Insight: Behind the healthcare-law case: The challengers' tale

WASHINGTON Tue Mar 13, 2012 6:33pm EDT

Opponents of the proposed U.S. health care bill are pictured during a rally outside the U.S. Capitol Building in Washington, March 21, 2010. REUTERS/Jason Reed

Opponents of the proposed U.S. health care bill are pictured during a rally outside the U.S. Capitol Building in Washington, March 21, 2010.

Credit: Reuters/Jason Reed

WASHINGTON (Reuters) - A little over a year ago, Florida Attorney General Pam Bondi was on a mission. Along with a group of like-minded officials from other states, she was determined to be the first to test President Barack Obama's healthcare reform law at the U.S. Supreme Court. And she wanted to find the right lawyer to do it.

On February 16, 2011, two weeks after Bondi and the other state attorneys had scored a victory in a Florida trial court, she and two top assistants boarded a 6:25 a.m. flight from Tallahassee to Washington, D.C., for what attorneys call a "beauty contest."

The officials had set up a series of interviews with lawyers who wanted to be hired to take the case to the federal appeals-court level and beyond. Seeking someone with deep experience before the U.S. Supreme Court, Bondi and her colleagues had worked their contacts in Washington.

The Florida team had a sense of urgency. Similar cases were moving fast. The state of Virginia, which had filed its own challenge, was trying to leap over the appeals-court stage. In addition, the National Federation of Independent Business, an influential trade association that had initially joined Florida's effort, had just hired its own lawyer and was ready to split off.

Bondi had borrowed a conference room at a Washington law office where her brother was a partner, and her team heard pitches from three law firms winnowed down from a lengthy list.

In the end, Paul Clement, a partner at the law firm King and Spalding LLP who had been a U.S. solicitor general under President George W. Bush, prevailed with arguments Bondi and her associates later described as "passionate," a manner they called "humble," and an eventual price tag that was especially attractive.

The choice of Clement on that cold day 13 months ago was one of several critical moments that defined the arc of the dispute the justices will hear over an extraordinary three days of arguments on March 26-28.

Clement - 45 years old and often regarded as the leading Supreme Court advocate of his generation - agreed to charge a $250,000 flat rate. That figure, recorded in state documents, was a small fraction of what other lawyers had suggested they would bill, according to state officials involved in the case.

"I thought the advocacy could make a difference," Clement said in an interview last week, not long after completing his 57th argument before the Supreme Court. Of the overarching legal question in the healthcare care, a test of power between Washington and the states, he added, "I was really interested in that."

HIGH HURDLES

The case challenges the Affordable Care Act, at the core of which is a requirement that most people in the United States purchase health insurance by 2014. The Democratic-sponsored legislation opened up deep partisan divisions that continue to rend the country. Congressional Republicans argue that the law should be repealed, and all major Republican presidential candidates have opposed it.

As a purely legal matter, however, any challenges to the Affordable Care Act faced high hurdles. Past Supreme Court cases give Congress broad authority to regulate interstate activities affecting commerce, such as insurance.

Defending the law, the Obama administration has argued that even opting not to buy health insurance affects commerce because uninsured people inevitably require healthcare and raise the cost for everyone. That argument has largely prevailed in the lower courts, and the administration has hewed to it.

In contrast, as the challengers developed their strategy, they have reworked and broadened their case. They pivoted to sweeping arguments they believed highlighted the administration's vulnerability: If government could force people to buy health insurance, what couldn't government force people to buy? What was the limit?

As a result, the litigation has had its own distinctive trajectory, rising from what once was regarded among many law professors as an "implausible" and "frivolous" case to one scheduled for a modern-record six hours of oral argument at the U.S. Supreme Court.

ORIGINS OF AN ARGUMENT

In late summer 2009, as the Affordable Care Act was inching closer to passage, a few Washington lawyers began to question the constitutionality of the provision requiring most people to buy insurance, the so-called individual mandate.

Washington attorneys David Rivkin and Lee Casey - who previously worked in the Ronald Reagan and George H.W. Bush administrations - together penned opinion pieces in the Washington Post and Wall Street Journal decrying the individual mandate. In December, Georgetown University law professor Randy Barnett entered the debate with a scholarly essay for the conservative Heritage Foundation. Along with two co-authors, Barnett asserted that the individual mandate does not affect interstate commerce because it "regulates no action."

While the academic debate simmered, some state attorneys general began getting ready to challenge the individual mandate. They seized on ideas such as Barnett's, claiming that Congress lacks the power to regulate a decision not to buy insurance.

SUITS FROM DAY ONE

On the day Obama signed the legislation, March 23, 2010, the lawsuits hit. Florida's was initially joined by 12 other states and the National Federation of Independent Business, which together were represented by state attorneys, along with Rivkin and Casey. Virginia Attorney General Ken Cuccinelli, who like Bondi is a Republican, filed separately, as did Liberty University in Virginia and the Thomas More Law Center in Michigan.

As the suits proliferated, many professors, including conservatives, declared the challenges meritless. Charles Fried, a U.S. solicitor general under Reagan and now a Harvard law professor, told Greta Van Susteren of Fox News that he was so confident the individual mandate was valid that he would eat his hat - "bought in Australia ... made of kangaroo skin" - if the law was struck down.

Indeed, the Obama administration prevailed in the first cases to be decided. Two Democratically appointed U.S. District Court judges - ruling in the Liberty University and Thomas More Law Center suits - rejected their claim that Congress had exceeded its power.

But then, on December 13, 2010, in the state of Virginia's case, U.S. District Court Judge Henry Hudson gave the challengers their first big win. Hudson, a Republican appointee, agreed with the challengers that a decision to forgo insurance was "inaction" beyond Congress' power to regulate commerce.

Three days later, it was time for Florida and its partner states - together totaling 26 - to have their case heard. The night before arguments in Pensacola, as lawyers gathered in a hotel bar, Georgetown professor Barnett met Karen Harned, director of the National Federation of Independent Business's legal center. They began a series of conversations about what to do after the district court judge ruled. Also looking ahead were the state attorneys general. Even if they won at the trial court, the case would surely be appealed to the next level.

On January 31, 2011, U.S. District Court Judge Roger Vinson, a Republican appointee, delivered a second win for the challengers. In a statement that would become an important theme for them in the months to come, Vinson declared: "Never before has Congress required that everyone buy a product from a private company (essentially for life) just for being alive and residing in the United States."

A CONFERENCE CALL

When Bondi and her associates flew to Washington, they were excited about the Vinson decision. And after the interviews at her brother's law firm, they were confident they had found the right lawyer to counter the government's appeal. They gathered their notes, returned to Tallahassee, and on a conference call they and their partner states unanimously agreed on Clement.

"He shared our passion, and he was confident we could win," Bondi said in an interview. Clement's contract split his $250,000 fee among the 26 states on the case, with five that had taken the lead - Florida, Colorado, Nebraska, South Carolina and Texas - agreeing to contribute $20,000 apiece. Others paid half that, or a quarter, and a few paid nothing because of legal or budgetary constraints.

At the time he was hired, Clement was representing the NFL in a labor dispute and had just agreed to represent the Republican-led U.S. House of Representatives in its defense of the U.S. law prohibiting recognition of gay marriages. Over the next couple of months, Clement would undertake more Republican-backed causes, including Arizona in defense of its tough immigration law.

Within weeks of Clement's hiring, there was a potential bump. In an episode that drew national headlines, Clement resigned from King and Spalding when the firm said it had not fully vetted the decision to take the Defense of Marriage Act case. Clement immediately joined the small Washington firm of Bancroft PLLC.

Bondi said Clement called as the story was breaking and reassured officials that the states' case was on track.

When Clement submitted his brief on behalf of Florida and its partner states to the U.S. Court of Appeals for the 11th Circuit in Atlanta on May 4, it reflected his view that the challengers would be better off shifting away from the intricacies of past commerce-power rulings and arguing more robustly that the government's stance lacked any limits.

Stepping to the lectern on June 8, Clement cut directly to that argument: The case, he said, "boils down to the question of whether or not the federal government can compel an individual to engage in commerce ..." Clement insisted no past case could fully guide courts because "for 220 years Congress never saw fit to use this particular power."

Next, the lawyer hired by the National Federation of Independent Business, Michael Carvin, argued for that group. He stressed that the government was trying to "conscript" people into the insurance market.

Defending the individual mandate, Justice Department lawyer Neal Katyal told the three-judge panel that the healthcare law was not novel, and that it flowed from traditional commerce power. "Congress was building on an existing apparatus," he said.

GOVERNMENT VICTORIES

Before the 11th Circuit ruled in the Florida case, the Obama administration won a major victory at the Cincinnati-based U.S. Court of Appeals for the 6th Circuit, in the Thomas More Law Center's case. In a 2-1 decision in June, the court endorsed congressional authority to require most people to buy health insurance.

It was the first decision by an appeals court in the litigation - and, significantly, the first time a Republican-appointed judge had voted for the administration. Jeffrey Sutton, a former Ohio solicitor general held in high regard by conservatives, wrote that Congress could require people to pay for healthcare now so that money would be available when needed later.

Two other appellate courts went the Obama administration's way, too. The U.S. Court of Appeals for the District of Columbia Circuit, in another decision written by a Republican appointee, upheld the individual mandate. The Richmond-based U.S. Court of Appeals for the 4th Circuit also rejected a challenge to the individual mandate, yet for procedural reasons rather than on the merits.

CLEMENT SCORES A WIN

But, in August, the Florida group scored a win at the 11th Circuit. By a 2-1 vote, the court agreed with Clement's argument that the rationale for the healthcare law could lead to limitless government power. The individual mandate, the court ruled, "represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy."

In November came more good news for the states: The Supreme Court agreed to take up the case that the Florida group had started. The case, U.S. Department of Health and Human Services v. Florida, will be heard with two related cases. Together they cover the dispute over the individual mandate and other aspects of the controversial law, such as its expansion of the joint federal-state Medicaid program for the poor.

Countering Clement on the individual-mandate issue will be Solicitor General Donald Verrilli, now the government's top lawyer before the court. Verrilli, 54, will be arguing the healthcare case for the first time, and he has not spoken publicly about it. But his brief for this final test of the challengers' strategy suggests he will try to shift the justices away from Clement's framing.

Verrilli writes that Congress was not entering uncharted territory when it enacted the healthcare law, but rather was addressing "economic effects that already exist ... because the uninsured as a class routinely consume healthcare they cannot afford."

Last week, soon after wrapping up his latest appearance before the high court - an Indianapolis tax dispute - Clement said he plans to make the same argument to the Supreme Court in the healthcare case that he successfully used before the 11th Circuit: The government's rationale for the healthcare law has no limits.

"The states were well served to think about how this case was going to look to the Supreme Court even while they were at the 11th Circuit," he said. "There is an art to framing a case for the Supreme Court."

(Editing by Amy Stevens, Howard Goller and Eric Beech)