The conservative ruling that might save Obamacare

Obamacare defenders hope a conservative ruling from the 1980s could win the day before the Supreme Court

The Pennhurst State School and Hospital outside Philadelphia was once one of America’s most notorious institutions.

During much of the 20th century, it was where the state of Pennsylvania confined thousands of children and adults with mental and physical disabilities, some in horrific conditions.

The long legal battle to close the facility made Pennhurst a landmark in the historic campaign to expand the rights of Americans with disabilities.

Today, much of Pennhurst is abandoned. (One building is a haunted house attraction.) But the campus is making an unexpected cameo in the legal battle over the Affordable Care Act.

Pennhurst produced a legal doctrine cherished by conservatives, including Chief Justice John G. Roberts Jr. Defenders of the federal health law now hope that doctrine will help persuade Roberts or one of the other right-leaning members of the Supreme Court to preserve the healthcare law, also known as Obamacare, which is under challenge in a case the justices are set to hear next week.

The case the high court is to consider involves whether consumers who buy health coverage can receive subsidies to help with their premiums in the 37 states that use the federal government's healthcare.gov site to sell insurance. The groups challenging the law say its wording mandates that those subsidies only be allowed in the 13 states that set up their own healthcare exchanges.

Defenders of the healthcare law have advanced several arguments. A key one grew out of a 1974 lawsuit filed on behalf of a group of Pennhurst residents, including a severely disabled young woman who was committed there when she was 12 years old.

Terri Lee Haldeman suffered approximately 40 injuries at the institution, including a broken jaw, fractured fingers and cracked teeth. After nearly a decade at Pennhurst, she lost the ability to say even basic words such as “mama” and “dada” that she’d known when she was admitted.

The plaintiffs in the case, who would ultimately include all current and former Pennhurst residents, detailed a frightening pattern of abuse, neglect and overcrowding in a place a local newspaper labeled the “shame of Pennsylvania.”

"What was happening was chilling,” said James Conroy, a sociologist who studied Pennhurst and its residents at the time and now directs a nonprofit group dedicated to honoring them.

In 1977, a federal judge ordered Pennsylvania to close the institution, a decision later upheld by an appeals court. The appellate decision was grounded in part on a federal law that provided states with money to care for the disabled and included a “bill of rights” that seemed to give people with disabilities the right to access services in the community rather than in institutions.

Because Pennsylvania had taken the federal money, the appeals court concluded, the state had to honor the rights outlined in the federal law.

That ruling was considered a monumental victory for disability rights. But in 1981, the Supreme Court reversed it, this time creating a landmark for states’ rights, which would subsequently be known as the "Pennhurst doctrine."

Then-Justice William H. Rehnquist, a leading advocate for restricting federal power, wrote that Pennsylvania could not be forced to adhere to the disability bill of rights and close Pennhurst because Congress had not explicitly told states that by taking the money, they were obligated to adhere to the rights that the law set out.

“Congress must express clearly its intent to impose conditions on the grant of federal funds,” Rehnquist wrote. “Though Congress’ power to legislate under the spending power is broad, it does not include surprising states.”

Rehnquist’s opinion -- and the “clear notice” requirement in it -- marked one of the first instances in decades that the court had restricted federal authority over states. Dating back to the New Deal, the court had repeatedly supported expansions of the federal government.

“This was really the beginning of the Supreme Court’s shift to protecting states' rights and controlling federal power,” said Erwin Chemerinsky, dean of the UC Irvine School of Law. That shift toward favoring the states would become a hallmark of Rehnquist’s 19-year tenure as chief justice, which began in 1986.

Many legal scholars believe that Roberts, who clerked for Rehnquist at the time he was wrote the Pennhurst decision, has picked up the federalism mantle since he became chief justice in 2005.

Roberts himself cited Pennhurst in the last major challenge to the Affordable Care Act. In that case, in 2012, Roberts upheld the law, but struck down its requirement that states expand their Medicaid programs. The Medicaid requirement threatened the balance between states and the federal government that Rehnquist had highlighted in his 1981 opinion, Roberts wrote.

Today, defenders of the health law, including many states, are themselves citing Pennhurst. They say the Affordable Care Act provided no clear notice to states that if they did not set up their own insurance marketplaces under the law, their residents would be barred from getting federal insurance subsidies.

Closer to Pennhurst, Thomas Gilhool, a public interest lawyer who worked on the case more than three decades ago, chuckled that it was now part of the healthcare debate.

“It was doctrinal setback,” he said of Rehnquist’s opinion. “But it didn’t set back the movement.”

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