On January 31, 2011, Federal District Court Judge Roger Vinson ruled on a legal challenge to the health care reform legislation brought by governors and attorneys general from 26 states. In his ruling, Judge Vinson held that the health care reform legislation is unconstitutional and that the entire legislation – not just the individual mandate – must be declared void. The government is expected to appeal Judge Vinson’s ruling.

Earlier this month, the Republican-controlled U.S. House of Representatives passed the “Repealing the Job-Killing Health Care Law Act.” On February 2, 2011, Senate Democrats successfully fought back the efforts of Republican Senators to repeal the health care reform legislation. However, the Senate did approve an amendment to the health care reform legislation to remove the requirement that businesses file a Form 1099 with the Internal Revenue Service any time they spend more than $600 a year with any other business. It is expected that the U.S. House of Representatives will pass similar legislation. We will continue to monitor this development and will advise if this requirement is eliminated.

It is likely that the U.S. Supreme Court will ultimately decide the constitutionality of the health care reform legislation. In fact, Virginia has requested the U.S. Supreme Court to expedite review of the State’s constitutional challenge to the health care reform legislation. As you may remember, in December 2010, the U.S. District Court for the Eastern District of Virginia ruled that the individual health insurance mandate under the health care reform legislation is unconstitutional and in violation of the Commerce Clause.

Due to the increased media attention to these challenges over the past several weeks, you are likely wondering: What is the future of the health care reform legislation? These challenges to the constitutionality of the health care reform legislation by both State representatives and Republicans in Congress have led to speculation that all or a portion of the health care reform legislation will be repealed. However, at this time, the health care reform legislation remains in effect.

While the future of the health care reform legislation may be uncertain as a result of these challenges, there have been no changes in the practical realities of the health care reform legislation for employers, insurers and health plan participants at this time. Therefore, employers must continue to comply with the requirements of the health care reform legislation.

We will continue to provide updates as to the status of the health care reform legislation. For more information, please contact your SGR Executive Compensation and Employee Benefits counsel.