D. Minn.: Feds can’t enforce pre-Hobby Lobby regulations

The Obama Administration agreed to an injunction permanently enjoining it from enforcing the Affordable Care Act’s contraceptive mandate—as it existed on the day the Supreme Court issued its decision in Burwell v. Hobby Lobby Stores, Inc.—against a small employer. The District Court of Minnesota explicitly ordered, however, that the injunction and judgment does not apply to any statutory or regulatory changes enacted or promulgated after June 30, 2014 (Annex Medical, Inc. v. Burwell, August 19, 2015, Doty, D.).

Background

In response to the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) requirement that employers with 50 or more employees offer health insurance that includes coverage of certain types of contraception, Annex Medical, Inc., and its controlling shareholder, Stuart Lind, filed suit against HHS, the Department of Labor, and the Department of the Treasury. The suit alleged that the contraception mandate violated Annex’s and Lind’s rights under the Religious Freedom Restoration Act (RFRA) (P.L. 103-141). Annex said it attempted to purchase insurance excluding contraceptive coverage from four private insurers, none of whom were willing to offer such a policy. Initially, the district court denied Annex’s request for a permanent injunction. The Supreme Court ruled in Hobby Lobby that the mandate violated the RFRA as to closely-held, for-profit employers who opposed the mandate on religious grounds (see Closely-held ‘corporate Christians’ win crusade against contraceptive coverage, Health Reform WK-EDGE, July 2, 2014).

On appeal, the Eighth Circuit wrote that Annex only had 16 full-time employees and two part-time employees at the time of filing, and therefore was not required to offer a health plan to its employees at all, much less offer contraceptive coverage. Further, Annex could not be penalized for its failure to do so. The court questioned whether Annex had standing, due to questions about whether it had demonstrated an actual injury, and remanded the case to the district court to determine whether Annex had standing to oppose the mandate.

The Eighth Circuit then issued a replacement decision, clarifying the requirements imposed on Annex by the ACA. The court wrote, “if Annex—a ‘small employer’—chooses to offer insurance from a health insurer anyway, Annex cannot be penalized if the insurance is inconsistent with the contraceptive mandate.” Because the ACA’s contraceptive mandate does not apply to Annex, “the only alleged injury is that independent third parties—private health insurance companies not involved in this case—are unable to sell Annex a health insurance plan that excludes healthcare inconsistent with Lind’s religious beliefs.” The case was again remanded to see whether Annex’s alleged injury could be redressed by a permanent injunction (see Will injunction fix small employer’s objection to contraceptive mandate?, Health Reform WK-EDGE, October 8, 2014).

Injunction

The district court entered a permanent injunction against the Obama Administration, preventing it from enforcing what the court called the “June 30, 2014 Contraceptive Coverage Requirement,” defined to include provisions of federal law in existence on that date. As part of the judgment, the government cannot levy any penalties, fines, or assessments for noncompliance with the requirement on that date. It entered judgment in favor of Annex with regard to its RFRA claim, and dismissed all of Annex’s other claims.

Post-Hobby Lobby

The injunction and judgment does not apply to any statute or regulation enacted or promulgated after the Hobby Lobby decision. The court explicitly mentioned that it does not apply to the regulations issued to provide accommodations to closely-held corporations (Final rule, 80 FR 41319, July 14, 2015). However, the court noted that that nothing prevents Annex and Lind from filing a new civil action challenging the accommodations or any other post-Hobby Lobby legal or regulatory changes.

The case is Civil No. 0:12-02804(DSD/SER).