After Reed O’Connor, a federal district judge in Wichita Falls, Texas ruled Tuesday the IRS should reimburse Texas and five other states, including Louisiana, a portion of the fees collected from the Affordable Care Act’s Health Insurance Provider Fee (HIPF), Louisiana state Attorney General Jeff Landry and his top legal aide, Liz Murrill, both talked about a “deep state” conspiracy in an interview with the conservative online publication, PJ Media, and a press release issued by Landry on Wednesday.
Murrill claims to be Louisiana’s first-ever state Solicitor General, an office that does not exist under state law.
During the past three years, she has spearheaded Landry’s efforts in federal court to oppose climate change, LGBT rights, and the enforcement of the Americans with Disabilities Act, among other things. She has also championed cases aimed at dismantling the Patient Protection and Affordable Care Act (better known as Obamacare).
Notably, though, Louisiana first became a party to this particular lawsuit during the previous administration, under former state Attorney General Buddy Caldwell.
The case on Tuesday involved a minor technicality in Obamacare, which requires states to cover a portion of federal taxes and fees incurred by for-profit Managed Care Organizations (MCOs) as a consequence of participating in Medicaid and the Child Health Insurance Program (CHIP).
“This is a prime example of how the administrative state works — and how difficult it can be to unravel the work of deep state bureaucrats,” Murrill declared after Judge O’Connor’s decision on Tuesday in a case styled as Texas v. United States.
Although it seems exceedingly unlikely, the decision purports to force the IRS to return $170 million to Louisiana. According to those familiar with the case, the decision will have no effect on the state’s finances and is almost certain to be overturned.
The judge ruled that plaintiff states had not been provided proper notification of their obligation to cover the HIPF and were thus forced to pay an unconstitutional tax.
Louisiana leads the nation in “state government’s dependency” on federal funding, according to a recent analysis, and it receives exponentially more money from the federal government than it contributes in federal taxes. Moreover, the HIPF is not and has never been considered an actual tax, and Louisiana’s payments are essentially an accounting maneuver, not a net burden incurred by the state government or taxpayers.
Judge O’Connor, a far-right appointee of former President George W. Bush, is best known for issuing a nationwide injunction against the Obama administration’s efforts to ensure schools receiving federal funding do not discriminate on the basis of sex; the decision largely was concerned with preventing transgender students from using bathrooms (O’Connor called them “intimate facilities”) not assigned to their biological sex at birth.
O’Connor used similarly tortured logic to justify his order that the IRS reimburse states for the HIPF, overruling previous decisions under a questionable interpretation of a federal procedural rule and then declaring that the HIPF was both statutorily created as a fee- not a tax- but was still a tax for the purposes of the Anti-Injunction Act. Read the ruling here.
In simple terms, the judge conceded that although Congress had created the HIPF to be treated as a “fee” (it’s literally in the title), states could sue under the pretense that it was a “tax.”
The application of the Anti-Injunction Act is a legal strategy encouraged by opponents of Obamacare and is at the center of another case involving Landry, which aims to strike down the mandate preventing health insurance companies from discriminating against Americans with preexisting conditions.
Jeff Landry used nearly identical language as Murrill to describe the decision on Tuesday. “This is a prime example of the deep administrative state doing something that Congress expressly forbid,” he wrote.
“Obamacare has always been an economic house of cards, and this ruling has again exposed it for what it is: a money laundering scheme,” Landry claimed in a separate press release titled “Money Laundering Scheme Foiled as Victory in Obamacare Lawsuit Yields $172,493,095 for Louisiana.”
His statements grossly mischaracterize the facts of the case, distort the statutory definition of “money laundering,” and comically appropriate talking points from the alt-right fringe.
The term “deep state” refers to a conspiracy theory, almost exclusively embraced by the most radical supporters of Donald Trump and primarily promoted by Steve Bannon, Trump’s former chief strategist and the publisher of the online, alt-right news site Breitbart.
Those who believe in the “deep state” argue the United States government is secretly controlled by a small cabal of intelligence operatives and lawyers at the Department of Justice determined to sabotage the current administration.
Landry and Murrill are the first public officials to apply the term to an entirely ministerial accounting procedure or to suggest that career civil servants at the Department of Health and Human Services are somehow actively involved in this conspiracy.
Landry issued his statement on Wednesday, August 22nd, less than 24 hours after President Donald Trump’s former campaign manager, Paul Manafort, was convicted on five counts of tax fraud, two counts of bank fraud, and one count of failure to disclose a foreign bank account and his former personal lawyer, Michael Cohen, pleaded guilty to campaign finance violations, multiple counts of tax evasion, and one count of bank fraud.