A legal challenge to the administration’s postponement of the Affordable Care Act’s employer mandate was denied by a 3-judge panel of the U.S. Circuit Court of Appeals. The panel ruled on Dec. 2 that the Florida company challenging the postponement did not have standing to sue because it failed to show it had been harmed by the delay.
In February of 2014 the Obama administration delayed by two years, to 2016, the mandate for businesses with 50 or more full-time workers to provide health insurance to employees or pay a penalty.
A Florida company, Kawa Orthodontics LLP, argued that it was injured by the delay because it would have used its executives’ time differently had it known that compliance would not begin in 2014.
The 11th Circuit panel split 2-to-1 on the issue, with two judges ruling that the impact on Kawa was too minor to be grounds for a lawsuit and that the preparation done by the company would eventually be useful when the mandate became effective.
The third judge, an Obama appointee, supported the company’s complaint on the grounds that Kawa was harmed by losing the interest it could have earned on the money it spent prematurely on compliance work. The other judges rejected this argument as well, saying the expenditure resulted from the ACA, not from the delay.
In addition, the majority said granting the relief requested by the company – reinstating the mandate – would “simply subject Kawa and other employees to the employer mandate tax penalties and reporting requirements,” rather than curing any injury Kawa claimed it suffered.