ACA’s contraceptive coverage provisions may not provide sufficient protection

Religious objections by Catholic groups in Michigan and Tennessee to the contraceptive coverage requirements of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) were fueled once again, as the Supreme Court threw out a lower court’s decision favoring the government. The High Court granted the petition for writ of certiorari filed by the Michigan Catholic Conference and the Catholic Diocese of Nashville, vacating the Sixth Circuit’s order and remanding the case for further consideration in light of the Supreme Court’s decisions in Burwell v. Hobby Lobby Stores, Inc. (Hobby Lobby) and Wheaton College v. Burwell.

The Cincinnati-based Sixth U.S. Circuit Court of Appeals must now reconsider its decision affirming two lower-court decisions that the religious organizations were not substantially burdened by the requirement that they self-certify an objection to providing contraceptive coverage (see Courts refuse injunctions in two contraceptive coverage cases, Health Reform WK-EDGE, January 8, 2014, and Religious employers lacked strong likelihood of success in contraceptive mandate challenge, Health reform WK-EDGE, June 18, 2014). Under the ACA, non-grandfathered group health plans are required to cover the full range of contraceptive methods approved by the FDA, as well as sterilization procedures. Religious employers, however, are exempt from this provision. Religious accommodations are available for group health plans of religious nonprofit organizations under which, following a certification process, employees of an eligible nonprofit may receive direct payments for contraceptive methods from the insurance company.

The Catholic groups argued in their petition that they will be substantially burdened by the requirements of the ACA, as well as the accommodation for organizations such as themselves. According to the organizations, the contraceptive mandate imposes a substantial burden on their exercise of religion because it forces the organizations to facilitate access to contraceptives and thus prevents them from bearing witness to their religious beliefs. Among other things, the religious organizations assert that while Hobby Lobby shows that the Religious Freedom Restoration Act (RFRA) (P.L. 103-141) “requires courts to assess the ‘consequences’ of noncompliance when analyzing substantial burden” (the pressure on plaintiffs to violate their beliefs), the Sixth Circuit instead focused on “the nature of the actions the Petitioners are compelled to take” (see Nonprofits ask Justices to take up question left open in Hobby Lobby, Health Reform WK-EDGE, January 7, 2015).

The order marks the third time in the last two months that the court has thrown out a ruling that favored the government’s interpretation of the contraceptive coverage portions of the ACA. In March, the high court used a similar approach in a case involving the University of Notre Dame (see Alito stymies Third Circuit, temporarily blocks enforcement of mandate, Health Reform WK-EDGE, April 16, 2015, and Notre Dame contraception battle revived, Health Reform WK-EDGE, March 11, 2015). The appeals court rulings in the University of Notre Dame and Michigan Catholic Conference cases came prior to the Supreme Court’s June 2014 ruling that closely held corporations such as family-owned Hobby Lobby Stores, Ltd., could seek a religious exemption from the contraception provision of the ACA. Courts that have ruled on the issue since the Supreme Court’s Hobby Lobby decision have all decided in favor of the government, finding the government’s compromise does not impose a substantial burden on the plaintiffs’ religious beliefs (see Contraceptive Coverage Mandate Accommodations Remain Troublesome for Religious Organizations, March 2015).

Alito stymies Third Circuit, temporarily blocks enforcement of mandate

Supreme Court Justice Samuel Alito has recalled a decision of the Third Circuit Court of Appeals, which lifted a preliminary injunction preventing the federal government from enforcing the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) contraception mandate against the Roman Catholic Diocese of Pittsburgh and an affiliate nonprofit corporation. On April 15, 2015, Alito issued an order in Zubik v. Burwell, recalling and staying the Third Circuit’s mandate pending a response from the government.

Background

The Most Reverend David A. Zubik, Bishop of the Roman Catholic Diocese of Pittsburgh, along with the Diocese and Catholic Charities of the Diocese of Pittsburgh, Inc. (collectively, the Diocese) alleged that the contraception mandate violated the organizations’ rights under the Religious Freedom Restoration Act (RFRA) (42 U.S.C. §§2000bb et seq.). In 2013, a federal district court in Pennsylvania granted them a preliminary injunction against enforcement of the mandate (see Catholic dioceses granted preliminary injunction, Health Law Daily, November 26, 2013).

The case was consolidated with others and, in February 2015, the Third Circuit reversed the injunction (see Catholics stay clean: form submission ‘washes their hands’ of involvement with contraceptive coverage, Health Reform WK-EDGE, February 18, 2015). The appellate court determined that the requirement to execute EBSA Form 700-Certification, which certifies an organization’s religious objection to the mandate, did not burden the Dioceses’ exercise of religion. The Diocese, however, maintained that completing the form, which triggers notification that a third-party administrator must assume responsibility for providing or arranging contraceptive coverage to employees, made it complicit in sin. The Diocese sought an en banc hearing before the appellate court; the court denied the request on April 6, 2015.

Impact

Religious groups view this as a positive step toward unravelling the contraception mandate. Lori Windham, Senior Counsel at the Becket Fund for Religious Liberty, has represented organizations with religious objections to the mandate in other cases. She issued a statement on Justice Alito’s order, noting “The government really needs to give up on its illegal and unnecessary mandate.” The government’s response is due no later than April 20, 2015.

Texas universities shopping for Hobby Lobby treatment

Two Christian-based universities in Texas are hoping to receive the same exemption from the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) contraception mandate as Hobby Lobby did in its famous Supreme Court case. Texas Baptist University and East Texas Baptist University previously obtained a victory in the U.S. District Court for the Southern District of Texas. The district court found that the universities “demonstrated a substantial likelihood of success on the merits of their claim under the Religious Freedom Restoration Act.” However, HHS appealed and the hearing in the U.S. Court of Appeals for the Fifth Circuit in Houston took place April 7, 2015.

Religious exemption

In a provision known as the “HHS mandate,” employers are required to provide insurance coverage that includes 20 methods of contraception. However, some believe that certain forms of contraception result in abortion. This view often stems from religious faith. Hobby Lobby objected to this mandate, and the Supreme Court ruled in 2014 that if owners of a closely held for-profit corporation oppose the mandate due to religious beliefs, the company is exempt.

The arguments against the mandate stem from the Religious Freedom Restoration Act (RFRA) (P.L. 103-141). Under this Act, the government has limitations on creating burdens on the exercise of religion. These burdens must further a compelling governmental interest in the least restrictive way possible. The district court originally granted stays preventing the government from subjecting fines upon the universities for failing to provide contraception coverage. The district court felt that a substantial burden would be placed on the universities if they were forced to drop employee health benefits altogether for fear of facing huge fines under the ACA.

Extending the exemption to schools and nonprofits

According to legal counsel for the Beckett Fund for Religious Liberty, which represents the universities in the lawsuit, many employers have received exemptions for economic or political reasons. The universities are therefore fighting for this same exemption on the basis of religious liberty. Eric Rassbach, another Beckett Fund attorney, stated that the universities object to the coverage of four out of the 20 methods of contraception. These are pills known as “morning after” and “week after,” as well as two intrauterine devices, known as IUDs. President Robert Sloan of Houston Baptist University professed that the leaders of the universities sincerely believe that life begins when an egg is fertilized in the reproduction process, and that these forms of contraception destroy that life.

HHS previously exempted churches, auxiliaries, religious orders, and companies that employ fewer than 50 people from compliance with the mandate. Nonprofits that are morally opposed to covering certain forms of contraception are able to transfer away administrative obligations either to the insurance company or another administrator. That entity would handle all contraception claims, including processing, payment, and employee advising. The universities object to this process of transferring obligations. Even after self-certifying as morally opposed, the contraception options to which they oppose are still provided, but handled by someone else.

Federal stance

The government’s brief cited other rulings from circuit courts that deemed federal law requires insurance to assume responsibility for the program, not nonprofit action. The government argues that the universities are attempting to block access to contraceptives through a third party after they decide not to provide coverage. According to the brief, this goes beyond preventing the government from forcing an organization to provide contraceptive coverage against its religious beliefs.

Other cases

This case has been combined with cases involving Catholic institutions in the state during court deliberations. In March, the Supreme Court told the Seventh Circuit Court of Appeals to reconsider the University of Notre Dame’s objection to the contraception provision. Notre Dame also objects to the compromise of allowing an insurer to take over contraception obligations. After the Seventh Circuit rejected a preliminary injunction request, Notre Dame has been using this alternative system under protest. The American Civil Liberties Union opposes Notre Dame’s objections to the compromise, stating that the objection to contraceptive coverage is discrimination.

Kusserow on Compliance: U.S. Court of Appeals invalidated a portion of the new RAC contract

The U.S. Court of Appeals for the Federal Circuit invalidated a provision of the new 2014 Recovery Audit Contractor (RAC) contracts with CMS that were scheduled to be awarded last year but were delayed pending outcome of the Court’s decision. This resulted in the original RAC contracts from 2008 being extended.

The RAC contractor, CGI Federal Inc., initiated the lawsuit in the U.S. Court of Federal Claims against the government in April 2014 asserting that a payment provision of the 2014 Recovery Audit Program contracts violates federal law. Under the invalidated provision, CMS payment of contingency fees to RACs would occur at the second level of appeal rather than the first level of appeal. Consequently, CMS’ timeframe for payment to RACs would potentially increase from approximately 120 days to more than 400 days.

The Court held that the revised payment terms violated the federal acquisition regulations’ prohibition against including contract terms inconsistent with customary commercial practice. Under current RAC contracts, CMS pays RACs after issuance of an overpayment determination. As part of the Court’s decision, CMS will either have to issue a new request for quotes that will omit the payment terms or seek a waiver to include the payment terms.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.