Employee Benefits Compliance

Federal District Court Dismisses Plaintiffs’ Complaint that Individual Mandate is Unconstitutional

The US District Court for Southern Mississippi dismissed a complaint filed by Lt. Gov. Bryant and 10 other plaintiffs claiming that the minimum essential coverage provisions of PPACA (26 USC section 5000A) (generally referred to as the “individual mandate”) are unconstitutional.  (Lt. Gov. Bryant v Holder, US Atty Gen., issued Feb. 3, 2011)

The Court concluded that plaintiffs failed to show they have standing to challenge the individual mandate provision, but granted them 30 days to file an amended complaint.  The Court did not address the merits of the plaintiffs’ claims, but did review the requirements that must be met for a plaintiff to have standing:  1) a plaintiff must have suffered an injury in fact, 2) there must be a causal connection between the injury and the allegedly unlawful conduct or law, and 3) it must be likely that a favorable ruling by the court will redress the injury.  The Court also reviewed cases where the plaintiffs claimed to have standing based on alleged future harm, as in the present case.

The Individual Mandate

The individual mandate requires that, beginning in 2014, each “applicable individual” must ensure that (s)he and any dependents are covered under minimum essential coverage for each month or pay a penalty tax for that month.  The penalty tax will be included in the individual’s tax return for the year in which the failure occurred.  “Applicable individual” are all people residing in the US except those who are:  1) subject to certain religious exceptions, 2) not lawfully present in the US, or 3) incarcerated.  The penalty tax will not be imposed on individuals who:  1) cannot afford coverage, 2) earn less than the minimum amount required to file a tax return, 3) are members of Native American tribes, 4) have only a short gap in coverage, and 5) HHS determines “have suffered a hardship” and cannot get coverage under a qualified plan.

State Sovereignty Claims

The Court also noted that, to the extent that plaintiff Lt. Gov. Bryant was alleging an injury to the sovereign interests of the state of Mississippi, he does not have standing because he is suing in his “private and individual capacity” and not as an officer of the state of Mississippi.