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

Plain-English summary

Three pieces of 2010 legislation were proposed in Tennessee to push back against the federal individual health-insurance mandate that Congress had just enacted in the Affordable Care Act. SB 3498/HB 3433 (the Tennessee Health Freedom Act) would have declared as state policy that every person in Tennessee is free to choose or decline any mode of securing health care without federal penalty, and would have prohibited state and local officials from collecting or enforcing any federal penalty in Tennessee that violated that declared state policy. The Act would also have directed the Tennessee Attorney General to sue the federal government and to defend state actors who refused to enforce federal penalties. HJR 745 would have proposed adding the same anti-mandate principle to the Tennessee Constitution.

AG Cooper concluded that a court would likely find all three preempted by the federal Affordable Care Act under the Supremacy Clause. Even though the federal Act contains no express preemption clause, three of the four implied-preemption theories apply: Congress has supplanted contrary state law in the area of the individual and employer mandates; compliance with both federal and state law would be impossible; and the Tennessee proposals stand as an obstacle to the federal goal of "near-universal coverage."

The opinion also flags two important secondary points. First, the Health Freedom Act would attempt to direct the Attorney General's office to litigate against the federal Act. Because the AG would be obliged to enforce a state statute he had concluded was unconstitutional, the office could not act as state counsel under that mandate; the constitutional duty to refuse to defend unconstitutional laws (under Tenn. Code Ann. § 8-6-109(b)(9)) would govern. Second, a statute that purports to dictate which cases the AG must prosecute raises separation-of-powers concerns because the Attorney General is a constitutional officer attached to the judicial branch.

The opinion was issued the same day as Opinion 10-42 (the free-enterprise constitutional amendment) and is part of a cluster of early-ACA preemption opinions across many states.

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.

The Supreme Court's decision in NFIB v. Sebelius, 567 U.S. 519 (2012), upheld the ACA's individual mandate as a valid exercise of the federal taxing power while striking down the coercive aspect of Medicaid expansion. The Tax Cuts and Jobs Act of 2017 zeroed out the individual mandate penalty starting in 2019, and California v. Texas, 593 U.S. 659 (2021), held that no plaintiff had standing to challenge the zeroed-out mandate. The federal preemption picture against state-level anti-mandate laws has therefore shifted substantially since this 2010 opinion. Tennessee in fact later enacted a Health Care Freedom Act in 2011 (Public Chapter 115). Anyone working on a current Tennessee health-coverage question should look at the current federal and state statutes and the current Supreme Court precedent.

Common questions

Q: What did the proposed Tennessee Health Freedom Act actually say?
A: It declared as state policy that every Tennessean is free to choose or decline any mode of securing health care services "without penalty or threat of penalty by the federal government." It prohibited state and local officials from imposing, collecting, enforcing, or effectuating any penalty that violated that policy. And it directed the AG to seek injunctive relief and defend state officials who refused to enforce federal penalties.

Q: How did HJR 745 differ from the statutory Health Freedom Act?
A: HJR 745 would have written the same anti-mandate rule into the Tennessee Constitution (Article XI). It went further than the statute by prohibiting any law or rule from compelling any person, employer, or health care provider to participate in any health care system, and from penalizing them for paying directly for, or accepting direct payment for, lawful health care services.

Q: Why did the AG conclude the state proposals were preempted?
A: Because the federal Affordable Care Act, as enacted in March 2010, requires individuals to maintain "minimum essential coverage" starting in 2014 and imposes financial penalties on those who do not. It also imposes "shared responsibility" assessments on large employers who fail to offer coverage. The Tennessee proposals directly conflicted with those federal obligations. Under the Supremacy Clause, federal law preempts state law that makes compliance with both impossible or that obstructs the objectives of Congress.

Q: Does that mean states have no power to challenge federal health-coverage rules?
A: No. States can and did sue in federal court, and ultimately the Supreme Court reshaped the ACA's structure in NFIB v. Sebelius. What states cannot constitutionally do is unilaterally declare federal law unenforceable inside their borders. The Supremacy Clause defeats that approach.

Q: Why couldn't the AG act as state counsel under the proposed statute?
A: Tennessee statute (Tenn. Code Ann. § 8-6-109(b)(9)) excuses the AG from defending state legislation that the AG believes is unconstitutional. Because the AG had concluded that the Health Freedom Act itself was preempted by federal law, the office could not also be commanded by that same statute to litigate in furtherance of it.

Q: What's the separation-of-powers concern?
A: The Tennessee Attorney General is a constitutional officer in the judicial branch (Tenn. Const. art. VI, § 5), appointed by the state Supreme Court. A statute that orders the AG to bring or defend particular litigation, removing prosecutorial discretion, encroaches on the judicial branch.

Q: Did Tennessee pass anything along these lines later?
A: Yes. Tennessee enacted a version of the Health Care Freedom Act in 2011 (Public Chapter 115). The legal landscape around it shifted substantially after the Supreme Court's 2012 decision in NFIB v. Sebelius and the 2017 zeroing-out of the federal mandate penalty.

Background and statutory framework

The Patient Protection and Affordable Care Act was enacted on March 23, 2010, just two weeks before this AG opinion was issued. The federal Act, as later amended by the Health Care and Education Reconciliation Act of 2010, established a new regulatory regime over individuals, employers, and health insurers. Three pieces of that regime mattered for the preemption analysis here:

1. Individual coverage requirement. Beginning in 2014, individuals were required to maintain "minimum essential coverage" for themselves and their dependents. Failure to do so triggered a monetary penalty. The federal Act exempted certain categories, including members of recognized religious sects with a conscience objection, members of health care sharing ministries, non-citizens, and incarcerated persons.

2. Large-employer shared responsibility. Employers with more than 50 full-time employees who failed to offer minimum essential coverage, or whose employees took subsidies on the Exchanges, would owe tax assessments under what became § 4980H of the Internal Revenue Code.

3. Insurer market rules. Group health plans and insurers were prohibited from establishing lifetime or annual benefit limits and from rescinding coverage except for fraud or intentional misrepresentation. They were also required to cover certain preventive services without cost sharing.

Congressional power to preempt state law arises from the Supremacy Clause, U.S. Const. art. VI, cl. 2. Under the Tennessee Court of Appeals' framework in Wadlington v. Miles, Inc., 922 S.W.2d 520 (Tenn. Ct. App. 1995) (citing Ingersoll-Rand v. McClendon, 498 U.S. 133 (1990) and Wisconsin Public Intervenor v. Mortier, 501 U.S. 597 (1991)), preemption results in any of four situations: express preemption, complete supplantation of state law in the field, impossibility of dual compliance, or state law as an obstacle to congressional objectives. The federal Act does not contain express preemption language, but the AG concluded the other three categories all applied to the Tennessee proposals.

The Tennessee proposals were not unique. Many state legislatures in 2010 considered similar anti-mandate statutes and constitutional amendments. Tennessee enacted its own Health Care Freedom Act in 2011 (Public Chapter 115) after this opinion, though the version that passed was structured differently from the proposal analyzed here.

The opinion also notes that the federal Act contained a state-waiver provision (Pub. L. 111-148 § 1332) allowing states to apply for waivers of certain mandate provisions starting in plan years on or after January 2017, provided the state's alternative coverage scheme was at least as comprehensive, covered at least as many residents, and did not increase the federal deficit. That waiver mechanism is the proper federal channel for state-level alternative approaches; unilateral nullification is not.

The Attorney General's role as a constitutional officer in the judicial branch (under Tenn. Const. art. VI, § 5) is the structural anchor for the AG's conclusion that the proposed statutory mandate to litigate against the federal government would be unconstitutional independently of the preemption problem. Tennessee is one of only a handful of states where the AG is selected by the state Supreme Court, not elected by voters, which heightens the separation-of-powers stakes around legislative attempts to direct AG action.

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)

Related Tennessee AG opinions:

• Op. Tenn. Att'y Gen. 10-47 (April 12, 2010) (analyzing the parallel HB 2622/SB 2560)

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