Fifth Circuit Remands Challenge to ACA Shared-Responsibility Payments for the District Court to Reconsider Mootness

In Dierlam v. Trump, No. 18-20440 (5th Cir. Oct. 15, 2020), the Fifth Circuit holds that the district court was too hasty to judge whether changes in the Affordable Care Act (ACA) entirely mooted a claim to recover “shared responsibility” payments.

In this pro se case, plaintiff sought “retrospective and prospective relief for myriad alleged violations of the United States Constitution and the Religious Freedom Restoration Act” relating to the “shared-responsibility” payment (a tax imposed on those who don’t obtain health insurance) and the so-called “contraceptive mandate,” to which plaitiff The plaintiff sought recovery of payments that he made in 2014 and 2015, and various kinds of prospective relief.

The district court held that Tax Cut and Jobs Act of 2017 (TCJA), which zeroed-out the tax payments, mooted prospective relief against government for future liabilities. It also held that the intervening decision in Little Sisters of the Poor v. Pennsylvania, 140 S. Ct. 2367 (2020), mooted relief for the contraceptive mandate. Regarding the latter, the district court took “judicial notice, sua sponte, of a ‘Catholic health care sharing ministry’ [that] she found online,” which plaintiff supposedly could “join . . . without violating his beliefs.” The district court neglected to rule on the damages claim.

The Fifth Circuit vacates and remands, holding that the court below conducted an incomplete analysis.

Regarding the prospective relief, the panel holds that there’s a difference between plaintiff’s “primary relief” getting knocked out by intervening events and there being no “effectual relief whatever” in a case. “[E]ven when the ‘primary relief sought is no longer available,’ ‘being able to imagine an alternative form of relief is all that’s required to keep a case alive’” (quoting Univ. of Notre Dame v. Sebelius, 743 F.3d 547, 553 (7th Cir. 2014), judgment vacated sub nom. Univ. of Notre Dame v. Burwell, 575 U.S. 901 (2015)).

Here, the panel holds, it was uncertain whether all prospective relief was effectively foreclosed:

“First, it’s unclear what effect the district court thought the TCJA had on the mootness of Dierlam’s claims. At the hearing, the district court only said: ‘I think, prospectively, it seems to me that most recent legislation does take care of the problem.’

“Second, the magistrate judge’s conclusion about the insufficiency of Dierlam’s search for alternative health-insurance plans, including taking sua sponte judicial notice of a Catholic healthcare-sharing ministry, is irrelevant to the mootness determination. . . . It is inappropriate to resolve these types of factual disputes at the pleadings stage to determine mootness. These are merits issues, not mootness issues.”

Finally, the parties all agreed “that the district court incorrectly dismissed Dierlam’s [damages] claim with prejudice, and the Government argues that Dierlam is entitled to amend his complaint to cure any jurisdictional deficiencies.” So that part of the case, the panel holds, must be remanded as well.

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