Judge Overturns Part of Affordable Care Act and DOL Begins Referring Claimants to Plaintiffs' Bar December 2010

Monday was a big news day for two significant areas of labor and employment law. In Virginia, a federal district judge overturned the individual mandate to buy health insurance that is the centerpiece of the Patient Protection and Affordable Care Act ("PPACA"). Judge Henry Hudson concluded that Section 1501 of PPACA, mandating that all U.S. citizens purchase minimum essential coverage beginning with the 2014 tax year, is unconstitutional and exceeds the authority granted to Congress under the Constitution's Commerce Clause and General Welfare Clause. As a result, Judge Hudson severed Section 1501 from the remainder of PPACA, but left the law intact, in anticipation of an appeal to higher courts, likely to reach the U.S. Supreme Court.

Earlier this year, two other federal judges dismissed similar challenges to PPACA, finding the opposite of Judge Hudson, that PPACA is constitutional. Given the heightened partisan debate around the law, it is noteworthy that Judge Hudson is a George W. Bush appointee and the two judges who previously upheld PPACA are Clinton appointees.

Many of our clients have already asked what Judge Hudson's decision means for employers. Our answer: nothing, for now. Judge Hudson's ruling overturns the individual mandate only, and does not affect any other facet of PPACA. This means the employer mandate (the obligation of employers with 50 or more full time equivalent employees to provide minimum essential coverage beginning in 2014) and all other provisions of the law are unaffected by the court's decision. We agree that PPACA seems to be on a collision course with the U.S. Supreme Court. Based on its long-standing precedent of broadening Congressional authority under the Constitution's Commerce Clause, the Court's decision on PPACA could be a landmark one.

Also on Monday, DOL's Wage and Hour Division announced that it has begun an unprecedented partnership with the plaintiffs' bar. Effective yesterday, whenever a Fair Labor Standards Act or Family and Medical Leave Act claimant's complaint is declined by DOL, the agency may provide the complainant with the American Bar Association's toll free number for its Attorney Referral System. In addition to providing this referral, DOL will provide prompt claim information and relevant documents in the case to complainants and their attorneys. In recent years, Congressional studies and Office of Management and Budget reviews have been critical of DOL divisions like Wage and Hour and OSHA for the large number of complaints that seemingly fall through the cracks or go unresolved. Connecting complainants with the Attorney Referral System is just one way of balancing the limited resources of the agencies with the increasing number of complaints requiring attention.

While this is certainly an unprecedented move by DOL that is likely to result in more claimants becoming litigants, there is no shortage of lawyers willing to take these cases. Anecdotally, we must confess that we have never met a plaintiff who had a hard time finding a lawyer. Between daytime television commercials, billboards, yellow pages, and now web browser pop-up ads, there are plenty of ways to make contact with a lawyer. The difference-maker in DOL's recommendation of the ABA's Attorney Referral System is the perceived value of the DOL's endorsement, both of the underlying claims and of a plaintiffs' lawyer's receptivity to taking them on. We have to wonder if EEOC will be the next DOL agency to begin making lawyer referrals.

If you have any questions about this Advisory or any matter of labor, employment or benefits law, please contact your LMV attorney at (205) 326-3002.