YOUNGSTOWN, Fla.—The woman chosen to represent the legal challenge to the Obama administration’s health-care overhaul filed for bankruptcy in September after her business failed, a move that could pose problems for the high-profile lawsuit.
The suit, brought by 26 states and joined by the National Federation of Independent Business, a small-business lobby group, is set to be heard by the Supreme Court next year. It relies in part on the story of Mary Brown, an auto-repair-shop owner who argued in court filings she would have had to divert funds from her business to comply with the law’s requirement that, beginning in 2014, most Americans obtain coverage or pay a penalty.
Ms. Brown closed her five-year-old Panama City, Fla., shop, Brown & Dockery Inc., in August, the same month she and the state coalition prevailed in front of the 11th U.S. Circuit Court of Appeals. On Sept. 30, Ms. Brown and her husband filed for personal bankruptcy. They later listed $62,972.04 in debts, most of which were business expenses.
Without owning a business, it could be harder for Ms. Brown to argue she is harmed by the legislation. Meanwhile, her recent financial woes suggest the possibility she would be exempt from penalties for noncompliance with the individual mandate. That raises questions about whether the suit can be based on her experience.
How much of a problem this could cause is hard to predict. If her standing is voided and no replacement can be found, the suit could falter. The 11th Circuit specifically cited the government’s acknowledgment of Ms. Brown as a legitimate plaintiff in permitting the suit to proceed. That court is the only one of the four federal appeals courts to have ruled on the law that found any aspect of it unconstitutional.
Ms. Brown was asked to join the case, because she was better able to show she was harmed by the law today. In a May 2010 filing, Ms. Brown and the states cited the “profound and injurious impact” of the law on her and other business owners. These proprietors would be forced to divert resources from their endeavors even if the added costs threatened their ability to maintain their businesses, the filing said. Her bankruptcy hasn’t yet been disclosed to the court, something experts in civil procedure call necessary. “We intend to address the bankruptcy issue in our opening brief in January, and we will explain why it does not change anything,” Mr. Katsas said. Her lawyers in the case first learned of her bankruptcy around Oct. 6, he said.