In its ruling, the court held that Congress cannot force an individual to engage in a private commercial transaction. The law was scheduled to take effect in 2014.
According to the Obama administration's own arguments in the case, the mandatory purchase law is the bedrock of the health care law.
Without that provision, "the financial foundation supporting the health care system will fail," according to Hudson's ruling.
Virginia Attorney General Ken Cuccinelli, who filed the lawsuit, wrote on his website that Hudson's ruling will be appealed by the Obama administration.
"This won't be the final round, as this will ultimately be decided by the Supreme Court," he said. "But today is a critical milestone in the protection of the Constitution."
Hudson is the first judge to strike down the law, which had been upheld by two others in Virginia and Michigan.
In a press conference Monday afternoon, White House Press Secretary Robert Gibbs said that favorable rulings by two out of three judges underscores the importance of the heathcare law. He also cited the provision as a "basis and foundation" for doing away with discrimination by heath insurance companies.
Without the healthcare law, many Americans with pre-existing conditions cannot be covered by health insurance.
House Republican leader John Boehner, R-OH, questioned the government's ability to force Americans to purchase health insurance and to impose penalties if they don't.
He said via Twitter that Republicans would move immediately to repeal the entire health care law and its effects on the economy in January.
"Today's decision is an encouraging sign for families and small business owners who have revolted against President Obama's job-killing health care law and called for its repeal," Boehner said in a news release.
Twenty-five similar lawsuits are pending across the country, including one in Florida in which 20 states - including Alabama - are a joint party.
ALABAMA AG REACTION
Attorney General King was encouraged by Monday's ruling. "Judge Hudson's decision reaffirms the founding principle that the federal government is one of limited and enumerated powers." Attorney General King observed that "the arguments advanced by the federal government in support of the individual mandate were without bounds and could be used to justify virtually unlimited federal control of every sphere of private activity." Attorney General King believes that reforming America's health care system is important, "but just like everything else, it must be done in a way that's consistent with the constitution."
Attorney General King is hopeful that Alabama and 19 other States will similarly prevail in their suit challenging the PPACA. A hearing is scheduled for December 16, 2010, on the States' motion for summary judgment in that case.
Unless Congress intervenes and repeals the law, it will continue to move through the courts. Its implementation will go forward as planned until all legal issues are resolved.
Gibbs said the Department of Justice is weighing how to appeal this particular case.
"The bill will continue to have its day in court," Gibbs said, expressing his confidence that the constitutionality of the law would be upheld.
Virginia Gov. Bob McDonnell urged the Department of Justice to fast-track the case, by-passing the Circuit Court of Appeals and going directly to the U.S. Supreme Court.
"I have asked all governors and governor-elects to join me in a letter to United States Attorney General Eric Holder asking for his agreement to an expedited review," McDonnell said, citing the money it will cost Virginia and other states to implement the law.
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