Federal Court Rules Health Care Reform Provision Unconstitutional

Yesterday, the U.S. District Court for the Eastern District of Virginia held that the individual health insurance mandate provision found in the Patient Protection and Affordable Care Act (PPACA), the comprehensive health care reform legislation that President Barack Obama signed into law in March 2010, is unconstitutional. The individual mandate would require most individuals to obtain health insurance or pay a fine.

The court’s ruling doesn’t invalidate the PPACA as a whole since the court determined that the individual mandate provision and “directly dependent provisions” are severable from the rest of the PPACA. The court also didn’t invalidate the entire law because that particular provision won’t go into effect until 2014.

Although there are more than 20 legal challenges to the PPACA, this is the first time a court has ruled that the individual mandate is unconstitutional. More specifically, the court held that Congress lacks the power under the Commerce Clause “to compel an individual to involuntarily engage in a private commercial transaction.”

The U.S. Supreme Court may eventually have to decide whether the individual mandate is constitutional.

What does this mean for employers and for the health care reform law as a whole? We asked John Hickman, an Atlanta, Georgia, attorney with Alston & Bird LLP, who contributes to our benefits newsletter — Benefits Compliance Advisor — for his input. He noted: “I think it’s the first salvo in a long, protracted battle over the law and its validity. At this point I am not telling plan sponsors to change course with respect to any of the immediately applicable mandates.”

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