(Reuters) RICHMOND, Virginia May 10, 2010 - Lawyers for President Barack Obama go to court on Tuesday to try to save the cornerstone of his healthcare overhaul, arguing that the requirement for Americans to buy insurance is constitutional.

A three-judge panel of the U.S. Court of Appeals for the Fourth Circuit will consider whether a lower court was correct in striking down the requirement. But they will not be the final arbiter in a fight that is expected to reach the Supreme Court.

Legal scholars see the case as pivotal because it is the first to have oral arguments before an appeals courts. That means its ruling could affect other courts and become the first challenge to the law to reach the high court.

The panel of judges — selected at random by a computer — turned out to have all been appointed by Democratic presidents, including two by Obama: James Wynn and Andre Davis. The third, Diana Motz, was appointed by President Bill Clinton.

The state filed a legal challenge arguing that the federal government cannot penalize citizens for not buying goods or services under the U.S. Constitution's Commerce Clause.

"It will also be important because any future decision from other courts will feel compelled to respond to the Fourth Circuit's reasoning," said Kevin Russell, a former Justice Department appellate lawyer.

"If it is a well-reasoned opinion, it will likely be influential in other courts as well," said Russell, now in private practice. The 4th Circuit is split evenly among judges appointed by Democratic and Republican presidents.

Justices in another U.S. appeals court in Atlanta will likely take note of the arguments when they hear an appeal on June 8 by the Obama administration in a similar lawsuit filed by more than half the U.S. states.


Many challenges still ahead

Republicans in the House of Representatives have tried to repeal Obama's health care overhaul, but the president's fellow Democrats control the Senate and have stymied the effort.

So the focus has been turning to the courts, where numerous challenges are pending.

Two federal judges have struck it down, including one who found the entire law unconstitutional in a challenge by 26 states, but several other judges have ruled that it passed muster and upheld it.

In Atlanta, the 11th Circuit Court of Appeals will hear the Obama administration's arguments calling for the reversal of a decision in a multi-state lawsuit that declared the entire healthcare law unconstitutional. The court has yet to decide if a three-judge panel or all judges will hear it.

In the Virginia case, state Attorney General Ken Cuccinelli appealed Hudson's refusal to toss out the entire law, arguing that Congress would not have passed the health care reform legislation without the individual mandate and penalty.

While the appeals courts could side with the government argument that those challenging it are being premature because the individual mandate does not take effect until 2014, one legal scholar said they will likely discount that point.

"I think it is a weaker argument for the government, and I think the courts of appeals feel some pressure to sort of move forward on this," said Daniel Ortiz, a law professor at the University of Virginia. "There is some feeling that if you wait until things are really clear, then it would be so disruptive to unwind the thing and change states' expectations."

The three appeals court judges in Virginia will also consider on Tuesday an appeal by Liberty University, founded by conservative evangelical Jerry Falwell, which argued another federal judge in Virginia was wrong to uphold the individual mandate as constitutional under the Commerce Clause.

(Editing by Vicki Allen)

© 2010 Thomson Reuters. Click for Restrictions.

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