Relevant Document:Lawsuit
Federal laws and regulations “explicitly” exclude U.S. citizens in Puerto Rico from receiving the same federal benefits given to fellow U.S. citizens of equal need who live in any of the 50 states, costing island residents some $4 billion annually, according to a lawsuit filed on Friday in San Juan federal court on behalf of 10 island residents.
The lawsuit alleges that this “facial discrimination contributes significantly to both the fiscal and health-care crises in Puerto Rico,” and it “seeks to stop and rectify that discrimination.” It asks the court to issue a declaration that the federal laws causing this “disparate treatment” violate plaintiffs’ right to equal protection guaranteed by the Fifth Amendment as well as an injunction to prevent those laws from being enforced.
Representing the plaintiffs are Quinn Emanuel and Reichard & Escalera, which represent the COFINA senior bondholders coalition in the commonwealth Title III case. The plaintiffs are U.S. citizens residing in Puerto Rico who receive “significantly fewer” benefits under federal law than “similarly-situated counterparts” living in any of the 50 states, according to the suit. Several of them lived for a time in one of the 50 states, where they received higher benefits than currently. The lawsuit is filed against the the U.S. Department of Health and Human Services, U.S. Department of Agriculture and the Social Security Administration, as well as the heads of each agency in their official capacity.
The lawsuit targets three large federal spending programs: the Social Security Supplemental Income program, which has excluded Puerto Rico residents since its inception; the Supplemental Nutrition Assistance program, which also excludes island residents; and Medicare, specifically provisions under Part D that render Puerto Rico residents ineligible for some low-income subsidies.
The suit indicates that this discriminatory treatment under these programs costs island residents some $4 billion annually. It cites a 2014 U.S. Government Accountability Office estimate that granting the same benefits to island residents as stateside residents would carry annual costs of $1.8 billion with regard to the SSI program, $700 million in nutritional assistance and $1.5 billion in additional Medicare funding.
“Each of those programs plays a critical role in ensuring that U.S. citizens have access to needed health care services and can live free from the grip of hunger and crushing poverty. Each of these programs also facially discriminates against U.S. citizens who reside in Puerto Rico,” the suit states.
The suit provides an overview of Puerto Rico’s long-standing fiscal and economic challenge, leading to the enactment of the PROMESA legislation and the subsequent Title III cases. It discusses how the Hurricane Maria disaster has deepened these challenges.
“If Puerto Rico residents had been eligible for these levels of federal funding over the last decade, Puerto Rico’s current predicament may well have been substantially mitigated. In the wake of Hurricane Maria, which has further depleted Puerto Rico’s resources and strained its already challenged governmental services, treating needy Puerto Rico residents equivalently to other U.S. citizens in federal benefits programs would provide a significant influx of funds to support their health and welfare,” the lawsuit adds.
The lawsuit argues that all U.S. citizens, including those who live in Puerto Rico, have the fundamental right to equal protection of the laws. It cites the series of U.S. Supreme Court cases from 1901, known as the Insular Cases, that established the “doctrine of territorial incorporation,” which it says found that “fundamental” rights under the U.S. Constitution apply to unincorporated territories such as Puerto Rico.
“The U.S. Supreme Court has held repeatedly that the constitutional right to equal protection is ‘fundamental’ and therefore applicable in Puerto Rico,” the lawsuit states.
The suit says the earliest indication that the right to equal protection applies in Puerto Rico stems from one of the original Insular Cases:
Downes v. Bidwell, 182 U.S. 244 (1901). Since then, the U.S. Supreme Court “has repeatedly reiterated that the constitutional guarantee of equal protection, which applies against the federal Government through the Due Process Clause of the Fifth Amendment, applies with full force in Puerto Rico.” The suit also states that the U.S. First Circuit has also “recognized time and again that the right to equal protection is fundamental and fully applicable in Puerto Rico.”
The lawsuit acknowledges that the U.S. Congress through the Territorial Clause has “broad power” to legislate with respect to Puerto Rico and other territories, but it argues that Congress cannot deny Puerto Rico residents fundamental rights embodied in the U.S. Constitution. “The facial discrimination in the federal benefits statutes and regulations described above amounts to an equal-protection violation. Because the right to equal protection of the laws is fundamental, it follows that Congress cannot engage in such discrimination, notwithstanding its plenary power under the Territory Clause,” the lawsuit states.
The lawsuit also states that two U.S. Supreme Court decisions that upheld the ability of the federal government to establish separate benefit program rules for Puerto Rico residents “require judicial re-examination in light of contemporary realities.”
Both
Califano v. Torres 435 U.S. 1 (1978), which involved the SSI program, and
Harris v. Rosario 446 U.S. 651, 651 (1980), which involved the Aid to Families with Dependent Children, relied on the same reasoning in their decisions. The lawsuit quotes the three-part reasoning from the
Califano v. Torres decision: (1) “because of the unique tax status of Puerto Rico, its residents do not contribute to the public treasury;” (2) “the cost of including Puerto Rico would be extremely great - an estimated $300 million per year;” and (3) “inclusion in the SSI program might seriously disrupt the Puerto Rican economy.”
The lawsuit argues, however, that “it is simply not the case today that U.S. citizens who live in Puerto Rico do not pay federal taxes or contribute to the public treasury,” saying that Puerto Rico paid a total of $67 billion from 1999 to 2014, or $4.21 billion annually. These federal taxes include federal payroll taxes, import and export taxes, federal commodity taxes, self-employment taxes and federal taxes on income generated outside Puerto Rico. Federal government employees residing in Puerto Rico also pay federal taxes, and island employers pay taxes levied under the Federal Insurance Contributions Act, which funds Social Security and Medicare, and the Federal Unemployment Tax Act.
The lawsuit also states that the expense of extending a benefit does not permit the federal government to engage in unconstitutional discrimination, which it says the court recognized in its
Sessions v. Morales-Santana ruling 137 S. Ct. 1678, 1699 (2017), while
Westcott, 443 U.S. at 89–90 (collecting cases) found that the U.S. Supreme Court “regularly has affirmed District Court judgments ordering that welfare benefits be paid to members of an unconstitutionally excluded class.”
The lawsuit calls the reliance on a lack of tax payments “an ill-fitting justification for denying benefits to those qualifying for federal assistance. Whether located in the fifty States or in Puerto Rico or another Territory, such citizens will, virtually by definition, not be positioned to pay taxes, much less taxes commensurate with the benefits they receive. Their lack of financial means is precisely what makes them so deserving of governmental assistance,” the lawsuit states.
Finally, the lawsuit argues that there is no threat to the island economy from fully extending federal benefits program to island residents. “Far from disrupting Puerto Rico’s economy, extending federal benefits for SSI, SNAP, and Medicare would greatly improve the financial health of Puerto Rico residents by ensuring that all U.S. citizens who live in Puerto Rico have financial, medical, and nutritional security equal to that of U.S. citizens living in the fifty United States or the District of Columbia,” the lawsuit states.