Dr. Steven Hotze faces a grim choice as he grapples with rising insurance costs under Obamacare: Reduce the hours worked by the 97 employees at his Houston wellness center or jack up prices on his patients.
He doesn’t like either option. So instead, he is opting for a third way: He is fighting the Affordable Care Act in court, challenging its constitutionality under the Origination Clause and the 5th Amendment’s takings clause.
Similar lawsuits have yet to win a round in federal court, but Dr. Hotze believes his case is different because in law, as in real estate, location is everything. His next stop is the 5th U.S. Circuit Court of Appeals, one of the most conservative federal courts in the nation.
If there is any court that would be open to the private-property arguments against the Affordable Care Act, it’s the 5th Circuit, says Dr. Hotze, who has become something of a legal strategist since filing the lawsuit May 7.
In January, he lost his initial round in federal district court, but Judge Nancy Atlas ended up doing him a favor. While she ruled against the merits of the lawsuit, she agreed that Dr. Hotze had standing to file the case and that it was “ripe for consideration.”
Clearing the “standing” and “timeliness” hurdles allows the case to move straight to the merits of the arguments, said lawyer Andy Schlafly, who represents Dr. Hotze and his management company, Briarwood Management.
“What’s nice about this case, Hotze v. Sebelius, is the trial court resolved all the procedural issues in favor of Dr. Hotze, so they got to the substance at the trial level,” said Mr. Schlafly. “That makes this case a stronger case than most of the other ones.”
The Hotze lawsuit argues that Obamacare violates the takings clause by ordering private business owners to pay other private businesses, in this case insurance companies, or face penalties.
“Obamacare coerces, forces and compels people to take their own money and pay it to private entities directly. That’s not allowed,” said Mr. Schlafly. “Government can tax people and redistribute what government receives, but Obamacare for the first time in an unconstitutional way is forcing people to give money to other private people.”
In her decision, Judge Atlas disagreed, saying the “employer mandate functions as a tax and thus is not unconstitutional under the Takings Clause.”
The lawsuit also makes the same Origination Clause argument as a case filed by the Pacific Legal Foundation. That case, brought by artist and small-business owner Matt Sissel, is before the U.S. Court of Appeals for the D.C. Circuit.
Both cases contend that the Affordable Care Act effectively began in the Senate after Majority Leader Harry Reid, Nevada Democrat, took an unrelated House bill, gutted it and replaced the language with what became Obamacare. Under the Constitution, bills for raising revenue must begin in the House.
Supreme Court Chief Justice John G. Roberts Jr. described Obamacare’s penalty for not having insurance as merely a tax in the majority opinion for NFIB v. Sebelius, the 2012 case upholding the Affordable Care Act.
Judges in both the Sissel and Hotze cases have rejected that argument, saying Obamacare in fact originated in the House, and that the original bill was not wholly unrelated in that it did deal with revenue by proposing a tax break for veterans.