Tuesday, March 27, 2012

Healthcare Legislation In Supreme Court Today

Today, the Supreme Court convened for the second of three days to hear arguments on the healthcare legislation signed into law by President Obama two years ago. The court is set to determine the extent of congressional power. At the heart of the controversy is the individual mandate, which requires individuals to purchase health insurance by 2014.

No past Supreme Court decisions are completely on point, leaving many observers to speculate about how the ideologically divided justices will decide the limits of congressional power to address society's raising health insurance costs. Today’s legal arguments will focus on the extent of Congress’s power granted to it by the Constitution. The two specific powers at issue in the case, are set out in Article I, Section 8, concern the regulation of interstate commerce and the imposition of taxes.  
            
THE ARGUMENTS

U.S. Solicitor General Donald Verrilli, the Obama administration's top lawyer at the court, will argue that the individual mandate flows naturally from Congress' authority to regulate commerce. He notes congress’ long-standing authority to regulate the insurance field. In his brief to the justices, Verrilli said the law addressed an existing problem in the healthcare market brought on by the uninsured consuming healthcare they cannot afford. He said unaffordable health insurance annually leads to $43 billion in uncompensated healthcare, much of which is passed on to people with insurance. The administration estimates that such "cost-shifting" adds $1,000 a year to a family's insurance policy. The Obama administration frames the issue as such: may Congress decide, in fashioning a comprehensive response to a national crisis in the health care market, to regulate how people pay for the health care they will almost inevitably need?
            
The challengers, including 26 of the 50 states and a small-business trade group, contend Congress exceeded its authority to regulate commerce with that so-called individual mandate. At the heart of the legal controversy is the mandate that most people obtain health insurance by 2014 or pay a tax penalty. Representing the 26 states is Washington lawyer Paul Clement, formerly a solicitor general under George Bush. He relies upon a slippery slope argument. Clement deems the mandate "unprecedented" and said it could lead to limitless intervention by Congress in people's lives. He frames the legal issue as one of individual liberty. May the federal government, he asks, compel individuals not engaged in commerce to buy a product from private companies?
           
 SOURCES

1. Adam Liptak, Hard Questions From Justices Over Insurance Mandate, N.Y. Times, March 27, 2012, at http://www.nytimes.com/2012/03/28/us/hard-questions-from-conservative-justices-over-insurance-mandate.html?_r=1&hp.
2. Editorial, Getting to the Merits, N.Y. Times, March 27, 2012, at A26
3. Joan Biskupic and James Vicini, Supreme Court Divided Over Obama Healthcare Law, Reuters U.S. Edition (March 27, 2012), http://www.reuters.com/article/2012/03/27/us-usa-healthcare-court-idUSBRE82L1CJ20120327.
4. Robert Reich, Health Care Jujitsu, Huffington Post (March 27, 2012), http://www.huffingtonpost.com/robert-reich/single-payer-health-care_b_1381382.html.
5. Lee Ross, Swing Justice Poses Tough Questions on Obamacare at Supreme Court Hearing, Fox News (March 27, 2012), http://www.foxnews.com/politics/2012/03/27/swing-justice-poses-tough-questions-on-obamacare-at-supreme-court-hearing/.

Thursday, March 15, 2012

Legislation to Eliminate New York and Delaware’s monopoly on Corporate Bankruptcy

Legislation to eliminate New York and Delaware’s monopoly on Corporate Bankruptcy was introduced in 2001 when Enron filed for bankruptcy in New York, the state of its incorporation instead of its hometown in Houston, Texas, where its principle place of business was located. Much like the 50% of corporate Chapter 11 cases filed in Delaware and New York combined, the two states reap economic benefits for the legal community.  Bloomberg reports that Delaware derives about $100 billion from its Bankruptcy docket alone.  70 percent of the largest 200 coroporations who filed for Bankruptcy since 2005 did so in New York and Delaware. 

Currently, federal law allows companies to file in either the state of their principle place of business or in the state of their incorporation.  For tax consequences, a majority of businesses are incorporated in New York and Delaware despite their lack of nexus to the states.  This encourages businesses to engage in forum shopping, selecting the state to file for Bankruptcy in the state which provides them with the most benefits including state exemptions.  Additionally, filing in New York and Delaware also creates an inefficient use of resources: flying company representatives out to appear in court, disparity in costs of litigation, and greater Court fees etc…

Legislation was at a standstill in 2001 and again in 2005 as a strong opponent of the law was Vice President Joe Biden who was at the time chaired the Senate Judiciary Committee.  Currently, the legislation has been re introduced by U.S. House Judiciary Chairman, Lamar Smith R-Texas in July 2011 in the Bankruptcy Venue Reform Act of 2011. 

See “Playing on the Home Court” Curriden, Mark. ABA Journal, March 2012.