Judge Foils 'Deep State Bureaucrats' in Obamacare Case, Demands IRS Return $839M to 6 States
On Tuesday, a federal district court judge in Texas ordered the Internal Revenue Service (IRS) to return more than $839 million that bureaucrats effectively stole from six states in a violation of the plain text of the Affordable Care Act, also known as Obamacare.
"This is a prime example of how the administrative state works — and how difficult it can be to unravel the work of deep state bureaucrats," Louisiana Solicitor General Liz Murrill, who helped argue the case, told PJ Media.
In the ruling, U.S. District Judge Reed O'Connor ruled that the Centers for Medicare and Medicaid Services (CMS) had unlawfully required six states — Indiana, Kansas, Louisiana, Nebraska, Texas, and Wisconsin — to foot the bill for health care providers, paying a fee that Obamacare clearly exempted them from.
Obamacare mandated that more Americans purchase health insurance. In order to avoid enriching health care providers — known as managed care organizations or MCOs — the law levied a health insurance provider fee (HIPF). Due to an actuarial rule established under Alex Azar, secretary of the department of Health and Human Services, states had to pay the HIPFs to the tune of hundreds of millions.
"The law expressly forbids imposing the fee on states," Liz Murrill told PJ Media. "It was intended to basically take back some of the profits insurers would achieve from the expansion of insurers and the associated increase in premiums (projected to come from a less sick, younger population)."
Instead, the deep state bureaucrats forced the states to foot the bill.
"Obamacare has always been an economic house of cards, and this ruling has again exposed it for what it is: a money laundering scheme," Louisiana Attorney General Jeff Landry said in a statement. "This is a prime example of the deep administrative state doing something that Congress expressly forbid."
Landry argued that the deep state broke the law it was attempting to apply. "Even though the Affordable Care Act forbid imposing the Health Insurance Providers Fee (HIPF) on states, the federal government found a way to do it anyway," he explained.
"HIPF has always been an unconstitutional fee imposed upon our State’s workers," Landry concluded. "I commend our Solicitor General Liz Murrill and the entire multi-state coalition for achieving victory in this important case."
Thanks to Judge O'Connor's ruling, the IRS will have to pay $839,324,730 to the six states: $94,801,483 to Indiana, $142,121,776 to Kansas, $172,493,095 to Louisiana, $36,238,918 to Nebraska, $304,730,608 to Texas, and $88,938,850 to Wisconsin.
Led by Texas, the states sued in 2015, claiming Obamacare gave no clear notice to states that the fees would be required in order for the states to continue to receive federal funding for their Medicaid and Child Health Insurance Program (CHIP), Courthouse News reported. When they found out about the fee, notice was given by a "private entity wielding legislative authority."
"We all know that the feds cannot tax the states, and we’re proud to return this illegally collected money to the people of Texas," Texas Attorney General Ken Paxton said in a statement.
In February, Texas and 19 other Republican-led states filed another lawsuit to strike down Obamacare, arguing that the individual mandate would be an unconstitutional exercise of federal power under Supreme Court precedent, since Congress removed the tax penalty in the Republican tax bill.
Follow the author of this article on Twitter at @Tyler2ONeil.