Like the recent Supreme Court decision in Hobby Lobby, the D.C. Circuit’s ruling earlier this week in Halbig v. Burwell is being hailed by conservatives and bemoaned by liberals as a death knell for Obamacare.  Unlike the decision in Hobby Lobby, however the D.C. Circuit’s ruling is not the end of the matter, and many liberals are finding hope in the ruling of the 4th Circuit the same day, the probability of an en banc hearing in the D.C. Circuit, and the ultimate possibility of a favorable Supreme Court decision.  In an earlier post in HealthLawProf, I decided to take seriously the possibility of damage control from a limited reading of Hobby Lobby.  It is pretty much universally agreed—and I believe correctly—that it is not possible to do similar damage control by giving a limited reading to Halbig v. Burwell.  If the ruling stands, that tax subsidies are not available to people purchasing coverage through the exchanges in the states that are letting the federal government do the work, many important other provisions of the ACA will be untenable, including the penalties for large employers not offering insurance whose employees receive subsidies and likely the individual mandate itself.  But I think it is possible to undermine Halbig in a way not generally recognized by the liberal critics who argue (correctly) that the statutory provision at issue is ambiguous:  argue that the jurisprudence of the majority opinion in Halbig is internally inconsistent.  Here’s how.

Under D.C. Circuit precedent, the court must “uphold an agency action unless we find it to be ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”  So, the question for the court was whether the IRS rule permitting individuals purchasing insurance through federally-run exchanges was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.  In concluding that it was, Judge Griffith’s opinion for the court reasoned that it was not in accordance with law. That is, Judge Griffith found that there was no ambiguity in the relevant provision of ACA that permitted the IRS to interpret the statute as it did.   Here's where much of the criticism takes him on.  But there’s more to say.

In reaching the conclusion that the statutory language is not ambiguous, Judge Griffith purported to rely on a literalist approach to statutory interpretation.  But he did not in fact rely consistently on such an approach—nor could he have done so.  The problem is that in order to formulate the literalist question to answer, Judge Griffith had to resolve several issues in a manner that was not literalist at all.