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.


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.


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.



The Affordable Care Act at age five: a look back and a look ahead

Somewhere near their first birthdays, children learn to walk. At three years of age, they might start pedaling a tricycle, and at age five, they are poised to enter kindergarten. March 23, 2015, marks the fifth anniversary of the enactment of President Obama’s signature health reform law, the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Has the ACA, at five years of age, made the same amount of progress as a child?

Critics argue that the ACA has failed, but proponents say that it is moving closer to achieving its goal of quality, affordable health care for all Americans. As a law that seeks to expand health insurance coverage for Americans, improve the functioning of health insurance markets, and control the efficiency and quality of health care, the ACA has “had a major positive impact, and one that will continue to bring efficiencies over time,” said Keith Fontenot, the managing director of government relations and public policy at Hooper, Lundy & Bookman, P.C.

Regardless of whether it has met its milestones, it is clear that the ACA has already made an impact. It has had significant effects on the uninsured rate, the affordability of coverage via the provision of subsidies, the use of preventive services, and the actions of large employers and insurers. Many ACA provisions have gone into effect over the last five years; however, due to design or delay, a number of significant reforms have yet to be implemented or fully realized.

This White Paper looks at the ACA’s impact on Medicare and Medicaid issues and its impact on the private insurance market. It also looks at major ACA changes facing health care providers and employers in the coming months.

Read further, “The Affordable Care Act at age five: a look back and a look ahead.”