Health-Care Law Challenges Thrown Out by U.S. Appeals Court

(Updates with reasoning of decision in second paragraph.)

Sept. 8 (Bloomberg) -- The U.S. appeals court in Virginia threw out two challenges to the Obama administration’s health- care overhaul, saying it lacked authority to decide whether the measure is constitutional.

With the rulings, the Richmond-based court today became the second of three appellate panels this year to leave the law intact. The decisions came in separate cases challenging the statute’s requirement that individuals buy insurance or pay a penalty.

Today’s decision deepens a rift among the regional federal appeals courts, a division likely to be eventually resolved by the U.S. Supreme Court.

The administration won its first appeals court victory on June 29 when a Cincinnati panel turned aside a challenge to the law by the Ann Arbor, Michigan-based Thomas More Law Center, a Christian-based public interest law firm.

In a 2-1 decision, that court found Congress had power to enact the insurance mandate through its constitutional authority to regulate interstate commerce. Thomas More appealed that ruling to the Supreme Court on July 27.

The U.S. Court of Appeals in Atlanta invalidated the insurance-purchasing mandate in an Aug. 12 ruling, also by a 2-1 margin, concluding that Congress lacks authority to compel people to buy a product for their entire lives.

The Virginia appeals stem from one challenge to the law by the state of Virginia and another by Liberty University, a Christian school founded in Lynchburg, Virginia, by the late Rev. Jerry Falwell.

One lower-court ruling reviewed by the court upheld the health-care law and another struck down part of it.

Insurance Mandate

The U.S. calls the insurance mandate the linchpin of the Patient Protection and Affordable Care Act, claiming that without expanding the pool of younger, healthier customers the insurance industry won’t be able to meet its obligations for coverage under the law. Absent the mandate, the health-insurance market will wither, the government said in court papers.

The individual mandate and expansions of Medicaid and employer-base coverage will provide about 32 million more people with coverage by 2019, Justice Department lawyers said, citing the Congressional Budget Office.

Virginia and Liberty University will likely file petitions with the U.S. Supreme Court in time for the justices to consider taking the case in its 2011-2012 session, said Kevin Walsh, a law professor at the University of Richmond and a former clerk to Supreme Court Justice Antonin Scalia.

--With assistance from Andrew Harris in Chicago. Editors: Fred Strasser, Michael Hytha

To contact the reporter on this story: Tom Schoenberg in Washington at [email protected]

To contact the editor responsible for this story: Michael Hytha at [email protected]