Can Tennessee pass a law saying residents don't have to comply with the federal health insurance mandate?

Plain-English summary

Tennessee legislators asked whether SB 3498/HB 3433 and HJR 745 would be preempted by federal law. SB 3498/HB 3433 would have enacted the Tennessee Health Freedom Act, declaring that people in the state could choose or decline a mode of health care without a federal penalty. It would have barred state and local officials from enforcing penalties contrary to that policy and directed the Attorney General to seek relief and defend state actors. HJR 745 proposed a state constitutional amendment against compelled participation in a health care system and penalties for direct payment for lawful care.

The AG concluded that a court would likely find both proposals preempted by conflicting provisions of the recently enacted federal Affordable Care Act. The opinion described federal requirements for individual coverage, assessments for some large employers, and rules for insurers. It said the state proposals opposed Congress's stated objective of achieving "near-universal coverage." The AG saw three forms of implied preemption: federal law supplanting contrary state law, impossible dual compliance, and an obstacle to federal objectives.

The opinion separately discussed the proposed instruction to the Tennessee Attorney General to litigate against federal law. Because that duty would require enforcement of a state law or policy the AG considered preempted, the office said it could not act as state counsel under the proposed provision. Legislation directing which actions the AG must prosecute or defend "could also raise separation of powers concerns." The opinion did not hold that provision independently unconstitutional on separation-of-powers grounds.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: What would Tennessee's proposed Health Freedom Act have done?
A: It would have declared a state policy allowing people to choose or decline a mode of securing health care without a federal penalty. It also would have restricted state and local officials from enforcing penalties contrary to that policy and directed the AG to seek relief and defend state actors.

Q: How was HJR 745 different?
A: HJR 745 proposed a Tennessee constitutional amendment barring laws or rules that compelled a person, employer, or health care provider to participate in a health care system. It also addressed penalties for paying directly for, or accepting direct payment for, lawful health care services.

Q: Why did the AG think federal law would override the state proposals?
A: The opinion identified federal obligations for individuals, employers, and insurers under the 2010 Act and concluded that the Tennessee proposals conflicted with them and impeded Congress's stated coverage objective. It said a court would likely find preemption under the Supremacy Clause.

Q: Could the proposed law require the Tennessee AG to challenge the federal Act?
A: The AG said the proposed litigation duty depended on enforcing a state policy it considered preempted, so the office could not act as state counsel under that provision. It added that directing the AG's choices of cases could raise separation-of-powers concerns, without deciding that issue separately.

Q: Did the opinion discuss federal waivers for state alternatives?
A: No. It did not discuss a waiver provision or identify a federal process for state alternatives. Its analysis concerned whether these two Tennessee proposals would conflict with the federal Act.

Background and statutory framework

The federal Patient Protection and Affordable Care Act, Pub. L. No. 111-148, as amended by Pub. L. No. 111-152, had recently been enacted when the AG wrote in April 2010. The opinion described its planned individual coverage requirement beginning in 2014, assessments for certain large employers, and requirements for health plans and insurers. Those provisions supplied the basis for the AG's comparison with the Tennessee proposals.

The opinion quoted the Supremacy Clause and cited Perez v. Campbell for the rule that state law cannot stand as an obstacle to Congress's purposes. Drawing on Wadlington v. Miles, Inc., it listed four ways federal law can preempt state law: express preemption, complete supplantation, impossibility of complying with both laws, and obstruction of congressional objectives. The AG said the federal Act had no express preemption language but that the remaining three factors appeared to apply to SB 3498/HB 3433 and HJR 745.

The opinion compared Tenn. Code Ann. § 8-6-109(b)(9), which excepts legislation the AG considers unconstitutional from the duty to defend state law. It cited Tenn. Const. art. VI, § 5 when noting that the AG is a constitutional officer in Tennessee's judicial branch. The opinion framed separation of powers as a possible concern about legislative control of the AG's litigation decisions.

Citations and references

Statutes:

• Tenn. Code Ann. § 8-6-109(b)(9) (AG duty to defend State legislation)
• Patient Protection and Affordable Care Act, Pub. L. No. 111-148 (2010)
• Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152

Constitutional provisions:

• U.S. Const. art. VI, cl. 2 (Supremacy Clause)
• Tenn. Const. art. VI, § 5 (Attorney General office)

Cases:

• Perez v. Campbell, 402 U.S. 637 (1971)
• Hines v. Davidowitz, 312 U.S. 52 (1941)
• Wadlington v. Miles, Inc., 922 S.W.2d 520 (Tenn. Ct. App. 1995)
• Ingersoll-Rand v. McClendon, 498 U.S. 133 (1990)
• Wisconsin Public Intervenor v. Mortier, 501 U.S. 597 (1991)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2010/op10-043.pdf

Original opinion text

April 6, 2010

Opinion No. 10-43

Validity of SB 3498/HB 3433 and HJR 745 relative to health care

QUESTION

Are Senate Bill 3498/House Bill 3433 and House Joint Resolution 745 likely preempted by federal law?

OPINION

Yes. A court would likely determine that SB 3498/HB 3433 and HJR 745 are preempted by conflicting provisions of the federal Patient Protection and Affordable Care Act.

ANALYSIS

Senate Bill 3498, as amended, and House Bill 3433 would enact the Tennessee Health Freedom Act. The Act would declare that the public policy of the State of Tennessee is that every person within the State is free to choose or decline to choose any mode of securing health care services without penalty or threat of penalty by the federal government. It would prohibit public officials, employees and agents of the State and of its political subdivisions from imposing, collecting, enforcing or effectuating any penalty in the State that would violate the public policy declared by the Act. The Act would also direct the Attorney General and Reporter to seek injunctive and other appropriate relief and to defend the State, its officials, employees and agents in the event that any government enacted any law or regulation violating the public policy set forth in the Act.

House Joint Resolution 745 would amend Article XI of the Tennessee Constitution to provide that no law or rule may compel, directly or indirectly, any person, employer or health care provider to participate in any health care system. It would further prohibit persons, employers, and health care providers from being penalized or fined for paying directly for, or accepting direct payment for, lawful health care services.

The recently-enacted federal Patient Protection and Affordable Care Act, Public Law No. 111-148 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. Law No. 111-152, (collectively referred to as the "federal Act") establishes new responsibilities and requirements upon individuals, employers, and health insurers. For example, beginning in 2014, individuals must ensure that they and their dependents are covered under "minimum essential coverage." Patient Protection and Affordable Care Act, Pub. L. No. 111-148 (2010) § 1501(b) (to be codified at § 5000A(a) of the Internal Revenue Code of 1986). "Minimum essential coverage" includes government sponsored programs such as Medicare and Medicaid, eligible employer-sponsored plans, health plans offered in a State's individual market, and other coverage. Id. § 1501(b) (to be codified at § 5000A(f)(1) of the Internal Revenue Code of 1986). If an individual fails to meet the coverage requirement during one or more months during a calendar year, he will be subject to a monetary penalty. Id. §§ 1501(b), 10106(b) (to be codified at § 5000A(b)(1), (2) of the Internal Revenue Code of 1986).

Large employers who do not offer their full-time employees the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan and large employers who have one or more full-time employees that take advantage of subsidies in the Exchanges will be required to pay tax assessments and/or penalties. Id. § 1513(a), as amended by Pub. L. No. 111-152 (2010) § 1003 (to be codified at § 4980H(a), (b) of the Internal Revenue Code of 1986).

Group health plans and health insurance issuers offering group or individual health insurance coverage will be prohibited from establishing lifetime and annual limits on the dollar value of benefits as set out in the federal Act, and from rescinding coverage except in instances of fraud or intentional misrepresentation of material fact. Id. §§ 1001(5), 10101(a) (to be codified at §§ 2711 and 2712 of the Public Health Service Act). They will be subject to monetary sanctions for discouraging individuals from remaining enrolled in prior coverage based on their health status. Id. § 1101(e). They will also be required to provide coverage for certain preventive health services without imposition of any cost sharing requirements upon such services. Id. § 1001(5) (to be codified at § 2713(a) of the Public Health Service Act).

Congressional power to preempt state law arises from the Supremacy Clause of the United States Constitution. The Supremacy Clause provides that the laws of the United States "shall be the supreme law of the land; and the judges in every state shall be bound thereby, any thing in the Constitution or laws of any state to the contrary notwithstanding," U.S. Const. art. 6, cl. 2. Accordingly, a state statute cannot "stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Perez v. Campbell, 402 U.S. 637, 647 (1971) (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). Congressional intent determines whether a federal statute preempts state law. Wadlington v. Miles, Inc., 922 S.W.2d 520, 522 (Tenn. Ct. App. 1995) (citing Ingersoll-Rand v. McClendon, 498 U.S. 133, 137-38, 111 S.Ct. 478 (1990)). The Supremacy Clause results in federal preemption of state law when: (1) Congress expressly preempts state law; (2) Congress has completely supplanted state law in that field; (3) adherence to both federal and state law is impossible; or (4) the state law impedes the achievements of the objectives of Congress. Id. (citing Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 111 S.Ct. 2476, 2481-82 (1991)).

Our comparison of SB 3498/HB 3433 and HJR 745 with the provisions of the federal Act leads us to the conclusion that the former are preempted by the latter. The public policy expressed in both SB 3498/HB 3433 and HJR 745 is directly opposed to the expressly stated Congressional intent of "achiev[ing] near-universal coverage" for health care insurance. Pub. L. No. 111-148 § 1501(a)(2)(D). While the federal Act does not contain express preemption language, each of the remaining three factors outlined in Wadlington would appear to apply here. Congress has completely supplanted any state law that is contrary to the mandatory obligations imposed by the federal Act upon individuals, employers, health care insurers and health plans for the achievement of expanded health care coverage. If either or both SB 3498/HB 3433 and the constitutional amendment proposed by HJR 745 were enacted, adherence to both federal and state law would be impossible. Finally, the proposed state laws would impede the achievement of the objectives of Congress as stated in the federal Act.

SB 3498/HB 3433 would also add a section to the Tennessee Code that places a duty on the Attorney General and Reporter to initiate litigation against the federal government challenging the federal Act or any other federal law inconsistent with the public policy set forth in SB 3498/HB 3433 and to defend the State and state actors in related litigation. Because this statutory duty would require the enforcement of a state law or policy that is preempted by federal law, this Office could not act as counsel for the State pursuant to such a statute. Compare Tenn. Code Ann. § 8-6-109(b)(9) (Attorney General has a duty to defend the constitutionality and validity of all State legislation, except in those instances where the Attorney General is of the opinion that such legislation is not constitutional). Legislation aimed at regulating the Attorney General's discretion concerning which actions to prosecute and defend on behalf of the State could also raise separation of powers concerns, as the Office of the Attorney General and Reporter is a constitutional office that is part of the judicial branch of the State of Tennessee. See Tenn. Const., Art. VI, § 5.

ROBERT E. COOPER, JR.
Attorney General and Reporter

MICHAEL E. MOORE
Solicitor General

SUE A. SHELDON
Senior Counsel

Requested by:

Honorable Jimmy Naifeh
Speaker Emeritus
Suite G19A War Memorial Building
Nashville, Tennessee 37243

Honorable Charles Curtiss
State Representative
34 Legislative Plaza
Nashville, Tennessee 37243-0143

Honorable Henry Fincher
State Representative
32 Legislative Plaza
Nashville, Tennessee 37243-0142