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Cuccinelli challenges Obamacare's employer mandate on Virginia businesses

- Affordable Care Act as written does not allow $2000 or $3000 per employee penalty to be enforced in the commonwealth -

RICHMOND (November 26, 2013) - Today, Attorney General Ken Cuccinelli filed a brief in federal court challenging the IRS's enforcement of Obamacare's employer mandate penalty against Virginia businesses, alleging the penalty cannot be enforced in the commonwealth under the president's health care law, also known as the Patient Protection and Affordable Care Act (PPACA).

Cuccinelli filed a friend-of-the-court brief - or amicus brief - in the U.S. District Court for the Eastern District of Virginia in Richmond in the case of King v. Sebelius, asserting that because Virginia elected not to establish a health insurance exchange, opting instead to let the federal government establish one, PPACA does not allow the federal government to enforce the penalty against employers who hire Virginians.  The penalty is a $2,000 or $3,000 per employee annual tax on employers that do not offer government-approved "affordable" health insurance at the workplace.

"If the courts ultimately rule in our favor and determine that the federal government has to follow the law as it was actually written, Virginia's job creators can avoid a huge new $2000 or $3000 per employee annual tax, and our companies can instead invest that money to grow their businesses, hire new employees, and create needed jobs.  This is precisely why we pushed for a federally run exchange in Virginia instead of having the commonwealth run its own.  We knew how the law was written, and no matter how hard the IRS tries to circumvent the law, only Congress can change it," said Cuccinelli.

PPACA called on each state to create its own government-run insurance exchange where people without employer-based health insurance could shop for private insurance coverage.  For those states like Virginia that chose not to create their own exchanges, the federal government stepped in and set up federal exchanges.

However, the way the law was debated and ultimately written by Congress, PPACA only triggers the employer penalty in states with state-created exchanges, not federally created ones.

The IRS has tried to counter the law by passing a regulation to allow it to assess the penalty in states with federally run exchanges.  However, because laws passed by Congress trump regulations passed by government agencies, and because the IRS regulation directly contradicts, rather than implements, the law Congress passed, the IRS lacks the authority to penalize Virginia's employers under Obamacare.

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A copy of this news release may be found on the attorney general's web site here.

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