U.S. Eleventh Circuit - The FindLaw 11th Circuit Court of Appeals Opinion Summaries Blog

Fla. Orthodontist's Suit Against Obamacare Mandate Is Dismissed

The new hotness in suing over the Affordable Care Act took a hit at the Eleventh Circuit today, with the court denying relief to Kawa Orthodontics in a dispute over the delay of the ACA's employer mandate.

Kawa Orthodontics, owned by Larry Kawa (a noted figure in the Republican Party), apparently spent a bunch of money on figuring out how to comply with the mandate. Then, wouldn't you know it, the Treasury Department delayed enforcement of the employer mandate for another year, then another year. The bizarre thing is that, when Kawa filed its lawsuit, it didn't ask for that money back; rather, it just sought a declaratory judgment and injunction finding Treasury's delayed enforcement unlawful.

I Suffered an Injury, I Swear

It's wonderful that conservative legal organizations like Judicial Watch exist to litigate abuses of government power (though strangely, they seem to be limited to investigating abuses of power by Democratic politicians). Unfortunately, the Eleventh Circuit, like the district court before it, said Kawa lacked standing to bring this case.

No one disputes that, at some point, Kawa would have spent money on looking into compliance. The real dispute is over whether spending that money now, instead of later, constitutes an injury.

The Eleventh Circuit found that Kawa had suffered no injury, other than its "bare allegation that it has lost the 'value of the time and resources it expended in 2013'" researching the ACA. Had Kawa known that the employer mandate would be delayed, Kawa argued, Kawa would have instead spent its money on other stuff. That injury, however, "is too abstract and indefinite to confer Article III standing."

Even if it weren't abstract, the court said, the Treasury Department didn't cause Kawa's lost expenses: "Treasury played no role in determining when or how Kawa allocated its resources in preparation for the employer mandate and reporting requirements of the ACA." And even if that had been established, there's still the issue of redressability, which also wouldn't be forthcoming. Even if the court found in Kawa's favor, it wouldn't get that money back because it didn't ask for that money back. And it would be subject to exactly the same tax penalties if the mandate weren't delayed.

The Dissent Tries to Save This Burning Building

Dissenting, Judge Beverly Martin said she would have found standing, claiming that Kawa "lost two years of interest" on the money spent on complying with the mandate. (The majority, however, pointed out the problem with this claim: Kawa didn't sue for money and certainly didn't claim lost opportunity in the form of interest, and the court "may not hypothesize or speculate about the existence of an injury Kawa did not assert.")

Martin's dissent goes to great lengths to read into Kawa's pleadings information that isn't there, transmuting claims of lost opportunity into claims of lost interest. This, however, seems to be a bridge too far, and Martin actually acknowledges in a footnote that "Kawa has poorly explained how expending funds in 2013 rather than in 2015 would injure it." Ultimately, Kawa's speculative spending is just that, and speculation about what someone would have done isn't enough to grant Article III standing.

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