Amicus Curiae Brief — Citizens for Health v. Leavitt (No. 05-1311)

N JUN 14 2006

No. 05-1311

OFFICE OF THE ey

IN THE

Supreme Court of the United States

CITIZENS FOR HEALTH, et ai.,

Petitioners,

¥.

MICHAEL O. LEAVITT, SECRETARY, UNITED STATES

DEPARTMENT OF HEALTH AND HUMAN SERVICES,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

BRIEF OF LEONARD MORSE, M.D., GUENTER L.

SPANKNEBEL, M.D., WAYNE B. GLAZIER, M.D.,

GRAHAM L. SPRUIELL, M.D., AND ASSOCIATION

OF AMERICAN PHYSICIANS AND SURGEONS, INC.

AS AMICI CURIAE IN SUPPORT OF PETITIONERS

DAVID P. FELSHER

Counsel of Record

488 Madison Avenue

New York, NY 10022

June 14, 2006 (212) 308-8505

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 — WASHINGTON, D.C. 20001

QUESTIONS PRESENTED

1. May a lower federal court ignore Supreme Court pre-

cedent and invent its own “State Action Doctrine”?

2. If not:

a. May Congress add to the requirements of the Present-

ment Clause by legislatively restricting its own time to

pass a law?

b. May an agency or executive department set its own

boundaries of congressionally delegated authority”?

c. Does the Constitution authorize the federal govern-

ment to impair the obligations of physician-patient

contracts?

(1)

TABLE OF CONTENTS

Page

CORTESE ERODING RR esee ee 8 BSED assis svncisccnninsencteonecasaiinbgnieds i

FARES GOP PAGS FIRE 8 Si ssc nccnccs sdigaviessatapamasakcvcctacanh iv

INTERESTS OF AMICT CURIAB So. occivcsccssssssnsansassaveanes |

PRR TOT IE TE ini Gig -ckcdsve sabspiaspmeasdnascbeesbansantels easing wap 5

I. THE COURT BELOW MISAPPLIED THE

“STATE, ACTION DOCTRINE” BECAUSE

HHS [S A COVERED ENTITY .....................:. 5

lH. THE SECRETARY LACKS AUTHORITY

UNDER §264(C\(1) BECAUSE THAT SEC-

TION VIOLATES THE CONSTITUTION ...... 7

A. Section 264(c)(1) Unconstitutionally Lim-

its the Time of Congress to Pass a Law....... 10

B. Congress Defectively Delegated Authority

Reh TUNE UIE isisdiscccsscicrenstsabegbecdes 13

1. The 104th Congress Could Not Have

Delegated Its Authority Beyond the

CE IE Fe PU iceiskchi ctocitctiorennqneun 14

2. Congress Provided No Policy” or

Boundary to Limit the Secretary's

POT isi cits is icant nosiabniee 16

C. The Constitution Does Not Give Congress

Authority to Impair a Physician’s Confi-

GETS TITY COTO ois cases cic aiasrecsateiccs 19

CLFII LALRAGS AON scanihsandenivkiadantiersiphtladeanina taaceescanrOomienss 20

(iit)

iv

TABLE OF AUTHORITIES 3

CASES Page

A.L.A. Schechter Poultry Corporation y. United

IE, 2IS AIS, BID CAG IF aii viscissiicidancescisrraaci 18

Aufrichtig v. Lowell, 85 N.Y .2d 540 (1995).......... 3

Clinton v. Citv of New York, 524 U.S. 417

2: MURFRR ER TRIER RAS CE ue rea ree iaaueacicacineasies 10, 11

Cohens v. Virginia, 6 Wheat. (19 U.S.) 264

GRRE Dares thaasihthnecnsncugniisla Gevinbancandeseeniiasindiapeiionaes 9

Connecticut National Bank v. Germain, 503 U.S.

Rr india sikinnintigbicnigecdy clan cindenasianianasigenns 18

Continental Illinois National Bank and Trust

Company of Chicago v. Chicago, Rock Island

& Pacific Railway Company, 294 U.S. 648

EE hiksccduecdtanniiacebanscnanbdssisbeinkitmapebeasienvenenariss 20

Empire Life Ins. Co. of Am. v. Valdak Corp., 468

Fe Da COME PIER biccnsctivisssnsisospcvncnsensndiios 9

Forshev v. Principi, 284 F.3d 1335 (Fed. Cir.),

cert. denied, 537 U.S. 823 (2002)..............cccccee 9

Immigration and Naturalization Service — v.

Chadha, 462 U.S. 919 (1983)... 10, 11, 16, 18

Johnson v. U.S., 79 F.Supp. 208 (Ct. Cl. 1948)... 19-20

Kamen v. Kemper Financial Services, \Inc., 500

Fcc WR EB ED iii acs s sanbantcvciauncocieens iavcanenbeeniaslans 9

Loving v. United States, 517 U.S. 748 (1996) ....... 15

Marbury v. Madison, | Cranch (5 U.S.) 137

SPINE Risktcsuhctidin-cAguspattenh cessacacdavan ee tnseerbecbivccesbianaas 19

McCulloch v. Maryland, 4 Wheat. (17 U.S.) 316

ERI He Biksaciasasais wisi tens: dan davckcanhesvechaniieaeoateastndatis ‘14

Meinhard v. Salmon, 249 N.Y .458 (1928) 2... 3

Mistretta v. United States, 488 U.S. 361 (1989)... 16

Oregon v. Mitchell, 400 U.S. 112 (1970)... 10

South Carolina Medical Association v. Thomp-

son, 327 F.3d 346 (4th Cir.), cert. denied, 540

A RE IN a cscaiicccsdiertiscch aon iubes 17

United States v. Morrison, 529 U.S. 598 (2000)... 14

Vv

TABLE OF AUTHORITIES—Continued

Page

U.S. National Bank of Oregon v. Independent

Insurance Agents, 508 U.S. 439 (1993)............. 8.9

U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779

CEs soe ccndinteccakn as tadnusracivencs hie wc ibesean sonia 10, 15

Whitman v. American Trucking Associations, ;

OC SIU SOT APO isi ectcceccittndticexecske 18-19

_Yakus v. United States, 321 U.S. 414 (1944)... 18

UNITED STATES CONSTITUTION

Article I

BR saci cuactorsehei lacs hapsibaaereuik ex tints Cicada 5. 8, 10

FRIAR LRM NEN ENE SOIR ROE fe 14

Ee ee SS Was aoe te na aines Sow Peds Dheria feete a tee NRE pee 14

BS) ethics Kan oA ae 14

RGB cak sticdadadcincasbecsdesacintee vues on oa 14

eRe axcecnuk anecxvncbink po chatesccheiaa uiaee once bance enes 14

Oe Me auth cick oudiecik ete aeaceks Magonaanindis Eke 8, 10, 14

Ba ie ai pepakias lavas honk scincs Oe ee 19

I igs <ikcad ts sices nda aadnteca cbone aadaeaaa naw kaneaaa 14

LSet ttenredte Se sas ee ee eter eRe OMT eed 19

Article I]

Reet ht oc eon Cpe TU AUREL Det Ne NWS ce 14

DP RLME Bd Sarericesiaenauba bakin beats 14

A ERR EE AE alae Serco Wy eR eS Meee neea eres OT 10

Pa i ine. oo mdeneuness 20

Pa FEO i i 20

PE Fis ic cash ein akace 14

OTHER HISTORICAL DOCUMENTS

Declaration of Independence ................::eseeeeeeee: 20

PTTRIOR CT CORR TICIET ONION io iiviinctncksdhes dicicccsedssccdecse 20

UNITED STATES SUPREME COURT RULE

MMI WF hc ccs ciaduaudinac uid wah chcdsbwaidn caaaaniaknaiancacnicuts |

vi

TABLE OF AUTHORITIES—Continued

FEDERAL RULES OF APPELLATE PROCEDURE Page

De ae No isa, 3b ics ah dnceanceneconsruaeateehaneboaenbck 8

STATUTES

Health Insurance Portability and Accountability

Act of 1996, Pub. L. No. 104-191, 110 Stat.

FO A PRMIIE LE EID siciviccaveaisiscnidneiacicencssicnss 2-3

NII orbs lads cp cs cc nepiccccchanait ausscionsenedeauasianketh 16, 17

Be deh esa aks ks dk cei dlin's Caixa chbschtosdhasensic essa coacovcaneaae 16, 17

MAN is 1a Sosacivas gi casa’ vache du arvonaeeapaskieandinansabbiawboak 12,17

MI Dias chi dh atthcers nines vb cose Ooiep ta hakoommantn taabaa weed 12

7s eR Rant 2h at cap aRT nO NORA EAE QTR 22 12, 18

NT EB ii So sednes cxssirshncndicba ticbah Sassboehdceeaaaeaneenen passim

Be RIED 5605 cos dads och cares <a cookie cisobaavuecas ness canelrnbeeen 12,13

BO i outed tat olaek inci canes ap cetibos sk shal pankboncteletakteads 13,17

Ra aes eR is ok ta ain tacesed odiasninarhveianbaceecees 17

ee ST a SE FD in chk Gis Ge deisinisansdnicaninee 1.67

sw SO a sincss chi Gs cacdecneyids castatanedddedictins 6

Re hes Meh IPA a ch cisancncenvidnderscncccdhanteasnnancs 7

EXECUTIVE MATERIALS AND REGULATIONS

CE FO. FOG, SOE CID ois Sodasensssccnscincscinsnnnsoeves 3

BS Fs Be: DOr COD ions vy cosinscisesisnscivccstncsictas 3,4, 13

OG Fed: Fee 4 SG CIN Yon cssicsescivsccenscdanssnacinns 3

7 ee Pee FAT FG FD ive Kivnsisiincrcisrtenncs 3

FB I OWE CD a nssicevcncincicicevccesnivcndonnns ce A

Eeacwiive Cirmer NO: TSIS1 oo. oiiccncic ccsccicicese 17

a a I ag oss ch4a cp excess dahon anomuaicnns 1,6

PETITION

PIS OF FO sacs Oi aicGinacincay Gs te

COMPLAINT, BRIEF, MOTION, AND ORDER

First Amended Complaint for Declaratory and

Injunctive Relief: Constitutional Claim............. 6

Vii

TABLE OF AUTHORITIES—Continued

SOTRET TAINO oviesi dines thciepidenegscortitnnsintbaaionvenens

Motion of Guenter L. Spanknebel, M.D. ef al .as

Amici Curiue to File Reply Brief.......................

Order, dated March 4, 2005..........cccsceccesssopesneesseaes

LAW REVIEWS

Marci Hamilton, Representation and NonDele-

gation: Back to Basics, 20 Cardozo L. Rev.

EF Lae ieriuiisecrthinnderees avcninedcenpabicanaseelubianetes

Alan Morrison, A Non-Power Looks at Separa-

tion of Powers, 79 Georgetown LJ. 281

Fe ic iccincnis dcnivcninsinnsaiahiasinatanonabniasesiaetsinnennaeneas

Austin Scott, The Fiduciary Principle, 37 Cal. L.

RON, BS POR aigrivitdiirnnni istnccaninanins

OTHER AUTHORITIES

American College of Physicians, Medicine in

Quotations Online @ www.acponline.org/cgi-

TURIN PRI G6 rics sexsnyecinntzscxccuaperssseensecens

Bank Loses Tapes of Records of 1.2 Million

With Visa Cards, N.Y.Times, Feb. 26, 2005, at

PAPO a iidisns ik Bctaraiguatetisinieaate ummmaunenss

Signers of the Declaration: Biographical

Sketches (Josiah Bartlett) @ www.cr.nps.gov/

history/online_books/declaration/bio3.htm .......

Joseph Story, Commentaries on the Constitution

of the United States (Carolina Academic Press)

NE Bre sigs ic cscs hasi chacccsentsegesacieniea

The Federalist, No. 45, at 292 (Madison)(Clinton

I ONE” PI ss inctccencsarichstttravsncnterccensesseve

United States Department of Health and Human

Services, What We Do (@ www.hhs.gov/about/

WEEINBEEIEE bash ccincntadingesnone

VA: Data on 26.5M veterans stolen, USA Today,

ROE 20g ee GA IA Bg Ns Oc civtnncennbeneabinkass, cnaean

13,

19

20

14

19

IN THE

Supreme Court of the Anited States

CITIZENS FOR HEALTH, ef al.,

Petitioners,

Vv.

MICHAEL O. LEAVITT, SECRETARY, UNITED STATES

DEPARTMENT OF HEALTH AND HUMAN SERVICES,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Third Circuit

BRIEF OF LEONARD MORSE, M.D., GUENTER L.

SPANKNEBEL, M.D., WAYNE B. GLAZIER, M.D.,

GRAHAM L. SPRUIELL, M.D., AND ASSOCIATION

OF AMERICAN PHYSICIANS AND SURGEONS, INC.

AS AMICI CURIAE IN SUPPORT OF PETITIONERS

INTERESTS OF AMICI CURIAE |?

Amicus Leonard Morse, M.D., specializes in internal

medicine-infectious diseases. He is a past-Chair of the Ameri-

can Medical Association’s Council on Ethical and Judicial

' In compliance with Supreme Court Rule 37.6, this brief was not

written in whole or in part by counsel for a party, and no person or entity

other than Amici Curiae and their counsel has made any monetary con-

tribution to the briefs preparation and submission. The parties consent to

the filing of this brief.

* Medical records of the members of this Court and their staffs may be

at risk to the extent that each individual participates in the “Federal Em-

ployees Health Benefits Program. . . ~~ See 42 U.S.C.§1320d(5)(M): 45

C.FLR. $160,103.

2

Affairs and a past-President of Massachusetts Medical Soci-

ety (“MMS”) and of Boston Medical Library. Dr. Morse is

Professor of Clinical Medicine at University of Massachusetts

Medical School and Commissioner of Public Health for

Worcester, Massachusetts.

Amicus Guenter L. Spanknebel, M.D., privately practices

gastroenterology and is also past-President of MMS. He is

currently Chair of the History Committee and Vice-Chair of

the Judicial Committee of MMS. He is Associate Professor of

Medicine at University of Massachusetts Medical School and

is Assistant Dean for Continuing Medical Education at Uni-

versity of Massachusetts Medical Center-Memorial Campus.

He is also on the faculty of Tufts Medical School and is a

Trustee of the Health Foundation of Central Massachusetts.

Amicus Wayne B. Glazier, M.D., privately practices urol-

ogy. He is Chairman of the Health Foundation of Central

Massachusetts and President of the Massachusetts Indepen-

dent Physicians’ Association.

Amicus Graham Spruiell, M.D., privately practices psy-

chiatry and psychoanalysis in Boston and is the Chair of

the Faculty at the Psychoanalytic Institute of New England,

East, Inc.”

Amicus Association of American Physicians and Surgeons,

Inc. (*AAPS”) is a nationwide non-partisan professional

association of thousands of physicians in all types of practices

and specialties. Since it was founded in 1943, AAPS has

been dedicated to the highest ethical standards of the Oath of

Hippocrates and to preserving the sanctity of the patient-

physician relationship.

Pursuant to § 264(c)(1) of the Health Insurance Portability

and Accountability Act of 1996 (“HIPAA”), Pub. L. No. 104-

iy ctors Morse, Spanknebel, Glazier and Spruiell submit this brief as

individual providers and patients and not on behalf of any other entity.

3

191, 110 Stat. 1936 ef seg. (August 21, 1996), the Secretary

of the United States Department of Health and Human Ser-

vices (“HHS”) issued health privacy regulations (“Regula-

tions”).* Amici believe the Regulations compromise the trust

inherent in the patient-physician relationship and reduce

patient candor resulting in increased diagnostic and treatment

risks. Under the Regulations, the locus of decision-making

regarding access to patient medical records is shifted from the

patient to physicians and other covered entities and their

business associates. |

By climinating patient consent and authorization for the

use and disclosure of patient medical information in most

situations, the Regulations ignore principles attributed to

Hippocrates more than 2.400 years ago and obliterate the

foundation of the medical profession—trust between a patient

and his or her physician.

As providers and patients, Amici disagree with the sub-

° S , is °

stance of the Regulations.” However, as amici curiae, they

* On November 3, 1999, HHS published proposed health privacy regu-

lations. 64 Fed. Reg. 59918 et seg. After an extended comment period,

the final health privacy regulations were issued in December 2000 (“Orig-

inal Regulations”). 65 Fed. Reg. 82462 et seg. (December 28, 2000), and

became effective on Apnil 14. 2001, 66 Fed. Reg. 12434 (February 206.

2001). Modified health privacy regulations were proposed on March 27,

2002. 67 Fed. Reg. 14776 et seq.. and were finalized on August 14, 2002.

67 Fed. Reg. 53182 ef seg. (“Modified Regulations”).

* Amici consider themselves fiduciaries with respect to patient con-

fidences. They believe the Regulations encourage them as well as all

covered entities and their business associates to breach that fiduciary duty.

Aufrichtig v. Lowell, 85 N.Y .2d 546, 546 (1995) (“The physician-patient

relationship thus operates and flourishes in an atmosphere of transcendent

trust and confidence and is infused with fiduciary obligations.”) (citation

omitted). See generally, Austin Scott, The Fiduciary Principle, 37 Cal. L.

Rev. 539 (1949): Meinhard v. Salmon, 249 N.Y 458, 464 (1928) (Cardozo,

Ch. J.) (Fiductaries are held to higher standards than others. “Not honesty

alone, but the punctilio of an honor the most sensitive. is then the standard

of behavior’).

4

direct the Court’s attention to the Third Circuit’s misap-

plication of the “State Action Doctrine” and to important

constitutional issues that will not be addressed unless that

error is corrected. These issues question the power and

process by which Congress attempted to authorize ~ the

Secretary to issue the Regulations.

Today, patient records may be transmitted worldwide in an

instant, often without patient knowledge or consent. An in-

advertent or intentional release of patient information could

endanger millions of patient records at a time. See, “VA: Data

on 26.5M veterans stolen”, USA Today, May 23, 2006, at Al,

col. 4; see alsv., “Bank Loses Tapes of Records of 1.2

Million With Visa Cards”, N.Y.Times, Feb. 26, 2005, at A9,

col. 3 (Personal information of about 1.2 million federal

employees, including United States Senators, was lost by

Bank of America); see also 65 Fed. Reg. at 82467. Coupling

the rapidly evolving technological landscape with exceptions

to the consent requirements for disclosures in connection with

“treatment, payment and healthcare operations” creates a

recipe for disaster. Once the records are released, it is often

too difficult or impossible to reverse the breach of privacy.”

Although Congress after Congress attempted to strike a

balance between public policy goals and the need to keep

personal information private, Congress failed to enact any

legislation regarding the disclosure of personal medical infor-

mation because of the inherent tension between these com-

poting objectives. In 1996, Congress decided to break that

legislative deadlock, but did so using a blatantly uncon-

sututional vehicle, ie. § 264(c)1) of HIPAA. Through

§ 264(c)(1), Congress imposed, on itself, a three-year dead-

line to enact legislation governing medical privacy. Under

that provision, Congress directed the Secretary to promulgate

* This is analogous to letting air out of a balloon and then futilely

attempting to refill that balloon with the same air molecules. Ht cannet-

be dor»

5

medical privacy regulations if Congress failed to enact

medical privacy Icgislation by the deadline. Congress missed

that deadline and the Secretary ultimately promulgated the

Regulations. By enacting § 264(c)(1), Congress sought to

accomplish exactly what the Constitution's first clause does

not allow: transferring to an executive department authority to

enact legislation upon the failure of the legislative process in

Congress. U.S. CoONnsT. Art. 1, § 1 (“All legislative Powers

herein granted shall be vested in a Congress of the United

States... ):

Section 264(c)(1) is an effort to accomplish an uncon-

stitutional end by an unconstitutional means. This section is a

revolutionary attempt to spare Congress difficult decisions

regarding medical privacy by allowing the Secretary to make

decisions instead. It undermines, in fundamental and dan-

gerous ways, the Constitution’s mechanism for enacting

federal laws. Section 264(c)(1) has taken legislative respons-

ibility from Congress and delegated it to the Secretary. It Is

an impermissible effort by Congress to delegate to the Sec-

retary its most basic duty—to determine what the law shall

be. As such, it radically upsets the constitutionally contem-

plated process of political compromise within the legislative

branch and between the legislative and executive branches.

This Court must. in this case, protect Congress from itself,

and thereby protect the Nation and its people.

ARGUMENT

|. THE COURT BELOW MISAPPLIED THE

“STATE ACTION DOCTRINE” BECAUSE HHS

IS A COVERED ENTITY

Although the Third Circuit concedes, “the promulgation of

the Amended Rule by the Secretary—1is clearly government

conduct”, Appendix to Petition (“App.”) I4a, its “state

action” analysis relies on the premise that some “third party

actor” is not before the court. Amici disagree. As a covered

entity, the Secretary is that “third party actor” and he is before

6

the Court. Furthermore, Amici believe the promulgation of

the Regulations also establishes sufficient “state action” to

allow this case to proceed.

The heart of the Third Circuit’s “state action” analysis 1s

contained in the text accompanying footnote 12:

[T]he injury that Citizens allege is that their “personal

health information” is being “used and disclosed, with-

out their permission and against their will” Ay third

parties . . . To support their claims, Citizens point to

privacy notices that they received from private health

care providers and pharmacies . . . Citizens did not

challenge any use or disclosure by the Secretary himself,

or urge that the third parties were somehow acting on the

Secretary’s behalf, before the District Court.

App. 14a (emphasis added)(citation omitted).

This analysis ignores allegation 7! of the Complaint. This

allegation clearly refers to all covered entities and their

business associates. The Secretary is clearly contemplated by

the reference to “all covered entities”. Allegation 71 provides:

Defendant has further violated Plaintiffs’ rights

under the Fifth Amendment by conferring express

authorization and “regulatory permission” upon ALL

COVERED ENTITIES and their business associates to

use and disclose even the most sensitive of Plaintiffs’

health information without their permission and against

their will, retroactively and prospectively.

First Amended Complaint for Declaratory and Injunctive

Reliet: Constitutional Claim (emphasis added).

Medicare, Medicaid, and the Indian Health Services Pro-

grams are defined as “health plans” under the Administrative

Simplification provisions of HIPAA. 42 U.S.C. § 1320d (5)

(D, E, & L). See also, 45 C.F.R. §164.103. As “health

plans”, these programs are covered entities under 42 U.S.C.

§ 1320d-1. Based upon these definitions, this Court must

conclude that the actor who caused plaintiffs” injuries, fe. the

7

Secretary, as opposed to an unnamed third party actor, is

before the Court.

Although the Third Circuit created the “third party actor”

as a straw man in its “state action” analysis, it ignored the

Defendant's role as that “third party actor.”’ As Secretary,

Defendant supervises Medicare, Medicaid and Indian Health

Services Programs, covered entities with 42.1 million, 44.7

million and 1.6 million enrollees, respectively. United States

Department of Health and Human Services, What We Do,

available at www. hhs.gov/about/whatwedo.html. This makes

the Secretary the single largest covered entity, using and

disclosing more individually identifiable health information

(“HHI") than anyone else.* Unlike a criminal defendant who

argues that someone else committed the crime, the Secretary

cannot say someone else “acted”. He wears two hats in this

case—as promulgator of the challenged regulations and as

the ultimate “third party actor” i.e. covered entity. In either

capacity, he is a governmental actor and the “State Action

Doctrine” is satisfied.

Il. THE SECRETARY LACKS AUTHORITY

UNDER §264(C)(1) BECAUSE THAT SECTION

VIOLATES THE CONSTTEPUTION

While the District Court examined the contentions of the

parties regarding the scope of authority delegated to the

* The Third Circuit apparently ignored its own findings with respect to

justiciability, both with respect to the “injury im fact” and “traceability”.

The court said: “Citizens alleged injuries are “fairly traceable’ to the

Secretary's promulgation of the Privacy Rule...” App. 35a-36a.

* Given the extent to which the Secretary is a “third party actor” with

respect to these programs, it is unnecessary to analyze the Secretary's role

in other federally run health plans covering millions of additional enroll-

ees. Such “health plans” include programs and care provided by the

Department of Defense, the Veterans Administration, the Federal Employ-

ees Health Benefits Program, and the Civilian Health and Medical

Program of the Unitormed Services. 42 U.S.C. § 1320d(S)U, J, K & M).

8

Secretary, App. 7la-74a, the District Court neglected to

address the validity of that delegation under § 264(c)(1). That

should have been done first. The invalidity of § 264(c)(1)

obviates any need for its construction. This Court has stated

‘a court may consider an issue “antecedent to .. . and ulti-

mately dispositive of” the dispute before it, even an issue the

parties fail to identify and brief.” U.S. National Bank of

Oregon v. Independent Insurance Agents, 508 U.S. 439, 447

(1993) (SUSNB”) (citations omitted).

Amici believe that § 264(c)(1) is unconstitutional and dele-

gated no authority to the Secretary. By ignoring the validity

of § 264(c)(1), the courts below have issued advisory opin-

ions regarding regulations issued pursuant to a “non-existent”

act of Congress. Section 264(c)(1) 1s unconstitutional be-

cause it (1) violates the Bicameral and Presentment Clauses:

(2) violates the Non-Delegation Doctrine’; and (3) exceeds

the powers granted to Congress under the Constitution. As

discussed below, Congress never enacted legislation regard-

ing the standards for privacy of individually identifiable

health information. 1t merely directed the Secretary to make

legislative recommendations. Congressional authority to

issue the Regulations is, in fact, a null set.

It has been a long-standing principle of statutory construc-

tion that when a court is asked to construe a law, it has the

authority to determine if that law exists.

.

*... [A] court properly asked to construe a law has the

constitutional power to determine whether the law exists,

” Although the Secretary argued to both courts below that he received a

broad delegation of authority from Congress to promulgate privacy stand-

ards, he contended it was inappropriate for the Third Circuit to address

Amici's non-delegation argument. Brief for Appellee, 3Sn.8. In response

to the Secretary's contention, Amici made a motion to file a reply brief

pursuant to Fed. Ro App. P. 29 (b&f) regarding the applicability of

the Non-Delegation Doctrine. Motion of Guenter L.. Spanknebel. M.D.

jet al. |. as Amici Curiae, to File Reply Bnet. The Third Circuit granted

the motion. Order, dated March 4, 2005).

9

cf. Cohens v. Virginia, 6 Wheat. 264, 405 (1821) ("UTA

in any controversy depending in a court, the cause

should depend on the validity of such a law, that would

be a case arising under the constitution, to which the

judicial power of the United States would extend”)

(Marshall, C.J.). The contrary conclusion would permit

litigants, by agreeing on the legal issue presented, to

extract the opinion of a court on hypothetical Acts of

Congress or dubious constitutiona! principles, an opinion

that would be difficult to characterize as anything but

advisory.”

USNB, 508 U.S. at 446-447.

Under Supreme Court precedent, “[w]hen an issue or claim

is properly before the court, the court is not limited to the

particular legal theories advanced by the parties, but rather

retains the independent power to identify and apply the

proper construction of governing law.” Kamen v. Kemper

Financial Services, Inc., SOO U.S. 90, 99 (1991) (emphasis

added); USNB 508 U.S. at 446 (quoting Kamen). The failure

of litigants to argue the legal issues correctly does not render

an appellate court powerless to address those issues properly.

“Appellate review does not consist of supine submission

to erroneous legal concepts even though none of the

parties declaimed the applicable law below. [An

appellate court’s] duty is to enunciate the law on the

record facts. Neither the parties nor the trial judge, by

agreement or passivity, can force us to abdicate our

appellate responsibility.”

Forshev v. Principi, 284 F.3d 1335, 1357 1.20 (Fed. Cir.),

cert. denied, 537 U.S. 823 (2002) quoting Empire Life Ins.

Co. of Am. v. Valdak Corp., 468 F.2d 330, 334 (Sth Cir.

1972). Indeed, appellate review of the proper law prevents

misapplication of the law, injustice, and the construction of

hypothetical laws.

10

A. Section 264(c)(1) Unconstitutionally Limits the

Time of Congress to Pass a Law

Since our nation was founded, a “single, finely wrought

and exhaustively considered, procedure” has been used to

enact federal legislation. /mmigration and Naturalization

Service v. Chadha, 462 U.S. 919, 951 (1983). That procedure

is specified in the Constitution’s Bicameral and Presentment

Clauses. Strict compliance with that procedure is required.

When Congress delegates its lawmaking function to another

branch or independent agency it may not legislatively alter

“the Presentment Clause. If it does, the delegation is un-

constitutional. For example, the legislative veto and line item

veto were declared unconstitutional. /d. at 959; Clinton vy.

Citv of New York, 524 U.S. 417 (1998) (Stevens.J.). Sim-

ilarly, when Congress conditions the delegation of its law-

making function upon the restriction of its own time to

consider legislation, it alters that legislative procedure. Sec-

tion 264(c)(1) contains such an alteration.

_ The Bicameral and Presentment Clauses require passage of

exactly the same text by both Houses and presentment to the

President. Clinton, 524 U.S. at 448. Those procedures may

not be statutorily supplemented or modified. They may be

altered only by a constitutional amendment. Clinton, 524 U.S.

at 449: U.S. Term Limits, Inc. vo Thornton, 514 U.S. 779, 837

(1995) (Stevens, J.); Oregon v. Mitchell, 400 U.S. 112, 128

(1970). Section 264(c)(1) alters the procedure without rati-

fying a constitutional amendment in accordance with Arti-

cle V. Pursuant to § 264(c)(1), once three years had elapsed

without passage of new health privacy legislation, the Secre-

tary had six months to regulate (unless the House, Senate and

the President had agreed otherwise). Furthermore, without

S$ 264(c)(1), the Secretary may not regulate health privacy

unless the House, Senate and President agree on health

privacy legislation.

A law such as §264(c)(1), which completely delegates leg-

islative responsibility to an executive department or inde-

pendent agency, violates the Constitution’s letter and spirit.

The abdication of congressional responsibility encouraged by

§ 264(c)(1) is philosophically at odds with the Constitution.

Clinton, 524 U.S. at 452 (Kennedy, J., concurring) (“Abdi-

cation of responsibility is not part of the constitutional

design”). Section 264(c)(1) turned delegation on its head and

conditioned rulemaking authority solely upon the failure of

Congress to take action between two specified dates. It

allowed Congress to avoid tough decisions. As a result, the

scope of delegation was set by the Secretary rather than by

agreement of both Houses and the President.

Although not every action taken by Congress is subject to

the bicameralism and presentment requirements, those re-

quirements must be met when Congress exercises legislative

power. Whether particular actions are an “exercise of legis-

lative power depends not on their form but upon ‘whether

they contain matter which is properly to be regarded as leg-

islative in its character and effect.””” Chadha, 462 U.S. at 952

(citation omitted).

The legislative character of an action may be established

by an examination of the congressional action that it sup-

plants. This “Supplantation Principle” was used to analyze

the constitutionality of the legislative veto in Chadha. Id.

at 952 (“The legislative character of the one-House veto in

these cases is confirmed by the character of the congressional

action it supplants”). This principle should be extended to

apply to actions undertaken by independent agencies and

executive departments. There is no reason to limit application

of this principle to evaluating congressional exercises of leg-

islative power.

The Regulations are legislative in both character and effect

in two ways. First, by its own terms, § 264(c)(1) equates the

Regulations to legislation. The alleged authority of the Sec-

12

—

retary to promulgate regulations arose only after Congress

failed to pass legislation governing standards with respect to

the privacy of ITH! within 36 months of the enactment of

HIPAA. Second, the Regulations had the purpose and effect

of altering the rights, duties, and relations of persons, includ-

ing patients, providers, health care clearinghouses, health

plans, HHS, Office of Civil Rights and others, all outside of

Congress. Section 264(c)(1)(“Such regulations shall address

at least the subjects described in subsection (b)”).

s

Subsections “a” and “b” also demonstrate the legislative

character and effect of the Regulations. Subsections “a” and

“b” direct the Secretary to make legislative recommendations

regarding privacy of IT[HI. They set a limited agenda for the

Secretary: to make recommendations for future legislation.

The difficult policy choices regarding rights, procedures, and

uses and disclosure of ITHI were left to Congress. Subsection

“a” explicitly directed the Secretary to submit “detailed

recommendations on standards with respect to the privacy of

[WHI]. Those recommendations were to be received by a

Senate Committee and a House Committee. As used, the

word “recommendations” contemplated future congressional

action. In the context of § 264, “recommendations” were

sought to enable Congress to propose and possibly enact

future legislation. The subjects contained in § 264(b) are

legislative in nature and include the rights an individual

should have, § 264(b)(1), the procedures for exercising those

rights, § 264(b)(2), and the determination of permitted “uses

and disclosures”, § 264(b)(3). If Congress had enacted the

recommendations with respect to those rights, everyone in the

United States would have been affected. Similarly, the

Regulations affect everyone in the United States— people and

parties outside Congress.

The language secking recommendations from the Secretary

-

os,

set forth in Subsections “a”, “b”, and “d” suggests that Con-

gress was writing on a blank slate. It needed to be better

4,,%° 66

informed before legislating. Under Subsections “a”, “b”, and

13

“d", Congress explicitly sought recommendations from the

Secretary regarding those standards because it had not yet

made any policy determination or value judgment regarding

the standards for privacy of I[HI when it enacted HIPAA.

Marci Hamilton, Representation and NonDelegation: Back to

Basics, 20 Cardozo L. Rev. 807, 820 (1999)(“The legislature

holds primary responsibility to make the national policy

choices, and the President may not take on those choices”).

Congress had not balanced the interests of various constit-

uencies regarding that subject matter.'° However, Congress

had recognized that it needed further advice. Consequently,

HHS rulemaking authority under §264(c)(1) was equated

to legislation and carved-out from the remainder of §1173

rulemaking authority. |!

B. Congress Defectively Delegated Authority to

the Secretary

Congress may only delegate power it received from the

People. This principle adds a fourth component to the three-

pronged “intelligible principles” test. It ts derived from the

Institutionally, Congress is better able to balance multiple viewpoints

than a single agency or department. See, Hamilton, 20 Cardozo 1..Rev. at

$14 (“The legislative branch serves the people by filtering the factions in

the society and distilling those laws that will best serve the nation . . .

{PJositions must be funneled through a large number of ports before be-

coming governing law . . . [Congress] is capable of reaching more

nuanced compromises on national issues”). [In contrast. when lawmaking

is delepated to the President, there is only one port of entry, one view-

point, albeit representing the entire nation. When lawmaking is delegated

lo an avencey or executive department, the Viewpoint is even narrower and

without electoral accountability. /d at 819-21. Hts evident that Congress

and not the Secretary should be the filter setting national policy regarding

health privacy. The Secretary received over 60,000 comments reyarding

the Original and Modified Regulations, 67 Fed. Reg. at S3182-83.

' Section 1173 authorized the Secretary to issue uniform national stan-

dards regarding: transactions, unique health identifiers, code sets, security

and electronic signatures. In conterence, privacy of HHI had been moved

out of $1173. 65 Fed Rey. at 82469-70.

14

understanding that the federal government is one of cnumer-

ated powers and that a principal may not delegate authority

it lacks.

1. The 104th Congress Could Not Have

Delegated Its Authority Beyond the End of

Its Term

Since our nation’s first days, “[e]very law enacted by Con-

gress must be based on one or more of its powers enumerated

in the Constitution.” United States v. Morrison, 529 U.S.

598, 607 (2000); McCulloch v. Marvland, 4 Wheat. (17 U.S.)

316, 405 (1819). Those powers are constrained by the

Constitution’s procedural requirements, see e.g., U.S. CONST.

art. I, § 7, cl.2, and substantive requirements, see e.g. US.

Const. art. 1, § 9. Another constraint is provided by the

temporal limit on the congressional franchise.

The President and members of the Senate and members of

the House represent different geographic constituencies, have

different modes of election, and have different requirements

for holding office. U.S. CONST. art. I, §§ 2 & 3, U.S. CONST.

art. Hl. § | and U.S. CONST. amend. XVII. The Constitution

further diffuses power by limiting the terms of the President

and members of the Senate and House and by making those

terms of different lengths, iv. they have different temporal

mandates. Senators are elected for six years. U.S. CONST. art.

1, § 3, cls. 1&2 and U.S. Const. amend. XVII. The President

is elected for four years. U.S. Const. art. IH, § 1, cl. 1. Mem-

bers of the House of Representatives are elected for two

years. U.S. CONST. art. I, §2, cl. 1. The authority of each

Representative, each Senator and the President does not

extend beyond the expiration of his or her term in office,

respectively.” Any extension of authority beyond the end of

those terms would unconstitutionally transfer from the “peo-

ple” the power of the people to choose their own repre-

' See Joseph Story. Commentaries on the Constinuion of the United

States (Carolina Academic Press) Book HES 263.

15

sentatives.’ One commentator characterized the holding of

elective offices as a “temporary lease” from the nation’s

citizens. Alan Morrison, 4 Non-Power Looks at Separation

of Powers, 79 Geo. L.J. 281, 282 (1990). Expressed in real

estate terms, the Constitution does not allow “holdovers”.

‘ ee 99° es ssl4

When Congress “delegates” its power to “make law”’”, the

delegation must occur before the congressional term ends.

The reasoning is simple. A principal may delegate to its

agent only the authority within its possession. A principal

may not delegate authority that it does not have. Each House

and Senate member loses all authority from his or her con-

stituents at term-end. Consequently, the end of a congres-

sional term ends subsequent legislative actions by that

Congress. Similarly, the President has no authority to sign or

veto legislation once his or her term expires. If Congress, as

principal, cannot exercise its legislative power, then an agent

of that Congress may net exercise that power.

Under §264(c)(1), the 104th Congress did not attempt to

delegate its authority during the remaining four-plus months

of its term or even during the 24 months of the 105th Con-

gress. It was not until the eighth month of the 106th Con-

gress, i.e. 36 months after the enactment of HIPAA, that the

Secretary could issue the Regulations. However, the Regu-

lations could never have been issued if Congress had enacted

health privacy legislation during the intervening 36 months.

Once the 105th Congress began, the 104th Congress had no

power. Beginning tn January 1997, the 104th Congress had

' George Washington said: “The power under the Constitution will

always be in the People. /f is enirusted tor certain defined purposes, anid

for a certain limited period, to representatives of their own chusing: and

whenever tt is executed contrary to their Interest... . thetr Servants can,

and undoubtedly will be [ } recalled.” Thornton, S14 US. at 814n.26

(emphasis added (citations omitted).

4+) res 7 45 n

The power to “make law” stands in contrast to the power to “fill-in

details” or otherwise “execute” legislation. See, Loving vo United States,

S17 U.S 748. 771 (1996) (Kennedy, J.).

16

no power to “make law” with respect to health privacy

standards or anything else. Consequently, the agent of the

104th Congress, the Secretary, lacked that power as well.

2. Congress Provided No Policy or Boundary to

Limit the Secretary’s Authority

Under the “intelligible principles” test, a delegation is

“constitutionally sufficient if Congress clearly delineates the

general policy, the public agency which is to apply it, and the

boundaries of this delegated authority.” Mistretta v. United

States, 488 U.S. 361, 372-373 (1989)(citation omitted). A

delegation is always subject to the Icgislation that authorized

it. Chadha, 462 U.S. at 953-54 n.16.

It has been suggested that delegation to administrative

agencies leaves a gaping hole in the Constitution’s balanced

structure of checks and balances because agencies are prone to

be arbitrary and unaccountable. “The- nondelegation doc-

trine in this scenario is crucial to liberty, because it prohibits

general lawmaking from occurring in a structure both capable

of arbitrary action and removed from the national scrutiny to

which both Congress and the President are exposed by the

constitutional structure.” Hamilton, 20 Cardozo L. Rev. at 821.

Section 264(c)(1) fails to meet two of the “intelligible prin-

ciple” criteria. First, there is no clearly delineated general pol-

icy. Second, there is no boundary on the delegated authority.

Neither the general policy statement contained in the Pre-

amble to HIPAA nor the policy statement articulated as § 261

of the Administrative Simplification provisions of HIPAA

“clearly delineates” a general policy that is applicable to the

privacy of ITHI.

The Preamble provides that HIPAA is:

“{ajn Act to amend the Internal Revenue Code of 1986

to improve portability and continuity of health insurance

coverage in the group and individual markets, to combat

waste, fraud. and abuse in health insurance and health

17

care delivery, to promote the use of medical savings

accounts, to improve access to long-term care services

and coverage, to simplify the administration of health

insurance, and for other purposes.”

110 Stat. at 1936. None of these stated purposes refer to

privacy of ITHI.

Section 261, contains a statement of the purpose of subtitle

F of HIPAA. 110 Stat. at 2021 (not codified but appears at 42

U.S.C. § 1320d note). The language at the end of § 261 (i.e.

“through the establishment of standards and requirements for

the electronic transmission of certain health information”)

does not provide the Secretary with authority to issue stand-

ards with respect to the privacy of IIHI. A fair reading of

§ 261’s language points to § 1173, which is entitled “STAND-

ARDS TO ENABLE ELECTRONIC EXCHANGE”. It does not point

to § 264, which ts entitled “RECOMMENDATIONS WITH RE-

SPECT TO PRIVACY OF CERTAIN HEALTH INFORMATION.”

Section 264 directed the Secretary to make recommendations.

It did not direct the Secretary to establish any standard with

respect to privacy of IIH] upon enactment. The only

authority to issue such standards was contingent authority if

Congress failed to enact legislation. The policy and purpose

with respect to privacy of ITHI were to be determined by later

legislation. HIPAA contained no policy or purpose with

respect to privacy of IIHI. But see South Carolina Medical

Association v. Thompson, 327 F.3d 346, 351 (4th Cir.), cert.

denied, 540 U.S. 981(2003) (finding a “general policy” of

privacy).

Section 264(c)(1) and the Regulations are inconsistent with a policy

of privacy. They apply only to covered entities and do not apply to other

individuals and entities that wrongfully obtain HHL bxee. Order No

13181 reprinted in 42 U.S.C. §$1320d-2 notes. Furthermore, the Regu-

lations do not apply to all private medical information but only to [HI

that is within the scope of $1173. Section 264(c) 1). If privacy were truly

the policy, the Secretary would not have been able to reduce contidential-

1&

The phrase “shall address at least” is used both to list the

subjects of legislative recommendations to be submitted by the

Secretary and to list the subjects of rulemaking authority to be

delegated if Congress failed to pass legislation by the statutory

deadline. The use of that phrase removed all limits on the

Secretary's authority. In 4.1.4. Schechter Poultry Corporation

v. United States, the Supreme Court struck down, as overly

broad, a delegation that merely affected all industnes. 295 U.S.

495 (1935). The delegation in §$264(c)(1) is much broader. Its

impact is not limited to the healthcare industry or even ‘o all

industries. It affects everyone. Its impact is pervasive.

Section 264(c)(1) contains no boundaries to determine

whether the Secretary has exceeded the authority granted by

Congress. See Yakus v.United States, 321 U.S. 414, 423-424

(1944): Chadha, 462 U.S. at 953. It specifies only a minimal

set of subjects to be recommended to Congress and a minimal

set of subjects to be included in future regulations if Congress

did not enact such legislation by the deadline. Although the

Secretary was required to “address at least” the three subjects

specified in §264(b), there are no limits or constraints upon

those subjects. Potentially. the Secretary could have ad-

dressed an infinite number of subjects'® and had unbounded

discretion with respect to each subject that he or she did

address. In Whitman v. American Trucking Associations, Inc.,

the Supreme Court said, “[t]he very choice of which portion

of the power to exercise—that is to say, the préscription of

the standard that Congress had omitted—would itse/f be an

exercise of the forbidden legislative authority.” $31 U.S. 457,

ity from the Hippocratic standard practiced by physicians throughout our

nation’s history.

ito

The meaning of the words “at least” is unambiguous. In mathe-

matical terms, those words mean “greater than or equal to”. There is no

upper limit. Under the Plain Meaning Rule, the Court must construe the

words as written. Connecticut National Bank v. Germain, 503 U.S. 249.

253-54 (1992) (Thomas, J.).

19

473 (2001) (Scalia, J.). The Secretary has exercised such

forbidden legislative authority.

C. The Constitution Does Not Give Congress

Authority to Impair a Physician’s Confiden-

tiality Obligations

itis btack letter law that “the powers of the legislature are

defined and limited.” Marbury v. Madison, 1 Cranch (5 U.S.)

137, 176 (1803) (Marshall.C.J.). See also, The Federalist,

No. 45, at 292 (Madison) (Clinton Rossiter, ed. 1961) (“The

powers delegated by the proposed Constitution to the federal

government are few and defined”).

According to the Constitution, the states are prohibited from

changing or “impairing” contractual obligations. U.S. CONST.

art. 1, § 10, cl. | (*No State shall... pass any... Law impairing

the Obligation of Contracts. .. .”’). Here, no state law is at issue.

Rather, federal law (i.e. $264(C) 1) and the Regulations) acts lo

impair confidentiality obligations from physicians to patients.’

No power of Congress to impair a contractual obligation was

enumerated in the Constitution other than the Bankruptcy

Clause. U.S. CONST. art. 1, § &, cl. 4.

While section 10 of Article I of the Constitution is di-

rected to the states alone, we think it nevertheless states

the policy of the founders of the Government on the

question of impairing the obligation of contracts and that

any Act of the national legislature that does impair the

obligation of contracts is contrary to that policy and not

Typically. a contract ts formed when a patient receives care from a

physician. The patient promises to pay or have a third party pay. The

physician promises to diagnose and treat the patient. The physician also

promises to keep the confidences of his or her patients. Dr. Benjamin

Rush, a signer of the Declaration of Independence said: “[t}he most im-

portant contract that can be made. ts that which takes place between a sick

man and his doctor. The subject is human life. . ~ American College of

Physicians. Medicine in Quotations Online (a www.acponline.org cyi-

bin medquotes.pl (citations omitted):

20

within the powers delegated to the National Govern-

ment, except in specific cases, such as bankruptcy.

Johnson v. U.S., 79 F.Supp. 208 (Ct. Cl. 1948).'* The lack of

congressional power to impair contractual obligations is also

confirmed by the need to include a provision in the Fourteenth

Amendment in order to extinguish debts and obligations in-

curred in aid of the confederacy. U.S. CONST. amend. XIV, § 4.

Without a constitutional amendment authorizing Congress

to enact laws impairing the obligation of contracts, § 264(c)(1)

and the Regulations may not impair a physician's obligation

to keep a patient's confidences. This is as true today as it was

219 years ago."

CONCLUSION

For the foregoing reasons, the Court should grant certiorari

and ultimately declare § 264(c)(1) unconstitutional and the

Regulations void.

Respectfully submitted,

DAVID P. PFELSHER

Counsel of Record

488 Madison Avenue

New York, NY 10022

June 14, 2006 (212) 308-8505

'S The impairment of physicians’ obligations may not be justified by

nor derived from the Constitution's other provisions. But see, Continental

Illinois National Bank and Trust Company of Chicago v. Chicago, Rock

Island & Pacific Railwav Company, 294 U.S. 648, 680-81 (1935).

" The Framers understood the importance of a physician's confiden-

tiality obligation. In fact, one key Framer, Dr. Josiah Bartlett, was founder

and first president of the New Hampshire Medical Society. As New

Hampshire's representative to the Continental Congress. he cast the first

vote for the Declaration of Independence. He also cast the first vote for

the Articles of Confederation, With the help and influence of Dr. Bartlett

during its ratification convention, New Hampshire became the ninth state

to ratify the Constitution, triggering the formation of the United States

under Article VII. U.S. Const. art. VIL. Signers of the Declaration: Biog-

raphical Sketches (Josiah Bartlett) «@ www.cr.nps.zov history online_ books’

declaration: bios htm.