Arlington, Va.—If government-mandated health insurance is upheld by the U.S. Supreme Court after the Patient Protection and Affordable Care Act (PPACA) case is argued in March 2012, the Institute for Justice warns in its amicus brief that there will be dire and predictable threats to individual liberty and voluntary relations that have been the foundation of American contract law for centuries.

Constitutional law professor Elizabeth Price Foley, who is the executive director of the Institute’s Florida Chapter and who co-authored IJ’s brief, said, “The individual mandate violates a cardinal rule of contract law—to be enforceable, all agreements must be voluntary. The Framers understood this, and would never have given the federal government the power to force individuals into lifelong contracts of insurance. The Court should not allow the government to exercise this unprecedented and dangerous power.”

As IJ’s brief shows, the principle of mutual assent, under which both parties must consent for a contract to be valid, is a fundamental principle of contract law that was well understood during the Founding era and is still a cornerstone of contract law today. Indeed, contracts entered under duress have long been held to be invalid. Yet the mandate forces individuals to enter into contracts of insurance that would never be valid under this longstanding principle. (For a copy of IJ’s brief, visit: www.ij.org/PPACAbrief.)

If the U.S. Supreme Court fails to strike down the individual mandate, there will be nothing to stop Congress from forcing people into other contracts against their will—employment contracts or union membership, for example. If we still have a constitutional republic in which the federal government’s powers are limited, then the Court should strike down this law.

The Institute for Justice’s brief is the only amicus brief filed with the Court that examines this case in the context of the history of contract law. The brief illustrates how the Supreme Court has recognized the principle of consent in commercial relations in its Commerce Clause and Tenth Amendment cases, and it explains why the U.S. Supreme Court has a key role in acting as a check against this unconstitutional power grab by the federal government.

Coercing Contracts Is Not a Proper Use of Government Power

IJ’s brief states, “The Founding generation that drafted and ratified the Constitution never meant for the federal government to possess the power to coerce individuals to engage in commercial transactions against their will. Coercing commercial transactions is antithetical to the foundational principle of mutual assent that permeated the common law of contracts at the time of the Founding and continues to do so today. The Founding generation recognized that this principle was critical to protecting individual liberty. It would never have given, and in fact did not give, Congress, through the guise of the Commerce Clause, the power to gut the foundation upon which the entirety of contract law rests.”

The brief continues, “Construing the enumerated powers of Congress as including a power to coerce individuals to engage in commerce would destroy the longstanding principle of mutual assent. It truly would be the last step in creating a general federal police power to legislate concerning ‘the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State’ that the Framers assured the American people were reserved to the States.”

“Allowing Congress to compel individuals to enter into contracts against their will would destroy a fundamental precept of contract law and would have a devastating impact on individual liberty. Under any understanding of Anglo-American law, compelled contracts are not binding.”

Foley said, “The requirement of mutual assent was firmly entrenched by the time of the American Founding and well understood by the Founders. The Founding generation never meant to give Congress the ability to gut this basic principle of legally binding contracts, and until now, Congress never assumed it had such power. Under the mandate, the government is tossing out this principle and with it a fundamentally important restraint on the power of government.”

A Vital Principle of Civilized Society

“In a free society, individuals must be free to choose with whom they do business and with whom they interact,” said Steve Simpson, an IJ senior attorney and the brief’s co-author. “That is a cardinal principle of American law, but the mandate destroys it by forcing individuals to enter into contracts of insurance whether they want to or not.”

The Supreme Court has long claimed that Congress lacks a general “police power,” which is the power to protect rights and to legislate concerning the daily affairs of citizens. The Tenth Amendment reserves those powers not granted under the Constitution to the States and to the people. The Supreme Court recently noted, in Bond v. United States, that the Tenth Amendment exists not simply to protect State power, but to protect individual liberty as well.

Simpson added, “It is time for the Supreme Court to decide whether it has meant what it said all these years. If the federal government is truly a government of limited powers and individuals still retain some authority to govern their own lives, then the mandate must go.”

Judicial Engagement vs. Judicial Abdication

IJ’s brief concludes by discussing the need for judicial engagement in this case if liberty is to be preserved. The brief states, “Several lower courts and judges that have heard challenges to the individual mandate have opined that a properly ‘restrained’ federal judiciary should leave to Congress the task of deciding how to regulate the health care system. But, as the Eleventh Circuit noted in striking down the mandate, ‘the Constitution requires judicial engagement, not judicial abdication.’”

The brief continues, “Reflexively deferring to Congress’ enactment of the individual mandate is an abdication of the judicial duty owed to the American people to enforce and support the Constitution. If courts cannot find and articulate meaningful limits on the federal government’s enumerated powers, the entire constitutional architecture collapses. At a minimum, courts should be willing to draw a line between the power to regulate commerce and the power to compel it. Hundreds of years of historical understandings of the centrality of mutual assent, this Court’s own constitutional and statutory decisions relating to the commerce power, and the very nature of our federal structure all support the conclusion that, by enacting the individual mandate, Congress has pushed its commerce power one critical step too far.”

A Warning about the Future if PPACA is Upheld

IJ President Chip Mellor issued this warning about the future if the Supreme Court does not strike down the individual mandate: “A power to compel contractual relations would have no logical stopping point. It would include, for example, the power to compel individuals to buy any good or service or even to enter into employment contracts, so long as Congress could rationally conclude that the market for that product or the industry would benefit from compelled contractual relations. When combined with the Court’s highly deferential standard of review for exercises of the commerce power, extending that power to include the awesome power to compel would create the very Leviathan government the Founders spilled their blood to resist.”

The Institute for Justice is a nonprofit, public interest law firm committed to defending the essential foundations of a free society through securing greater protection for individual liberty and restoring constitutional limits on the power of government. IJ and its advocates have litigated five cases before the U.S. Supreme Court during the past ten years, winning all but one:

• Zelman v. Simmons-Harris, the landmark Supreme Court ruling, which held educational vouchers as constitutional.
• Granholm v. Heald, which struck down New York’s ban on interstate wine sales.
• Kelo v. City of New London, which unsuccessfully challenged eminent domain for private development, a decision that led to a national backlash in which nine state high courts have limited eminent domain powers and 44 state legislatures have passed greater property rights protections.
• Arizona Christian School Tuition Organization v. Winn, which upheld Arizona’s school choice tax credit program.
• Arizona Freedom Club PAC v. Bennett, which struck down the “matching funds” provision of Arizona’s campaign finance “Clean Elections” Act as an unconstitutional violation of free speech.

In addition, IJ helped pursue the landmark District of Columbia v. Heller case, in which the Supreme Court struck down D.C.’s ban on handguns and held that the Second Amendment to the U.S. Constitution protects an individual’s right to possess a firearm for self-defense.