United States: Federal Judge in Virginia Declares Health Insurance Mandate Unconstitutional - Challenges to Health Care Reform are Ongoing

In an opinion filed Monday, December 13, 2010, Judge Henry Hudson of the U.S. District Court for the Eastern District of Virginia invalidated a health care reform provision requiring most Americans to obtain medical insurance by 2014. The "Minimum Essential Coverage" provision of the Patient Protection and Affordable Care Act (PPACA) requires most U.S. citizens to purchase and maintain health coverage or face a monetary penalty, beginning in 2014.

The suit, brought by Virginia's attorney general, attacked the Minimum Essential Coverage provision on two basic grounds: first, that the provision exceeded the bounds of federal legislative authority based on Supreme Court precedent interpreting the Constitution; and second, that the provision is in direct conflict with the Virginia Health Care Freedom Act. Ultimately, Judge Hudson agreed that the provision "exceeds the constitutional boundaries of congressional power."

Since its final passage in March 2010, the PPACA has been challenged in numerous courts throughout the United States. Other federal district courts in Virginia and Michigan have rejected attacks on the new law. The largest challenge, filed by governors and attorneys general from 20 states, is currently pending in a Florida federal court. To date, the Virginia attorney general's suit is the first successful challenge of its kind.

Impact on Employers Sponsoring Group Health Plans. The Virginia decision invalidated only the Minimum Essential Coverage provision. The litigation over health care reform is ongoing on a national scale, and the recent Virginia decision should not disrupt the work of employers preparing for compliance with the law's many requirements applicable to employer-sponsored group health plans. As Judge Hudson acknowledged: "The outcome of this case has significant public policy implications. And the final word will undoubtedly reside with a higher court." Ultimately, the Supreme Court may decide the constitutionality of the PPACA, an outcome that grows more likely if significant disagreement materializes among federal courts. In the meantime, we will monitor all developments and we encourage you to contact us with your questions about health care reform compliance.

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