INDIANAPOLIS | Attorney General Greg Zoeller is taking a second legal shot at halting a piece of the Affordable Care Act, also known as Obamacare.
The Republican sued the Internal Revenue Service on Tuesday, claiming that tax penalties for businesses with 50 or more full-time employees that fail to provide qualifying health benefits cannot be enforced against state or local governments.
He is asking the Indianapolis federal court permanently exempt government entities from the so-called "employer mandate," but is not re-challenging the constitutionality of the overall health law, which the U.S. Supreme Court upheld last year following an earlier Zoeller lawsuit.
"If there is this new tax-penalty authority that can be applied by the IRS against state sovereigns, it really changes the fundamental relationship between the state and federal government, because we've never taxed one another," Zoeller said.
"My responsibility is to defend the authority of the state and to defend it whether it's a direct challenge to us or a requirement that we're now being required to fulfill by the IRS," Zoeller said. "This question has never been directly asked of our federal courts."
The state's challenge has been joined by 15 school corporations, none in Northwest Indiana.
The schools claim the health law has forced them to cut employee hours because it requires employers provide adequate health insurance to all employees working at least 30 hours a week, or be fined $2,000 for every full-time worker on their payroll.
"The costly and burdensome employer mandate the IRS wrongly applies to government employers, such as our school corporation, interferes with our ability to efficiently manage our workforce," said Randy Taylor, assistant superintendent of the Metropolitan School District of Martinsville. "As public servants who revere the Constitution, we join with the state in asking the federal court to correct the IRS's overreach."
The U.S. Treasury Department, which oversees the IRS, announced in July the employer mandate would not take effect until 2015.
Nevertheless, Zoeller still wants the courts to decide if government employers are subject to the mandate.
He said the employer mandate tax penalty is different from federal requirements state and local governments must follow pertaining to workplace safety, minimum wage and other typical employer regulations.
That's because those were affirmed under the federal power to regulate commerce, not its taxing authority -- which has never been applied to other governments, he said.
"We're not used to being regulated by the federal government, because we're not a taxable entity," Zoeller said. "It raises the question: do they (the IRS) have this authority through Congress or have they exceeded their authority?"
A similar lawsuit was filed last week by a Florida orthodontist challenging the ability of the Obama administration to delay the employer mandate for one year.
The Indiana lawsuit is being led by Solicitor General Thomas Fisher, a Jasper County native, and will paid for using existing resources appropriated by the Republican-controlled General Assembly for the attorney general's office. The schools are represented by the Indianapolis law firm of Bose, McKinney and Evans.
Zoeller has authorized spending an additional $20,000 to hire Ken Klukowski as a special deputy attorney general for 10 months.
Klukowski is a Notre Dame graduate and director of Center for Religious Liberty at the conservative Family Research Council where he co-authored the 2011 book, "The Blueprint: Obama's Plan to Subvert the Constitution and Build an Imperial Presidency."