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Virginia Court Holds that Congress Cannot Require Individuals to Purchase Health Insurance

A December 13, 2010 decision from the Eastern District of Virginia held that the Minimum Essential Coverage Provision, Section 1501 of the Patient Protection and Affordable Care Act, ("PPACA"), which requires Americans to purchase health insurance or pay a penalty, is unconstitutional.

Congress did not have authority to enact the Minimum Essential Coverage Provision under the Commerce Clause, the court ruled. The Commerce Clause grants Congress power to regulate those activities which have a substantial effect on interstate commerce. The court rejected the argument that uninsured individuals, in the aggregate, create a "substantial effect on commerce" because uninsured individuals will, at some point in their lives, need health care services.

Further, every proper application of the Commerce Clause has been based upon some form of action or transaction by an individual or legal entity. The court determined that the decision of an individual to not purchase health insurance does not constitute an "action or transaction" even if the individual, at some point, may require health care services. The Commerce Clause has never been applied, the court noted, to "compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market."

Additionally, Congress's power to tax under the General Welfare Clause in Article I of the United States Constitution did not provide the authority to enact the Minimum Essential Coverage Provision. The purpose of the legislation was to penalize taxpayers who did not purchase insurance, the court determined; it was not a tax designed to generate revenue as is authorized under the General Welfare Clause.

"Unchecked expansion of congressional power to the limits suggested by the Minimum Essential Coverage Provision would invite unbridled exercise of federal police powers," the court warned.

The court declined, however, to rule on the remainder of the provisions in the PPACA. Still, a successful challenge to the Minimum Essential Coverage Provision, a key provision in the PPACA, may likely open the floodgates to more litigation attacking this historic legislation.