Case 2:10-cv-11156-GCS-RSW Document 28 Filed 10/07/10 Page 1 of 20

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

THOMAS MORE LAW CENTER,

JANN DeMARS; JOHN CECI;
STEVEN HYDER; and SALINA HYDER,

Plaintiffs,
Case No. 10-CV-11156
vs.
HON. GEORGE CARAM STEEH

BARACK HUSSEIN OBAMA, in his

official capacity as President of the
United States, et al.,

Defendants.
_____________________________/

ORDER DENYING PLAINTIFFS’ MOTION FOR INJUNCTION AND

DISMISSING PLAINTIFFS’ FIRST AND SECOND CLAIMS FOR RELIEF [DOC. #7]

Plaintiffs Thomas More Law Center (“TMLC”), Jann DeMars, John Ceci, Steven

Hyder, and Salina Hyder filed their complaint to challenge the constitutionality of the

recently enacted federal law known as the “Patient Protection and Affordable Care Act”

(“Health Care Reform Act” or “Act”)1, which was signed into law by President Obama on

March 23, 2010. Plaintiffs seek a declaration that Congress lacked authority under the

Commerce Clause to pass the Health Care Reform Act, and alternatively a declaration that

the penalty provision of the Act is an unconstitutional tax. In addition, plaintiffs allege that

the Health Care Reform Act violates states’ rights under the Tenth Amendment, the Free

Exercise Clause, and the Fifth Amendment’s Equal Protection and Due Process Clauses.

The matter is presently before the court on plaintiffs’ motion for a preliminary

1
Pub. L. No. 111-148, 124 Stat. 119 (2010), amended by the Health Care and
Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010).
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injunction. As agreed to by the parties, and subsequently ordered by the court, trial and

the preliminary injunction hearing on plaintiffs’ Commerce Clause and tax power claims

have been consolidated pursuant to Fed. R. Civ. P. 65(a)(2). Also, the parties agree that

there are no factual disputes to be resolved by the court before the matter can be decided

as a matter of law. Oral argument was heard July 21, 2010.

FACTUAL BACKGROUND

The Health Care Reform Act seeks to reduce the number of uninsured Americans

and the escalating costs they impose on the health care system. In an attempt to make

health insurance affordable and available, the Act provides for “health benefit exchanges,”

allowing individuals and small businesses to leverage their collective buying power to

obtain prices competitive with group plans. Act §§ 1311, 1321. It provides for incentives

for expanded group plans through employers, id. §§ 1421, 1513, affords tax credits for low-

income individuals and families, id. §§ 1401-02, extends Medicaid, id. § 2001, and

increases federal subsidies to state-run programs. Id. § 2001(a)(3)(B). The Act also

prohibits insurance companies from denying coverage to those with pre-existing medical

conditions, setting eligibility rules based on medical factors or claims experience, or

rescinding coverage other than for fraud or misrepresentation. Id. §§ 1001, 1201.

Integral to the legislative effort to lower the cost of health insurance, expand

coverage, and reduce uncompensated care is the so called minimum coverage provision

which requires that every United States citizen, other than those falling within specified

exceptions, maintain “minimum essential coverage” for health care for each month

beginning in the year 2014. If an individual fails to comply with this requirement, the Act

imposes a penalty to be included with a taxpayer’s return.

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Congress determined that the Individual Mandate2 “is an essential part of this larger

regulation of economic activity,” and that its absence “would undercut Federal regulation

of the health insurance market.” Id. § 1501(a)(2)(H). Congress found that without the

Individual Mandate, the reforms in the Act, such as the ban on denying coverage based on

pre-existing conditions, would increase the existing incentives for individuals to “wait to

purchase health insurance until they needed care,” which in turn would shift even greater

costs onto third parties. Id. § 1501(a)(2)(I). Conversely, Congress found that by

“significantly reducing the number of the uninsured, the requirement, together with the other

provisions of this Act, will lower health insurance premiums.” Id. § 1501(a)(2)(I). Congress

concluded that the Individual Mandate “is essential to creating effective health insurance

markets in which improved health insurance products that are guaranteed issue and do not

exclude coverage of pre-existing conditions can be sold.” Id.

Plaintiff Thomas More Law Center (“TMLC”) is a national public interest law firm

based in Ann Arbor, Michigan. TMLC’s employees receive health care through an

employer health care plan sponsored and contributed to by TMLC. TMLC’s health care

plan is subject to the provisions and regulations of the Health Care Reform Act. The

individual plaintiffs are United States citizens, Michigan residents, and federal taxpayers.

None of them have private health care insurance, and each of them objects to being

compelled by the federal government to purchase health care coverage. They contend that

if they do not purchase health insurance and are forced to pay a tax, such tax money would

2
The term “Individual Mandate” in the pleadings and in this opinion refers to the
minimum coverage provision of the Act which requires that all private citizens maintain
minimum essential coverage under penalty of federal law.

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go into the general fund and could go to fund abortions. Each of the individual plaintiffs

objects to being forced by the federal government to contribute in any way to the funding

of abortions.

ANALYSIS

I. Standing

Under Article III of the Constitution, a party must demonstrate standing in order to

satisfy the “case or controversy” requirement necessary for a federal court to exercise its

judicial power. The Supreme Court set forth three elements to establish standing in Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992):

(1) Plaintiff must have suffered an injury in fact - an invasion of a legally

protected interest which is (a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical; (2) There must be a causal
connection between the injury and the conduct complained of - the injury has
to be fairly traceable to the challenged action of the defendant, and not the
result of the independent action of some third party not before the court; and
(3) It must be likely, as opposed to merely speculative, that the injury will be
redressed by a favorable decision.

The first element is disputed by the parties in this case.

Plaintiff TMLC describes itself as a “national, public interest law firm” that “educate[s]

and defend[s] the citizens of the United States with respect to their constitutional rights and

liberties.” TMLC does not assert any injury to itself as an employer or organization; rather,

it “objects . . . through its members . . . to being forced to purchase health care coverage.”

“An association has standing to bring suit on behalf of its members when its members

would otherwise have standing to sue in their own right, the interests at stake are germane

to the organization’s purpose, and neither the claim asserted nor the relief requested

requires the participation of individual members in the lawsuit.” Friends of Earth v. Laidlaw

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Environ. Servs., 528 U.S. 167, 181 (2000) (citation omitted). Plaintiffs Jann DeMars and

Steven Hyder are members of TMLC, but plaintiffs John Ceci and Salina Hyder are not.

The individual plaintiffs assert that they do not have private health insurance and object “to

being compelled by the federal government to purchase health care coverage.” Plaintiffs

claim they have “arranged their personal affairs such that it will be a hardship for them to

have to either pay for health insurance that is not necessary or face penalties under the

Act.”

According to plaintiff DeMars, a basic health care policy will cost approximately

$8,832.00 per year, and to add one child will increase the cost to $9,914.28 per year.

(DeMars’ Suppl. Decl. ¶ 4). For standing, plaintiffs describe their injury as being subjected

to an unconstitutional regulation causing present economic injury and forcing a change in

behavior with a significant possibility of future harm. Plaintiff Hyder states, “I have arranged

my personal affairs such that it will be a hardship for me and my family to have to either pay

for health insurance that is not necessary or desirable or face penalties under the Act.”

(Hyder Decl. ¶5). The Act was signed into law on March 23, 2010, so the minimum

coverage provision is already law, there is no condition precedent necessary, nor is there

any subsequent regulation required to make it so.

It is true that the minimum coverage provision does not become effective until 2014.

The provision thus neither imposes obligations on plaintiffs nor exacts revenue from them

before that time. Furthermore, the Act might not affect plaintiffs after 2014, if, for instance,

changed health circumstances or other events lead plaintiffs voluntarily to satisfy the

minimum coverage provision by buying insurance. They may also satisfy the provision by

obtaining employment that includes a health insurance benefit. Indeed, the Act encourages

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employers to provide insurance to employees. Even if they do not obtain insurance,

plaintiffs may have insufficient income in 2014 to become liable for any penalty.

Defendants focus on plaintiffs’ assertion of future harm, pointing out that

“[a]llegations of possible future injury do not satisfy the requirements of Art. III. A

threatened injury must be certainly impending to constitute injury in fact.” Rosen v. Tenn.

Comm’r of Fin. & Admin., 288 F.3d 918, 929 (6th Cir. 2002) (citation omitted). A plaintiff

who “alleges only an injury at some indefinite future time” has not shown an injury in fact,

particularly where “the acts necessary to make the injury happen are at least partly within

the plaintiff’s own control.” Lujan, 504 U.S. at 564 n.2. In these situations, “the injury

[must] proceed with a high degree of immediacy, so as to reduce the possibility of deciding

a case in which no injury would have occurred at all.” Id. Plaintiffs facing a real and certain

threat of future harm need not wait for the realization of that harm to bring suit. Rosen, 288

F.3d at 929 (citations omitted). The future threat, however, must be “real and immediate,”

not “conjectural or hypothetical.” Id. (citation omitted).

The plaintiffs in this case allege a present harm in addition to a future harm, which,

if present, would be enough to establish standing. Plaintiffs describe their present injury

as being compelled to “reorganize their affairs.” An economic injury can satisfy the

requirements of Article III, but such injury must be fairly traceable to the Act. See, Linton

v. Commissioner of Health & Env’t, 973 F.2d 1311, 1316 (6th Cir. 1992). A plaintiff’s

alleged injury is not “fairly traceable” to a challenged provision if that injury “stems not from

the operation of [the provision] but from [his] own . . . personal choice.” McConnell v. FEC,

540 U.S. 93, 228 (2003). For example, the Seventh Circuit found that soybean farmers

lacked standing to allege antitrust violations arising out of a Board of Trade resolution

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because the farmers, who claimed they refrained from selling soybeans due to depressed

prices caused by the resolution, could not show that their injuries were fairly traceable to

the resolution. The court recognized it would never be able to determine whether a

particular farmer refrained from selling soybeans because of price, as opposed to

excessive transportation costs, low storage costs, or some other reason. Sanner v. Board

of Trade, 62 F.3d 918, 923 (7th Cir. 1995).

One of the plaintiffs in this case may decide not to buy a movie ticket because the

money he or she previously allocated to entertainment is now allocated to saving for health

insurance. However, the court is not required to determine if every financial decision made

by plaintiffs is caused by the Individual Mandate. The economic burden due to the

Individual Mandate is felt by plaintiffs regardless of their specific financial behavior. The

Act does not make insurance more costly, in fact the contrary is expected; rather the Act

requires plaintiffs to purchase insurance when they otherwise would not have done so.

This case is distinguishable from Sanner because the government is requiring plaintiffs to

undertake an expenditure, for which the government must anticipate that significant

financial planning will be required. That financial planning must take place well in advance

of the actual purchase of insurance in 2014.

Plaintiffs’ decisions to forego certain spending today, so they will have the funds to

pay for health insurance when the Individual Mandate takes effect in 2014, are injuries fairly

traceable to the Act for the purposes of conferring standing. There is nothing improbable

about the contention that the Individual Mandate is causing plaintiffs to feel economic

pressure today. See Friends of Earth, 528 U.S. at 184. In fact, the proposition that the

Individual Mandate leads uninsured individuals to feel pressure to start saving money today

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to pay more than $8,000 for insurance, per year, starting in 2014, is entirely reasonable.

See id. at 184-85. Parents wishing to send their child to college often start saving money

for that purpose as soon as the child is born, even though the expense will not be incurred

for eighteen years. And while such parents may be diligent in their saving, making many

sacrifices along the way, their child might earn a scholarship to college, or decide to forego

higher education, thus rendering the parents’ sacrifices unnecessary. Such outcomes,

however, do not diminish the real financial burden felt by the parents in earlier years.

For purposes of standing, the court looks at the circumstances as they exist at the

filing of the complaint. Lynch v. Leis, 382 F.3d 642, 647 (6th Cir. 2004); Cleveland Branch,

N.A.A.C.P. v. City of Parma, 263 F.3d 513, 524 (6th Cir. 2001). This court finds that the

injury-in-fact in this case is the present financial pressure experienced by plaintiffs due to

the requirements of the Individual Mandate. If something happens to change plaintiffs’

circumstances in the future, such as coverage by employer-provided insurance, the case

may very well become moot. See Becker v. Federal Election Com’n, 230 F.3d 381, 386

n.3 (1st Cir. 2000). Given their current circumstances, the individual named plaintiffs do

have standing to bring their constitutional challenge to the Individual Mandate provision of

the Health Care Reform Act and TMLC has standing to advance its challenge on behalf of

its members.

II. Ripeness

In considering whether an issue is ripe for review, courts are to “evaluate both the

fitness of the issues for judicial decision and the hardship to the parties of withholding court

consideration.” Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967). The rationale of the

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ripeness inquiry is to “prevent courts, through avoidance of premature adjudication, from

entangling themselves in abstract disputes.” Id. at 148.

It certainly appears that the government has an interest in knowing sooner, rather

than later, whether an essential part of its program regulating the national health care

market is constitutional, although in this case it is not the government asking for the review.

The Sixth Circuit has held that a claim is ripe when it is “highly probable” that the alleged

harm or injury will occur. Kardules v. City of Columbus, 95 F.3d 1335, 1344-46 (6th Cir.

1996). Pending the outcome of the numerous legal challenges to the Act, the imposition

of the Individual Mandate is highly probable, as is the penalty provision. This case presents

a purely legal issue which “would not be clarified by further factual development.” Abbott

Labs, 387 U.S. at 149. Therefore, this case is ripe for consideration by the court.

III. Anti-Injunction Act

In its prayer for relief, plaintiffs ask the court to declare the Health Care Reform Act

unconstitutional and to enjoin its enforcement. The Individual Mandate provides that,

beginning in 2014, taxpayers subject to the minimum coverage provision who fail to obtain

qualifying coverage will be assessed a penalty, reportable with their tax returns.

Defendants argue that the relief sought by plaintiffs would restrain the federal government

from collecting the penalty, and plaintiffs’ lawsuit is therefore barred by the Anti-Injunction

Act.

The Anti-Injunction Act provides that “no suit for the purpose of restraining the

assessment or collection of any tax shall be maintained in any court by any person,

whether or not such person is the person against whom such tax was assessed.” 26

U.S.C. § 7421(a). The purpose of the Anti-Injunction Act is to preserve the government’s

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ability to collect assessments expeditiously with ‘a minimum of preenforcement judicial

interference” and “to require that the legal right to the disputed sums be determined in a

suit for refund.” Bob Jones Univ. v. Simon, 416 U.S. 725, 736 (1974).

The Internal Revenue Service has not assessed a tax pursuant to the Health Care

Reform Act, nor has it taken any action that could reasonably be expected to lead to the

assessment or collection of such a tax. This is because the Individual Mandate, which

contains the tax consequence, does not go into effect until 2014. Individuals to whom the

Individual Mandate applies, who do not obtain qualifying health care coverage in 2014, will

be obligated to pay a penalty tax with their 2014 return filed in 2015. Cases in which the

Anti-Injunction Act has been found to bar a suit all involve a challenge to an action of the

IRS which resulted in, or was expected to result in, the assessment or collection of a tax.

See e.g., Bob Jones Univ., supra (Anti-Injunction Act barred suit seeking to enjoin IRS from

revoking ruling letter which declared University had tax-exempt status); J. L. Enochs v.

Williams Packing & Navigation Co., 370 U.S. 1 (1962) (Anti-Injunction Act barred suit to

enjoin collection of social security and unemployment taxes assessed); Bell v. Rossotti, 227

F.Supp.2d 315 (M.D. Pa. 2002) (Anti-Injunction Act barred suit to enjoin IRS investigation

of whether plaintiff’s tax advice website violated section of Revenue Code prohibiting the

promotion of tax shelters, where investigation could lead to the assessment and collection

of taxes from individuals using plaintiff’s methods).

Defendants have advanced no authority for applying the Anti-Injunction Act to bar

lawsuits when no attempt to collect, or otherwise act affirmatively, has been taken by the

IRS. In the pending matter, the IRS has not taken any steps to assess or collect a tax. The

plaintiffs, in fact, make it clear that they intend to purchase minimum essential coverage if

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the Individual Mandate is upheld so as not to be subject to the penalty, which could go to

fund abortions.

In any event, the Anti-Injunction Act does not bar the court from considering the

declaratory relief sought by plaintiffs. The constitutional issues raised go well beyond the

availability or not of an injunction, or the terms of possible injunctive relief. Also, the

provisions of the Health Care Reform Act at issue here, for the most part, have nothing to

do with the assessment or collection of taxes. The declaratory relief sought in this case is

primarily directed at the statutory requirement that individuals obtain health insurance

coverage as provided. The plaintiffs have a right to a court determination of the

constitutional authority of Congress to enact the statute in the first place.

IV. Congressional Power to Regulate Interstate Commerce

The Individual Mandate requires that each “applicable individual” purchase health

insurance, or be subject to a “penalty” or “Shared Responsibility Payment.” The definition

of “applicable individual” is “an individual other than” religious objectors who oppose health

insurance in principle, non-residents or illegal residents, and incarcerated individuals. The

Act, and the Individual Mandate, therefore, apply to everyone living in the United States,

unless they are excepted.

The crux of plaintiffs’ argument is that the federal government has never attempted

to regulate inactivity, or a person’s mere existence within our Nation’s boundaries, under

the auspices of the Commerce Clause. It is plaintiffs’ position that if the Act is found

constitutional, the Commerce Clause would provide Congress with the authority to regulate

every aspect of our lives, including our choice to refrain from acting.

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The Constitution grants Congress the authority to “regulate Commerce . . . among

the several States . . . .” U.S. Const. art. I, § 8, cl. 3. In the body of jurisprudence

interpreting the Commerce Clause, the Supreme Court has set out a three-prong analysis

to determine if a federal law properly falls within this enumerated grant of authority. This

inquiry presumes that Congress may regulate: (1) “the use of the channels of interstate

commerce,” such as regulations covering the interstate shipment of stolen goods; (2) to

protect “the instrumentalities of interstate commerce, or persons or things in interstate

commerce,” such as legislation criminalizing the destruction of aircraft and theft from

interstate commerce; and (3) “those activities that substantially affect interstate commerce.”

United States v. Lopez , 514 U.S. 549, 558-59 (1995); see also, Perez v. United States,

402 U.S. 146, 150 (1971). It is the last category, which deals with local activities that in

themselves do not participate in interstate commerce, but which nonetheless “substantially

affect” interstate commerce, which is the focus of this case.

“In assessing the scope of Congress’ authority under the Commerce Clause,” the

court’s task “is a modest one.” Gonzalez v. Raich, 545 U.S. 1, 22 (2005). The court need

not itself determine whether the regulated activities, “taken in the aggregate, substantially

affect interstate commerce in fact, but only whether a ‘rational basis’ exists for so

concluding.” Id.

The Supreme Court has expanded the reach of the Commerce Clause to reach

purely local, non-commercial activity, simply because it is an integral part of a broader

statutory scheme that permissibly regulates interstate commerce. Two cases, decided

sixty years apart, demonstrate the breadth of the Commerce power and the deference

accorded Congress’s judgments.

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In Wickard v. Filburn, 317 U.S. 111 (1942), the Supreme Court upheld a penalty on

wheat grown for home consumption despite the farmer’s protest that he did not intend to

put the commodity on the market. For purposes of Congress invoking its Commerce

Clause power, the Court held it was sufficient that the existence of home-grown wheat, in

the aggregate, could “suppl[y] a need of the man who grew it which would otherwise be

reflected by purchases in the open market,” thus undermining the efficacy of the federal

price stabilization scheme. Id. at 128. The Supreme Court’s decision in Gonzales v. Raich,

handed down in 2005, also supports the notion that the Commerce Clause affords

Congress broad power to regulate even purely local matters that have substantial economic

effects. There, the Supreme Court sustained Congress’s authority to prohibit the

possession of home-grown marijuana intended solely for personal use. The Controlled

Substances Act “regulates the production, distribution, and consumption of commodities

for which there is an established, and lucrative, interstate market.” Raich, 545 U.S. at 26.

The restriction on home-grown marijuana for personal use was essential to the Act’s

broader regulatory scheme. In both Wickard and Raich, the Supreme Court sustained

Congress’s power to impose obligations on individuals who claimed not to participate in

interstate commerce, because those obligations were components of broad schemes

regulating interstate commerce.

Far from permitting the Commerce Clause to provide Congress with unlimited power

to regulate, the Supreme Court has, in fact, placed limits on its reach. The Court was

asked to review Congress’s power to enact the Gun-Free School Zone Act of 1990 which

criminalized possession of a gun within a statutorily defined school zone. United States v.

Lopez, 514 U.S. 549 (1995). The government argued that possession of a firearm in a

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school zone may result in violent crime, which can be expected to affect the national

economy in several ways. First, the costs of violent crime are substantial, and via

insurance those costs are spread throughout the population. Second, violent crime

reduces the willingness of individuals to travel to areas that are perceived to be unsafe.

Finally, the presence of guns in schools threatens the educational process, which will result

in a less productive citizenry. The government concluded that these adverse effects on the

nation’s economic well-being gave Congress the power to pass the Gun-Free School Zone

Act under the Commerce Clause. The Lopez Court held that Congress could not “pile

inference upon inference” to find a link between the regulated activity and interstate

commerce. Id. at 567. Ultimately, the Court concluded that possessing a gun in a school

zone was not an economic activity. Nor was the prohibition against possessing a gun “an

essential part[] of a larger regulation of economic activity, in which the regulatory scheme

could be undercut unless the intrastate activity were regulated.” Id. at 561. Clearly, the

Gun-Free School Zone Act was first and foremost about providing a safe environment for

students in the areas surrounding their schools, as opposed to an economic regulation.

Similarly, in United States v. Morrison, 529 U.S. 598 (2000), the Court invalidated

the cause of action created in the Violence Against Women Act, finding that any link

between gender-motivated violence and economic activity could be established only

through a chain of speculative assumptions. Id. at 615. In declining to accept Congress’s

rationale for regulating under the Commerce Clause because gender-motivated violence

deters “potential victims from traveling interstate, from engaging in employment in interstate

business, . . . and by diminishing national productivity . . . ”, the Court strove to preserve

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the “distinction between what is truly national and what is truly local.” Id. at 615, 617-18

(citation omitted).

In Morrison and Lopez, the Court found that the statutes at issue legislated non-

commercial activities. Plaintiffs in the present case focus on the common fact that each

of the regulations that survived Supreme Court scrutiny under the Commerce Clause

regulated an economic “activity,” as opposed to the “inactivity” they have demonstrated by

merely existing and not purchasing health care insurance. The Supreme Court has always

required an economic or commercial component in order to uphold an act under the

Commerce Clause. The Court has never needed to address the activity/inactivity

distinction advanced by plaintiffs because in every Commerce Clause case presented thus

far, there has been some sort of activity. In this regard, the Health Care Reform Act

arguably presents an issue of first impression. Plaintiffs contend that the court must

engage in metaphysical gymnastics in order to find that “the act not to purchase insurance”

is an affirmative economic activity, specifically “a choice regarding the method of payment.”

According to plaintiffs, this is the type of inferential chain prohibited by Lopez and its

progeny.

In its legislative findings, Congress explains that it enacted the Health Care Reform

Act to address a national crisis - an interstate health care market in which tens of millions

of Americans are without insurance coverage and in which the cost of medical treatment

has spiraled out of control. The government explains that as part of a comprehensive

reform to reduce the ranks of the uninsured, the Act regulates economic decisions

regarding the way in which health care services are paid for. The government contends

that the Individual Mandate falls within Congress’ authority under the Commerce Clause

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for two principal reasons. First, the economic decisions that the Act regulates as to how

to pay for health care services have direct and substantial impact on the interstate health

care market. Second, the minimum coverage provision is essential to the Act’s larger

regulation of the interstate business of health insurance.

A. Substantial Effect on Interstate Commerce

There is a rational basis to conclude that, in the aggregate, decisions to forego

insurance coverage in preference to attempting to pay for health care out of pocket drive

up the cost of insurance. The costs of caring for the uninsured who prove unable to pay

are shifted to health care providers, to the insured population in the form of higher

premiums, to governments, and to taxpayers. The decision whether to purchase insurance

or to attempt to pay for health care out of pocket, is plainly economic. These decisions,

viewed in the aggregate, have clear and direct impacts on health care providers, taxpayers,

and the insured population who ultimately pay for the care provided to those who go without

insurance. These are the economic effects addressed by Congress in enacting the Act and

the minimum coverage provision.

The health care market is unlike other markets. No one can guarantee his or her

health, or ensure that he or she will never participate in the health care market. Indeed, the

opposite is nearly always true. The question is how participants in the health care market

pay for medical expenses - through insurance, or through an attempt to pay out of pocket

with a backstop of uncompensated care funded by third parties. This phenomenon of cost-

shifting is what makes the health care market unique. Far from “inactivity,” by choosing to

forgo insurance plaintiffs are making an economic decision to try to pay for health care

services later, out of pocket, rather than now through the purchase of insurance,

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collectively shifting billions of dollars, $43 billion in 2008, onto other market participants.

As this cost-shifting is exactly what the Health Care Reform Act was enacted to address,

there is no need for metaphysical gymnastics of the sort proscribed by Lopez.

The plaintiffs have not opted out of the health care services market because, as

living, breathing beings, who do not oppose medical services on religious grounds, they

cannot opt out of this market. As inseparable and integral members of the health care

services market, plaintiffs have made a choice regarding the method of payment for the

services they expect to receive. The government makes the apropos analogy of paying by

credit card rather than by check. How participants in the health care services market pay

for such services has a documented impact on interstate commerce. Obviously, this

market reality forms the rational basis for Congressional action designed to reduce the

number of uninsureds.

The Supreme Court has consistently rejected claims that individuals who choose not

to engage in commerce thereby place themselves beyond the reach of the Commerce

Clause. See, e.g., Raich, 545 U.S. at 30 (rejecting the argument that plaintiffs’ home-

grown marijuana was “entirely separated from the market”); Wickard, 317 U.S. at 127, 128

(home-grown wheat “competes with wheat in commerce” and “may forestall resort to the

market”); Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964) (Commerce Clause

allows Congress to regulate decisions not to engage in transactions with persons with

whom plaintiff did not wish to deal). Similarly, plaintiffs in this case are participants in the

health care services market. They are not outside the market. While plaintiffs describe the

Commerce Clause power as reaching economic activity, the government’s characterization

of the Commerce Clause reaching economic decisions is more accurate.

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B. Essential to Broader Regulatory Scheme

The Act regulates a broader interstate market in health care services. This is not

a market created by Congress, it is one created by the fundamental need for health care

and the necessity of paying for such services received. The provision at issue addresses

cost-shifting in those markets and operates as an essential part of a comprehensive

regulatory scheme. The uninsured, like plaintiffs, benefit from the “guaranteed issue”

provision in the Act, which enables them to become insured even when they are already

sick. This benefit makes imposing the minimum coverage provision appropriate.

The Supreme Court recognized Congress’s power to regulate wholly intrastate,

wholly non-economic matters that form “‘an essential part of a larger regulation of economic

activity, in which the regulatory scheme could be undercut unless the intrastate activity

were regulated.’” Raich, 545 U.S. at 24-25 (quoting Lopez, 514 U.S. at 561). In 2014, the

Act will bar insurers from refusing to cover individuals with pre-existing conditions and from

setting eligibility rules based on health status or claims experience. Act § 1201. At that

time, all Americans will be insurable. Without the minimum coverage provision, there would

be an incentive for some individuals to wait to purchase health insurance until they needed

care, knowing that insurance would be available at all times. As a result, the most costly

individuals would be in the insurance system and the least costly would be outside it. In

turn, this would aggravate current problems with cost-shifting and lead to even higher

premiums. The prospect of driving the insurance market into extinction led Congress to

find that the minimum coverage provision was essential to the larger regulatory scheme of

the Act. Act § 1501(a)(2)(I) and (J).

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The minimum coverage provision, which addresses economic decisions regarding

health care services that everyone eventually, and inevitably, will need, is a reasonable

means of effectuating Congress’s goal.

V. Congressional Power to Tax and Spend to Provide for the General Welfare

Having concluded that Congress has the power under the Commerce Clause to

enact the Health Care Reform Act, it is unnecessary for the court to address the issue of

Congress’s alternate source of authority to tax and spend under the General Welfare

Clause. U.S. Const. Art. I, § 8, cl. 1. Plaintiffs also challenge the constitutionality of the tax

imposed by the Act as being an improperly apportioned direct tax. However, Congress is

authorized by the Commerce Clause to impose a sanction “as a means of constraining and

regulating what may be considered by the Congress as pernicious or harmful to

commerce.” Rodgers v. United States, 138 F.2d 992, 995 (6th Cir. 1943) (upholding

penalty provision of Agricultural Adjustment Act for exceeding quota of permissible cotton

sales as exercise of Congress’s power to regulate commerce, where purpose of statute

was not levying a tax but regulating the production of cotton affecting interstate commerce).

The constitutional limits on taxes argued by plaintiffs relate to taxation generally for

the purposes of raising revenue. While these might be legitimate concerns if Congress had

to rely on its power conferred by the General Welfare Clause, such is not the case with

regard to penalties imposed incidentally under the Commerce Clause. Id. In this case, the

minimum coverage provision of the Health Care Reform Act contains two provisions aimed

at the same goal. Congress intended to increase the number of insureds and decrease the

cost of health insurance by requiring individuals to maintain minimum essential coverage

or face a penalty for failing to do so. Because the “penalty” is incidental to these purposes,

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plaintiffs’ challenge to the constitutionality of the penalty as an improperly apportioned

direct tax is without merit.

VI. Injunctive Relief

The purpose of a preliminary injunction is to “preserve the relative positions of the

parties until a trial on the merits can be held.” University of Texas v. Camenisch, 451 U.S.

390, 395 (1981). In this case, the court consolidated the hearing on preliminary injunction

with a trial on the merits pursuant to Fed. R. Civ. P. 65(a)(2). Plaintiffs’ claim that the

minimum coverage provision of the Health Care Reform Act is unconstitutional under the

Commerce Clause has failed on the merits. Defendants have also succeeded in

overcoming plaintiffs’ challenge to the penalty provision of the Individual Mandate. As

these are the only issues before the court at this time, further consideration of plaintiffs’

application for injunctive relief is not necessary.

CONCLUSION

For the reasons given above, plaintiffs’ motion for preliminary injunction is DENIED

and the court finds for defendants on plaintiffs’ first and second claims for relief; those

claims are DISMISSED.

Dated: October 7, 2010

S/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE

CERTIFICATE OF SERVICE

Copies of this Order were served upon attorneys of record on

October 7, 2010, by electronic and/or ordinary mail.

S/Josephine Chaffee
Deputy Clerk

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