[JURIST] The US Supreme Court [official website] heard oral arguments [day call, PDF] Monday in United States Department of Health and Human Services v. Florida [transcript; JURIST report] on whether the suit brought by challengers of the minimum coverage provision of the Patient Protection and Affordable Care Act (PPACA) [text; JURIST backgrounder] is barred by the Anti-Injunction Act of 1867 (AIA) [text]. The PPACA requires that most citizens obtain health insurance by January 1, 2014, and prescribes a financial penalty for those who do not comply. The AIA forbids lawsuits that challenge a tax before that tax has been collected. Because the PPACA penalty is contained in the Internal Revenue Code and is to be collected via federal tax returns, the AIA arguably prevents the court from hearing the challenge to the PPACA on its merits. Interestingly none of the parties to the case advocated such an application of the AIA. The court appointed Washington attorney Robert Long as special counsel to argue that the AIA is “jurisdictional” and thus categorically prevents courts from hearing challenges to covered tax provisions, including the PPACA individual mandate penalty. Alternatively the AIA could be construed as a mandatory claim-processing rule, under which parties may agree to waive its application, and federal courts could make equitable exceptions in order to hear and decide certain cases that would otherwise be barred.

Regardless, the PPACA penalty must be considered a tax for the AIA to apply at all, a point argued by Solicitor General Donald Verrilli. Because the government has an “exceedingly strong interest” in generally preventing challenges to other tax provisions, as a function of “history and context,” Verrilli conceded Long’s claim that the AIA is jurisdictional. Instead Verrilli argued that the PPACA individual mandate penalty is not a tax, evidenced by the decision by Congress to specifically term the measure a “penalty” instead of a tax. The court noted that Verrilli walked a fine line in his categorization of the penalty, since he later plans to present the individual mandate as authorized by the legislature’s Article I taxing power, under which he claims the “penalty” label is irrelevant. The challengers of the individual mandate agreed with Verrilli that the AIA does not block the case from being heard, mostly because the case to be decided is whether the individual mandate requirement itself is constitutional, and since the requirement is certainly not a tax, the AIA does not apply. The attempt to separate the mandate from the penalty was not well received by the justices, who stressed that there can be no requirement without a penalty, regardless of whether the two provisions constitute separate legal actions and apply to differently sized classes of people. While the court’s final decision on the application of AIA will not be published until June, this week’s arguments on the merits of the challenge to the PPACA will proceed as scheduled.