A federal judge in Oklahoma ruled Tuesday that Affordable Care Act (ACA) subsidies cannot go to residents of 36 states not running their own insurance exchanges.
The decision came in the case of Pruitt v. Burwell, one of a series of lawsuits filed across the country challenging the federal government’s ability to offer subsidies through its exchanges. Opponents argue that the ACA allows only states, and not the federal government, to provide subsidies to people purchasing insurance on one of the exchanges.
The Obama administration disagrees, arguing opponents are advancing a legal argument that is inconsistent with both the language of the statute and its intent.
But U.S. District Court Judge Ronald A. White, a 2003 appointee of President George W. Bush, disagreed and ruled that because the statutory language of the ACA does not authorize the IRS to administer subsidies, those subsidies provided through the federal exchange are invalid.
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“The court holds that the IRS Rule is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law … in excess of statutory jurisdiction, authority, or limitations, or short of statutory right … or otherwise is an invalid implementation of the ACA, and is hereby vacated,” wrote Judge White.
Tuesday’s ruling in Pruitt v. Burwell is the first district court victory for those challenging the subsidies. Earlier this year, a unanimous panel of judges on the Fourth Circuit Court of Appeals ruled in favor of the administration while a divided panel of judges from the D.C. Circuit Court of Appeals ruled the subsidies were invalid.
The D.C. Circuit Court of Appeals decision was later vacated when the entire panel of judges agreed to rehear the case. Oral arguments in that case are scheduled for 9:30 a.m. on December 17.
White stayed his ruling pending an expected appeal by the Obama administration to the Tenth Circuit Court of Appeals.
Attorneys challenging the federal subsidies filed multiple lawsuits attacking the federal subsidies in districts courts across the country in part to try and create a split, or disagreement, among those federal courts about how to interpret the law at issue.
Those disagreements, known as circuit splits, make it likelier the U.S. Supreme Court will intervene to resolve the dispute.
So far no circuit split exists as a result of the D.C. Circuit vacating its order and agreeing to rehear its case. In order for a split to occur, the full panel of judges would have to rule against the administration, an outcome that seems less likely given the full roster of active judges on the D.C. Circuit Court of Appeals is a 7-4 advantage for Democrats, thanks to a recent string of appointments by the Obama administration.
That would mean opponents would need a favorable ruling from the Tenth Circuit, which has ruled against the administration in other ACA-related litigation in Hobby Lobby and Little Sisters of the Poor, cases challenging the federal contraception benefit.