## Facts

- Florida, other states, individual plaintiffs, and the National Federation of Independent Business sued the U.S. Department of Health and Human Services and other federal agencies and officials, challenging the constitutionality of major provisions of the Patient Protection and Affordable Care Act (ACA).
- A central target was the ACA’s “minimum coverage provision” (the individual mandate), which required most individuals to maintain health insurance or make a payment to the federal government.
- Congress justified the mandate in part by stating it would broaden the insurance risk pool (including healthier people) and reduce premiums.
- The challengers argued Congress’s power to regulate interstate commerce does not include power to require people to enter commerce, and that being uninsured is not economic activity that Congress may regulate under the Commerce Clause.
- The U.S. District Court for the Northern District of Florida held the individual mandate unconstitutional and, finding it not severable, invalidated the ACA in full.
- The Eleventh Circuit agreed the individual mandate exceeded Congress’s powers under the Commerce Clause and the Necessary and Proper Clause, but held the mandate severable and left the remainder of the Act standing; it also rejected the states’ Medicaid expansion challenge.
- The federal government sought Supreme Court review in No. 11-398, raising (among other questions) whether the Anti-Injunction Act barred the suit and whether Congress had authority to enact the minimum coverage provision.
- The Supreme Court granted review and resolved the dispute as part of the consolidated decision reported at *National Federation of Independent Business v. Sebelius*, 567 U.S. 519 (2012), which included this docket captioned *Department of Health and Human Services v. Florida*.

## Issues

1. Whether the Anti-Injunction Act barred a pre-enforcement suit challenging the ACA’s minimum coverage provision.
2. Whether Congress had authority under the Commerce Clause and the Necessary and Proper Clause to enact the minimum coverage provision requiring individuals to obtain health insurance.
3. Whether the minimum coverage provision could be sustained under Congress’s power to tax.
4. Whether the ACA’s Medicaid expansion could be enforced by threatening states with loss of existing Medicaid funding if they refused to accept the expansion’s new terms.

## Decision

- The Court held the Anti-Injunction Act did not bar the suit, because Congress described the exaction for noncoverage as a “penalty,” not a “tax,” for purposes of the Anti-Injunction Act.
- The Court held the minimum coverage provision could not be justified under the Commerce Clause or the Necessary and Proper Clause because it compelled individuals to become active in commerce rather than regulating existing commercial activity.
- The Court nonetheless upheld the minimum coverage provision by construing the payment for noncoverage as a tax within Congress’s taxing power, relying on features such as IRS collection, revenue-raising operation, and the absence of criminal-type punishment.
- In the same consolidated decision, the Court held the Medicaid expansion could not be enforced by threatening states with termination of existing Medicaid funding; that threatened loss was unconstitutionally coercive.
- The remedy for the Medicaid ruling was to bar the federal government from withdrawing preexisting Medicaid funds from a state that declined to accept the expansion, leaving states a choice whether to adopt the new terms.

## Legal Principles

- The Anti-Injunction Act does not bar pre-enforcement review when Congress has not made the challenged exaction a “tax” for Anti-Injunction Act purposes, even if the payment may be treated as a tax for constitutional analysis.
- The Commerce Clause allows Congress to regulate existing economic activity with a sufficient connection to interstate commerce, but it does not authorize Congress to require individuals to engage in commerce.
- The Necessary and Proper Clause does not supply power to adopt measures that amount to a new, independent authority beyond Congress’s enumerated powers, including a power to compel market participation.
- A statutory “penalty” may be upheld as a tax when it operates like a tax in practice (including IRS administration and revenue generation) and is not so punitive that it functions as a criminal sanction.
- Under the Spending Clause, Congress may attach conditions to federal funds, but it may not use the threatened termination of an existing, major funding stream to leave states with no real choice but to accept new program terms.

## Conclusion

In *Department of Health and Human Services v. Florida* (No. 11-398), decided as part of the consolidated ACA ruling in *NFIB v. Sebelius*, the Supreme Court allowed the challenge to proceed despite the Anti-Injunction Act, rejected Commerce Clause and Necessary and Proper Clause support for the individual mandate, upheld the mandate’s payment as a valid tax, and limited the Medicaid expansion enforcement mechanism by forbidding the cutoff of existing Medicaid funds for states that refused to participate.


Department of Health and Human Services v. Florida, No. 11-398 (Feb. 6, 2012)