It is what it is: U.S. Judge says IRS ObamaCare rule is “arbitrary, capricious, an abuse of discretion”

OKLAHOMA CITY – The state of Oklahoma won the first round in Attorney General Scott Pruitt’s historic challenge to the Affordable Care Act.

The Sooner State was the first to challenge an IRS rule requiring taxpayer premium subsidies, which Pruitt’s legal briefs have described as illegal, because they were never authorized by Congress.

On Tuesday (September 30), U.S. District Judge Ronald White, in eastern Oklahoma, agreed with the state’s position. White said the underlying IRS ruling “runs afoul of the principle that Congress cannot compel sovereign states to implement federal regulatory programs.” The jurist said the act “also provides … that states may choose not to establish such Exchanges. Oklahoma has so chosen.”

White rebuffed arguments from the Obama Administration that Pruitt’s office (and the state) did not have legal standing to sue. Further, White pointed to another court’s assertin that the government’s rationale (in his summary, “that an exception in the statute was actually intended to broaden the statute’s scope”) was nonsense. That interpretation could “lead[] us down a path toward Alice’s Wonderland, where up is down and down is up, and words mean anything.”

Explaining his willingness to tackle core issues of the case, Judge White wrote, “[A] proper legal decision is not a matter of the court ‘helping’ one side or the other. A lawsuit challenging a federal regulation is a commonplace occurrence in this country, not an affront to judicial dignity. A higher-profile case results in greater scrutiny of the decision, which is understandable and appropriate.”

Contending that even with higher stakes than normal the case is a matter of statutory interpretation within his powers, White quoted a federal decision from earlier this year: “The text is what it is, no matter which side benefits.”

Wrapping up his own analysis, White wrote, “The court rules that the IRS rule is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law.”

Judge White’s ruling can be read here.

In a statement sent to CapitolBeatOK and other news organizations, state Attorney General Pruitt said the “ruling is a consequential victory for the rule of law. The administration and its bureaucrats in the IRS handed out billions in illegal tax credits and subsidies and vastly expanded the reach of the health care law because they didn’t like the way Congress wrote the Affordable Care Act. That’s not how our system of government works.

“The Obama administration created this problem and rather than having an agency like the IRS rewrite a law it didn’t like, the administration should have done the right thing and worked with Congress to amend the law. 

Oklahoma was the first to challenge the administration’s actions and today’s ruling vindicates what we recognized early on and that is the administration can’t rewrite the Affordable Care Act by executive fiat.”

The suit originated in May 2012, and, as summarized by Pruitt’s office, challenged:

“1) tax subsidies to be issued in states like Oklahoma without a state-based health care exchange, and

“2) assessed ‘large employer’ penalties in states that did not establish state health care exchanges.”

Oklahoma’s briefs argued that both sections of the controversial IRS edict were contrary to the actual language of the ACA, and, Pruitt’s office explained, “tax subsidies can only be issued and tax penalties are only to be assessed in states that established state-based health care exchanges.”

The district court ruling is likely to be appeared to the U.S. Circuit Court of Appeals for the Tenth Circuit, based in Denver, Colorado.

Pruitt’s statement Tuesday went on to describe the ruling as “a huge win for Oklahoma, but it’s just a first step. 

Since Oklahoma filed the first lawsuit in 2012, others have followed our lead and made similar claims in other jurisdictions. It’s likely this issue will ultimately be decided by the U.S. Supreme Court. 

We look forward to making our case and continuing the effort to hold federal agencies accountable to their duty to enforce the laws passed by Congress.”

Pruitt praised state Solicitor General Patrick Wyrick and other lawyers in his office’s federalism unit for their work on the case.

Gov. Mary Fallin thanked Pruitt and his team, saying in an afternoon statement, “For years, I have argued that Obamacare represents bad policy, irresponsible spending, an outrageous expansion of federal authority into the private sector, and unconstitutional law. Since 2012, the state of Oklahoma has been fighting the implementation of the ACA, both to protect our citizens from the negative effects of this law – including devastating cuts to Medicare — and to stand up for Constitutional principles.”

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