Fourteen states filed suit yesterday to challenge the constitutionality of the health care reform bill.

The states of Florida, Alabama, Colorado, Idaho, Louisiana, Michigan, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah, and Washington joined together in a suit filed in Florida.

Virginia filed its own suit separately.

The crux of these suits is the constitutionality of the new health care legislation, which will now increase the federal government’s regulatory powers into health care insurance, which had been traditionally regulated at the state level (along with most private insurance), and will impose penalties on individuals for failing to purchase private insurance policies.

If you have been following the commentary on this issue at all, you know that this argument is basically a classic states’ rights debate: that the legislation deprives the states of sovereignty and violates the 10th Amendment to the Constitution, which says that powers not delegated to the federal government are reserved to the states.

Of course, the other side of the argument says that the bill is constitutional because Congress has the power to regulate interstate commerce under the commerce clause of the Constitution.

As most lawyers recall from our Constitutional Law courses in law school, the commerce clause has been read in recent years to provide the federal government greater and greater powers to regulate interstate commerce in various ways.   For this reason, many commentators are predicting that the legislation will stand up under constitutional scrutiny.

But should it withstand constitutional scrutiny?   There is no question that insurance generally, and particularly health insurance, has up until now been entirely within the purview of state regulation.  Each state has its own regulatory requirements for what can be in health insurance plans offered under that state, each state has its own insurance commissioners, and each state makes independent regularly decisions about the activities of individual insurers.  We haven’t even been able to buy insurance over state lines–if you move to a new state, you have to get a new policy entirely.  So, clearly insurance has long been viewed as falling under the purview of the states.

Moreover, this legislation now allows the federal government to mandate that you buy health insurance, and if you do not, you will be penalized by the IRS.  While supporters argue that this is like state laws requiring that you buy car insurance, I think that there is a valid argument that this is different.  In the case of car insurance, states are imposing these requirements on residents of their state who choose to avail themselves of the privilege of driving, in order to protect other drivers from injury.  It’s hard to see the parallel when this is a federal instead of a state exercise of power, and when there is no privilege like driving involved with health care, which Democrats are now calling a “right.”

The bottom line is that the IRS is entwined in this bill, and there is a good chance that the Supreme Court will read this bill to be a valid exercise of commerce clause powers–even more so because a taxation component is involved.

However, if that happens, I think supporters of this bill should look beyond the current legislative debate and consider how continuing to broaden the commerce clause powers might be used in the future.  Extending the commerce clause is going to someday make it that much easier for a Republican Congress to use the new enhanced commerce clause powers in a way that may not be quite so palatable to Democrats.  Continuing to allow an encroachment of states’ rights does have consequences and they are consequences that may very well cut in both directions.   I think it is an open question as to whether we as Americans want to continue to see the commerce clause powers continuing to encroach on states’ rights.   The line is moving further and further over into the traditional purview of the states: where is the hard stop?  Do we as Americans care enough to draw a line in the sand and say it stops in any particular place or are we okay with the states’ powers continuing to dwindle?

Clearly, this challenge raises some very interesting constitutional and societal issues.  So, whether you support health care reform and this particular piece of legislation, or you oppose it, I would urge you to tune into this Constitutional debate.  How the issues are decided will have an impact that goes far beyond our recent health care reform debate. The California Biotech Law Blog will continue to follow this issue as it unfolds.

A petition has been filed with the U.S. Supreme Court, which challenges the constitutionality of the appointments of more than two-thirds of the USPTO’s board of patent appeals and interferences ("BPAI") judges, reported The National Law Journal.

The National Law Journal reported on the filing of the petition as follows:

The company’s petition, drafted by veteran high court litigator Robert Long of Washington’s Covington & Burling, contends that one of the three panel judges in its case was named to the board in violation of the Constitution’s appointments clause. Translogic Technology v. Dudas, No. 07-1303. . . .

Such a constitutional flaw, if legitimate, could call into question the hundreds of decisions worth billions of dollars in the past eight years. The flaw, discovered by highly regarded intellectual property scholar John Duffy of George Washington University Law School, could also afflict the appointment of nearly half of the agency’s trademark appeals judges.

According to The National Law Journal, forty of the sixty-one of the BPAI judges were appointed after March 29, 2000, which was the date when a law changing the appointment process came into effect.

The National Law Journal reported:

The Intellectual Property and Communications Reform Act of 1999, according to Duffy, was intended to give more authority and status to the director of the PTO, but also to keep the agency firmly within the Department of Commerce. A provision of the act transferred the power to appoint BPAI judges from the secretary of Commerce to the PTO director.

BPAI judges exercise "significant authority," argue Duffy, Long and others, and qualify as "inferior officers" under the appointments clause. The clause requires that inferior officers be appointed either by the president, the courts of law or heads of departments. The PTO director is not a head of a department.

Given the large number of judges appointed after March 2000, Duffy said, the odds are that the vast bulk of appeals since then had at least one invalidly appointed judge sitting on the panel.

With respect to the current petition, Long has is arguing that the Supreme Court should vacate the BPAI decision in the Translogic case; however, he denies that such an action by the Supreme Court would call into question all of the decisions by the BPAI since 2000. 

The National Law Journal states as follows:

[Long] contends that the de facto officer doctrine does not apply, and that the PTO’s claim — that failure to apply it would cast a cloud over "many thousands of Board decisions" — is inaccurate.

"Our position is this affects only decisions that are still subject to a direct appeal — those pending in the Federal Circuit or in the Supreme Court — a much smaller group. . . . "

We will continue to follow this matter as it develops, and keep you posted here at the California Biotech Law Blog.