Judge: IRS Obamacare Rule 'Is Arbitrary, Capricious, and Abuse of Discretion'

By Craig Bannister | October 2, 2014 | 1:10 PM EDT

In his decision, U.S. District Judge Ronald White concluded Tuesday that the IRS rule altering the Obamacare law and providing billions in subsidies is "arbitrary, capricious and abuse of discretion":

"The court holds that the IRS rule is arbitrary, capricious, and abuse of discretion or otherwise not in accordance with law, pursuant to 5 U.S.C.706(2)(A), in excess of summary jurisdiction, authority or limitation, or short of statutory right, pursuant to 5 U.S.C. 706(2)(C), or otherwise is an invalidation of the ACA [Affordable Care Act], and is hereby vacated. The court's order of vacatur is stayed, however, pending resolution of any appeal from this order."

In September 2012, Oklahoma was the first of several states to challenge the legality of an IRS rule that caused billions in subsidies to be paid out, despite Congress having never authorized those payments.

Oklahoma Attorney General Scott Pruitt hailed the state's victory in its lawsuit challenging the implementation of the Affordable Care Act:

"Today's ruling is a consequential victory for the rule of law. The administration and its bureaucrats in the IRS handed out billions in illegal tax credits and subsidies and vastly expanded the reach of the health care law because they didn't like the way Congress wrote the Affordable Care Act. That's not how our system of government works."

Pruitt said the ruling proves that the administration can't change a law by executive fiat:

"The Obama administration created this problem and rather than having an agency like the IRS rewrite a law it didn't like, the administration should have done the right thing and worked with Congress to amend the law. Oklahoma was the first to challenge the administration's actions and today's ruling vindicates what we recognized early on and that is the administration can't rewrite the Affordable Care Act by executive fiat."

He said the victory is just the beginning, because he fully expects the case to, ultimately, be decided by the Supreme Court:

"Today's ruling is a huge win for Oklahoma, but it's just a first step. Since Oklahoma filed the first lawsuit in 2012, others have followed our lead and made similar claims in other jurisdictions. It's likely this issue will ultimately be decided by the U.S. Supreme Court. We look forward to making our case and continuing the effort to hold federal agencies accountable to their duty to enforce the laws passed by Congress."

Oklahoma Sen. Jim Inhofe (R) also praised Judge White's decision, saying that the Obama Administration is trying to fix a legally-dubious law using waivers and exemptions:

"Today's decision is a reminder that the President's broken promises of affordable, accessible health care are the result of broken policy. The Obama Administration has tried to make the law work with waivers and exemptions, but the courts continue to confront the legality of this legislation that was rushed through a Democrat-controlled Congress."

"While it will undoubtedly take time for Oklahoma's case to play out in the federal court system, I am confident in Attorney General Scott Pruitt and that our state's argument will prevail."

Tuesday's decision is the latest in a wave of court losses for Obamacare.

Currently, over a hundred lawsuits have been filed against Obamacare - and Obamacare has lost 91% of the cases decided to-date, (71 losses out of 78 decisions), according to the latest tally by The Beckett Fund.