IRS wants federal court to dismiss lawsuit over employer mandate delay

By Jessica M. Karmasek | Dec 11, 2013

FORT LAUDERDALE, Fla. (Legal Newsline) -- The federal government wants a lawsuit filed over a delay of the federal health care law's employer mandate to be tossed.

The Internal Revenue Service filed a 17-page motion to dismiss in the U.S. District Court for the Southern District of Florida Monday.

The agency argues that none of the harms alleged in Kawa Orthodontics LLP v. Lew et al. are sufficient to establish standing for the plaintiff, an orthodontist based in Boca Raton, Fla., to maintain the action.

Kawa filed the lawsuit in October, alleging it expended time and resources in preparing for the health care law's employer coverage provisions, which were previously set to take effect Jan. 1.

The business alleges that it lost some or all of the value of that time and resources as a result of the one-year delay.

In July, the Obama administration announced it would delay enforcement of the requirement that all employers with more than 50 employees provide coverage to their workers until 2015.

"Plaintiff has suffered no harm whatsoever as a result of Treasury's announcement that it would delay by one year enforcement of the above-referenced (Affordable Care Act) provisions," lawyers for the IRS wrote in the motion this week. "Notably, Plaintiff does not allege that the challenged transition relief will cause any future monetary loss."

The government argues that any such expenditures of time or money have "already occurred" and cannot be redressed by the federal court through the action.

"Moreover, Defendants played no role in determining what resources Plaintiff purportedly devoted to preparation for the employer coverage and reporting requirements of the ACA," the agency's lawyers wrote. "The government did not require Plaintiff to hire lawyers or consultants or to take any other action in preparation for the law's enforcement.

"Plaintiff, meanwhile, is of course free to use any information it obtained as a result of its choice to seek outside legal or other advice in selecting an insurance plan for 2014 if it chooses to do so."

The IRS noted that the reporting requirements and assessment of the provision "have merely been delayed by one year," saying the plaintiff can use whatever preparations it undertook to prepare for compliance with these requirements in 2015.

In its complaint, Kawa also alleges it will lose federal tax revenue as a result of the delay.

Click here to read the full complaint.

But the government contends that argument has no legs.

"It is well-established, however, that a plaintiff's status as a taxpayer cannot establish standing outside the context of an Establishment Clause challenge to a federal statute," its lawyers wrote.

Judge William P. Dimitrouleas is presiding over the case.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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