July 22, 2014 4th Circuit published opinion

King v Burwell

King sued for a declaration that the IRS rules implementing tax credits for insurance policies purchased on federal exchanges under eh Affordable Care Act was void as against the plain language of the Act. The district court dismissed the complaint and the panel, with one judge adding a concurrence, affirmed. It held that King had standing as the rules would require him to purchase a product he does not want or face a penalty and this harm is directly caused by the rules and would be remedied by the declaration sought. It also held that a taxpayer refund action was not the correct forum for this challenge. As to the merits, the panel, unlike the District of Columbia Circuit who also issued an opinion on this issue today and held the language unambiguous and limiting credits to state created exchanges, held the relevant statutory language is ambiguous because “Exchange” could mean only state created exchanges or exchanges which the federal government creates for a state and other provisions on reporting requirements and defining “qualified individuals” do not resolve the ambiguity nor is the legislative history dispositive. Thus, applying Chevron deference, the panel held that the IRS rule allowing credits for federally created exchanges is a plausible interpretation which implements a major goal of the Act and thus upheld the rule. The concurrence argued that the Act is unambiguous and requires the credits be available whether the person enrolls through a state created or federally created exchange.


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