Labor & Employment Law Daily SCOTUS finds regs allowing religious, moral exceptions to ACA contraception coverage mandate valid
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Friday, July 10, 2020

SCOTUS finds regs allowing religious, moral exceptions to ACA contraception coverage mandate valid

By Cathleen Calhoun, J.D.

Regulations allowing “moral” or “religious” exemptions to providing contraception coverage were found valid in 7-2 decision.

The U.S. Supreme Court held that federal agencies had the authority to provide exemptions from the regulatory contraceptive coverage requirements stemming from the Affordable Care Act (ACA) for employers with religious and conscientious objections. In a 7-2 decision, the High Court found that the Departments of Health and Human Services (HHS), Labor, and the Treasury–agencies that jointly administer the relevant ACA provision—had the authority to exempt certain employers that have religious and conscientious objections from the “agency-created mandate.” The Court reversed and remanded the Third Circuit’s contrary ruling with instructions to dissolve the nationwide preliminary injunction (Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania, No. 19-431, July 8, 2020).

Background on contraception coverage, regulations. The ACA’s contraception coverage mandate initially allowed for exemptions on religious grounds for houses of worship, while religiously affiliated nonprofits (and eventually, closely held for-profits) were able to use an accommodation allowing them to opt out of providing and paying for contraception coverage as generally required by the ACA. Lawsuits and regulations followed. In 2017, federal agencies promulgated two interim final rules (finalized in 2018) that expanded the religious exemptions authorizing employers with religious or moral objections to limit employees’ access to health insurance coverage for contraception (See Contraception coverage exemptions extended for objecting employers on religious, moral grounds, October 11, 2017), and litigation again followed.

Third Circuit decision, appeal. In 2019, the Third Circuit Court held that Pennsylvania and New Jersey were likely to succeed in proving that the agencies did not follow the Administrative Procedure Act (APA) and that the regulations allowing for the exemptions were not authorized under the ACA or required by the Religious Freedom Restoration Act (RFRA). The Third Circuit also affirmed the district Court’s order preliminarily enjoining the rules’ enforcement nationwide. On October 1, 2019, the Little Sisters of the Poor Saints Peter and Paul Home filed a petition for writ of certiorari that was granted on January 17, 2019. On October 7, 2019, the Trump Administration also filed a petition for writ of certiorari with the U.S. Supreme Court that was granted on January 21, 2020. The two were consolidated.

Supreme Court’s findings. The Court analyzed whether the final rules providing religious and moral exemptions to the contraceptive mandate were both substantively and procedurally invalid.

  • Statutory authority. First, the Court addressed whether the agencies lacked statutory authority to promulgate the rules. The respondents argued that the ACA permits the Health Resources and Services Administration (HRSA), an agency of HHS, to only list the preventive care and screenings that health plans “shall . . . provide,” not to exempt entities from covering identified services. The Court disagreed, stating, “Because that asserted limitation is found nowhere in the statute, we agree with the Departments.” The Court also noted that Congress could have limited HRSA’s discretion in many ways, but it did not. The Court added, “Under a plain reading of the statute, then, we conclude that the ACA gives HRSA broad discretion to define preventive care and screenings and to create the religious and moral exemptions.”
  • Religious Freedom Restoration Act (RFRA). The Court also found that the respondent states’ argument that the agencies erred by looking to RFRA as a guide when framing the religious and moral exemption was without merit. The Court stated that if the Departments did not look to RFRA’s requirements or discuss RFRA at all when formulating their solution, they would be susceptible to claims “that the rules were arbitrary and capricious for failing to consider an important aspect of the problem.”
  • Procedures. The Court was not persuaded by arguments of invalid procedures, either. Respondents showed that the 2018 final rules were preceded by a document entitled “Interim Final Rules with Request for Comments,” not a document entitled “General Notice of Proposed Rulemaking.” However, the Court found that the rules “contained all of the elements of a notice of proposed rulemaking as required by the APA.” The Court also declined to evaluate the final rules under the “open-mindedness” test. The Third Circuit had applied an “open-mindedness” test in its ruling, concluding that because the final rules were “virtually identical” to the IFRs, the agencies lacked the requisite “flexible and open-minded attitude” when they promulgated the final rules.

The Court summarized its findings in its conclusion, stating “… the Departments had the statutory authority to craft that exemption, as well as the contemporaneously issued moral exemption. We further hold that the rules promulgating these exemptions are free from procedural defects.”

However, in a concurring opinion, Justice Kagan noted, “…I question whether the exemptions can survive administrative law’s demand for reasoned decision-making. That issue remains open for the lower courts to address.”

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