King v. Burwell, Petitioners’ “Phantom Exclusion” Argument


What is the petitioners’ primary case built on? Two, definitional subsections that define the terms “premium assistance amount” and “coverage amount” in the tax-credit statute (26 U.S.C. § 36B), amended by section 1401 of the Affordable Care Act. Both subsections refer to qualified health plans “enrolled in through an Exchange established by the State….”


The tax-credit statute contains no upfront language that specifies to whom the tax credits apply. More to the point, the statute is devoid of any limiting language that restricts the availability of tax credits to individuals in states with state-run health care Exchanges. The statute is also devoid of any language that prohibits tax credits to individuals in states with federally-facilitated Exchanges.


This is important to keep in mind, because the petitioners’ entire case is based not on a reading of what the tax-credit statute says, but on a reading of what the petitioners think it means. Somehow they conclude that their interpretation is the “plain meaning” of what was meant though what they think was meant wasn’t said. So, how do the petitioners arrive at their conclusion? Through misguided, statutory construction, according to Maurice F. Baggiano, Esq., in his amicus brief filed on January 28th.


The Latin doctrine of statutory construction – expressio unius est exclusio alterius (“the express mention of one thing excludes all others”) – is, without direct reference, the legal doctrine upon which the petitioners seem to rely in construing the tax-credit statute. But this doctrine is based on construing the absence of an item in an express list of items in a statute, not on the absence of a single item in a simple phrase that mentions just one thing and not another. As correctly applied, the doctrine requires that items not in an express list in a statute are impliedly assumed not to be covered by the statute. The list is considered to be “exhaustive” and, therefore, not subject to interpretation based on ambiguity.


There is no list of included items in the tax-credit statute, just a simple phrase – “an Exchange established by the State” – in two, definitional subsections buried deep in the statute. So, it is unfair to conclude, as the petitioners have done, that the statute plainly means that tax credits are prohibited to individuals enrolled in health plans through federally-operated Exchanges. This “phantom exclusion” is the basis of the petitioners’ lawsuit.

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