State has right to challenge healthcare law, judge rules

The Obama administration lost an early legal skirmish over the new healthcare law Monday when a federal judge declined to dismiss Virginia’s lawsuit challenging a key part of the landmark legislation.

U.S. District Judge Henry E. Hudson did not rule on the central issue in the lawsuit brought by Virginia Atty. Gen. Kenneth Cuccinelli — the law’s requirement that most Americans buy health insurance beginning in 2014.

But the judge swept aside the Obama administration’s efforts to quash the legal contest in its infancy, ruling that the state of Virginia has the right to sue. Citing the sweep of the new law, he also appeared to open the door to a potentially drawn-out legal battle over a core tenet of the health overhaul.

“While this case raises a host of complex constitutional issues, all seem to distill to the single question of whether or not Congress has the power to regulate — and tax — a citizen’s decision not to participate in interstate commerce,” wrote Hudson, an appointee of President George W. Bush. “Neither the Supreme Court nor any circuit court of appeals has squarely addressed this issue.”

President Obama and many healthcare experts think that requiring Americans to buy health coverage — and fining them if they do not — is the only way to assure that healthy people do not game the system by purchasing insurance only after they develop medical problems, thereby pushing up costs for everyone.

Many legal experts also support the administration’s view that because the Constitution gives Congress the power to regulate interstate commerce, lawmakers have broad authority to regulate the health insurance market.

Critics argue that the insurance requirement is an unprecedented and illegal expansion of federal power. On Monday, Cuccinelli, a conservative Republican, and other opponents cheered the judge’s ruling.

“Today’s decision makes us very optimistic about the prospects of our own legal challenge,” said Karen Harned, executive director of the Small Business Legal Center at the National Federation of Independent Business.

The traditionally conservative federation has joined in a second legal challenge brought by officials — almost all Republican — in 20 other states. A federal judge in Florida is expected to rule this year on the administration’s motion to dismiss that case.

In Washington, Obama administration officials downplayed the Virginia ruling as procedural, while emphasizing the importance of the mandate and other benefits of the healthcare law that would be imperiled by a legal challenge.

“People who make an economic decision to forgo health insurance do not opt out of the healthcare market, but instead shift their costs to others when they become ill or are involved in an accident and cannot pay,” Stephanie Cutter, assistant to the president for special projects, said in a blog post Monday.

noam.levey@latimes.com