Labor & Employment Law Daily HHS’s contraceptive care exemption, Notre Dame settlement, violated APA
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Friday, January 24, 2020

HHS’s contraceptive care exemption, Notre Dame settlement, violated APA

By Jeffrey H. Brochin, J.D.

HHS was without legal authority to enter into the settlement agreement with Notre Dame University that bound future administrations, faculty, staff, and students.

A federal district court in Indiana has denied the motions to dismiss filed by HHS and Notre Dame University in a case brought by an Indiana women’s health organization challenging both the 2018 final rules governing the contraceptive care exemption under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), and a previous 2017 settlement agreement entered into between HHS and Notre Dame to resolve prior litigation over the cost-sharing provisions of the ACA. The women’s health organization pleaded a plausible claim that the final rules and the settlement agreement violated the substantive provisions of the Administrative Procedures Act (APA) (Irish 4 Reproductive Health v. U.S. Dept. of Health and Human Services, January 16, 2020, Simon, P.).

Extensive litigation history of ACA’s contraception mandate. After various challenges were raised to the ACA’s contraceptive care mandate, HHS issued its final rules pursuant to which both houses of worship and other religious organizations could apply for exemption from the cost-sharing provisions of the Women’s Health Amendment to the ACA. Notre Dame was one of those organizations entitled to exempt accommodation by filling out a form, but rather than merely sign off as required in order to obtain exempt status, the university objected that even that requirement made it “a conduit” for the provision of contraceptive care and filed suit to enjoin that requirement. According to the district court, upon reaching the Supreme Court, the litigation was “punted” and remanded, in hopes that a settlement would be achieved.

Terms of settlement agreement. HHS responded to the Supreme Court’s “nudge” by promulgating first interim final rules and then the 2018 final rules regarding religious accommodation. But HHS also resolved Notre Dame’s litigation challenges by entering into a settlement agreement in October, 2017, that inoculated Notre Dame in perpetuity from any future regulation that might mandate the provision of contraception to its students or employees. The settlement agreement provided that “no person may receive contraceptive coverage as an automatic consequence of enrollment in any health plan sponsored by Plaintiffs.”

Agreement violated APA. An Indiana women’s health organization acting on behalf of Notre Dame students and faculty filed suit alleging that the settlement agreement violated the APA because the Attorney General settled the matter in a manner that exceeded its authority. The agreement did not merely resolve the cost-sharing issue, but rather it relieved Notre Dame from providing any coverage at all. Furthermore, the court found it “especially disturbing” that HHS purported to bind future administrations, as well as future faculty, staff, and students at Notre Dame, by entering into such a broad settlement agreement that exempted Notre Dame from the regulations or any materially similar regulation or agency policy, and provided that no penalties would be assessed for noncompliance with “any law or regulation” requiring contraceptive coverage.

The court further noted that Notre Dame had been denying contraceptive coverage since October 2017 even though the final rules have been enjoined nationwide since December 2017. Accordingly, the court found that the settlement agreement injured the plaintiffs, and it denied Notre Dame’s motion to dismiss those claims of the lawsuit.

Final rules and the APA. The court next turned to the administrative challenge to the final rules. Although the court acknowledged that the relevant agencies’ desire to quickly address purported harm to religious objections did not ameliorate the need to follow appropriate procedures, the need to address uncertainty did not establish good cause, and the previous solicitation and collection of comments regarding rules about the contraceptive mandate was not a substitute for the notice and comment requirements pertaining to those rules. Accordingly, the court ruled that the federal agencies did not have good cause to ignore the APA’s notice and comment requirement.

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