By Rebecca Mayo, J.D.
Massachusetts has standing to challenge the religious and moral exemptions to the ACA after showing it would incur costs for covering contraceptive care through state-funded programs for women who would lose coverage as a result of the exemptions.
The Commonwealth of Massachusetts was able to show that it has standing to challenge the final rules creating religious and moral exemptions to the Patient Protection and Affordable Care Act, promulgated by the departments of HHS, Labor, and the Treasury. The First Circuit found that the Commonwealth was able to show an imminent financial injury based on the costs it would incur in covering contraceptive care for women who lost coverage as a result of the rules. The court vacated a district court ruling that dismissed the case for lack of standing and remanded it back for further proceedings (Commonwealth of Massachusetts v. HHS, May 2, 2019, Torruella, J.).
Interim final rules. After many attempts at promulgating regulations to provide exemptions to the mandate and many legal challenges, the departments issued an interim final rule (IFR) creating a religious exemption and an IFR creating a separate moral exemption. Both were effective immediately upon publication and did not go through the notice and comment process. The religious exemption expanded the previous exemption from only churches and related entities, to nonprofit organizations, corporations, institutions of higher education, and health insurance issuers. The moral exemption created a similar exemption but based on sincerely held moral convictions, but did not define the term moral conviction. The departments included a regulatory impact analysis in the IFRs and found that an estimated 31,700 to 120,000 women would likely lose contraceptive coverage due to the IFRs and the average annual expenditure on contraceptive products and services was $584 per user.
The challenge. The Commonwealth of Massachusetts filed suit to enjoin the IFRs in October 2017 and both sides moved for summary judgement. In March 2018, the district court granted the Departments’ motion for summary judgment, holding that the Commonwealth failed to establish standing because it had not set forth specific facts establishing that it will likely suffer future injury from the defendants conduct. The Commonwealth appealed and the Departments then issued final rules superseding the IFRs.
Mootness. The court found that the challenged portions of the final rules were sufficiently similar to the IFRs that the case was not moot as to the substantive challenges. The features of the final rules that would have harmed the Commonwealth, would do so in the same fundamental ways as the IFRs. The final rules were also not based on an entirely new analysis and were only superficially altered. Therefore the substantive challenges to the federal regulations are not moot. The IFRs did not go through the notice and comment rulemaking, however the final rules superseding the IFRs. Therefore the procedural challenge is moot because any determination as to the validity of the IFRs would be made for the first time after they had ceased to exist.
Standing. The court found that the Commonwealth demonstrated a substantial risk of fiscal injury by showing that the final rules would cause women to lose contraceptive coverage and there is a strong likelihood that some of those women would obtain state-funded contraceptive services or prenatal and postnatal care for unintended pregnancies and thus the state will insure costs. Based on the numbers of the Regulatory Impact Analysis and the Commonwealth’s percentage of the population, an estimated 373 to 1,414 Massachusetts women would lose coverage because of the IFRs. At least three employers would use the expanded exemptions based on their past litigating positions or their past objections to providing contraceptive coverage, all of which are identified in the Departments’ administrative record.
The Commonwealth was also able to establish that through its MassHealth program, it provides at least partially state-funded contraceptive services to women with incomes up to 300 percent of the federal poverty line and about twenty-five percent of women in the Commonwealth who currently have employer-sponsored coverage could qualify for these state-funded programs. Using those numbers with the numbers in the Regulatory Impact Analysis, an estimated 99 to 354 women that would likely lose coverage as a result of the regulations would qualify for state funded programs. According to the Regulatory Impact Analysis’s estimation of $584 per woman per year cost of contraceptive coverage, the Commonwealth would likely be liable for about $54,312 to $206,736 a year for contraceptive care. This does not include unplanned birth maternity care and the cost of a child’s first year of life, which can cost an estimated $15,109.
Decision. The court held that although the asserted imminent fiscal injury relies on a prospective chain of events, it does not defeat standing. The imminent financial harm alleged would impact the Commonwealth in an individual way and therefore the asserted financial injury is concrete and particularized. The injury is also fairly traceable to the challenged action. And an injunction preventing application of these exemptions would stop the alleged fiscal injury from occurring.
The case is No. 18-1514.
Attorneys: Julia E. Kobick, Office of the Attorney General, for Commonwealth of Massachusetts. Karen Schoen, U.S. Department of Justice, for the Department of Health and Human Services.
Companies: Commonwealth of Massachusetts; Department of Health and Human Services
Cases: CaseDecisions AccessNews AgencyNews ContraceptionCoverageNews ProgramIntegrityNews MaineNews MassachusettsNews NewHampshireNews PuertoRicoNews RhodeIslandNews NewsFeed
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