1:18-CV-03410 (LDH) (CLP)
Todd C. Bank, Law Office of Todd C. Bank, Kew Gardens, NY, pro se. Elisabeth Layton, U.S. Department of Justice, Washington, DC, Robert Charles Merritt, DOJ-Civil, Richmond, VA, for Defendants.
Todd C. Bank, Law Office of Todd C. Bank, Kew Gardens, NY, pro se.
Elisabeth Layton, U.S. Department of Justice, Washington, DC, Robert Charles Merritt, DOJ-Civil, Richmond, VA, for Defendants.
MEMORANDUM AND ORDER
LaSHANN DeARCY HALL, United States District Judge
Plaintiff Todd C. Bank, an attorney, brings the instant action on his own behalf against Defendants the United States Department of Health and Human Services ("HHS"); Alex M. Azar II, in his official capacity as Secretary of HHS; the United States Department of the Treasury (the "Treasury Department"); and Steven Mnuchin, in his official capacity as Secretary of the Treasury, alleging that Defendants' application of the Patient Protection and Affordable Care Act ("PPACA") violates the United States Constitution both facially and as applied to Plaintiff. (Compl., ECF No. 1.) Defendants move pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint for lack of subject-matter jurisdiction and failure to state a claim for which relief can be granted. (ECF No. 21.)
Plaintiff's status as an attorney takes precedence over his status as a pro se litigant. Bank v. U.S. Dep't of Health & Human Servs. , 708 F. App'x 43, 44 (2d Cir. 2018) (summary order) ("Although pro se litigants are generally entitled to special solicitude, Bank is not because he is an attorney.").
The following facts are taken from the complaint, as well as publicly available documents of which the Court takes judicial notice, and they are assumed to be true for the purposes of this memorandum and order.
On March 23, 2010, the PPACA was signed into law by President Barack Obama. Pub. L. No. 111–148, 124 Stat. 119. The PPACA was designed to (1) achieve near-universal healthcare coverage in the United States and (2) lower premiums associated with said healthcare coverage. 42 U.S.C. § 18091(2)(D), (F) (2018). To achieve these goals, Congress prohibited insurers from denying healthcare coverage to individuals with preexisting health conditions and charging higher rates to individuals based on medical history, thereby eliminating incentives to purchase preventive healthcare. Id. §§ 300gg–3, 300gg–4. Congress understood that because the PPACA eliminated incentives to obtain preventive care, many individuals would wait to purchase coverage until they needed care. Id. § 18091(2)(I). Congress further believed that insurers would increase the overall price of healthcare coverage to compensate for their increased costs resulting from this "adverse selection" problem. Id. To mitigate against this issue, Congress included a provision requiring that most taxpayers maintain a minimum level of coverage ("essential coverage") to stabilize the price of healthcare coverage. Id. This provision is colloquially known as the "Individual Mandate."
The Individual Mandate requires that every "applicable individual ... ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under ... minimum essential coverage." 26 U.S.C. § 5000A(a) (2018). All individuals, except those with religious exemptions, those who are not lawfully present in the country, and those who are incarcerated upon conviction of charges, are "applicable individuals." Id. § 5000A(d). Section 5000A(e) exempts from the penalty for failure to abide by the Individual Mandate applicable individuals who: (1) cannot afford coverage, (2) have incomes that fall below the filing threshold, (3) are members of Indian tribes, (4) have short gaps in coverage, or (5) have suffered a hardship prohibiting them from obtaining coverage. In the absence of circumstances qualifying for the exemptions enumerated in § 5000A(e), applicable individuals who fail to maintain essential coverage must pay a tax to the Treasury Department known as the "Shared Responsibility Payment." Id. § 5000(A)(b).
The Shared Responsibility Payment is assessed through the process for filing federal income-tax returns. Pursuant to the Internal Revenue Code, U.S. residents and citizens whose taxable gross income exceeds a minimum threshold determined by factors such as gross income and filing status for a given calendar year (the "tax year"), must file for a tax return using a Form 1040 ("1040 tax form"). See 26 U.S.C. §§ 6011 (empowering Secretary of the Treasury to prescribe forms and regulations regarding tax returns), 6012 (describing persons required to make income-tax returns); 26 C.F.R. § 1.6012-1(a)(6) (prescribing Form 1040 for general use in making individual income-tax returns). Pursuant to 26 C.F.R. §§ 1.6012-1(a)(iii), taxpayers must file their 1040 tax forms with the Treasury Department each year. The IRS-imposed deadline for the 2017 tax year was April 17, 2018. Press Release, IRS, 2018 Tax Filing Season Begins Jan. 29, Tax Returns Due April 17; Help Available for Taxpayers (Jan. 4, 2018), https://www.irs.gov/newsroom/2018-tax-filing-season-begins-jan-29-tax-returns-due-april-17-help-available-for-taxpayers.
Notably, in October 2017, the IRS announced that it would no longer accept 1040 tax forms electronically filed by taxpayers who did not indicate whether they maintained either essential coverage or an exempt status, or intended to make a Shared Responsibility Payment (the "IRS Policy"). (Compl. ¶ 28); IRS Statement on Health Care Reporting Requirement, ACA Information Center for Tax Professionals, IRS.gov, https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals (last updated June 25, 2019). Thus, taxpayers who filed 1040 tax forms during the 2018 tax season were required to indicate their essential-coverage status for the 2017 tax year.
At all times relevant to the complaint, Plaintiff was an "applicable individual" pursuant to § 5000A(d) because he: (1) was a legal resident; (2) did not claim a religious objection; and (3) was not incarcerated. (See Compl. ¶¶ 22–23.) Plaintiff possessed essential coverage at all times relevant to the complaint. (Id. ¶¶ 24–25.) Pursuant to an IRS extension, Plaintiff was required to file his 1040 tax form for the 2017 tax year by October 15, 2018. (Id. ¶ 29.) Plaintiff was subject to the Shared Responsibility Payment for failure to maintain essential coverage until January 1, 2019, but not after that date. (Compl. ¶¶ 23–24.)
The Tax Cuts and Jobs Act ("TCJA") eliminated the Shared Responsibility Payment—by reducing the penalty amount to zero for taxable years after 2015—effective January 1, 2018. Pub. L. No. 115–97, § 11081(b), 131 Stat. 2054, 2092 (2017). Thus, applicable individuals are no longer subject to a tax penalty for failing to maintain essential coverage.
STANDARD OF REVIEW
"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. U.S. , 201 F.3d 110, 113 (2d Cir. 2000). The plaintiff bears the burden of establishing beyond a preponderance of the evidence that subject-matter jurisdiction exists. Id. "In reviewing a Rule 12(b)(1) motion to dismiss, the court ‘must accept as true all material factual allegations in the complaint, but [the court is] not to draw inferences from the complaint favorable to plaintiff[ ].’ " Tiraco v. N.Y. State Bd. of Elections , 963 F. Supp. 2d 184, 190 (E.D.N.Y. 2013) (quoting J.S. ex rel. N.S. v. Attica Cent. Sch. , 386 F.3d 107, 110 (2d Cir. 2004) ). Further, "[i]n resolving a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), a district court ... may refer to evidence outside the pleadings." Makarova , 201 F.3d at 113.
Plaintiff complains that the Shared Responsibility Payment (1) violates his constitutional right to forego healthcare coverage and (2) was unconstitutionally enacted in violation of the Origination Clause. (Compl. ¶¶ 43–46.) Defendants argue that this Court need not reach the merits of Plaintiff's claims as it lacks jurisdiction to adjudicate them. (Mem. Points & Authorities Supp. Defs.' Dismiss ("Defs.' Mot.") 1, 22-1.) The Court agrees.
It is well settled that "standing is an essential and unchanging part of the case-or-controversy requirement of Article III" necessary to confer subject-matter jurisdiction on federal courts. Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). To establish Article III standing, a plaintiff must demonstrate that (1) he suffered an injury in fact that is that is both (a) concrete and particularized and (b) actual or imminent; (2) his injury is causally connected to the challenged conduct; and (3) his injury is likely to be redressed by a favorable decision. Id. at 560–61, 112 S.Ct. 2130 ; Crupar-Weinmann v. Paris Baguette Am., Inc. , 861 F.3d 76, 79 (2d Cir. 2017). In addition to demonstrating that the injury in fact is legally cognizable, a plaintiff must show that he is among the injured. Lujan , 504 U.S. at 563, 112 S.Ct. 2130. Here, Plaintiff fails to do so.
Since the PPACA's enactment, courts have entertained challenges to its Shared Responsibility Payment. In those cases, plaintiffs have alleged that they lacked essential coverage and did not qualify for an exemption. That is, their injuries stemmed from the imposition or practical imposition of the Shared Responsibility Payment. E.g., Sissel v. U.S. Dep't of Health & Human Servs. , 760 F.3d 1, 5 (D.C. Cir. 2014) (holding that the plaintiff had Article III standing because "it appear[ed] certain that [he was] subject to the Section 5000A mandate requiring him to purchase minimum essential health insurance coverage or else to pay the shared responsibility payment"), cert. denied , ––– U.S. ––––, 136 S. Ct. 925, 193 L.Ed.2d 810 (2016).
Conversely, courts have refused to consider challenges to the Shared Responsibility Payment where an injury has not been sufficiently established. It is axiomatic that to be injured by the Shared Responsibility Payment, one must be subjected to it. Hotze v. Burwell , 784 F.3d 984, 993 (5th Cir. 2015) (acknowledging "a commonsense distinction under which ... plaintiffs who are exempt from the mandate or who already have [ ] essential coverage ordinarily will not have an injury in fact for standing purposes"); accord Kinder v. Geithner , 695 F.3d 772, 776–78 (8th Cir. 2012) (holding that both plaintiffs lacked standing because neither individual alleged facts establishing that they were subject to the Shared Responsibility Payment); N.J. Physicians, Inc. v. President of the U.S. , 653 F.3d 234, 239–40 (3d Cir. 2011) (affirming that a plaintiff did not have standing because his "allegations were factually barren" as to whether he was presently or imminently harmed by the Individual Mandate). Accordingly, a challenge to the Shared Responsibility Payment must allege enough facts to indicate an injury to the plaintiff caused by the Shared Responsibility Payment. See Libby v. Price , 689 F. App'x 659, 660 (2d Cir. 2017) (summary order) (holding that the plaintiff did not have Article III standing because he was "not even subject to tax penalties pursuant to the ... individual mandate."); Butler v. Obama , 814 F.Supp.2d 230 (E.D.N.Y. 2011) (holding that the plaintiff lacked standing because he "wholly failed to allege any actual, present injury based on having to comply with the individual mandate").
Here, Plaintiff concedes both in his complaint and opposition brief that he maintained essential coverage during the 2017 tax year. (Compl. ¶ 25; Pl.'s Mem. Law Opp'n Defs.' Mot. Dismissal Pursuant R. 12(b)(1) & 12(b)(6) Fed. R. Civ. P. ("Pl.'s Opp'n") 9, ECF No. 21-2.) Because he maintained essential coverage as required by the Act, and, as such was not subject to the Shared Responsibility Payment for the 2017 tax year, Plaintiff has failed to demonstrate that he suffered a legally cognizable injury.
Plaintiff argues that "with respect to the 2018 tax year, [Plaintiff] could not ... have had [essential coverage] for enough time so as to be able to drop that coverage without having been subject to the Shared Responsibility [Payment]" and notes that "the complaint was filed before December 22, 2017," the date the TCJA was enacted. (Pl.'s Opp'n 9.) Interestingly and contrary to Plaintiff's assertion, Plaintiff's complaint is dated June 11, 2018. (Compl. 9). However, even if the Court were to construe Plaintiff's contention as an argument that he could not drop his healthcare coverage in the interim six months between the filing of his complaint, in June 2018, and the date that the TCJA became effective, in January 2019, without being subjected to the Shared Responsibility Payment, such a claim would fail. Indeed, Plaintiff's allegation that he "wishes to ... obtain non-[q]ualified [c]overage if available or, if not available, to refrain from possessing health-insurance coverage" is nothing more than patent conjecture (Pl.'s Opp'n 2–3), and as such fails to present a redressable injury, Lujan , 504 U.S. at 560, 112 S.Ct. 2130 (an alleged injury must not be conjectural or hypothetical). Moreover, even if the Court construed Plaintiff's challenge as a pre-enforcement facial challenge, his claim would be dismissed as moot in light of the TCJA, as "when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome, a case is moot and the federal court is divested of jurisdiction over it." Catanzano v. Wing , 277 F.3d 99, 107 (2d Cir. 2001) (finding that the plaintiffs' claims were moot where the parties agreed that the challenged laws were no longer being enforced, and there was no reason to believe that they would be enforced in the future) (quoting Powell v. McCormack , 395 U.S. 486, 496, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969) ).
Furthermore, as Defendants highlight (Defs.' Mot. at 1.), Plaintiff's arguments are identical to those previously rebuffed by the Second Circuit in response to his first challenge to the Shared Responsibility Payment, Bank v. United States Department of Health & Human Services , 708 F. App'x 43 (2d Cir. 2018) (summary order) ("Bank I "). In Bank I , the Second Circuit held that Plaintiff lacked standing to challenge the Individual Mandate because he "maintain[ed] [essential] coverage and [did] not have to pay § 5000A's ‘shared responsibility payment.’ " Id. at 44. This Court follows suit.
For the foregoing reasons, Defendant's motion to dismiss Plaintiff's complaint for lack of subject-matter jurisdiction is GRANTED.