127, and even though the regulation “forc[ed] some farmers into the market
21

22
     to buy what they could provide for themselves,” id. at 129.

23          “While the unique nature of the market for health care and the breadth of the Act
24
     present a novel set of facts for consideration, the well-settled principles expounded in
25
     Raich and Wickard control the disposition of this claim.” Liberty Univ. Inc., 753 F.
26

27   Supp. 2d at 633. The plaintiffs in Raich and Wickard could not exempt themselves from
28

                                                   23
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 1
     regulation by declaring themselves to be “inactive” in a market, where the category of

 2   behavior that they were engaged in had concrete effects on the larger interstate market. 3
 3
     Similarly, the claim that an uninsured individual is “inactive” ignores that health
 4
     insurance is not a stand-alone consumer product, but instead is the principal means of
 5

 6   financing participation in the health care market. “Regardless of whether one relies on an
 7
     insurance policy, one’s savings, or the backstop of free or reduced-cost emergency room
 8
     services, one has made a choice regarding the method of payment for the health care
 9

10   services one expects to receive.” Liberty Univ. Inc., 753 F. Supp. 2d at 633.
11
            Even if the uninsured population does not currently participate in the health
12
     insurance market (though any given individual likely had or will have insurance in the
13

14   near past or future), 4 it indisputably participates in the larger market for health care
15   services. SMF ¶¶ 3-4, 19-21. Thus, plaintiffs’ assertion “that the Commerce Clause
16
     power does not extend to regulations which require individuals to enter a market they
17

18   would otherwise choose to remain outside of is irrelevant to this case.” Mead, 766 F.

19   Supp. 2d at 37. Nothing required Congress to focus exclusively on the submarket that
20
     plaintiffs define, and nothing barred Congress from focusing on economic conduct in the
21

22
     health care market. Some individuals may prefer to pay for their participation in that

23   larger market out of pocket rather than through insurance. But that type of economic
24
     3
25      Here, Coons is arguably more “active” in the interstate market than Raich or Filburn.
     Coons does not deny that he is a consumer of services in the health care market; by
26   contrast, the plaintiffs in Raich and Wickard claimed they would not enter the marijuana
27   or wheat markets.
     4
       See SMF ¶ 10 (observing that “[o]f those who are uninsured at some point in a given
28   year, about 63% have coverage at some other point during the same year”).
                                                   24
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 1
     preference—which, Congress recognized to have had adverse market consequences on a

 2   classwide basis—is plainly subject to regulation under the Commerce Clause. Congress
 3
     had a rational basis to conclude that the uninsured shift billions of dollars annually on to
 4
     other market participants when they use health care services for which they do not fully
 5

 6   pay. Under this “common sense understanding of the [market] forces” at issue, Congress
 7
     has the authority to regulate. See United States v. Rodia, 194 F.3d 465, 478 (3d Cir.
 8
     1999) (upholding federal ban on intrastate possession of child pornography based on
 9

10   court’s recognition of the nexus between the regulated intrastate behavior and the
11
     interstate market).
12
            Moreover, the uninsured population benefits directly from the Act’s regulatory
13

14   reforms. As noted, the Act prohibits insurers from denying coverage to, or charging
15   more, for persons with pre-existing conditions. 42 U.S.C. §§ 300gg, 300gg-1, 300gg-
16
     3(a), 300gg-4(a). The Act makes everyone insurable, and thus provides tangible
17

18   protection against the risk of being left destitute by catastrophic medical expenses. See

19   42 U.S.C. § 18091(a)(2)(G) (62% of all personal bankruptcies are caused in part by
20
     medical expenses). Even apart from the other rational bases for Congress’s choice of
21

22
     means, “[t]his benefit makes imposing the minimum coverage provision appropriate.”

23   Thomas More Law Center v. Obama, 720 F. Supp. 2d 882, 894 (E.D. Mich. 2010).
24
            Plaintiffs’ theory—that conduct can be exempted from federal regulation simply
25
     by attaching the label of “inactivity” or “consumption” to that conduct—disregards the
26

27   “broad principles of economic practicality” that underlie the commerce power. Lopez,
28

                                                  25
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 1
     514 U.S. at 571 (Kennedy, J., concurring). The Court has long held that “questions of the

 2   power of Congress are not to be decided by reference to any formula which would give
 3
     controlling force to nomenclature” without regard to “the actual effects of the activity in
 4
     question upon interstate commerce.” Wickard, 317 U.S. at 120; see also Swift Co. v.
 5

 6   United States, 196 U.S. 375, 398 (1905) (“commerce among the states is not a technical
 7
     legal conception, but a practical one, drawn from the course of business”); cf. Brown
 8
     Shoe Co. v. United States, 370 U.S. 294, 336-337 (1962) (Congress chose in the Clayton
 9

10   Act to “prescribe[] a pragmatic, factual approach to the definition of the relevant market
11
     and not a formal, legalistic one”). Indeed, the Supreme Court has expressly rejected the
12
     relevance of any distinction between “production” and “consumption” for purposes of
13

14   Commerce Clause analysis. Wickard, 317 U.S. at 124.
15          Moreover, plaintiffs’ “inactivity” fallacy not only ignores Congress’s considered
16
     judgment but also is illogical. After all, if the uninsured were truly “passive” with
17

18   respect to the relevant market, they could not shift costs to others through their

19   participation in that market. Cf. SMF ¶¶ 19-24. It is the conduct of the uninsured, due to
20
     their participation in the health care market, that Congress identified as having a
21

22
     substantial economic effect on interstate commerce, due to the significant amount of

23   uncompensated care that the uninsured receive, which shifts costs to others and drives up
24
     prices of both health care services and health insurance premiums. 42 U.S.C.
25
     § 18091(a)(2)(F). Indeed, “the notion that self-insuring amounts to inaction and buying
26

27   insurance amounts to action is not self-evident[,]” particularly where, “[i]f done
28

                                                  26
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 1
     responsibly, the former requires more action (affirmatively saving money on a regular

 2   basis and managing the assets over time) than the latter (writing a check once or twice a
 3
     year or never writing one at all if the employer withholds the premiums).” Thomas More,
 4
     2011 WL 2556039, at *28 (Sutton, J.). Thus, “self-insurance and private insurance are
 5

 6   two forms of action for addressing the same risk. Each requires affirmative choices; one
 7
     is no less active than the other; and both affect commerce.” Id. at *29. Congress plainly
 8
     has the authority to regulate conduct that has substantial economic effects in the interstate
 9

10   market with which it is concerned. 5
11
                   4.     Congress’s rational basis for enacting the Affordable Care Act
12                        does not depend upon attenuated links to interstate commerce
13
            Plaintiffs’ reliance on the holdings of Lopez and Morrison, the only modern cases
14
     to invalidate federal statutes as beyond the commerce power, is misplaced. Both statutes
15

16   were stand-alone measures that involved no economic regulation. In Lopez, the Supreme

17   Court struck down a ban on possession of a handgun in a school zone because the ban
18
     was related to economic activity only insofar as the presence of guns near schools might
19

20
     impair learning, which in turn might undermine economic productivity. Similarly, in

21   Morrison, the Court invalidated a tort cause of action established by the Violence Against
22
     Women Act, explaining that it would require a chain of speculative assumptions to
23
     5
         Similarly unavailing is plaintiffs’ argument that the term “regulate” “means to govern
24   activity that is already ongoing or is initiated in [an] independent way. It does not mean
25   to compel or require activity.” Pls.’ Mem. at 18. This argument ignores the undeniable
     fact that Congress has both the power to “prescribe and proscribe” rules of conduct, and
26   that, in the legislative context, Congress may enact “rules of conduct, some which require
27   action.” Thomas More, 2011 WL 2556039, at *28 (Sutton, J.) (observing that federal
     sex-offender registration laws and federal laws governing child support payments compel
28   some action on the part of certain individuals).
                                                  27
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 1
     connect gender-motivated violence with interstate commerce. Neither of these measures

 2   played any role in a broader regulation of economic activity. Lopez, 514 U.S. at 561.
 3
     Indeed, the “noneconomic, criminal nature of the conduct at issue was central” to the
 4
     Court’s decisions. Morrison, 529 U.S. at 610; see also Sabri, 541 U.S. at 607.
 5

 6          The minimum coverage provision, in contrast, “steers clear of the central defect in
 7
     the laws at issue in Lopez and Morrison. Health care and the means of paying for it are
 8
     ‘quintessentially economic’ in a way that possessing guns near schools . . . and domestic
 9

10   violence . . . are not.” Thomas More, 2011 WL 2556039, at *25 (Sutton, J.) (citation
11
     omitted). The provision is also part of a broad economic regulation of health care
12
     financing in the massive interstate health care market, and it is essential to the Act’s
13

14   guaranteed issue and community rating reforms. Moreover, the minimum coverage
15   provision regulates economic conduct—the means of payment for health care services in
16
     a market that accounts for over one-sixth of the nation’s GDP. See SMF ¶ 1. Indeed, it is
17

18   difficult to conceive of legislation that is more clearly economic.

19          Likewise, “[n]o one must ‘pile inference upon inference’ . . . to recognize that the
20
     national regulation of a $2.5 trillion industry, much of which is financed through ‘health
21

22
     insurance . . . sold by national or regional health insurance companies’ . . . is economic in

23   nature.” Id. (Sutton, J.). As noted, the Supreme Court has clearly held that Congress
24
     may consider the effects of an entire class of conduct “in the aggregate.” Raich, 545 U.S.
25
     at 22. And, in the aggregate, the direct result of the decision to attempt to pay for health
26

27   care expenses out of pocket is that “Congress’s efforts to stabilize prices for [health
28

                                                  28
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 1
     insurance] are thwarted.” Mead, 766 F. Supp. 2d at 34. Thus, “there is no need for

 2   metaphysical gymnastics of the sort proscribed by Lopez” to understand the direct
 3
     connection between choosing to forego insurance, on the one hand, and cost-shifting—
 4
     which is the very thing that, according to Congress, has a substantial effect on interstate
 5

 6   commerce—on the other. Thomas More, 720 F. Supp. 2d at 894.
 7
            Ultimately, the concerns underlying the Supreme Court’s decisions in Lopez and
 8
     Morrison are inapplicable here. Those cases sought to avoid a view of economic
 9

10   causation so broad that it would “‘obliterate the distinction between what is national and
11
     what is local in the activities of commerce.’” Morrison, 529 U.S. at 616 n.6 (quotations
12
     omitted). By contrast, the problems that are addressed by the Affordable Care Act are by
13

14   no means local. “‘The modern health care system is highly interdependent and operates
15   across state boundaries.’” SMF ¶ 28 (quoting Sara Rosenbaum, Can States Pick Up the
16
     Health Reform Torch?, 362 NEW ENG. J. MED. e29, at 3 (2010)); see Freilich v. Upper
17

18   Chesapeake Health, Inc., 313 F.3d 205, 213 (4th Cir. 2002) (“Hospitals are regularly

19   engaged in interstate commerce, performing services for out-of-state patients and
20
     generating revenues from out-of-state sources.”) (citing Summit Health, Ltd. v. Pinhas,
21

22
     500 U.S. 322, 329-30 (1991)); Amicus Br. of the Commonwealth of Massachusetts in

23   Support of Appellant at 12-13, State of Florida et al. v. U.S. Dep’t of Health & Human
24
     Servs., No. 11-11021 (11th Cir. filed Apr. 11, 2011). As just one example,
25
     Pennsylvanians make over 1500 emergency room visits each year to a hospital across
26

27   state lines in West Virginia, resulting in over $820,000 owed, and not yet paid, for visits
28

                                                  29
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 1
     that occurred in fiscal year 2007 alone. See SMF ¶ 28 (citing Amicus Br. of the

 2   Governors of Washington, Colorado, Michigan, and Pennsylvania, State of Florida v.
 3
     HHS, No. 3:10-cv-91 (N.D. Fla. filed Nov. 19, 2010), at 9). Congress reasonably found
 4
     that the Act’s national standards were required to ensure that employers and individuals
 5

 6   would not be subject to a state-by-state “patchwork of requirements and protections.”
 7
     H.R. REP. NO. 111-443, pt. I, at 211-12 (2010). The minimum coverage provision, a
 8
     quintessentially economic regulation, addresses national problems that arise in the
 9

10   context of a vast interstate market. It is a means reasonably adapted to that legitimate
11
     end.
12
            This fact rebuts plaintiffs’ claim that upholding the minimum coverage
13

14   provision—regulating “inactivity,” in their parlance—obliterates any limitations on the
15   Commerce Clause. Lopez and Morrison imposed limits that have nothing to do with
16
     “activity” or “inactivity.” The minimum coverage provision falls well within those
17

18   boundaries, and upholding the provision leaves them unaltered.

19   II.    CONGRESS ENACTED THE MINIMUM COVERAGE PROVISION
20
            PURSUANT TO ITS INDEPENDENT POWER UNDER THE GENERAL
            WELFARE CLAUSE
21

22
            Plaintiffs’ challenge fails for an additional reason. Independent of its power under

23   the Commerce Clause, Congress has the “Power To lay and collect Taxes, Duties,
24
     Imposts and Excises, to pay the Debts and provide for the common Defence and general
25
     Welfare of the United States.” U.S. CONST. art. I, § 8, cl. 1. Congress’s power to collect
26

27   revenue and make expenditures under the General Welfare Clause is “comprehensive.”
28

                                                  30
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 1
     Charles C. Steward Machine Co. v. Davis, 301 U.S. 548, 581 (1937); see also Veazie

 2   Bank v. Fenno, 75 U.S. 533, 541 (1869) (“[I]t was the intention of the Convention that
 3
     the whole power should be conferred….”). Indeed, Congress may use its general welfare
 4
     authority for purposes beyond its powers under other provisions of Article I. See United
 5

 6   States v. Sanchez, 340 U.S. 42, 44 (1950) (“Nor does a tax statute necessarily fall because
 7
     it touches on activities which Congress might not otherwise regulate.”); Knowlton v.
 8
     Moore, 178 U.S. 41, 59-60 (1900) (Congress may tax inheritances, even if it may not
 9

10   regulate them under the Commerce Clause); United States v. Doremus, 249 U.S. 86, 94
11
     (1919). As long as a statute is “productive of some revenue,” Congress may exercise its
12
     taxing powers irrespective of any “collateral inquiry as to the measure of the regulatory
13

14   effect of a tax.” 6 Sonzinsky v. United States, 300 U.S. 506, 514 (1937); see also United
15   States v. Gianni, 455 F.2d 147, 148 (9th Cir. 1972). In determining whether a
16
     congressional enactment is authorized under the taxing power, the only question is
17

18   therefore whether the regulation bears “some reasonable relation” to the “raising of

19   revenue.” Doremus, 249 U.S. at 93-94; see also J.W. Hampton, Jr., & Co. v. United
20
     States, 276 U.S. 394, 412 (1928) (“motive” and “effect” “to secure revenue” bring
21

22
     measure within taxing power, even if Congress announces other motives to regulate
     6
23       Sozinsky forecloses plaintiffs’ argument that the minimum coverage provision is an
     invalid exercise of Congress’s taxing power because its purpose is regulatory. See Pls.’
24   Mem. at 32. As the Supreme Court recognized, “[e]very tax is in some measure
25   regulatory” in that “it interposes an economic impediment to the activity taxed as
     compared with others not taxed.” Sozinsky, 300 U.S. at 513. “[C]ourts have sustained
26   taxes although imposed with the collateral intent of effecting ulterior ends which,
27   considered apart, were beyond the constitutional power of the lawmakers to realize by
     legislation directly addressed to their accomplishment.” Sanchez, 340 U.S. at 44-45
28   (internal quotation and citation omitted).
                                                 31
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 1
     commerce).

 2          In contrast to the Sixth Circuit’s conclusion, see Thomas More, 2011 WL
 3
     2556039, at *17-21 (Sutton, J.), the minimum coverage provision falls within Congress’s
 4
     comprehensive taxing power. The Affordable Care Act requires “taxpayers” not exempt
 5

 6   to obtain “minimum essential coverage” or pay a penalty. 26 U.S.C. § 5000A(a), (b)(1).
 7
     “Taxpayers” who are not required to file income tax returns for a given year are not
 8
     subject to this provision. 26 U.S.C. § 5000A(e)(2). If the penalty applies, the taxpayer
 9

10   must report it on his income tax return for the taxable year, as an addition to his income
11
     tax liability. 26 U.S.C. § 5000A(b)(2). The resulting penalty is a percentage of the
12
     taxpayer’s household income, subject to a floor and a cap of the national average
13

14   premium for the lowest-tier plans offered in the new Exchanges for the taxpayer’s family
15   size. 26 U.S.C. § 5000A(c)(1), (2). The taxpayer’s responsibility for his family members
16
     turns on their status as dependents under the Internal Revenue Code. 26 U.S.C. §
17

18   5000A(a), (b)(3). The Secretary of the Treasury is empowered to enforce the provision,

19   and he collects the penalty in the same manner as other assessable penalties under the
20
     Internal Revenue Code. 26 U.S.C. § 5000A(g). 7
21

22
            Because the provision, where it applies, will increase a taxpayer’s total liability,

23   there can be no dispute that the provision will be “productive of some revenue.”
24
     Sonzinsky, 300 U.S. at 514. Indeed, the Congressional Budget Office (“CBO”) estimated
25
     that $4 billion in revenues will be derived each year from the provision when it is fully in
26
     7
27      The Secretary of the Treasury may not collect the penalty through notice of federal tax
     liens or levies, and may not bring a criminal prosecution for a failure to pay it. 26 U.S.C.
28   § 5000A(g)(2).
                                                  32
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 1
     effect. See SMF ¶ 44 (citing Letter from Douglas W. Elmendorf, Director, CBO, to the

 2   Hon. Nancy Pelosi, Speaker, U.S. House of Representatives 2 tbl. 4 (Mar. 20, 2010)).
 3
     Plaintiffs attempt to undermine these facts by arguing that the provision is beyond
 4
     Congress’s taxing power because “[i]f every individual subject to the [provision]
 5

 6   complied, the penalty would produce no revenue.” Pls.’ Mem. at 32. But, as the
 7
     Supreme Court has instructed, “a tax does not cease to be valid merely because it
 8
     regulates, discourages, or even definitely deters the activities taxed.” 8 Sanchez, 340 U.S.
 9

10   at 44.
11
              Beyond the determinative fact that the minimum coverage provision will be
12
     “productive of some revenue,” the provision operates as a tax in every meaningful sense,
13

14   that is, as a “pecuniary burden laid upon individuals or property for the purpose of
15   supporting the government.” United States v. New York, 315 U.S. 510, 515-16 (1942).
16
     Congress placed the provision in the Internal Revenue Code; directed that the amount a
17

18   taxpayer owes under the provision be reported on the taxpayer’s annual tax return and

19   added to the taxpayer’s annual tax liability; and granted enforcement authority to the
20
     Secretary of the Treasury. Revenues from the provision go to the general treasury. In all
21

22
     practical respects, the provision is a tax. Cf. In re Chateaugay Corp., 53 F.3d 478, 498

23

24   8
        In the same vein, plaintiffs’ argument that the minimum coverage provision is punitive
25   is without merit. As discussed in prior briefing, see Defs.’ Reply 22-23,
     § 5000A has none of the hallmarks of a punishment. It does not have a scienter
26   requirement, cf. The Child Labor Tax Case, 259 U.S. 20, 36-37 (1922), and is “not
27   conditioned upon the commission of a crime,” Sanchez, 340 U.S. at 45, nor is the penalty
     so “exorbitant” that it demonstrates an intent to “punish rather than to tax,” United States
28   v. Constantine, 296 U.S. 287, 294, 295 (1935).
                                                  33
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 1
     (2d Cir. 1995) (“Coal Act was at least partially an exercise of the taxing power,” given

 2   placement in Internal Revenue Code and grant of enforcement authority to Treasury).
 3
            The only basis that has been offered for refusing to recognize the minimum
 4
     coverage provision as a valid taxing measure is that Congress did not label the § 5000A
 5

 6   penalty a “tax.” But the substance of the provision, not its label, is dispositive. Penn
 7
     Mut. Indem. Co. v. Comm’r of Internal Revenue, 277 F.2d 16, 20 (3d Cir. 1960) (“the tax
 8
     itself” need not “bear an accurate label” in order to be upheld as a valid taxing measure).
 9

10   The Supreme Court has emphasized that, “[i]n passing on the constitutionality of a tax
11
     law [the Court is] concerned only with its practical operation, not its definition or the
12
     precise form of descriptive words which may be applied to it.” Nelson v. Sears, Roebuck
13

14   & Co., 312 U.S. 359, 363 (1941) (internal quotation omitted); see also United States v.
15   Sotelo, 436 U.S. 268, 275 (1978) (funds owed by operation of Internal Revenue Code had
16
     “essential character as taxes” despite statutory label as “penalty”).
17

18          Indeed, Congress was under no obligation to identify the § 5000A penalty as a tax

19   or otherwise expressly invoke the General Welfare Clause in order to enact legislation
20
     pursuant to its taxing power. 9 “‘The constitutionality of action taken by Congress does
21

22   9
         Plaintiffs’ argument that the minimum coverage provision is an unconstitutional
23   direct tax is without merit. As the government explained in prior briefing, the minimum
     coverage provision conditions its tax on a number of factors, including the receipt of a
24   threshold amount of income, and the absence of qualifying coverage. It is not a direct
25   tax, which is a tax imposed on property “solely by reason of its ownership.” Knowlton,
     178 U.S. at 81; see Quatry v. United States, 170 F.3d 961, 970 (9th Cir. 1999). Nor does
26   any precedent require defendants to identify specifically the category of tax—direct,
27   excise, impost, or duty—in which the minimum coverage penalty provision falls. The
     Supreme Court rejected the same argument in Charles C. Steward Mach. Co., upholding
28   the employment taxes in the Social Security Act against a claim that they did not qualify
                                                  34
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 1
     not depend on recitals of the power which it undertakes to exercise.’” United States v.

 2   Nelson, 277 F.3d 164, 178 n.14 (2d Cir. 2002) (quoting Woods v. Cloyd W. Miller Co.,
 3
     333 U.S. 138, 144 (1948)); see Oregon Short Line R.R. v. Dep’t of Revenue Or., 139 F.3d
 4
     1259, 1266 (9th Cir. 1998) (noting that the constitutionality of congressional action does
 5

 6   not depend on recitals of the power which it undertakes to exercise).
 7
            In any event, even if Congress did not expressly invoke its taxing power, as
 8
     defendants discussed in prior briefing, the word “tax” or a derivative of it appears more
 9

10   than forty times in the minimum coverage provision. Placing the provision in the Tax
11
     Code, requiring that compliance be reported on the tax return, providing that any
12
     penalties be paid every April 15 with income taxes, and referring repeatedly to the
13

14   obligations of the taxpayer are all clear indicators that Congress intended the provision to
15   operate as a tax. Moreover, the taxing power was expressly invoked in the Senate to
16
     defeat constitutional points of order against the provision. 155 Cong. Rec. S13,830,
17

18   S13,832 (Dec. 23, 2009). During the floor debates, congressional leaders explicitly

19   defended the provision as an exercise of the taxing power. See, e.g., 156 Cong. Rec.
20
     H1882 (Mar. 21, 2010) (statement of Rep. Miller); 156 Cong. Rec. H1824, H1826 (Mar.
21

22
     21, 2010) (statement of Rep. Slaughter); 155 Cong. Rec. S13,751, S13,753 (Dec. 22,

23   2009) (statement of Sen. Leahy); 155 Cong. Rec. S13,581-82 (Dec. 20, 2009) (statement
24

25   as “excise.” “The subject-matter of taxation open to the power of the Congress is as
     comprehensive as that open to the power of the states.” Id. at 581. The General Welfare
26   Clause power “may be applied to every object of taxation, to which it extends, in such
27   measure as Congress may determine. . . . [I]t was the intention of the Convention that the
     whole power should be conferred. The definition of particular words, therefore, became
28   unimportant.” Veazie Bank, 75 U.S. at 541.
                                                  35
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 1
     of Sen. Baucus). There is no doubt on that score, and no ambiguity arising simply from

 2   the fact that the word “penalty” can be used outside the tax context. If there were such
 3
     ambiguity, however, the presumption of constitutionality would dictate that it be resolved
 4
     in favor of upholding the provision as an exercise of the taxing power. See Edward J.
 5

 6   DeBartolo Corp. v. Florida Gulf Coast Bldg., 485 U.S. 568, 575 n.1 (1988)).
 7
     III.      THE AFFORDABLE CARE ACT DOES NOT UNCONSTITUTIONALLY
 8             DELEGATE LEGISLATIVE POWER TO THE INDEPENDENT
               PAYMENT ADVISORY BOARD (IPAB)
 9

10             The only IPAB-related issue remaining here is plaintiffs’ non-delegation doctrine
11
     challenge. After the Supreme Court’s decision in Nevada v. Carrigan, plaintiffs
12
     withdrew Count VI, which had asserted that the ACA unconstitutionally prohibits the
13

14   repeal of the IPAB. See Pls.’ Mem. at 1, ECF No. 51 (voluntarily dismissing Count
15   VI). 10
16
               As for the non-delegation claim, defendants have explained that the pages of
17

18   detailed requirements contained in the ACA easily establish the required “intelligible

19   principle.” In particular, the ACA specifies a list of “considerations” that the Board must
20
     take into account (42 U.S.C. § 1395kkk(c)(2)(B)); it contains a general statement of
21

22
     purpose (id. § 1395kkk(b)); and it prohibits the Board from making certain types of

23   recommendations (id. § 1395kkk(c)(2)(A)). The Supreme Court and the Ninth Circuit
24
     10
25      For this reason, the ten pages of speculation that the amicus brief devotes to this issue
     (see Amicus Br. 12-22, ECF No. 53) are irrelevant. “While an amicus may offer
26   assistance in resolving issues properly before a court, it may not raise additional issues or
27   arguments not raised by the parties.” Cellnet Commc’ns Inc. v. FCC, 149 F.3d 429, 443
     (6th Cir. 1998); see also Swan v. Peterson, 6 F.3d 1373, 1383 (9th Cir. 1993)
28   (“Generally, we do not consider on appeal an issue raised only by an amicus.”).
                                                   36
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 1
     have upheld statutes containing far broader delegations. See New York Cent. Sec. Corp.

 2   v. United States, 287 U.S. 12, 24-25 (1932) (the “public interest”)); Freedom to Travel
 3
     Campaign v. Newcomb, 82 F.3d 1431, 1436-38 (9th Cir. 1996) (“in the national
 4
     interest”). Plaintiffs’ insistence that the IPAB lacks an “intelligible principle” is therefore
 5

 6   unsupportable.
 7
            Moreover, plaintiffs and the amicus are wrong to say that the congressional review
 8
     procedures are the only way that Congress may exert control over the Board’s
 9

10   recommendations. See, e.g., Amicus Br. 6. In fact, the ACA establishes “fast-track”
11
     parliamentary procedures to ensure Congress, should it choose to do so, has sufficient
12
     time to consider its own legislative alternative to IPAB’s recommendations. As the
13

14   government has observed, nothing prevents Congress from repealing or suspending the
15   rules governing congressional changes to IPAB recommendations while voting on
16
     superseding legislation. Congress is constitutionally entitled to set its own rules. See
17

18   U.S. CONST. art. I, § 5. 11

19   IV.    THE MINIMUM COVERAGE PROVISION AND THE PROVISIONS
20
            CREATING THE IPAB ARE SEVERABLE FROM THE ACA’S
            REMAINING PROVISIONS
21

22
            Plaintiffs’ insistence that the minimum coverage provision and the provisions of

23   the ACA creating IPAB are not severable from the rest of the ACA is irrelevant, as these
24
     provisions fall well within Congress’s constitutional authority. If this Court reaches
25

26

27
     11
       The government incorporates by reference the non-delegation doctrine discussions
28   contained in prior briefing. See Local Rule 7.1(d).
                                                   37
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 1
     severability, however, it should conclude that these provisions are severable from the vast

 2   majority of the ACA’s provisions.
 3
            The Supreme Court has repeatedly held that, “when confronting a constitutional
 4
     flaw in a statute,” courts must “try to limit the solution to the problem, severing any
 5

 6   problematic portions while leaving the remainder intact.” Free Enterprise Fund v. Pub.
 7
     Co. Accounting Oversight Bd., 130 S. Ct. 3138, 3161 (2010) (internal quotation marks
 8
     omitted). “[T]he ‘normal rule,’” therefore, “is that ‘partial, rather than facial, invalidation
 9

10   is the required course’ such that a ‘statute may ... be declared invalid to the extent that it
11
     reaches too far, but otherwise left intact.’” Ayotte v. Planned Parenthood of N. New
12
     England, 546 U.S. 320, 329 (2006) (quoting Brockett v. Spokane Arcades, Inc., 472 U.S.
13

14   491, 504 (1985)). If provisions are “fully operative as a law,” they must be sustained
15   “[u]nless it is evident that the Legislature would not have enacted those provisions ...
16
     independently of that which is [invalid].” Free Enterprise Fund, 130 S. Ct. at 3161
17

18   (internal citation and quotation marks omitted).

19          The government’s position is that the minimum coverage provision is so closely
20
     and inextricably linked to the new guaranteed issue and community rating reforms that
21

22
     those reforms are not severable from that provision. See, e.g., Reply/Response Br. of

23   HHS, et al., Florida v. HHS, Nos. 11-11021 & 11-11067 (11th Cir.), at 24-26 (noting that
24
     §§ 2701, 2702, 2704 (with respect to adults), and 2705(a) of the Public Health Service
25
     Act, as added by § 1201 of the Affordable Care Act are not severable from the minimum
26

27   coverage provision).
28

                                                   38
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 1
            But plaintiffs’ assertion, see Pls.’ Mem. at 56-58, that neither the minimum

 2   coverage requirement nor the IPAB can be severed from any other provision of the
 3
     Affordable Care Act for the reasons set forth in the Florida district court decision,
 4
     Florida ex rel. Bondi v. HHS, 2011 WL 285683,*33-39 (N.D. Fla. Jan. 31, 2011), which
 5

 6   has been appealed and is awaiting decision by the Eleventh Circuit, is simply wrong. The
 7
     other provisions of the Act are “fully operative as a law,” and plaintiffs have not shown
 8
     that “the Legislature would not have enacted those provisions . . . independently of” the
 9

10   minimum coverage provision. Free Enterprise Fund, 130 S. Ct. at 3161 (quotations
11
     omitted); see also Reply/Response Br. of HHS, et al., Florida v. HHS, at 56-58.
12
            The Florida court reasoned that “[g]oing through the 2,700–page Act line-by-line,
13

14   invalidating dozens (or hundreds) of some sections while retaining dozens (or hundreds)
15   of others, would not only take considerable time and extensive briefing, but it would, in
16
     the end, be tantamount to rewriting a statute in an attempt to salvage it.” Florida, 2011
17

18   WL 285683, at *38. But this conclusion fails to follow the rule that “partial, rather than

19   facial, invalidation is the required course.” Brockett v. Spokane Arcades, 472 U.S. 491,
20
     504 (1985). Indeed, as the Virginia v. Sebelius, 728 F. Supp. 2d 768, 789-90 (E.D. Va.
21

22
     2010) court recognized, the Act contains provisions that are plainly severable from the

23   minimum coverage provision and the IPAB. For example, parts of the ACA make
24
     changes to Medicare payment rates for 2011, ACA Title III, and “provide for more
25
     rigorous enforcement” of drug pricing requirements. Astra USA, Inc. v. Santa Clara
26

27   Cnty., 131 S. Ct. 1342, 1346 (2011). Other provisions re-authorized programs already on
28

                                                  39
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 1
     the books, e.g., ACA §§ 4204(c), 5603, amended the False Claims Act, ACA §

 2   10104(j)(2), and imposed requirements to eliminate Medicaid waste and fraud, e.g., ACA
 3
     §§ 6402(h)(2), 6411. Without question, these provisions can survive without the
 4
     minimum coverage provision or the IPAB provisions. 12
 5

 6          Plaintiffs are equally wrong to rely on the lack of a severability clause in the ACA.
 7
     “In the absence of a severability clause . . . Congress’ silence is just that-silence-and does
 8
     not raise a presumption against severability.” Alaska Airlines v. Brock, 480 U.S. 678,
 9

10   686 (1987). Indeed, even if a severability clause had been removed, the “unexplained
11
     disappearance” of text during the progress of a bill is rarely a “reliable indicator[] of
12
     congressional intent.” Mead Corp. v. Tilley, 490 U.S. 714, 723 (1989). That principle
13

14   has particular force here because Congress legislated against the background presumption
15   of severability. Indeed, both the Senate Legislative Drafting Manual and the House
16
     Legislative Counsel’s Manual on Drafting Style “advise drafters that a ‘severability
17

18   clause is unnecessary’ unless Congress intends to make certain portions of a statute

19   unseverable.” Interpreting by the Book: Legislative Drafting Manuals and Statutory
20
     Interpretation, 120 Yale L.J. 185, 190 (2010). Plaintiffs’ description of the legislative
21

22
     history is, moreover, misleading. Although a bill initially passed by the House contained

23   a severability provision, none appeared in the bills considered by the Senate or enacted as
24
     the Affordable Care Act.
25

26

27
     12
        Moreover, the Court should not reach the question of the severability of those other
28   provisions. See Printz v. United States, 521 U.S. 898, 935 (1997).
                                                   40
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 1
                                       CONCLUSION

 2         Plaintiffs’ motion for summary judgment should be denied, and defendants’ cross-
 3
     motion for summary judgment should be granted.
 4

 5   Dated: August 10, 2011                 Respectfully submitted,
 6                                          TONY WEST
                                            Assistant Attorney General
 7
                                            IAN HEATH GERSHENGORN
 8
                                            Deputy Assistant Attorney General
                                            DENNIS K. BURKE
 9                                          United States Attorney, District of Arizona
10                                          JENNIFER RICKETTS
                                            Director
11
                                            SHEILA LIEBER
12                                          Deputy Director
13                                          /s/ Tamra T. Moore_____________
                                            JOEL McElvain
14
                                            TAMRA T. MOORE (D.C. Bar #488392)
                                            ETHAN P. DAVIS (N.Y. Bar)
                                            Attorneys
15                                          United States Department of Justice
                                            Civil Division, Federal Programs Branch
16                                          20 Massachusetts Ave. NW
                                            Washington, D.C. 20001
17                                          Phone: (202) 514-8095
                                            E-mail: Tamra.Moore@usdoj.gov
18
                                            Attorneys for Defendants
19

20

21

22

23

24

25

26

27

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 1
                                 CERTIFICATE OF SERVICE
 2
           I hereby certify that on August 10, 2011, I electronically transmitted the attached
 3   document to the Clerk’s Office using the CM/ECF system for filing and transmittal of a
     Notice of Electronic Filing to the following CM/ECF registrants:
 4
            Clint D. Bolick, Goldwater Institute, cbolick@goldwaterinstitute.org
 5
            Diane S. Cohen, Goldwater Institute, dcohen@goldwaterinstitute.org
 6
            Nicholas C. Dranias, Goldwater Institute, ndranias@goldwaterinstitute.org
 7

 8
                                                      s/ Tamra T. Moore
 9                                                    TAMRA T. MOORE
10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

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28

				
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