6th Cir.: After Supreme Court remand, ‘nothing changed’ in failed contraceptive mandate challenge

The Sixth Circuit reaffirmed its position that the religious accommodation for the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) contraceptive mandate does not violate the Religious Freedom Restoration Act (RFRA) (42 U.S.C. § 2000bb). After reviewing the Supreme Court’s decisions in Burwell v. Hobby Lobby Stores, Inc. (Hobby Lobby) and Wheaton College v. Burwell (Wheaton College), the Sixth Circuit adhered to its prior opinion—a preliminary injunction was inappropriate because it was unlikely that the challengers would succeed on the merits of their claims—and held that “nothing in Hobby Lobby” changed that conclusion (Michigan Catholic Conference v. Burwell, August 21, 2015, Moore, K.).

Background

At an earlier stage in the litigation, several religious organizations challenged the exemption and the accommodation. The plaintiffs sought a preliminary injunction on the grounds that the exemption and accommodation violated the RFRA. The district court and the Sixth Circuit rejected the request (see Religious employers lacked strong likelihood of success in contraceptive mandate challenge, Health Reform WK-EDGE, June 18, 2014). Subsequently, the groups filed a petition for a writ of certiorari with the Supreme Court, asserting that the accommodation violated the RFRA. The Supreme Court granted the writ filed by the Michigan Catholic Conference (MCC) and the Catholic Diocese of Nashville (CDN), vacated the Sixth Circuit’s decision, and remanded the case back to the appellate court. The high court directed the Sixth Circuit to reconsider the case in light of the Supreme Court decisions in Hobby Lobby and Wheaton (see ACA’s contraceptive coverage provisions may not provide sufficient protection, Health Reform WK-EDGE, April 27, 2015).

The challengers

The Sixth Circuit’s second evaluation of the accommodation challenge centered around the objections of nine religious employers: MCC; CDN; Catholic Charities Diocese of Kalamazoo; Catholic Charities of Tennessee, Inc.; Camp Marymount, Inc.; Mary, Queen of Angels, Inc.; St. Mary Villa, Inc.; Aquinas College; and Dominican Sisters of St. Cecilia Congregation. Some of the religious organizations (MCC, CDN, and St. Cecilia Congregation) are eligible for the exemption whereas the others are only eligible for the accommodation.

Exemption

Entities defined as religious employers under federal law are exempt from the ACA’s mandate that health insurance plans provide coverage for contraception. This means that religious employers do not need to provide or pay for contraceptive coverage to individuals covered under their insurance plans or have their insurance plan provide or pay for contraceptive coverage. The contraceptive mandate, simply stated, does not apply to these organizations—they are exempt.

Accommodation

For some objecting organizations that are not exempt, an accommodation is available. The accommodation, initially, was available only for objecting non-profit entities. However, the Hobby Lobby decision expanded the reach of the accommodation to closely held, for-profit corporations. However, the non-exempt religious organizations in the litigation are all within the accommodation because they are non-profit entities. Catholic Charities of Kalamazoo offers a self-insured health plan. Otherwise, the remaining organizations offer fully-insured group health plans. The two types of plans, for the purposes of the contraceptive mandate, are distinguished by the fact that, under self-insured plan, the employer bears the risk associated with providing health benefits. Under a fully-insured group health plan, the insurance company assumes the risk.

Objection

For non-objecting entities, the contraceptive mandate is satisfied by requiring the insurance company to provide contraceptive coverage without cost-sharing to insured individuals. In this circumstance, the insurance company provides contraceptive coverage, and the non-objecting entity pays for the coverage with the premiums collected. However, when a non-profit entity objects to such a coverage scheme, the objecting entity may take part in an accommodation either through a self-certification form (EBSA Form 700) or by notifying HHS directly of the objection. All that changes, in the context of a fully-insured group health plan, is that an insurance issuer “must segregate premium revenue collected from the eligible organization from the monies used to provide payments for contraceptive services.” With or without an accommodation, “the insurance company must, as a matter of federal law, provide contraceptive coverage to insured individuals without cost-sharing.” The coverage is identical—the payor changes.

Self-insured accommodation

In the case of a self-insured plan, without an objection, a third party administrator (TPA) would process a claim for contraceptive coverage and the non-objecting entity would pay the claim. In the case of an objecting entity with a self-insured plan, the responsibilities for contraceptive coverage shift entirely to the TPA. The federal government then reimburses the TPA for the expenses associated with providing the coverage.

Success on the merits

When reconsidering whether a preliminary injunction should have been granted, the Sixth Circuit began by evaluating the likelihood that the religious organizations would succeed on the merits of their accommodation challenges. Specifically, as directed, the court considered how Hobby Lobby did or did not alter the earlier conclusion. The court explained that the, in essence, Hobby Lobby stood for the proposition “that the government cannot compel closely held companies with sincere religious objections to provide contraception coverage to their employees.” However, the Sixth Circuit explained, that the holding in Hobby Lobby and the case at issue, were “fundamentally different.” The court reasoned that Hobby Lobby did nothing to “negate the underlying federal requirement that some entity must provide contraceptive coverage.”

RFRA challenge

With respect to whether the accommodation constitutes a substantial burden under the RFRA, the Sixth Circuit noted that every circuit evaluating the issue has answered the question in the negative. Specifically, the court pointed to the Tenth Circuit’s analysis in Little Sisters of the Poor Home for the Aged v. Burwell (Little Sisters), where the Tenth Circuit explained that “whether a law substantially burdens religious exercise in one or more of these ways is a matter for courts—not plaintiffs—to decide.” The Sixth Circuit agreed with the reasoning in Little Sisters that the substantiality of a burden cannot turn on “moral or theological consequences.”

ACA and exempt organizations

The court decided not to revisit its analysis of whether the exempt religious organizations would succeed on the merits of their exemption challenge. The court explained that their mere status as religious employers meant that they did not need to provide, pay for, or facilitate access to contraceptives either before the ACA or after its enactment. Accordingly, the contraceptive mandate had no effect on those organizations and, therefore, the exempt organizations had no basis for a legal challenge to the mandate.

Accommodation challenges

The court engaged in a more detailed analysis regarding the merits of the accommodation challenges. In the context of both fully-insured plans and self-insured plans, the Sixth Circuit explained that there is hardly a less burdensome requirement. The court characterized the obligations of the accommodation simply—“tell us who you are, and tell us how we can contact you.” The court went on to agree with the holding in Little Sisters that, in the context of fully-insured plans, the accommodation does not impact the provision of contraceptive coverage because insurers are obligated to provide contraceptive coverage under the ACA as an independent obligation that runs “irrespective of the notification.”

Regarding the single self-insured plan, Catholic Charities of Kalamazoo, the court explained that the accommodation did not require it to “provide, pay for, and/or facilitate contraceptive coverage.” The Sixth Circuit explained that the accommodation shifts the cost of contraceptive coverage from the objecting entity to the federal government, and leaves the administration of the coverage to the TPA. The court also rejected the argument that such a shift could be construed to mean that the accommodation “triggered” contraceptive coverage, because it was the ACA, and not some aspect of the accommodation, that triggered the contraceptive coverage obligations. The Sixth Circuit also acknowledged that a TPA, unlike an insurer of a fully-insured group health plan, is not required to provide contraceptive coverage prior to an accommodation. However, the court reasoned that even though the accommodation is “a but-for cause of someone else—the TPA—providing contraceptive coverage,” that is the point of an accommodation, to shift a responsibility from an objector to a non-objector.

Denied injunction

The court explained that the accommodation challenges were premised upon a misunderstanding of the RFRA. The court reasoned that while the RFRA allows a particular party to request that the government create an exception to the rule for that particular party, “it does not, however, allow accommodated parties to challenge the rule itself.” After reasoning that the religious entities failed to demonstrate a likelihood of success on the merits of their accommodation challenge, the court analyzed the other factors under consideration for injunctive relief. The court explained that there were no other factors which did anything to outweigh “the clear unlikelihood of success.”

The case is No. 13-2723/6640.

10th Cir.: Little Sisters granted relief from the heat

Refusing to give up in its battle for religious freedom, the Little Sisters of the Poor Home for the Aged, Denver, Colorado (Little Sisters) can breathe a temporary sigh of relief; it will not at this time need to comply with the contraceptive coverage provision of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The Tenth Circuit’s order granted the Little Sisters a reprieve until the Supreme Court rules on its case (The Little Sisters of the Poor for the Aged, Denver, Colorado v. Burwell, August, 21, 2015, per curiam).

The Little Sisters of the Poor recently filed their petition with the Supreme Court, following their dissatisfaction with a decision by the Tenth Circuit (see Prayers for injunction go unanswered in appellate review of contraceptive accommodation, Health Reform WK-EDGE, July 15, 2015). In that decision, the Tenth Circuit upheld the district court’s denial of the preliminary injunction, which the Little Sisters requested after the court’s finding that the ACA and its regulations do not burden the free exercise of religion or violate First Amendment rights.

History

The Little Sisters initially challenged the government’s accommodation allowing religious organizations that were not exempt from the contraception mandate to file Employee Benefits Service Administration (EBSA) Form 700. This form notifies HHS of the organization’s religious objection, and submission to the insurer or third-party administrator puts the responsibility of providing the coverage on these parties and shifts it away from the employer. The Little Sisters were initially denied a request for preliminary injunction, but the Supreme Court granted relief pending appeal (see Supreme Court grants reprieve to nuns opposing contraceptive requirement, pending appeal, Health Reform WK-EDGE, January 29, 2014 and Little Sisters of the Poor file appeal in contraceptive challenge, Health Reform WK-EDGE, February 26, 2014).

Supreme Court appeal

While the Tenth Circuit provided the Little Sisters with a reprieve, religious organizations and various states are wasting no time voicing their opinions. To date, 20 states, a group of Orthodox Jewish Rabbis, six orders of nuns, the flagship seminary of the Southern Baptist Convention, and various other religious and secular organizations are filing friend-of-the-court briefs at the Supreme Court, expressing support for the Little Sisters in the contraceptive coverage mandate challenge.

“This strong show of support for the Little Sisters demonstrates just how important it is that the Supreme Court address the impact of the HHS mandate, particularly on religious groups,” said Mark Rienzi, Senior Counsel at the Becket Fund for Religious Liberty, who is leading the challenge. “It is especially significant that 20 state governments are supporting the Little Sisters at the Supreme Court.”

The case is No. 14-6028.

Religious nonprofits’ objections percolated, states ask Supreme Court to brew decision

Sixteen states have filed an amicus brief asking the U.S. Supreme Court to grant certiorari in Houston Baptist University v. Burwell, a case filed by religious nonprofits challenging the Obama Administration’s accommodation to the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) contraception mandate. The states argue that circuits are split as to interpretations of Hobby Lobby and its effect on the accommodation, with some courts misinterpreting the Religious Freedom Restoration Act’s (RFRA) (42 U.S.C. §2000bb et seq.) substantial burden inquiry to evaluate whether a religious conviction has a substantial justification. In their opinion, “the issue has sufficiently percolated in the lower courts” and is ready to be adjudicated by the High Court. The brief argues that the states have an interest in protecting religion and in ensuring that the beneficial work of religious nonprofits will continue.

Accommodation

Religious entities that do not qualify as religious employers, including religious nonprofits, are not exempt from the contraception mandate. However, they can seek an accommodation by either executing an Employee Benefits Service Administration (EBSA) Form 700, certifying that they are nonprofit entities holding themselves out as religious organization opposed the provision of contraceptive services, or by notifying HHS in writing with the name of the organization, the nature of the objection, and certain plan information. The nonprofits’ third-party administrators then become responsible for the provision of contraception.

Underlying lawsuit

Religious nonprofits led by Houston Baptist University filed suit against HHS, alleging that the accommodations substantially burdened their religious exercise by making them complicit in the provision of certain FDA-contraceptive services that the entities consider abortifacients. The Fifth Circuit Court of Appeals overturned a trial court decision in the nonprofits’ favor by finding that they did not establish that the mandate or the accommodations substantially burdened their religious exercise or that they could make such a showing (see Mandate withstands religious challenge, providing contraceptives has ‘nothing to do with it’, Health Reform WK-EDGE, June 24, 2015). Houston Baptist and two co-plaintiffs filed a petition for certiorari with the Supreme Court, challenging the Fifth Circuit’s application of the RFRA and the High Court’s decision in Hobby Lobby (see Religious universities seek support from a higher authority, Health Reform WK-EDGE, July 15, 2015).

Amicus brief

The states filing the brief described their interest in ensuring that “courts do not demean religious beliefs.” They extolled the virtues of religious nonprofits and noted that preventing them from adhering to their religious beliefs could threaten their beneficial work. The brief argues that the RFRA substantial burden inquiry requires courts to determine whether the government has coerced a person to violate sincerely-held religious beliefs and whether that coercion is substantial. However, it maintains that some courts have misinterpreted that inquiry and instead judged whether the religious conviction itself has a substantial justification. In short, the states allege that the accommodation offered by the government requires the nonprofits to violate their religious beliefs, since the execution of EBSA-700 is a prerequisite to the provision of abortifacients, and that they will be faced with “draconian penalties” for noncompliance. The states urged the Supreme Court to hear the case, as “delay will not yield further clarity.”

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).