Topic: Regulatory Studies

Could an Independent Candidate Still Make It onto the Ballot in November?

As we enter the summer of Crump (or Trinton, take your pick), many Americans are unsatisfied with the two-party oligopoly that has produced the two most unpopular presidential candidates in modern memory. While some of these will nevertheless hold their noses and pick whomever they see as the “lesser evil,” others can’t fathom pulling that proverbial lever. Of these, some are gravitating toward Gov. Gary Johnson and look forward to becoming part of what will likely be the best showing for a Libertarian Party candidate. Still, others are less enamored with Johnson so, like Bill Kristol at his rolodex, are hoping for an as-yet unnanounced candidate of whatever ideological stripe.

Not to rain on anybody’s parade, but as a lawyer – or at least someone who plays a lawyer on TV – I have to ask the question of whether this is even legally possible (forget the political and financial practicalities). During the primary season, when Donald Trump was lumbering towards the GOP nomination, we heard nervous #NeverTrumpers discussing ballot-access deadlines in Texas and elsewhere.

And indeed, the Lone Star State’s deadline for an independent candidate to collect and file the requisite signatures – 79,939 for those counting at home – came and went on May 9. We’re now past seven other states’ deadlines, with a further six being hit this week. These 13 states account for 178 of the 538 electoral votes, and include red, blue, and purple states. (There are separate, generally earlier deadlines for so-called “minor” parties, but I’ll stick to analyzing the rules for independent candidates because the logistics of having a theoretical white knight “take over” an existing third party with already-qualified ballot access are even more complicated.)

More Unconstitutional Executive Branch Actions

Imagine that your company’s board chairman, against the wishes of the board of directors and in contravention of the corporate charter, hires an interim CEO. Despite that illegal action, the interim CEO disciplines you in some manner. Would that discipline be any more legitimate if, two years later, the board finally agrees to hire the CEO, who then retroactively approved his own previous actions?

This is what’s happened at the highest levels of government. When Congress created the Consumer Financial Protection Bureau (CFPB) as part of the larger Dodd-Frank financial reform, it specified that the director was to be appointed by the president “by and with the advice and consent of the Senate.” This placed what’s called an Appointments Clause limitation on the director’s position. Four years ago, President Obama named Richard Cordray the CFPB director—after Elizabeth Warren’s expected appointment met significant political resistance—during what the president erroneously believed was a Senate recess. (You’ll recall that the Supreme Court unanimously invalidated the National Labor Relations Board appointments Obama made at the same time.)

ADA’s Assault on the Web: Your Turn, Congress

The Economist reports on a phenomenon I’ve been covering all year, how lawyers are beginning to churn out assembly-line complaints against businesses over their websites’ lack of Americans with Disabilities Act, or ADA, accessibility:

[Texas attorney Omar Weaver] Rosales says extending ADA rules to websites will allow him to begin suing companies that use color combinations problematic for the color-blind and layouts that are confusing for people with a limited field of vision.

While as I noted in January the Obama administration has declined to issue long-anticipated regulations prescribing web accessibility, its Department of Justice has taken the less visible route of supporting private lawsuits intended to accomplish many of the same goals, including (to quote The Economist again):

ObamaCare: Not Promoting Quality Care As Planned

At The Health Care Blog, Jeff Goldsmith and Bruce Henderson of Navigant Healthcare offer a grim assessment of ObamaCare’s performance that is worth quoting at length:

The historic health reform law passed by Congress and signed by President Obama in March, 2010 was widely expected to catalyze a shift in healthcare payment from “volume to value” through multiple policy changes. The Affordable Care Act’s new health exchanges were going to double or triple the individual health insurance market, channeling tens of millions of new lives into new “narrow network” insurance products expected to evolve rapidly into full risk contracts.

In addition, the Medicare Accountable Care Organization (ACO) program created by ACA would succeed in reducing costs and quickly scale up to cover the entire non-Medicare Advantage population of beneficiaries (currently about 70% of current enrollees) and transition provider payment from one-sided to global/population based risk. Finally, seeking to avoid the looming “Cadillac tax” created by ACA, larger employers would convert their group health plans to defined contribution models to cap their health cost liability, and channel tens of millions of their employees into private exchanges which would, in turn, push them into at-risk narrow networks organized around specific provider systems. 

Three Surprising Developments
Well, guess what? It is entirely possible that none of these things may actually come to pass or at least not to the degree and pace predicted. At the end of 2015, a grand total of 8.8 million people had actually paid the premiums for public exchange products, far short of the expected 21 million lives for 2016. As few as half this number may have been previously uninsured. It remains to be seen how many of the 12.7 million who enrolled in 2016’s enrollment cycle will actually pay their premiums, but the likely answer is around ten million. Public exchange enrollment has been a disappointment thus far, largely because the plans have been unattractive to those not eligible for federal subsidy. 

Moreover, even though insurers obtained deep discounts from frightened providers for the new narrow network exchange products (70% of exchange products were narrow networks), the discounts weren’t deep enough to cover the higher costs of the expensive new enrollees who signed up. Both newly launched CO-OP plans created by ACA and experienced large carriers like United and Anthem were swamped in poor insurance risks, and lost hundreds of millions on their exchange lives. As for the shifting of risk, it looks like 90% plus of these new contracts were one-sided risk only, shadowing and paying providers on the basis of fee-for-service, with bonuses for those who cut costs below spending targets. Only 10% actually penalized providers for overspending their targets.

The Medicare Accountable Care Organization/Medicare Shared Savings Program, advertised as a bold departure from conventional Medicare payment policy, has been the biggest disappointment among the raft of CMS Innovation Center initiatives. ACO/MSSP enrollment appears to have topped out at 8.3 million of Medicare’s 55 million beneficiaries. The first wave, the Pioneer ACOs, lost three-fourths of their 32 original participating organizations, including successful managed care players like HealthCare Partners, Sharp Healthcare, and Presbyterian Healthcare of New Mexico and others. The second, much larger wave of regular MSSP ACO participants lost one third of their renewal cohort. Only about one-quarter of ACO/MSSP participants generated bonuses, and those bonuses were highly concentrated in a relative handful of successful participants. 

Of the 477 Medicare ACO’s, a grand total of 52, or 11%, have downside risk, crudely analogous to capitation. As of last fall, CMS acknowledged that factoring in the 40% of ACO/MSSP members who exceeded their spending targets and the costs of the bonuses paid to the ACOs who met them, the ACO/MSSP programs have yet to generate black ink for the federal budget. And this does not count the billions care systems have spent in setting up and running their ACOs. It is extremely unlikely that the Medicare ACO program will be made mandatory, or voluntarily grow to replace DRGs and the Medicare Part B fee schedule. 

And the Cadillac Tax, that 40% tax imposed by ACA on high cost employee benefit plans, a potentially transformative event in the large group health insurance market, which was scheduled to be levied in 2018, was “postponed” for two years (to 2020) by an overwhelming Congressional vote. In the Senate, a 90-10 bipartisan majority actually voted to kill the tax outright, strongly suggesting that strong opposition from unions and large employers will prevent the tax from ever being levied. Presumptive Democratic nominee Hillary Clinton has announced her support for killing the tax. So the expected transformative event in the large group market has proven too heavy a lift for the political system. 

As a result, the enrollment of large group workers in private health exchanges, the intended off-ramp for employers with Cadillac tax problems, has arrested at about 8 million, one-fifth of a recent forecast of 40 million lives by 2018. Thus, the conversion of the enormous large group market members to narrow network products seems unlikely to happen. As a recent New York Times investigation revealed, the reports of the demise of traditional group health insurance coverage (based on broad network PPO models) have been greatly exaggerated.

What We Know About Fatal Tesla Accident

Numerous media stories have reported the first fatality in a self-driving car. The most important thing to know is that the Tesla that was involved in the crash was not a self-driving car, that is, a car that “performs all safety-critical functions for the entire trip” or even a car in which “the driver can fully cede control of all safety-critical functions in certain conditions” (otherwise known as “level 4” and “level 3” cars in the National Highway Traffic Safety Administration’s classification of automated cars). 

Instead, the Tesla was equipped with an Advanced Driver Assistance System (ADAS) that performs some steering and speed functions but still requires continuous driver monitoring. In the NHTSA’s classification, it was a “level 2” car, meaning it automated “at least two primary control functions,” in this case, adaptive cruise control (controlling speeds to avoid hitting vehicles in front) and lane centering (steering within the stripes). BMW, Mercedes, and other manufacturers also offer cars with these functions, the difference being that the other cars do not allow drivers to take their hands off the wheel for more than a few seconds while the Tesla does. This may have given some Tesla drivers the impression that their car was a level 3 vehicle that could fully take over “all safety-critical functions in certain conditions.”

The next most important thing to know about the crash is that the Florida Highway Patrol’s initial accident report blamed the accident on the truck driver’s failure to yield the right-of-way to the Tesla. When making a left turn from the eastbound lanes of the highway, the truck should have yielded to the westbound Tesla. Still, it is possible if not likely that the accident would not have happened if the vehicle’s driver had been paying full attention to the road.

Mobileye, the company that made the radar system used in the Tesla, says that its system is designed only to prevent a car from rear-ending slower-moving vehicles, not to keep them from hitting vehicles laterally crossing the car’s path. Even if the sensors had detected the truck, automatic braking systems typically can come to a full stop only if the vehicle is traveling no more than 30 miles per hour faster than the object. Since the road in question is marked for 65 miles per hour, the system could not have stopped the Tesla.

Thus, the Tesla driver who was killed in the accident, Joshua Brown, probably should have been paying more attention. There are conflicting reports about whether Brown was speeding or was watching a movie at the the time of the accident. Neither were mentioned in the preliminary accident report, but even if true it doesn’t change the fact that the Tesla had the right of way over the truck.

Just two months before the accident, Duke University roboticist Missy Cummings presciently testified before Congress that auto companies were “rushing to market” before self-driving cars are ready, and “someone is going to die.” She didn’t mention Tesla by name, but since that is so far the only car company that allows American drivers to take their hands off the wheel for more than a few seconds, she may have had it in mind.

Tesla’s autopilot system relies on two forward-facing sensors: a non-stereo camera and radar. Tests by a Tesla owner have shown that the system using these sensors will not always stop a vehicle from hitting obstacles in the road. By comparison, the Mercedes and BMW systems use a stereo camera (which can more quickly detect approaching obstacles) and five radar sensors (which can detect different kinds of obstacles over a wider range). Thus, in allowing drivers to take hands off the steering wheel, Tesla may have oversold its cars’ capabilities.

The day before information about the Tesla accident became publicly known, the National Association of City Transportation Officials issued a policy statement about self-driving cars urging, among other things, that drivers not be allowed to use “partially automated vehicles” except on limited access freeways because “such vehicles have been shown to encourage unsafe driving behavior.” While this would have prevented the Tesla crash, it ignores the possibility that partial automation might have net safety benefits overall.

A few days after the accident became publicly known, NHTSA announced that traffic fatalities had increased by 7.7 percent in 2015, the largest increase in many years. As Tesla CEO Elon Musk somewhat defensively pointed out, partial automation can probably cut fatalities in half, and full automation is likely to cut them in half again. State and federal regulators should not allow one accident in an ADAS-equipped car to color their judgments about true self-driving cars that are still under development.

The Constitution Protects Against NIMBYism

It should surprise no one that the government isn’t particularly good at respecting property rights. Still, the Constitution requires that property owners be provided with “due process of law” against arbitrary and unjustified deprivation of their right to put their property to beneficial use. According to several federal appellate courts, however, landowners lack such protections unless they show that they have a statutory “entitlement” to use their land.

This is circular Humpty Dumpty logic. Indeed, that approach impermissibly presumes the legitimacy of restrictions, without considering whether they are lawfully applied.

Most recently, the New York-based U.S. Court of Appeals for the Second Circuit employed the “entitlement” theory to deprive a small developer of its right to upgrade run-down apartment buildings. The NYC Landmarks Commission deprived Stahl York Avenue Company of its property rights by designating these nondescript buildings as landmarks—this despite a previous ruling that these exact buildings lacked any architectural or cultural merit worth preserving.

The Social Security Administration Shouldn’t Be Deciding Who’s Too “Mentally Defective” to Own a Gun

Unable to legislate new restrictions on what kind of arms can be sold, the government has embarked on a long-term effort of adding an untold number of Americans to “no buy” lists—based on the unfounded conjecture that they pose a “danger” to others—and deprive them of a fundamental constitutional right. The Gun Control Act of 1968 and NICS Improvement Amendments Act of 2007 requires that agencies with pertinent records on who is or is not “a mental defective” disclose those records to the attorney general so those people can be excluded from purchasing arms through the National Instant Criminal Background Check System (NICS).

The Social Security Administration (SSA) has proposed a new regulation that would create a process for transferring the records of those who seek a “representative payee” (legal proxy) under Social Security disability benefits programs to NICS, so that they may be considered a “mental defective” and thus lose their Second Amendment rights. The proposed SSA rule is arbitrary—there’s no evidence that someone who needs help with SSA paperwork can’t be trusted with a gun—and inconsistent with the regulatory and statutory scheme, not to mention blatantly unconstitutional.

Accordingly, for the first time ever, Cato’s Center for Constitutional Studies, with the help of law professors Josh Blackman and Gregory Wallace, has filed a public comment objecting to the rule on 10 different grounds. No one disputes that the government has an interest in keeping guns out of the hands of those who could harm themselves or others, but depriving a constitutional right requires due process of law. Under existing law, the root requirement of the Fifth Amendment’s Due Process Clause is that an individual receive a hearing before she is deprived of a constitutional right by a federal agency, one where the government must justify its restriction.