Relative Standing in the Seventh Circuit

In Association of American Physicians and Surgeons, Inc. v. Koskinan, the Seventh Circuit recently found no standing where plaintiffs challenged the IRS’s failure to collect an Affordable Care Act tax. Koskinen may prove to be a bellwether for future cases involving challenges to executive inaction. But what’s most interesting about Koskinen is that it cited last year’s Supreme Court decision in Lexmark as a reason to argue in terms of relativity—that is, in terms of whether the plaintiffs before the Court were the best ones available–even though that inquiry seemed irrelevant as a doctrinal matter. The takeaway is that relativistic reasoning often lies just under the surface of current standing doctrine.

The Seventh Circuit’s decision is a crisp five-pager by Judge Easterbrook. Here’s an edited excerpt providing background:

The Patient Protection and Affordable Care Act requires almost everyone to have health insurance. See National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012). The principal enforcement mechanism is a tax that most businesses must pay if they fail to provide health insurance as a fringe benefit, or that anyone not covered by an employer’s plan must pay in lieu of purchasing insurance. 26 U.S.C. §§ 4980H, 5000A. The Internal Revenue Service has announced that it will collect the tax in 2014 from uninsured persons, but not from certain businesses that fail to provide insurance as a fringe benefit.

Plaintiffs asked the district court to enjoin what they describe as a violation of the separation of powers (perhaps more accurately of Art. II §3, which requires the President to “take Care that the Laws be faithfully executed”) and the Tenth Amendment.

Plaintiff McQueeney is a physician; the other plaintiff is an association of physicians. McQueeney and many of the Association’s members operate cash-only practices and do not accept insurance. … They appear to believe … that insurance is “free” to workers—that wages do not adjust to reflect the value of pensions, insurance, and other fringe benefits. If that is so, then employers that do not provide insurance also will not offer higher wages (other things equal). Then, when workers buy their own insurance (or pay the penalty tax), they will have less income available to purchase medical care from plaintiffs. That change in the demand for their services gives them standing, plaintiffs maintain.

Having summarized these points, the Seventh Circuit immediately noted: “By the same logic, [the plaintiffs] could litigate about any tax policy.” Later, the Court underscored that point: “To allow a long, intermediated chain of effects to establish standing is to abolish the standing requirement as a practical matter.” This is the problem of too much standing. Federal courts do not like to let everyone sue over anything. Instead, federal courts want to hear from a subset of possible plaintiffs, such as those with adequate injuries or with relatively strong interests in seeking relief.

Most of Koskinen, consistent with the governing case law, is framed in terms of adequate standing. In other words, the court predominantly asked whether the plaintiffs had suffered an injury of sufficient directness and concreteness to justify standing. As the court’s penultimate paragraph concluded: “Plaintiffs . . . invoke a long and contestable chain of causation; they do not complain about anything done to them personally.” In this passage, the court assumed that injuries are adequate to confer standing only when plaintiffs complain about “anything done to them personally.” But, as the Seventh Circuit itself recounted, the plaintiffs arguably did raise a complaint of just that type. According to the plaintiffs, the government’s failure to enforce the law had caused them to suffer lost business. Perhaps the plaintiffs’ claim of injury was based on bad economics and so (after appropriate fact-finding) could have been rejected as false. But surely the plaintiffs claimed to have “personally” suffered. Alternatively, Koskinen–like many modern standing cases–could have invoked traditional norms of personal injury associated with the common law. Yet all agree that those norms do not exhaust modern standing doctrine.

Having arrived at its questionable finding of inadequate standing, the court concluded by expressly raising the issue of relativity:

Plaintiffs would be the wrong persons to litigate even if they had standing. Only persons seeking to advance the interests protected by the mandatory‑insurance portions of the Affordable Care Act would have a plausible claim to relief. See Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) (discussing the zone‑of‑interests requirement). Yet plaintiffs, who do not accept insured patients, want to reduce rather than increase the number of persons who carry health insurance. Someone else would be a much more appropriate champion of the contention that the IRS has not done what it should to accomplish the statute’s goal of universal coverage.

This is a very interesting paragraph. In citing Lexmark and the “zone-of-interests requirement,” the court pointed toward the doctrine formerly known as statutory standing. After Lexmark, the zone-of-interests requirement is now viewed as part of the statutory merits inquiry. But the plaintiffs in the Seventh Circuit were raising a constitutional claim, not a statutory one. Therefore, the “zone-of-interests requirement,” as discussed in Lexmark, did not straightforwardly apply. Intriguingly, Judge Easterbrook may believe that a Take Care Clause claim based on a statutory duty is equivalent to, and should be treated as, a suit under the statute itself. Perhaps the court didn’t explain this point in any greater depth because, having found no standing, it lacked jurisdiction to reach aspects of the merits. On that reasoning, the court shouldn’t have appended its final paragraph at all.

Yet Koskinen seemed to view its final paragraph as pertinent to its larger discussion of standing and, therefore, of jurisdiction. Indeed, the court framed its zone-of-interest analysis in terms of the classic standing question of whether the plaintiffs were “the wrong persons to litigate.” Linking standing and the zone-of-interests requirement in this way could easily lead to a collapse of standing and the merits—much as happened in Lexmark and as long advocated by then-Professor and now-Judge William Fletcher. Koskinen gestured in that direction by noting who “would have a plausible claim to relief.” However, the court framed its point in decidedly relativistic terms. According to the court, the plaintiff’s “contention” should have had a “more appropriate champion.” A claim to enforce a health insurance mandate should be brought by “[s]omeone else”–that is, by someone who “want[s]” there to be more health insurance. In a recent paper, I called this general form of argument “relative standing.”

As Koskinen illustrates, relativity and standing are closely linked—current doctrine notwithstanding. Indeed, it was not that long ago that the Supreme Court was prepared to underline this linkage. As then-Justice Rehnquist put it in Valley Forge: “The Art. III aspect of standing also reflects a due regard for the autonomy of those persons likely to be most directly affected by a judicial order.” Justice Blackmun used extremely similar language in Diamond v. Charles: “The nature of the injury is central to the Art. III inquiry, because standing also reflects a due regard for the autonomy of those most likely to be affected by a judicial decision.”

In appending a paragraph on relativity at the end of its standing decision, Koskinen followed the spirit of a long line of standing cases.

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