On Thursday October 14, 2010, 3:30 pm EDT
MIAMI (Reuters) - U.S. states can proceed with their lawsuit seeking to overturn President Barack Obama's landmark healthcare reform law, a Florida judge ruled on Thursday.

U.S. District Judge Roger Vinson had already indicated at a hearing last month that he could not uphold parts of a motion by the Justice Department to dismiss the lawsuit, led by Florida and 19 other states.

"In this order, I have not attempted to determine whether the line between constitutional and extra-constitutional government has been crossed," Vinson, of the U.S. District Court for the Northern District of Florida, wrote in his ruling.

Opponents of Obama's overhaul of the $2.5 trillion U.S. healthcare system have said it violates the Constitution by imposing, for example, unlawful taxes and requiring citizens to obtain coverage, among other issues.

"I am only saying that ... the plaintiffs have at least stated a plausible claim that the line has been crossed," Vinson said.

The suit was originally filed in March by mostly Republican state attorneys general.

In his formal ruling on Thursday, Vinson said the case would continue as scheduled. He had previously set a hearing for December 16.

(Reporting by Tom Brown, Editing by Pascal Fletcher and Doina Chiacu)

In his ruling, Vinson criticized Democrats for seeking to have it both ways when it comes to defending the mandate to buy insurance. During the legislative debate, Republicans chastised the proposal as a new tax on the middle class. Obama defended the payment as a penalty and not a tax, but the Justice Department has argued that legally, it’s a tax.

“Congress should not be permitted to secure and cast politically difficult votes on controversial legislation by deliberately calling something one thing, after which the defenders of that legislation take an “Alice-in-Wonderland” tack and argue in court that Congress really meant something else entirely, thereby circumventing the safeguard that exists to keep their broad power in check,” he wrote.

Vinson ruled that it’s a penalty, not a tax, and must be defended under the Commerce Clause and not Congress’s taxing authority.

Huh. Obama could end up (unwittingly) being a cause of the USA becoming just a little more free, and the fed becoming just a little less powerful. If the States successfully challenge the fed with things like this (and with things like legallizing Marijuana, like the state of California may do), they're setting up a massive power struggle that could tie the feds hands if it goes against them. Of course, the flipside, is if the Fed wins those struggles, things are worse, and the slippery slope becomes rather orwellian in appearance if you look down it very far.