The Justice Department has reversed course on a key argument it has been using to defend the federal health care overhaul, a move that Liberty University says clears the way for a ruling on the merits in its case challenging the law. The department has argued in lower courts that a narrow section of U.S. code dealing with the power of Congress to levy taxes barred various legal challenges. The law requires that most taxes can be legally challenged only by someone who has paid the tax, applied for a refund and is dissatisfied with the refund.

A three-judge panel from the 4th Circuit Court of Appeals, which last month heard oral arguments in the two Virginia cases challenging the health care law, questioned whether the rule applied to Liberty University, which brought one of the suits, or to Virginia, on whose behalf state Attorney General Ken Cuccinelli is suing.