On September 8, 2011, the US Court of Appeals for the Fourth Circuit issued two opinions rejecting separate challenges to the Affordable Care Act's (ACA's) individual mandate. The individual mandate requires that, after 2013, most individuals purchase and continuously maintain health insurance from private insurers or pay an annual monetary penalty. The key issues in the cases were:

The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010. The following day, Virginia signed into law the Virginia Health Care Freedom Act (VHCFA), which states that no Virginia resident must obtain or maintain individual insurance coverage. The district court, finding that the conflict between the VHCFA and the ACA provided Virginia with standing to sue, declared the individual mandate unconstitutional.

In its separate suit, Liberty University, along with certain individuals, challenged the constitutionality of the ACA's individual mandate and certain employer assessments under the ACA. The district court upheld the provisions.

In Sebelius, the court began by noting that a state has standing to challenge a federal statute only when the federal law interferes with a state's exercise of its sovereign power to both create and enforce a law. The court found that:

The court stated that granting Virginia standing on the basis of the VHCFA would permit states to litigate merely by enacting statutes declaring opposition to particular federal laws. The court found this theory of standing unacceptable, noting it would transform the federal court system into a forum for generalized grievances that are properly addressed in the political process. Having concluded that Virginia lacked standing to sue, the Fourth Circuit remanded the case to the district court with instructions to dismiss the case for lack of subject matter jurisdiction.

In Liberty University, the court determined it must decide whether the penalty for not complying with the ACA's individual mandate qualified as a tax for purposes of determining jurisdiction under the AIA. The AIA prohibits any lawsuit whose purpose is to prevent the assessment or collection of any tax, though plaintiffs may sue for a refund on taxes already collected. The plaintiff's suit in this case sought to enjoin the ACA's penalty provisions before the date the penalty would apply.

The Fourth Circuit concluded that the penalty for not complying with the individual mandate qualified as a tax, reasoning that the Supreme Court defined tax in its broadest possible sense in the context of the AIA, including "penalties that function as mere regulatory measure(s) beyond the taxing power of Congress and Article I of the Constitution." The fact that the penalty was not labeled or described as a tax did not alter the court's conclusion, though the dissent relied on Congress's repeated use of the term penalty to argue that the AIA does not bar the suit.

Since it found the AIA applicable, the Fourth Circuit concluded that the plaintiffs' suit was barred and remanded the case to the district court with instructions to dismiss for lack of subject matter jurisdiction.

With these two opinions, the Fourth Circuit becomes the third federal appellate court to rule on challenges to the ACA, following decisions of the Eleventh Circuit, which recently held the individual mandate unconstitutional, and of the Sixth Circuit, which upheld it.

Although the Fourth Circuit dismissed both challenges on jurisdictional grounds, two of the three Fourth Circuit judges who decided the cases stated in Liberty University that they would have upheld the ACA's constitutionality had they reached the merits of the parties' arguments.

Other appellate courts are expected to rule on this issue in the near future. However, it is widely assumed that the Supreme Court will ultimately address the individual mandate's constitutionality. For now, the ACA includes an extensive number of requirements with which employers must comply, including: