Close this search box.

Day 3 Recap, Part II:It Finishes How it Started

By March 29, 2012Legal
Print Friendly, PDF & Email

Oral Arguments:
Audio | Transcript

The last part of oral arguments before the Supreme Court relating to the Patient Protection and Affordable Care Act had to do with the constitutionality of the expansion of Medicaid within the law.

The arguments definitely finished how it all started on day 1- with disaster for the government and hope for the states.

First to argue was Paul Clement, representing the states. Clement said, “The constitutionality of the Act’s massive expansion of Medicaid depends on the answer to two related questions: First is the expansion coercive and, second, does that coercion matter?” And that was all he could say before Justice Elena Kagan eagerly jumped right into her inquiry.

The exchange is eye-opening as it shows, at its core, two different world views. Here is the last part of it:

JUSTICE KAGAN: Now, suppose I’m an employer and I see somebody I really like and I want to hire that person. And I say I’m going to give you $10 million a year to come work for me. And the person says well, I — you know, I’ve never been offered anywhere approaching $10 million a year, of course I’m going to say yes to that. Now we would both be agreed that that’s not coercive, right.

MR. CLEMENT: Well, I guess I would want to know where the money came from. And if the money came from –

JUSTICE KAGAN: Wow, wow. I’m offering you $10 million a year to come work for me and you are saying this is anything but a great choice?

MR. CLEMENT: Sure, if I told you actually it came from my own bank account. And that’s what’s really going on here in part. …

To say that the approach backfired for Justice Kagan would be a major understatement. She really couldn’t recover for the rest of his presentation.

Justice Ruth Bader Ginsburg said she found it hard to see the difference with this and other expansions of Medicaid. But Mr. Clement pointed to two distinguishing characteristics:

One is, in some of the prior expansions of the program, but not all, Congress has made covering newly eligible individuals totally voluntary.

[T]he second dimension in which this is distinct, which is, here, Congress has created a separate part of the program for the newly eligible mandatory individuals. That’s what they called them.

And those individuals are treated separately from the rest of the program going forward forever. They are going to be reimbursed at a different rate from everybody who’s covered under the preexisting program.

Justice Stephen Breyer was forceful and resolute on his view that the law gave the Health and Human Services (HHS) Secretary the ability to not take the funding from the state. When asked where he got the idea that the states will lose all Medicaid money if they refused this expansion, Mr. Clement struggled to provide the answer. Finally, Justice Breyer himself provided the answer and said:

Now, let me relieve you of that concern, and tell me whether I have. That a basic principle of administrative law, indeed, all law, is that the government must act reasonably. And should a secretary cut off more money than the secretary could show was justified by being causally related to the state’s refusal to take the new money, you would march into court with your clients and say, “Judge, the secretary here is acting unreasonably, and I believe there is implicit in this statute, as there is explicit in the ADA, that any such cut-off decision must be reasonable.”

But Clement recouped when he provided a piece of evidence that would remain hovering over the entire proceeding. It was a letter provided by the HHS secretary to the state of Arizona threatening that “if you withdraw from the CHIP program, you risk losing $7.8 billion, the entirety of your Medicaid participation.”

Mr. Clement focused on the sheer size of the Medicaid program, but Justice Sotomayor found the argument counter productive.

I guess my greatest fear, Mr. Clement, with your argument is the following: The bigger the problem, the more resources it needs. We’re going to tie the hands of the Federal government in choosing how to structure a cooperative relationship with the States. We’re going to say to the Federal government, the bigger the problem, the less your powers are. Because once you give that much money, you can’t structure the program the way you want.

Next, it was the government’s turn to argue, and representing them was, once again, U.S. Solicitor General (SG) Donald Verrilli, who simply seemed unprepared. His performance gave the impression that he did not think the states had any real argument, so he didn’t really have to prepare for the Justices’ questions. Towards the end of his argument, it got so bad that he simply looked like he wanted to get out of there. Chief Justice Roberts actually told him, “You have another 15 minutes.” To which he replied, “Lucky me, lucky me.”

When Chief Justice Roberts and Justice Scalia tried to ask about the state’s coercion argument, Verrilli was taken aback and was just unresponsive, continuing to repeat that it was not coercion. In this exchange Scalia notes the SG seemed surprised:

JUSTICE SCALIA: You can’t imagine a case in which it is both germane and yet coercive, is what you are saying. There is no such case as far as you know.

GENERAL VERRILLI: Well, I am not prepared to — to say right here that I can — that –

JUSTICE SCALIA: I wouldn’t think that is a surprise question. I mean, you know –

Even though Justice Breyer tried time and again to avail SG Verrilli with a way out of certain arguments, most notably the power of the secretary, he simply refused to take the lifeline.

Chief Justice Roberts asked:

Could you give me some assurance? We heard the question about whether or not the Secretary would use this authority to the extent available. Is [sic] there circumstances where you are willing to say that that would not be permissible? I’m thinking of the Arizona letter, for example.

Verrilli’s response was:

Mr. Chief Justice, it would not be responsible of me to stand here in advance of any particular situation becoming — coming before the Secretary of Health and Human Services and commit to how that would be resolved one way or another.

Justice Breyer comes to Verrilli’s rescue and argues that the Secretary is required by law to use that power within reason and that would be the way for accountability to occur. But Verrilli could not bring himself to accept that. Justice Breyer kept pressing:

JUSTICE BREYER: I don’t know when it [sic] be reasonable. So, you’ve looked into it, and that’s what I want to know.


JUSTICE BREYER: Is there — I could find no instance where they went beyond the funds that were related to the thing that the State refused to do or things affected by that. I would like you to tell me, when you looked into it, that what I thought of in this isolation chamber here is actually true. Or whether they have gone around threatening people that we will cut off totally unrelated funds.

What is the situation?

GENERAL VERRILLI: I think the situation is generally as you’ve described it, but I do want to be careful in saying I don’t think it would be responsible of me to commit now that the Secretary would exercise the discretion uniformly in one way or another.

After this went on for a while Justice Breyer finally asked him point blank, why he was so reluctant. To which he said, “I’m not trying to be – I’m not trying to be reluctant. I understand how this works. I’m trying to be careful about the authority of the Secretary of Health and Human Services and how it will apply in the future.”

The argument went nowhere, and although he tried to play to the emotional aspects of the many poor people that would benefit from this law, it did little to advance his legal argument. I think it is fair to say that no one was more enthusiastic to be done with this case than SG Verrilli.

Clement came back to make a few points on rebuttal and had a strong finish.

Let me just finish by saying I certainly appreciate what the Solicitor General says, that when you support a policy, you think that the policy spreads the blessings of liberty. But I would respectfully suggest that it’s a very funny conception of liberty that forces somebody to purchase an insurance policy whether they want it or not.

And it’s a very strange conception of federalism that says that we can simply give the States an offer that they can’t refuse, and through the spending power which is premised on the notion that Congress can do more because it’s voluntary, we can force the States to do whatever we tell them to. That is a direct threat to our federalism.

Other resources:

Day 3 Recap, Part I: Court Struggles with Weight of Massive 2,700-Page Law

Day 2 Recap, Part I: Government Crash

Day 2 Recap, Part II: The States Shine

Day 1 Recap: Skepticism Abounds

CWA’s Guide to Health Care Oral Arguments at the Supreme Court

CWA President Statement

Day 3 Preview

Day 2 Preview

Day 1 Preview