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After the ruling: Employers prepare, tort reform debate reignites

WASHINGTON — The Supreme Court’s ruling in National Federation of Independent Business v. Sebelius means that it’s time for many lawyers and their clients affected by the law to get moving quickly to prepare for its implementation next year.

While GOP lawmakers assail the ruling — Rep. Eric I. Cantor, R-Va., scheduled a July 11 vote in the House to repeal the Affordable Care Act in its entirety — the repeal effort is not expected to get past the Democrat-controlled Senate.

The decision “brings over two years of speculation and uncertainty to a close,” said Mark S. Hedberg, a partner in the Richmond, Va., office of Hunton & Williams. “Those subject to the act who adopted a wait-and-see attitude to implementation must now move to comply with the law’s requirements.”

One of the most immediate effects of the ruling will be to spur to action employment attorneys and their clients who have yet to prepare for the law’s enforcement.

“There was a feeling among some employers that they didn’t really want to deal with the tough issues that [the law] will impose on them in 2014,” said Steven J. Friedman, chair of the employee benefits practice at Littler Mendelson in New York.

The biggest decision facing lawyers and their business clients: whether to continue to provide health care coverage to their employees or simply pay the employer mandate penalty under the law and leave workers to buy their own health insurance from state-based exchanges that offer coverage options. And that decision, Friedman said, depends on employers’ evaluation of their budgets.

“Certain employers [may] take the position that they don’t care what others are doing – that they are going to continue to offer health care no matter what,” Friedman said. “Other employers may look at the bottom line and ask themselves what they have to do to remain competitive as employers in this job market. And they may come to the conclusion [that they should] stop offering coverage, pay the penalty and save money.”

The Supreme Court’s 5-4 rejection of the government’s Commerce Clause power is being hailed by the American Association for Justice, a trial lawyers’ group that says the ruling bolsters its argument that federal tort reform efforts are unconstitutional. Bills such as the House-passed H.R. 5 – which would cap non-economic damages in medical and other health-related negligence cases at $250,000, cut contingency fees paid to attorneys, limit punitive damages and allow courts to require periodic payments of damage awards – have all been introduced under Commerce Clause authority.

“It’s an indirect way to use the Commerce Clause [to alter] patients’ legal rights under state law,” said Jennie Rasmussen, AAJ’s federal relations counsel. “If Congress cannot mandate health care coverage under Commerce Clause authority, I can’t see how they [can] justify a federal takeover of state tort law.”

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