E.D. Mo.: Contraceptive accommodation judgment final for for-profit employers, non-profits are still looking up

A district court found no just reason to delay the entry of a final judgment on the claims of for-profit entities that successfully challenged the government’s accommodation allowing religious organizations to opt-out of the contraception mandate under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The court reasoned that the final judgment was proper because the portion of the case dealing with non-profit entities, which was likely to be the subject of another appeal, was unlikely to substantially affect the portion of the case dealing with for-profit entities. Accordingly, the court held that it would be unjust to the for-profit plaintiffs to further delay their award of fees and expenses to await the outcome of the non-profit portion of the litigation (Sharpe Holdings, Inc. v. HHS, October 9, 2015, Noce, D.).

Accommodation

Under the ACA, employers with fifty or more full-time employees must offer a health plan for employees including “minimum essential coverage.” As part of this, plans typically are required to cover all FDA-approved contraceptive methods without copayments or deductibles. An accommodation is available to religious entities that object to the mandate but are not exempt as “religious employers.” Such an organization can either execute an EBSA Form 700, certifying that it is a nonprofit entity holding itself out as a religious organization and that it opposed the provision of contraceptive services, or notify HHS in writing with the name of the organization, the nature of the objection, and certain plan information.

Background

Several for-profit entities—Sharpe Holdings, Inc.; Ozark National Life Insurance Company; N.I.S. Financial Services, Inc.; CNS Corporation—and non-profit entities—CNS International Ministries, Inc. (CNS) and Heartland Christian College (HCC)—challenged the contraception mandate and the accommodation, arguing that both imposed a substantial burden on their exercise of religion in violation of the Religious Freedom Restoration Act of 1993 (RFRA) (42 U.S.C. §§ 2000bb to 2000bb-4) and the Free Exercise Clause of the First Amendment of the U.S. Constitution. A Missouri district court found that the for-profit employers demonstrated a reasonable likelihood of success on the merits of their claims and granted a temporary restraining order in favor of the employers (see Court grants for-profit employer’s request for temporary restraining order enjoining enforcement of contraception mandate, Health Law Daily, January 2, 2013). Subsequently, the court granted a permanent injunction to the for-profit employers and awarded the employers $138,632.50 in attorneys’ fees and expenses.

Appeal

The claims of the non-profit employers reached the Eighth Circuit on appeal. The appellate court held that the accommodation offered by CMS to the ACA contraceptive mandate substantially burdened the exercise of religion of the non-profit religious educational institutions and was likely not the least restrictive means of furthering the government’s compelling interest in safeguarding public health and ensuring equal access to health care for women (see Accommodation process substantially burdens religious exercise, Health Reform WK-EDGE, September 23, 2015). The Eighth Circuit’s holding resulted in a circuit split, because seven circuits have held that the accommodation is consistent with the RFRA and Supreme Court precedent. The Supreme Court is expected to address the issue presented by one of the eight appellate court cases (see Looking higher, Fed Gov’t asks SCOTUS to resolve religious mandate challenges, Health Reform WK-EDGE, October 7, 2015).

Final judgment

The court reasoned that “it would be unjust to withhold the award of fees and expenses to the for-profit plaintiffs’ until further resolution of the non-profit plaintiffs’ case which could continue but, barring an unforeseen circumstance, will have no effect on the for-profit plaintiffs.” Because the case has been ongoing since 2012 and the for-profit entities’ motion was not opposed so long as the court determined that there was no just reason for delay, the court entered a final judgment.

The case is No. 2:12-cv-00092-DDN.