Last week, the Fourth Circuit Court of Appeals in King v. Burwell unanimously upheld the validity of an IRS final rule interpreting the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) as authorizing the IRS to grant tax credits to individuals who purchase health insurance on both state-run insurance Exchanges and federally-facilitated Exchanges created and operated by HHS. The plaintiffs contended that the IRS’s interpretation was contrary to the language of the statute, which expressly authorized tax credits only for individuals who purchase insurance on state-run Exchanges. The Fourth Circuit deferred to the IRS’s determination as a permissible exercise of IRS discretion, finding that the applicable statutory language was ambiguous and subject to multiple interpretations.
As we discussed, on that same day last week, the U.S. Court of Appeals for the District of Columbia Circuit reached the opposite conclusion, ruling 2-1in Halbig v Burwell that the IRS did not have the right to rewrite the wording of the law to suit its intent to allow federal Exchange subsidies. So, what happens now?
Supreme Court review?
The White House has vowed to appeal the Halbig ruling before a full panel of the D.C. Circuit, which has seven judges appointed by Democratic presidents and four appointed by Republicans. If the full panel of the D.C. Circuit reaches the same conclusion as the panel that voted against the Administration, then the split in the two Circuits will set the stage for the U.S. Supreme Court to hear the case.
But, full panel (or en banc) review in both Halbig and King will likely be favorable to the government. While a decision to grant en banc review would vacate the panel decision, thereby eliminating the existing Circuit split, if the en banc D.C. Circuit in Halbig were to rule differently from the three-judge panel, then there would not be a Circuit split. In addition, because an en banc Fourth Circuit decision is likely to be favorable for the government, the plaintiffs are likely to bypass en banc review and head straight to the Supreme Court. Remember that even without a Circuit split, the Supreme Court has discretion to grant certiorari.
Fourth Circuit opinion
We'll wait to see what happens with the en banc appeal of Halbig in the D.C. Circuit. In the meantime, here's the background on the Fourth Circuit decision.