JANUARY 22, 2015
(Washington, DC) – Judicial Watch announced that it has requested that the full court of the U.S. Court of Appeals for the Eleventh Circuit rehear Kawa Orthodontics LLP’s challenge to the Obama administration’s unlawful and unilateral delay of the “employer mandate” provisions of the Affordable Care Act (ACA) (Kawa Orthodontics, LLP v. Secretary, U.S. Department of the Treasury, et al. (No. 14-10296)). Kawa Orthodontics, owned by Dr. Larry Kawa, alleges it was injured by the delay.
In July 2013, the Obama administration unilaterally and without consent of Congress disregarded a clear statutory deadline and announced that the mandate would be delayed until 2015 even though the law expressly requires it to take effect on January 1, 2014. The Obama administration subsequently delayed the mandate a second time. It is now scheduled to take effect in 2016.
Kawa Orthodontics’ initial complaint was filed in October 2013. A lower federal court in Florida had initially dismissed the Kawa lawsuit for lack of standing in January 2014. On December 2, 2014, by a 2-1 vote, a 3-judge panel of the U.S. Court of Appeals for the Eleventh Circuit upheld the lower court’s decision. Judge Beverly Baldwin Martin, who was appointed to the federal bench by President Clinton and nominated to the Eleventh Circuit by President Obama, dissented from her colleagues. Judge Martin noted that a business that lost money, as did Kawa Orthodontics, would indeed have standing:
Kawa has shown that it has sustained an injury as a result of the government’s decision to delay enforcement of the employer mandate. It spent money on compliance costs two years earlier than necessary, and therefore lost two years of interest on those expenditures. Under basic rules of accounting, “[a] dollar today is worth more than a dollar tomorrow …”
Here, had Kawa spent money to ensure its compliance with the employer mandate in 2015 instead of 2013, it could have earned an additional two years of interest on that money. Or, instead of earning interest, Kawa could have invested that money in other endeavors to generate two years’ worth of added profits to the company.
In its request for rehearing en banc, Judicial Watch attorneys note that the panel’s ruling conflicts with another Eleventh Circuit ruling which granted standing to individuals who were challenging the individual mandate at the heart of the Obamacare law (Florida v. U.S. Dep’t of Health and Human Servs., 648 F.3d 1235, 1244 (11th Cir. 2011)). Judicial Watch lawyers highlight how, in the Florida case, the individual plaintiffs had also alleged anticipatory compliance costs for the individual mandate, which the Eleventh Circuit ruled was sufficient to grant standing:
In other words, this Court has already determined that the expenditure of anticipatory compliance costs is sufficient to confer standing. In Florida, the individual plaintiffs were injured by the enactment of the law because they had to spend money to comply with the law. In the instant matter, Kawa Ortho was injured because the subsequent delay meant that it spent money too early.
Ironically, in considering the Florida and other challenges, a deeply divided Supreme Court ultimately ruled in 2012 that Obamacare was constitutional in several key measures.
“Our client, Kawa Orthodontics, has indeed suffered real damage due to President Obama’s lawlessness,” said Judicial Watch President Tom Fitton. “This is why we are taking this case to the next level. We are hopeful that the full court will reverse the panel’s decision so our client can get justice and the court will require the Obama administration to follow the rule of law.”
“Obama’s lawlessness has caused damage not only to our constitutional system, but to my business and countless other American businesses that try to follow a law that this president thinks he can change on a whim,” said Dr. Larry Kawa. “It is urgent that the courts recognize that successful businesses are harmed by the Obamacare lawlessness out of Washington.”