RICHMOND, Va. (AP) - A federal statute that generally bars lawsuits challenging taxes before they are paid does not prohibit a federal appeals court from deciding two Virginia suits seeking to dismantle the Obama administration's health care overhaul, attorneys for all parties in the cases say.
The Justice Department, the Virginia attorney general's office and Liberty University took the same position in supplemental briefs filed this week with the 4th U.S. Circuit Court of Appeals in Richmond.
A three-judge panel of the appeals court heard arguments in the cases May 10, then asked last week for additional briefs. Specifically, the judges asked whether the federal Anti-Injunction Act strips the court of jurisdiction to decide the lawsuits. The 1867 federal law says a tax can be challenged only after it is paid and the taxpayer unsuccessfully seeks a refund.
The question arose because the new health care law requires citizens to buy health insurance starting in 2014 or pay a penalty. The Justice Department, citing the penalty provision, says the health care law is a valid exercise of congressional taxing authority, but the state and Liberty University argue that the penalty is not a tax.
Whether it is a tax or not, however, the parties agree that the Anti-Injunction Act does not apply.
Justice Department lawyers unsuccessfully argued to the contrary in district court but said in their new brief that they've changed their minds.
Upon further reflection and based on previous court decisions in the health care litigation, the Justice Department has concluded that the Anti-Injunction Act "does not foreclose the exercise of jurisdiction in this case," the department said in its brief.
The department still considers the penalty a tax, but believes Congress did not intend for the Anti-Inunction Act to prohibit pre-enforcement challenges to the health care law's key provision - the insurance mandate.
"In the unique circumstances of this case, we do not believe that Congress intended a refund suit to be the sole recourse for a constitutional challenge to the minimum coverage provision," the government's brief says.
Virginia Attorney General Kenneth Cuccinelli and lawyers for Liberty University offered different reasons for concluding that the Anti-Injunction Act does not apply.
The attorney general said the act has no bearing on his suit because he is defending a Virginia law that says no resident of the state can be compelled to buy health insurance. Liberty said the act doesn't apply because "the mandates themselves are compelled purchases of a product, or penalties for failure to purchase a product, not taxes."
The Justice Department is appealing U.S. District Judge Henry E. Hudson's decision striking down the insurance mandate. Liberty is appealing U.S. District Judge Norman Moon's ruling upholding the health care law.
The two judges disagreed on the central question in both cases: whether Congress exceeded its constitutional authority under the Commerce Clause in passing the minimum coverage requirement.
A decision by the appeals panel, which consists of two Obama appointees and one judge appointed by former President Bill Clinton, is expected in a few weeks. Lawyers on both sides have said the cases ultimately will be decided by the U.S. Supreme Court.