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Federal Court in Virginia Strikes Down Healthcare Reform Requirement for Individuals to Carry Health Insurance

Posted in Healthcare Services Investing

Earlier this week,  Judge Henry Hudson of the United States District Court for the Eastern District of Virginia became the first judge to strike down as unconstitutional the Minimum Essential Coverage Provision of the healthcare reform law, which requires uninsured individuals to carry certain levels of health insurance. ‬‪ In Commonwealth of Virginia v. Sebelius, the court ruled that the insurance mandate provision of Section 1501 was unconstitutional because people not buying health insurance were not taking any action that Congress could regulate as interstate economic activity.‬ 

Although there is no savings provision in PPACA  providing that invalidation of one part of a law does not eradicate the entire law, in this case Judge Hudson ruled that Section 1501 is unconstitutional but did not invalidate the entire healthcare reform law.  The government is nearly certain to appeal the decision, and industry followers believe the Commonwealth of Virginia will then ask the Fourth Circuit Court of Appeals to reconsider the judge’s decision that only one part of the healthcare reform law is unconstitutional.  In the meantime, Judge Hudson’s invalidation of Section 1501 without striking down PPACA in its entirety may provide additional grounds on which challengers to other portions of PPACA may rely, including in the Physician Hospitals of America and Texas Spine & Joint Hospital challenge of Section 6001 regarding physician-owned hospitals we’ve previously discussed.

As of the date of the decision, two other federal courts had declared the Minimum Essential Coverage Provision constitutional, and similar cases are pending in a handful of other states.

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