U.S. Supreme Court hears ACA employer mandate case

Following is a news release issued March 4, 2015 from the Attorney General of the State of Indiana:

U.S. Supreme Court hears ACA employer mandate case 
Outcome will impact case brought by Indiana, 39 schools

INDIANAPOLIS – A case of interest and importance to state government and 39 Indiana school corporations was argued today in the United States Supreme Court and its outcome will have direct bearing on a separate lawsuit Indiana and the schools filed challenging the tax penalties of the employer mandate.

The Supreme Court today heard oral argument in King v. Burwell, an appeal from the 4th Circuit in which petitioners contend the Internal Revenue Service is improperly interpreting the Affordable Care Act to require tax credits and employer mandate penalties in the 27 states that do not operate a health-insurance purchasing exchange. The King petitioners argued the plain language of the ACA says the tax credits and employer mandate penalties apply only in those states that have established an exchange – and don’t apply in states that opted against establishing one where the federal government operates an exchange.

The Supreme Court’s eventual decision in King v. Burwell will have a direct bearing on the lawsuit the State of Indiana and 39 school corporations as government employers filed against the IRS to negate the burdensome ACA employer mandate penalties of $2,000 per employee for every worker their organization employs.  That case, State of Indiana et al. v. IRS et al., was argued last Oct. 9 in the U.S. District Court for the Southern District of Indiana, and further proceedings in the case have been stayed until after the Supreme Court rules on King v. Burwell.  Although not parties to the King case, the State and 39 schools on Dec. 29 filed an amicus brief in the Supreme Court offering legal arguments in support of the petitioners’ side.

“Whether the IRS’s actions have exceeded the authority granted it under the act Congress passed is a legal question of great importance that only the U.S. Supreme Court can answer.  As government employers with personnel management responsibilities over large numbers of public employees, the State and schools need clarity on whether we will be subject to the employer mandate tax penalties; so we are pleased the justices heard the King case and we hope the Supreme Court will render a decision that resolves clearly this question of the IRS’s interpretation,” Indiana Attorney General Greg Zoeller said.

The Attorney General’s Office represents state government in the Indiana v. IRS case; it does not represent private employers or private individuals.  The 39 school corporations are represented by a private law firm, Bose McKinney & Evans LLP.  In their complaint in the Indiana v. IRS case and in their joint amicus brief in the King case, Indiana and the schools do not ask the Supreme Court to cancel private insurance policies obtained with tax credits and do not ask for repayment of tax credits already paid.  Instead, the complaint and amicus brief both note the ACA employer mandate would be a direct tax on the State and its political subdivisions, in violation of intergovernmental tax immunity.

At the oral argument today in the Supreme Court in the King v. Burwell case, the justices directed questions at both sides.  The Court is expected to rule by the end of June.  Further proceedings in the Indiana v. IRS case in federal court in Indianapolis will await the outcome of that ruling.

About Jennifer Jett

Jennifer is the chief marketing officer at the law firm of Bose McKinney & Evans LLP in Indianapolis, Indiana. She is a graduate of Butler University.
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