By Joan Biskupic
WASHINGTON, Feb 20 (Reuters) - The U.S. Supreme Court case that could shatter President Barack Obama's healthcare law this year was launched as a backup plan by a libertarian group and a powerful Washington lawyer frustrated by the slow progress of their original lawsuit.
Their success in persuading the court to take the ideologically driven case owes to a combination of canny legal tactics and the willingness of at least four justices to hear it in unusually swift time. Oral arguments are set for March 4.
But for the challengers' strategic maneuvering, Obama's signature domestic policy would not now face a possible ruling, expected by June, that could cripple the law and raise insurance costs for millions of Americans in nearly three dozen states.
Interviews with lawyers on both sides, along with a review of their filings over the past two years, show how both camps were in a battle against the calendar for advantage, right up to the court's surprise decision last November to accept the case.
To the challengers, speed was of the essence: getting a case to the court during its current session ending mid-year would give them their best shot. The administration was arguing that Obamacare was becoming too entrenched to undo, with millions of people dependent on it for insurance.
The case marks the second major challenge to the Affordable Care Act, which Republican lawmakers and other conservatives regard as a federal overreach. In 2012, the Supreme Court upheld the law, by a 5-to-4 vote, as constitutional.
At stake now are the tax-credit subsidies that have allowed low- and moderate-income Americans to buy insurance. The plaintiffs say the government unlawfully extended credits to states that did not create local insurance exchanges.
The plaintiffs' lead lawyer Michael Carvin represented some of the challengers in 2012. He and the libertarian Competitive Enterprise Institute (CEI), bankrolling the current lawsuit, began planning the new attack soon after that bid failed.
At every turn, they radiated urgency in their filings, even asserting at one point that the Supreme Court should deny the administration extra time to file a response, and building a consistent message for the justices.
"We had to convince them they were going to take this case eventually and they were going to undo (the subsidies provision) eventually," said Carvin, who has appeared often before the justices and who represented George W. Bush in the 2000 presidential election dispute in Florida.
THE VIRGINIA GAMBIT
The new challenge originated at a conference by the conservative American Enterprise Institute in 2010, where an employee-benefits lawyer highlighted an ACA provision allowing tax credits through exchanges "established by the state."
As Carvin and the CEI's general counsel Sam Kazman transformed the idea into a lawsuit, the stakes rose. Most states had declined to set up exchanges and the federal government stepped in to facilitate insurance-cost comparisons and enrollment. The administration said opponents were wrongly focused on one phrase and that, as a whole, the law clearly allowed subsidies across all exchanges.
Carvin filed first in May 2013 in a District of Columbia federal jurisdiction, where the government is based and where the appeals court was dominated by Republican appointees.
When four months passed without much action, Carvin tried a gambit that would become decisive. He turned to a Virginia federal judicial district nicknamed the "rocket docket" for its speed in moving cases.
Through its libertarian links, CEI sought plaintiffs and enlisted four Virginians who claimed that their eligibility for subsidies subjected them to a burdensome insurance requirement.
Some media reports have questioned the plaintiffs' insurance obligation under the law and whether they have legal "standing" to sue. Carvin and the CEI insist they adequately vetted the plaintiffs, only one of whom is needed to keep a lawsuit alive.
The Virginia district court judge sided with the government in February 2014 and an appeals court affirmed in July.
By early 2014 the D.C. case was moving. A judge ruled for the government, but then a panel of the D.C. Circuit reversed the decision, on the same July day as the Virginia ruling. That split gave Carvin ammunition for the high court, which typically waits for a division in appeals courts before hearing a dispute.
Obama lawyers moved quickly to cut off that opportunity by asking the D.C. Circuit, which had added new Obama appointees and had a Democratic majority, to rehear the case. The full D.C. Circuit agreed on Sept. 4, throwing out the July decision and saying it would hold new arguments in December.
But it was too late. In November, over the objections of U.S. Solicitor General Donald Verrilli, the conservative-leaning Supreme Court granted Carvin's Virginia appeal. It takes only four of the nine justices to agree to hear a case. The vote was in secret, and the justices, as is their practice, did not explain the order.
Now on March 4, when Carvin and Verrilli face off, Carvin says he will continue to emphasize the urgency of stopping the "lawless" flow of subsidies. Verrilli will raise the specter of upheaval if subsidies are curtailed.
If the challengers prevail, he wrote in his brief, the majority of the states "would face the very death spirals the act was structured to avoid, and insurance coverage for millions of their residents would be extinguished." (Reporting By Joan Biskupic; editing by Stuart Grudgings)