Do the plaintiffs in King have standing to sue?

The latest fracas in King is about standing. Recent reports in the The Wall Street Journal and Mother Jones have raised serious questions about whether the four individual plaintiffs have suffered the sort of injury that the federal courts are constitutionally empowered to redress. The stakes are high: if the plaintiffs lack standing, the Supreme Court has no jurisdiction and should dismiss the case outright.

The four plaintiffs are residents of Virginia, which didn’t establish its own exchange. If the IRS rule were invalidated, they would be ineligible for tax credits. Without tax credits, they say, they would have to spend more than 8% of their income to buy a bronze plan through—which would make them eligible for an exemption from the penalty for failing to get insurance. That exemption is what they want out of the lawsuit.

To unpack the standing question, we’ve got to take a close look at what the plaintiffs have alleged and what the newspapers have reported. As we do that, though, keep in mind that standing is often confused with a related concept called mootness. Both are relevant here. A plaintiff’s standing is measured at the moment she files her lawsuit. In cases seeking an injunction—and that’s what the King plaintiffs want—a plaintiff has standing if she has a reasonable, non-speculative basis for thinking that she will suffer an injury at the hands of the defendant. But a case that was proper when filed can become moot if, during the litigation, it becomes apparent that the threatened injury will never materialize.

David King. The lead plaintiff, King, asserted in his declaration that he is “not eligible for health insurance from the government or any employer.” That allegation appears to be false. King is a Vietnam veteran and is eligible for coverage through the Department of Veterans Affairs. His lawyer says that he never enrolled, although, as Greg Sargent has noted, King told The Wall Street Journal that he had been to a VA medical center and had a VA identification card, “which typically serves as proof of VA-care enrollment.” If King was enrolled when the lawsuit was filed, he would have been ineligible for tax credits under the ACA—which means he wouldn’t have had standing. If he enrolled after the lawsuit commenced, the case has become moot as to him.

Douglas Hurst. In his declaration, Hurst also said that he is “not eligible for health insurance from the government or any employer.” This allegation may likewise be false: Hurst’s wife has described him as a Vietnam veteran, which would qualify him for VA coverage. It’s possible that Hurst has never enrolled in VA coverage; that’s what his lawyers say. If so, he could be eligible for tax credits. But it’s the rare 63-year old who hasn’t needed health care—and rarer still for someone to pay for care when he can get it for free. It’s reasonable to wonder whether Hurst, like King, also has a VA card.

Brenda Levy. Levy will turn 65 in June, in all likelihood before the Supreme Court decides the case. At that point, she’ll be automatically enrolled in Medicare—and thus won’t be subject to the tax-credit rule. This is significant because the plaintiffs in King aren’t seeking to recoup anything from the federal government. They just want to stop the government from enforcing the IRS rule in the future. That means that Levy has no stake in the case once she turns 65. It will be moot as to her.

The only hard question is whether Levy’s 2015 tax liability could be affected by a ruling in her favor. I have my doubts, for two independent reasons. First, Levy said in her declaration that she is “employed as a substitute teacher” and that her income for 2014 would be $43,000. The Journal reported, however, that she made less than $10,000 as a substitute teacher at the public schools. Given that she’s made more than $5,000 in political contributions over the past few years, she presumably has other income sources. So what’s her estimated income for 2015? It might already be clear that she’ll be ineligible for tax credits (or, if she is eligible, that it wouldn’t cost her more than 8% of her pre-credit income to buy a health plan).

Second, the IRS has the power under 26 U.S.C. 7805(b)(8) not to give “retroactive effect” to a court decision, including a decision of the Supreme Court. The IRS is virtually certain to exercise that authority if the government loses this case. Otherwise, the IRS would have to claw back from taxpayers the advance tax credits that it paid to their insurers in the first half of 2015. Since the IRS won’t apply King retroactively, Levy’s tax liability for the first half of the year will be calculated under the IRS rule, whatever the outcome of the case.

Now, maybe the Supreme Court won’t be inclined to anticipate what the IRS will do in response to its decision. That’s a possibility. But it’d be a bit strained to pin standing on the exquisitely unlikely possibility that the IRS would sit on its hands if the government loses this case.

Rose Luck. As with the other plaintiffs, Luck’s standing depends on whether, without tax credits, she would have to pay more than 8% of her income for a bronze health plan. Figuring that out requires knowing something about her expected income and the price of a health plan in her coverage area. In her declaration, however, Luck listed her address as the American Inn motel. According to the Journal, “[a] receptionist at the inn said Sunday that Ms. Luck didn’t currently live there and that residents weren’t allowed to stay more than 28 days.”

The motel stay raises two questions. First, we don’t know where Luck now lives and what the price of a bronze plan is in her area. It’s thus hard to know whether, absent tax credits, she could reasonably expect to be exempt from the mandate penalty. It could be a very close call: when she filed her suit, a mere $32-per-month difference in premiums or income would have made her ineligible for the 8% exemption.

Second, the motel address makes me wonder about Luck’s statement that her projected income for 2014 “will be $45,000.” Most people who make that kind of money don’t live in motels. Depending on her employment situation, it seems possible that Luck has no basis for thinking that she’ll ever become subject to the IRS rule. If so, she would either lack standing (if her declaration was inaccurate when filed) or the case would be moot as to her.

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In short, I have serious doubts about the standing of King, Hurst, and Levy. It’s likely that King is enrolled in VA care. If King’s lawyers missed that when they filed the suit, they might also have missed Hurst’s enrollment. And because Levy is on the cusp of enrolling in Medicare, she probably has no stake in the outcome of the case.

The question is closer as to Luck. She’s 56 years old and she might have reason to think that, in 2015 and beyond, she’ll be hit with a mandate penalty that she could avoid if she were ineligible for tax credits. The trouble is that there’s no way to know. If it weren’t for the problems with the standing of the other three plaintiffs, I might be inclined to give Luck the benefit of the doubt. But I’m beginning to wonder how thoroughly the King lawyers vetted their clients. Tomorrow, I’ll discuss what the Supreme Court ought to do about it.


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