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Now 15 State AGs, Others Oppose “Cornhusker Kickback;” Lawsuit “Virtual Certainty” if Present Bill Passed

Wednesday, January 13, 2010 Update:

The Washington Times is reporting on the “Kickback Campaign,” where South Carolina Attorney General Henry McMaster is currently focusing his efforts on challenging the Nebraska Compromise but is leaving the door open for other legal challenges regarding the healthcare legislation:

Mr. McMaster spoke to conservative-leaning writers at a roundtable hosted by Americans for Tax Reform on Wednesday, saying, “There has to be some reason, called a distinction, and the only reason for this is that Sen. Nelson’s vote was needed for cloture.”

During his talk he also made it clear the “cornhusker kickback” wasn’t the only item in the bill open to legal challenges. Several conservatives have talked about fighting provisions requiring Americans to purchase health care and states to set up health care exchanges and Mr. McMaster appeared to encourage those efforts, too.

“There are plenty of targets of opportunity,” he said

Tuesday, January 12, 2010 Update:

Georgia Governor Sonny Perdue, a Republican, back in December, requested that State Attorney General Thurbert Baker, a Democrat, join other colleagues from around the nation reviewing the constitutionality of the federal healthcare bill.

The letter was provided in textual format:

The Honorable Thurbert Baker

Attorney General of Georgia

Dear Attorney General Baker:

RE: H.R. 3590 – “Health Care Reform”

The debate over healthcare policy in Washington, DC has reached a critical juncture now that 60 Senators have agreed to support the latest bill unveiled by Sen. Harry Reid over this past weekend. Under the House and Senate proposals, state spending on Medicaid will increase dramatically and Governors of both parties have repeatedly objected to the path we appear to be rushing toward. One of my Democratic Governor colleagues even called this bill “the mother of all unfunded mandates.”

The leadership of Congress, particularly Senate leadership, understands the financial devastation that is looming for states, which is clearly evidenced by the special deals that have been cut for states that have Democratic Senators with wavering support of the reform. In order to calm the concerns, Senate leadership has granted special exemptions with additional federal dollars to cover the substantial increases in Medicaid costs for a few states while leaving the rest of us to foot the entire bill. Senator Reid’s recent compromise to obtain the support of Senator Ben Nelson of Nebraska is the most striking example where the federal government would cover one hundred percent of the cost of all newly eligible Medicaid enrollees in just the State of Nebraska. In addition, the health care legislation grants an additional $300 million in Medicaid aid to the State of Louisiana which secured Senator Mary Landrieu’s support – a deal many are calling the new “Louisiana Purchase.”

Yesterday, seven Attorneys General from across the country confirmed that they are looking at the constitutionality of these special deals. As I have considerable concerns over the constitutionality of these recent actions, I respectfully request that you join your colleagues from Alabama, Colorado, Michigan, North Dakota, South Carolina, Texas and Washington state in investigating the constitutionality of these special exemptions in the health care legislation and explore the availability of any legal challenges that Georgia could pursue to oppose this unconscionable scenario.

Congress appears to be on the cusp of making a decision that will have ripple effects for decades to come. Now is the time to ensure that any decision that is made has been thoroughly vetted and deemed to meet the intent and spirit of our country’s Constitution.

Thank you for your attention to this matter.


Governor Sonny Perdue


Following up on my previous posting, two Democrat State Attorneys General are now separately pushing for removal of the so-called “Cornhusker Kickback,” otherwise known as the Nebraska Compromise, where Sen. Ben Nelson (D-NE) successfully lobbied the Majority Leader to have the pending federal health care legislation pay for all of Nebraska’s Medicaid payments at the behest of all other States.

Ohio Attorney General Richard Cordray released a presser encouraging his State’s congressional delegation to oppose the provision (letter PDF):

Healthcare Letter

However, regarding Arizona State Attorney General Terry Goddard, there has been a bit of drama concerning he and the Republican Governor, Janice Brewer (via

Goddard’s letter follows his rejecting earlier calls by Brewer to investigate the constitutionality of the Nebraska Deal. Goddard, who is widely expected to run for governor this year against Brewer, responded to the governor’s request, saying her request was premature, noting that the federal health care bill has not been finalized.

However, in his letter proposed letter to the Arizona delegation, Goddard expresses strong opposition to the “sweetheart deal” for Nebraska, denouncing it as “poor public policy and not in the best interest of Arizona or the nation,” a statement said.

To detail the goings-on, here is Gov. Brewer’s initial letter:


…to which the Attorney General responded as such:

Health Care Reform Letter From Terry Goddard

…and the Governor responded back with the following:


Not to be left out — but stating that he will not sign on to the original letter with 13 other Attorneys General — Arkansas State Attorney General Dustin McDaniel had the following to say about the potential legal activity:

McDaniel insists that the provision wrongfully benefits Nebraska at the expense of other states. Yet, after researching applicable law, he declined to sign onto a letter circulated by South Carolina Attorney General Henry McMaster, which threatens a lawsuit in federal court if the provision is not removed.

McDaniel states in his letter, “Although such threats make for good politics, I do not believe that the states would have a winning lawsuit based on what I know at this time. However, I strongly agree that the Nebraska Compromise should be removed in the Conference Committee, and I request your attention to this matter.”

Mr. McDaniel’s office posted a copy of his letter to Speaker Pelosi and Majority Leader Reid in textual format:

January 11, 2010

The Honorable Harry Reid
Majority Leader
522 Hart Senate Office Building
Washington, DC 20510

The Honorable Nancy Pelosi
Speaker of the House of Representatives
235 Cannon House Office Building
Washington, DC 20515

Dear Majority Leader Reid and Madam Speaker:

I want to thank you for your hard work on the effort to reform America’s broken health insurance system. Small businesses, working families and all Americans who are uncertain about the rising costs of healthcare need common sense, fiscally responsible reform. I encourage you to continue to work through the controversial challenges of this issue to create a final product that serves America’s needs.

To that end, I am writing as the chief legal officer of the State of Arkansas with respect to the “Nebraska Compromise” contained in the Senate version of the Patient Protection and Affordable Care Act, H.R. 3590. This provision would unfairly burden Arkansas and every other state, as we would be compelled to pay for the special status afforded to the Nebraska Medicaid program.

I have been contacted by a number of attorneys general who are preparing a letter to you on this matter. That letter will be signed by a number of Republican Attorneys General and to my knowledge, at least one Democrat, who all believe that the Nebraska Compromise is an illegal and unconstitutional exercise on the part of Congress. They threaten legal action in federal court if that provision is not removed in the Conference Committee.

After having done substantial legal research on the matter, I have declined to sign on to the above-referenced letter on behalf of Arkansas. Although such threats make for good politics, I do not believe that the states would have a winning lawsuit based on what I know at this time. However, I strongly agree that the Nebraska Compromise should be removed in the Conference Committee. I believe that, as Attorney General Terry Goddard of Arizona said recently, this provision “amounts to nothing more than a sweetheart deal for Nebraska only, is poor public policy and not in the best interest of . . . the nation.”

I request your attention to this matter and ask that the Nebraska Compromise be removed from H.R. 3590.

Dustin McDaniel
Arkansas Attorney General

Cc: The Honorable Blanche Lincoln
The Honorable Mark Pryor
The Honorable Marion Berry
The Honorable Vic Snyder
The Honorable Mike Ross
The Honorable John Boozman
The Honorable Mike Beebe

Furthermore, according to the, New Hampshire Governor John Lynch says that he’s “unhappy” with the Nebraska Compromise, but has not instructed his State’s Attorney General to oppose the legislation:

Gov. John Lynch has told the White House and the state’s congressional delegation he’s unhappy with a key component of the Democratic health-care reform bill that provides special treatment for Nebraska’s Medicaid costs, his spokesman says.

But the governor has not directly asked the congressional delegation to oppose the bill if it contains the $100 million so-called “Cornhusker Kickback,” which was inserted into the bill more than two weeks ago to win Nebraska Democratic Sen. Ben Nelson’s vote.

Nor has the governor asked the state’s attorney general to join with 13 other attorneys general who have threatened legal action to stop the provision. Lynch hasn’t joined with Democratic colleagues in urging congressional Democrats to pass the bill, either. …

Lynch spokesman Colin Manning said the governor has not directed the state Office of the Attorney General to join with the attorneys general who are threatening legal action over the Nebraska provision. “If there is a lawsuit filed, we’re sure it is something our attorney general would look at and consider,” Manning said.

Attorney General Michael Delaney on Friday did not return a call seeking comment. …

One Democratic attorney general, Drew Edmondon of Oklahoma, reportedly is poised to join the group. In California, Republican Gov. Arnold Schwarzenegger last week suggested that his state get the same deal Nebraska received.

Mr. Edmondon’s Twitter account confirms this:

OK AG Edmondson, SC AG McMaster asking state AGs to voice concerns over special treatment for Neb in Senate health care bill. #AGOs

The article continues:

Lynch’s spokesman would not say, however, whether Lynch has asked the delegation to try to have the Nebraska provision removed or to vote against the bill if it contains the provision.

“In his discussion with the delegation, he has stressed that he believes all states should be treated the same,” Manning said. “There has been regular communication with the delegation and regular communication with the (Obama) administration on this, as well as with other governors’ offices across the country.”

Manning said an official from the governor’s office on Thursday took part in a conference call that included members of the Democratic Governors Association, Health and Human Services Secretary Kathleen Sebelius, and senior White House adviser Valerie Jarrett. On the call, Pennsylvania Gov. Ed Rendell reportedly urged his fellow governors to send a group letter backing the reform measure to every Democrat in Congress.

Said Manning, “We haven’t seen a letter, so it’s something that would have to be evaluated.”

Not to be outdone, State legislators from Missouri — according to the KCStar — may call for their State’s Attorney General, Chris Koster, to similarly oppose the legislation:

Also likely to come up: a resolution calling for Attorney General Chris Koster to join a lawsuit opposing the so-called “Nebraska Compromise,” the deal securing Nebraska Sen. Ben Nelson‘s vote on the health-care bill by exempting his state from paying the cost of expanded Medicaid. [emphases original]

Nevertheless, there are some legal minds that think the Judiciary may not be sympathetic to this State-based initiative (via

Several legal scholars, however, say [Texas Attorney General Greg] Abbott’s constitutional analysis falls short because it underestimates congressional power and relies on a selective reading of prior Supreme Court rulings.

The White House and congressional Democrats dismiss Abbott’s conclusions as well. But a growing number of Republicans are embracing the idea of a constitutional challenge — by states and individuals — if current health care legislation becomes law. …

University of Texas law professor Daniel Rodriguez is sympathetic to Abbott’s position, saying the compromise “ought to raise the hackles of any American citizen.” But Abbott’s arguments are unlikely to gain traction in the federal courts, he said.

“Even for those of us who are very protective of states’ interests, we have a very hard time finding a constitutional doctrine that protects states’ rights under the general welfare clause,” Rodriguez said. “The courts have seldom used the general welfare clause in any way to invalidate federal legislation.”

UT law professor Mitchell Berman agrees, noting that the Supreme Court gives Congress tremendous leeway in defining whether issues address the nation’s welfare.

More important, Berman said, while the Supreme Court has required that taxes be imposed equally among states, the requirement does not extend to federal spending.

“It’s true that spending has to be for the general welfare, but it doesn’t mean spending has to be uniform everywhere,” he said. “The fact that spending isn’t uniform is not a constitutional problem.” …

Current versions of the health care bill would impose a tax penalty on individuals who fail to purchase insurance — an unprecedented and presumably improper federal intrusion, Abbott argued. …

“For the first time, Congress is attempting to regulate and tax Americans for doing absolutely nothing,” he said. “The act of doing absolutely nothing does not constitute an act of ‘commerce.'”

Twice since 1995, Abbott said, the Supreme Court has struck down laws for exceeding the commerce clause, limiting congressional power to regulate the channels and instruments of commerce as well as economic activities that affect commerce.

“The individual mandate is suspect because it does not fall within any of these categories,” Abbott said. “If there are to be any limitations on the federal government, then ‘commerce’ cannot be construed to cover every possible human activity.” …

Constitutional law professor Berman said Abbott, by focusing on the two Supreme Court cases that limited congressional power to regulate commerce, ignored a more relevant later ruling — Gonzales v. Raich, a 2005 decision that allowed federal anti-drug laws to overrule state exceptions for medical marijuana.

Raich gave the courts new guidance when parts of a comprehensive set of economic regulations are challenged as unconstitutional, Berman said. “That analysis doesn’t look at a single challenged provision all on its own but instead asks, essentially, whether Congress could conclude that this piece was an important part of the general legislation,” he said. …

Jonathan Adler, a conservative legal commentator and a Case Western Reserve University law professor, agrees that the Raich decision protects Congress’ power to create an insurance mandate.

The problem with such a broad view of federal power, he wrote in the Volokh Conspiracy legal blog, is where to draw the line.

“In short, Congress could mandate universal participation in any economic activity and mandate the purchase of any product or service it chooses, so long as it does so as part of a broader regulatory scheme,” he wrote. “If this is true for health care, there is no reason why it is not also true for Christmas trees, savings bonds or GM cars.”

Despite differing opinions, the Attorneys General are not going to give up without a fight, should the legislation pass as it currently stands:

In an interview with The Associated Press, Abbott said he was still researching the ramifications of a lawsuit over the insurance requirement. He said he has talked about the issue with other attorneys general and expected the topic to be the focus of “intensified discussion” with them in coming days.

As for the Nebraska Medicaid provision, Abbott said a multistate lawsuit against the federal government was a “virtual certainty” if the measure isn’t removed as U.S. House and Senate leaders iron out differences in competing versions of the bill. …

In his letter Tuesday, Abbott called the Nebraska provision a “uniquely contemptible and corrupt bargain” and a “naked transfer of wealth to one state from the 49 other states.”

Tomorrow, the National Press Club will be hosting a briefing on the Nebraska Compromise, featuring, South Carolina Attorney General Henry McMaster (pictured):

WASHINGTON, Jan. 11 /PRNewswire-USNewswire/ — South Carolina Attorney General Henry McMaster will discuss the review of state attorneys general into the constitutionality of the health care reform bill being considered by Congress, at a National Press Club Newsmaker press conference at 2:00 p.m. on Wednesday, January 13th, in the Zenger Room, 13th Floor, National Press Building, 529 14th Street, NW, Washington, DC.


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