Health Law Daily Rule related to federal conscience and anti-discrimination laws vacated in favor of Washington
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Monday, December 2, 2019

Rule related to federal conscience and anti-discrimination laws vacated in favor of Washington

By Sheryl Allenson, J.D.

A Final Rule issued by HHS related to Federal Conscience and Anti-Discrimination Laws was deemed, among other things, to be arbitrary and capricious and therefore vacated by a federal district court in Washington.

After analyzing several statutes, including the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), the court sided with Washington State, granting summary judgment setting aside the HHS final rule (State of Washington v. Azar II, November 21, 2019, Bastian, S).

In May 2019 HHS issued a final rule related to federal conscience and anti-discrimination laws. One week later the State of Washington filed suit alleging that the final rule imposed certain HHS officials’ religious views on individuals "who seek timely, medically necessary care and information about reproductive health, LGBTQ health and end-of-life care." Specifically, the complaint sought declaratory and injunctive relief, on the basis that HHS violated the APA for a variety of reasons, including but not limited to the argument that the agency action was not in accord with law and HHS authority or with other federal laws, including but not limited to the ACA. The state also claimed that the rule was arbitrary and capricious and in violation of Constitution.

During the course of the hearings on the motions for summary judgment, the state requested that the court address several additional arguments challenging the final rule. Specifically, the state suggested the court consider that the rule "impermissibility encompasses moneys that are issued to the State of Washington by the Departments of Labor and Education; that it address the impact of the rule on transgendered individuals; that it address whether the rule is "irreconcilable with medical ethics;" and finally, that it address access to care and the effect it would have on vulnerable populations.

In its review of the motions, the court explained the requirements for rulemaking under the Administrative Procedure Act (APA) as well as judicial authority under that act. The court noted that it must set aside agency action that is arbitrary and capricious, and defined action that is covered by that term. Additionally, the court laid out the standard of review for APA cases. The court explained that in considering summary judgment, it was tasked with the job of determining whether or not, as a matter of law, the administrative agency was permitted to make its decision based on the evidence in the administrative record.

The court set out the regulatory history behind the 2019 final rule, noting that the first underpinning to the rule was promulgated in a 2008 final rule. In 2011, HHS rescinded most of the 2008 rule, replacing it with the new 2011 final rule. Thereafter, HHS found that the 2011 rule created confusion over what is required under federal conscience and anti-discrimination laws.

Accordingly, and after reviewing previous rulemaking, comments from the public and Office of Civil Rights enforcement activities, HHS determined there was a "significant need" to amend the 2011 final rule. The 2019 final rule "generally reinstates" the structure of the 2008 rule, and also included additional definitions and certification and enforcement provisions. In its order on the motions for summary judgment, the court spells out those definitions.

In its decision, the court noted that in the 2019 final rule, HHS relied upon numerous provisions it claimed "reflect Congress’ intention to protect the freedoms of conscience and religious exercise in the health care context." These included, among numerous others, certain provisions under the ACA, including sections 1553, 1303 and 1441.

In the court’s review of the motions, it describes the various relevant provisions, including those under the ACA. Generally, section 1553 of the ACA prohibits the federal government, as well as any state or local government or health care provider that receives federal financial assistance under the ACA from certain forms of discrimination against health care entities related to those entities’ beliefs. Section 1303 of the ACA provides, among other things, that health plans need not provide coverage for abortion services as part of "essential benefits for any plan year." Section 1441 provides exemptions from the individual responsibility requirements drawn under the Internal Revenue Code.

In its analysis, the court agreed that to the extent the rule could be interpreted to permit withholding of federal funds from the Departments of Labor and Education, HHS was acting "outside the scope of its lawful authority". Moreover, the court rejected HHS’ argument that the rule would increase access to care, cutting down its rationale and finding that the state demonstrated that medical care would be negatively impacted by the rule. The court sided with the state, finding that the rule was arbitrary and capricious on several fronts. Accordingly, the court granted Washington’s motion for summary judgment and vacated the 2019 final rule.

The case is No. 2:19-cv-00183-SAB.

Attorneys: Lauryn K. Fraas, Attorney Generals Office, for the State of Washington. Benjamin Thomas Takemoto, U.S Department of Justice, for Alex M. Azar II and United States Department of Health and Human Services.

Companies: United States Department of Health and Human Services

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