King v. Burwell; Halbig v. Burwell

The Court’s decision to review King grew out of an effort by Jones Day’s Michael Carvin to challenge the Obama Administration’s interpretation of the insurance subsidies provision in two judicial circuits, the D.C. Circuit (Halbig v. Burwell) and the Fourth Circuit (King v. Burwell).  CIR represented several members of Congress in an amicus effort designed to support Carvin’s two challenges.  (Members include: Senators John Cornyn, Ted Cruz, Orrin Hatch, Rob Portman and Marco Rubio; and Representatives Dave Camp and Darrell Issa.)

The two cases took aim at the IRS’s interpretation of a provision of the law that limits federal heath care subsidies to individuals in states that have created healthcare exchanges.  As written, the Act clearly limits the subsidies to individuals in states with exchanges.  The Obama Administration contended that the clear language could be set aside in order to provide subsidies in all states, including states that have not created healthcare exchanges.

CIR’s brief in both cases argued that Congress in fact intended to pass the law as written, because after the election of Scott Brown to the Senate it could make no changes to the draft it had, and chose to pass the existing bill as drafted rather than nothing. The brief claimed that the lack of subsidies for those in federally established exchanges was a deliberate compromise reached in the Senate to secure crucial votes, and should not be overturned by the IRS or the courts.

In Halbig, the D.C. District Court upheld the IRS interpretation as consistent with congressional intent to give subsidies to both groups.  A three-judge panel of the D.C. Circuit reversed and struck down the Administration’s interpretation in July, 2014.  However, shortly thereafter, the full D.C. Circuit voted to vacate the panel’s decision and review it en banc by the full Circuit.

However, lead counsel Michael Carvin had filed a similar challenge in the Fourth Circuit, King v. Burwell.  Carvin’s strategy was to provide an alternative route to the Supreme Court and/or to provoke split decisions by different circuits, which would increase the likelihood that the Court would accept one or both decisions for review. The Fourth Circuit upheld the IRS’s interpretation while Halbig was still before the D.C. Circuit.  The plaintiffs then successfully petitioned the Supreme Court to hear King v. Burwell.