Agencies enjoined from enforcing contraceptive mandate

Because the Patient Protection and Affordable Care Act’s (ACA) contraception mandate violates the religious freedom of a closely-held for-profit corporation, the U.S. District Court for the District of Colorado entered a permanent injunction against three federal agencies and their Secretaries to ensure that the mandate is never enforced against the corporation (Newland v. Burwell, March 16, 2015, Kane, J.).

Background

The for-profit corporation Hercules Industries, Inc., and its five controlling shareholders and officers (the Newlands), “are practicing and believing Catholic Christians” who believe that contraception in any form is an “intrinsic evil.” In challenging the contraceptive mandate, the Newlands cited the Religious Freedom Restoration Act (RFRA),and argued that “it would be immoral and sinful for them to intentionally participate in, pay for, facilitate, or otherwise support” the use of contraceptives. The district court in Colorado granted a preliminary injunction in favor of the Newlands, without a consideration of whether the Newlands were likely to succeed on their RFRA claims. The 10th Circuit did not reach the merits of the RFRA claim, either, but, in affirming the preliminary injunction, stated that its decision in Hobby Lobby Stores, Inc. v. Sebelius (aff’d Burwell v. Hobby Lobby Stores, Inc., U.S., June 30, 2014) “resolves the likelihood of success factor in [the Newlands’] favor.”

Permanent injunction

On remand to the district court following the 10th Circuit’s affirmation, the parties agreed that a permanent injunction should be entered in favor of the Newlands. The court therefore entered judgment in favor of the Newlands. The court further entered a permanent injunction against HHS, the Department of Labor, and the Department of the Treasury, along with their employees, agents, and successors in office. The Agencies and their Secretaries are permanently enjoined from enforcing any regulation promulgated or amended pursuant to the contraceptive mandate against Hercules; from applying any related penalties, fines, or assessments for noncompliance; and from taking any other actions based on noncompliance with the mandate.

Lastly, the court ordered that if the federal agencies seek relief or modification of the injunction, they must first show that a significant change in factual conditions or in law renders continued enforcement of the injunction detrimental to the public interest.

Notre Dame contraception battle revived

More than one year after the Seventh Circuit Court of Appeals denied the University of Notre Dame’s plea for relief from the Patient Protection and Affordable Care Act’s (ACA’s) (P.L. 111-148) contraception mandate exemption requirements, the U.S. Supreme Court ordered the appellate court to revisit the issue. The High Court granted Notre Dame’s petition for writ of certiorari, vacating the Seventh Circuit’s order and remanding the case in light of the Supreme Court’s decisions in Burwell v. Hobby Lobby Stores, Inc. (Hobby Lobby) and Wheaton College v. Burwell (Wheaton College). Notre Dame’s contentions focused on the allegedly substantial burdens imposed on it by the requirement that it complete EBSA Form 700.

Notre Dame

Despite its status as a Catholic university, Notre Dame does not meet the ACA’s definition of a religious employer. In order to be exempt from the ACA’s requirement to provide FDA-approved contraceptive coverage to its employees and students, the university was required to execute EBSA Form 700, certifying that it was a nonprofit entity holding itself out as a religious organization and that it opposed the provision of contraceptive services. Upon execution, Notre Dame’s insurers would become responsible for providing contraception coverage. However, Notre Dame argued to the Seventh Circuit that the requirement imposed a substantial burden on its exercise of religion because completion of the form would serve as a trigger to provide contraceptive coverage, in contravention of its religious beliefs. The appellate court disagreed, referring to the form as a warning, rather than a trigger, and stating, “It enables nothing.” The court denied the case (see Notre Dame signs EBSA Form 700-Certification, not substantially burdened, Health Reform WK-EDGE, February 26, 2014).

Supreme Court litigation

Three months later, the U.S. Supreme Court issued its landmark ruling in Hobby Lobby, holding that the mandate could not be applied to for-profit closely-held corporations with religious objections to the mandate because the regulations violated the Religious Freedom Restoration Act (RFRA) (42 U.S.C. §§2000bb et seq.). Although it declined to rule on whether the provision of contraception was a compelling government interest, the Supreme Court determined that the mandate was not the least-restrictive means of furthering that interest. One week later, the Court granted an injunction to Wheaton College, a Christian liberal arts college, enjoining the government from requiring Wheaton to execute EBSA Form 700, which Wheaton believed, would “make it morally complicit in the wrongful destruction of human life.” In doing so, the Court noted the existence of a circuit split as to whether to enjoin the requirement that religious nonprofit organizations use EBSA Form 700 (see Supreme Court: religious college doesn’t have to file contraception mandate opt-out form, Health Reform WK-EDGE, July 9, 2014).

Certiorari and remand

In light of the Hobby Lobby and Wheaton College decisions, Notre Dame filed a petition for certiorari with the Supreme Court, asking it to vacate the Seventh Circuit decision and remand it for consideration. Notre Dame argued that the Hobby Lobby decision focused on the “‘consequences’ of noncompliance,” while the Seventh Circuit decision, “focused on the actions that Notre Dame was compelled to take.” Furthermore, according to Notre Dame, the Hobby Lobby decision left it to plaintiffs to determine whether an act was sufficiently connected to conduct as to make it immoral. It renewed its argument that the mandate substantially burdened Notre Dame’s exercise of religion, yet neither served a compelling government interest nor was the least restrictive means of doing so.

The Supreme Court granted the petition, vacating the Seventh Circuit’s decision and remanding the case to the appellate court. Mark Rienzi, Senior Counsel at the Becket Fund for Religious Liberty, which filed an amicus brief in the case, referred to the grant as, “a strong signal that the Supreme Court will ultimately reject the government’s narrow view of religious liberty.”

Highlight on Texas: Even Exchange Concerns are Bigger

A recent nationwide Gallup survey reported that Texas’ uninsured rate dropped more than 2 percent between 2013 and 2014, as more people were provided health coverage under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). But the state still had the highest uninsured rate nationwide. Nationally, the overall uninsured rate fell by 3.5 percent in 2014. Despite its uninsured rate drop, Texas is the only state in which more than 20 percent of its population is without health coverage. The high percentage is partly a consequence of the state’s reluctance to expand Medicaid or establish a state-operated marketplace.

The ACA provides for the establishment of Health Insurance Exchanges through which individuals can purchase health insurance. It also authorizes federal tax credits to low- and middle-income Americans to help offset the cost of the health coverage. By not setting up a state-operated marketplace, Texas relies upon exchanges run by the federal government. In the last open enrollment cycle that ended on February 15, 2015, more than 1 million Texans signed up for coverage on the federal Exchange. This places Texas second overall in the total number of enrollees among the 37 states on the federal marketplace.

Without a state-operated marketplace and a large number of enrollees in the federal Exchange, however, the Texans that did sign up for health insurance may be severely impacted by the eventual decision in King v. Burwell. In that case, individual residents of Virginia argued that the phrase “established by the State” in an implementing provision of the ACA made clear that health insurance subsidies were only available to enrollees living in the 16 states that set up their own exchanges. The individuals argued that the IRS erred in offering tax credits to individuals who lived in states that have federally run exchanges. As noted, Texas is one such state.

With oral argument scheduled for early March, health insurers in Texas are keeping a watchful eye on the Supreme Court’s eventual determination. If the high court finds that the subsidies were unlawful, then their elimination could affect the overall health insurance market. In Texas, 86 percent of the residents who purchased insurance on the federal Exchange received a tax subsidy that reduced their premiums by an average of 72 percent. Some industry groups have suggested that the elimination of subsidies would result in young and healthy enrollees leaving the Exchange and choosing to pay the ACA penalty rather than higher insurance prices. The loss of these younger, healthier individuals would mean that insurance rolls would have more individuals requiring medical care than not. As a consequence, insurers losing out on a larger pool of enrollees to fund health insurance plan payments could raise premiums for all of those insured, not just those who enrolled under the ACA, because of this exposure to higher risk enrollees.

In 2012 former Texas Governor Rick Perry had written a sharply worded letter to the HHS, refusing federal money to create a state-operated marketplace as a “brazen intrusion” on the state’s sovereignty. Then, just as now in Texas, political support from anti-ACA legislators, along with constituent outcry about federal government involvement, bolstered Perry’s stance. With the looming consequences of King v. Burwell, however, the current Texas administration has been quiet about opposition to a state-operated exchange.

Self-certification acceptable, consequences remain separate from action

A Missouri liberal arts college with a “five-fold emphasis” on academic, vocational, Christian, patriotic, and cultural education was unsuccessful with its challenge to the contraceptive coverage provisions of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Arguing that the contraceptive coverage provisions require the school to actively participate in a scheme forbidden by its religious beliefs, the school requested a reprieve from the employer requirements. Because it found that the requirements do not require active participation on behalf of the college, the court ordered the school to comply (The School of the Ozarks, Inc. v. HHS, January 13, 2015, Phillips, B.).

ACA provisions

Under the ACA, employers are required to provide contraceptive coverage benefits in their employee health plans if they employ 50 or more people. Nonprofit religious organizations may claim an exemption to this requirement through an insurance plan or a third-party administrator (TPA) if four criteria are met. The eligible organization must: (1) have a religious objection to some or all contraceptive services required; (2) be a nonprofit entity; (3) hold itself out as a religious organization; and (4) self-certify the above either through EBSA Form 700 (Form 700) sent to the insurance provider or TPA, or a written notice to HHS.

Self-certification

The self-certification process requires the execution of a short form, titled EBSA Form 700-Certification. The form is delivered to the TPA. Once properly completed, the organization is not obligated to comply with the mandate or insurance coverage that is required by the mandate. The TPA becomes responsible for providing or arranging contraceptive coverage for employees of the organization. The insurance company must then notify the employees that the employer is not providing the contraceptive coverage.

The School of the Ozarks (School) believes the destruction of a fertilized egg is morally wrong, based upon its religious beliefs and convictions. It has historically specifically excluded coverage for objectionable contraceptives in its group health insurance plans. The School of the Ozarks qualifies as an eligible organization and is able to utilize an accommodation method, however the School argues that that by utilizing that accommodation, it is being forced into facilitating the provision of religiously offensive contraceptives to its employees in violation of the Religious Freedom Reformation Act (RFRA), which provides that any law which substantially burdens a person’s free exercise of religion must be (1) in furtherance of a compelling government interest and (2) use the least restrictive means of furthering that interest.

Not burdensome

The court disagreed. After the School notifies either the insurer or the government that it would like to opt out of providing contraceptive coverage, the coverage provided is completely segregated from the School’s policy because the burden to provide the coverage falls on a third party. That third party provider cannot directly or indirectly require the School to pay or arrange for the coverage in any way. According to the court, “While the School may disagree with the ultimate outcome that the insurance company provides its employees contraceptive coverage, the actions taken by the government and the insurance provider cannot form the basis of the School’s RFRA claim.”

Compelling government interest

In addition to finding no substantial burden on the School of the Ozarks, the court also held that the government had a compelling interest in issuing the contraceptive coverage mandate. By mandating the coverage, the government was able to alleviate the “administrative, financial and/or logistical burdens on women seeking all types ofcontraception,” which, the court believed, formed a proper basis for establishing a compelling interest.

Further arguments

The School made several other unsuccessful arguments against the mandate. It argued that the accommodation method was not the least-restrictive means that the government could have used. The court disagreed. Because the accommodation requires very little from the School while at the same time, it provides an important role in women’s health and equality, the court stated that the government used the least restrictive means to accomplish its objective.

The School also argued that the mandate was a violation of free speech, but the court held that nothing in the requirement forced the school to speak against its religious beliefs. It also maintained that use of the tax code definitions outside the tax context to define a religious employer “creates impermissible and excessive entanglements between religion and the government,” but the court declined to entertain the argument, holding instead that their argument was “based upon non-binding guidelines which have not been applied to them, and therefore cannot be challenged at this point.” The School’s request was therefore denied.