Indiana sues IRS over ObamaCare employer mandate

While the media and public are focused on lawmakers’ fight over ObamaCare and the federal budget, a bigger fight is taking place in the courts. On Oct. 8, the state of Indiana, along with 15 school districts, filed suit against the Internal Revenue Service over ObamaCare’s employer mandate. Under the law, large employers are required...

While the media and public are focused on lawmakers’ fight over ObamaCare and the federal budget, a bigger fight is taking place in the courts. On Oct. 8, the state of Indiana, along with 15 school districts, filed suit against the Internal Revenue Service over ObamaCare’s employer mandate.

Under the law, large employers are required to offer affordable health insurance coverage to their employees; if they don’t, they face a penalty. In its ruling on ObamaCare, the Supreme Court ruled that this penalty is actually a “tax.” Indiana is taking the position that the federal government does not have the authority to tax a state entity.

The lawsuit raises the question of whether the IRS has exceeded its federal taxing authority over the state of Indiana.

According to Indiana Attorney General Greg Zoeller:

“The State of Indiana and 15 school corporations filed a lawsuit today against the Internal Revenue Service, challenging a new IRS regulation that imposes the costly “employer mandate” requirements of the Affordable Care Act onto state and local governments. The plaintiffs seek declaratory judgments and injunctions that would prevent the IRS from financially penalizing the State and its political subdivisions. They contend the Affordable Care Act or ACA as passed by Congress does not allow financial penalties in states that did not create their own health insurance exchanges; and that the financial penalties – which are based on the total number of employees – cannot be applied to government employers.”

Indiana’s lawsuit is just one in a long line of lawsuits working their way through the court system that could threaten implementation of the entire law. According to Forbes contributor Chris Conover:

“All told, Obamacare and its tens of thousands of pages of companion regulations have spawned nearly 100 lawsuits, although, as Washington and Lee University legal scholar Timothy Jost has pointed out, “over half of these challenge a single regulation promulgated under the law (the preventive services contraceptive requirement) rather than the law itself.” Currently, dozens of other lawsuits are pending. However, many are on hold until the law fully takes effect in 2014. That said, at least five are moving forward, having cleared preliminary hurdles to being heard on their merits. Each of these court cases raise constitutional or significant legal questions, i.e., whose resolution has the potential to significantly disrupt implementation of the law.”

Conover goes on to describe the five cases that have cleared the necessary hurdles to be heard on their merits and which raise constitutional questions (and could derail ObamaCare implementation). They are listed and discussed here.

As ObamaCare implementation continues, more cases will emerge. No matter what happens to ObamaCare during the government shutdown negotiations, the courts will ultimately have the last word.