Affordable Care Act Runs Into Religious Freedom Issues in Court

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[author: Gwen Morales and Ellen Babbitt]

Although the Supreme Court, in a landmark decision earlier this summer, affirmed the constitutionality of the Patient Protection and Affordable Care Act (ACA), the challenges to and controversies surrounding that Act are far from over. One implementing guideline in particular has been the target of considerable opposition from religious institutions: the requirement that all non-grandfathered health plans and insurers provide coverage for contraceptives and other preventative care for women. Although certain religious groups, primarily churches, are exempt from this requirement, the guideline does not exempt other religious employers such as schools, hospitals, and universities. The Department of Health and Human Services (HHS) has provided certain of these non-exempt religious employers with a temporary enforcement “safe harbor,” under which these selected employers are allowed an extra year to comply with the contraceptive coverage requirement (or, perhaps, work out an accommodation). Accordingly, because many non-exempt religious employers are not presently required to begin providing contraceptive services, the legal challenges they have raised to the contraceptive care mandate have yet to gain real traction in the courts.

A recent decision from the U.S. District Court for the District of Colorado, however, provides some indication that, if and when the mandate is enforced against non-exempt religious employers, those employers may be able to successfully oppose the mandate on religious freedom or First Amendment grounds. The plaintiffs in the case at issue, Newland et al. v. Sebelius et al., were Hercules Industries, a Colorado manufacturer and distributer of HVAC products, and William, Paul, James, and Andrew Newland and Christine Ketterhagen (the Newlands), the family group that owns Hercules and comprises its Board of Directors. Although Hercules is a private, for-profit, secular employer, the Newlands are devout Catholics who, as they stated to the court, “seek to run Hercules in a manner that reflects their sincerely held religious beliefs.”

Hercules maintains a self-insured group plan which, pursuant to the Newlands’ religious beliefs, does not cover contraception or other reproductive health services. Faced with the prospect of either having to begin providing such coverage in the fall of 2012 or pay significant fines, the Newlands filed suit, arguing that the contraceptive coverage requirement violated the Religious Freedom Restoration Act (RFRA) and their First Amendment right to the free exercise of religion. The Newlands’ action sought an injunction against their being forced to comply with the law. Although the District Court left some of the trickier issues presented by this case for another day, it ultimately found the plaintiffs’ argument sufficiently compelling to grant their request for a preliminary injunction.

In considering whether to grant the preliminary injunction, the court considered (1) whether plaintiffs were likely to succeed on the merits of their claim, (2) whether they faced irreparable and imminent harm which (3) outweighed any harm to the defendants, and (4) whether the injunction would adversely affect the public interest. Beginning with factor (2), the court found that, even though the required coverage would not begin until November 1, 2012 (the start date of Hercules’ new plan year), the extensive planning involved in the Newlands’ amendment of their plan rendered sufficiently “imminent” the harm being faced by plaintiffs. Moving to factor (3), the court summarily concluded that the potential harm to HHS of being prevented from enforcing its regulations “pale[d] in comparison” to a possible infringement upon Plaintiffs’ constitutional rights.

With regard to factor (4), HHS had argued that granting the injunction would adversely affect the public interest because it would undermine the ability of HHS to effectuate Congress’ goals of (a) improving the health of women and children and (b) equalizing the coverage of preventative services for women and men. The court disagreed, noting that HHS itself had undermined its own asserted interest by providing exemptions for certain religious organizations and also for employers with grandfathered health plans; the court also concluded that HHS’s interest was wholly outweighed by the public interest in the free exercise of religion. Finally, with regard to factor (1), the court concluded that plaintiffs had demonstrated a likelihood of success on their claim that the contraceptive coverage requirement unlawfully burdened their exercise of religion in violation of the RFRA, and thus a preliminary injunction was appropriate. The court did not reach the potential merits of plaintiffs’ First Amendment claim.

Under the RFRA, the government is prohibited from enforcing a law that “substantially burden[s] a person’s exercise of religion,” unless that law is “in furtherance of a compelling government interest” and is the “least restrictive means” of furthering that interest. The unusual twist in the present case is that it is Hercules – a secular corporation – against which the contraceptive and preventative care mandate would be enforced. Noting that the question of whether such an entity could “exercise religion” for purposes of the RFRA was a new and weighty one “merit[ing] more deliberate investigation,” the court declined to rule definitively upon the issue at this preliminary stage but, rather, set this issue aside for later proceedings. That the court ultimately granted plaintiffs their requested injunction, however, demonstrates that it found some merit to the argument. Moreover, in jumping ahead to the remainder of the RFRA analysis, the court noted that the “massive” exemptions to the contraceptive mandate that HHS had provided effectively served to undermine any compelling interest that HHS might have in applying that mandate to plaintiffs. And, furthermore, even if HHS did have a compelling interest in applying the mandate to plaintiffs, it failed in the court’s view to demonstrate that there were no feasible less-restrictive alternatives. For instance, the court noted, plaintiffs had proposed one alternative—government provision of free birth control—that HHS had failed to argue was logistically or administratively impracticable. Citing all of these concerns, the court therefore entered a preliminary injunction preventing enforcement of the mandate against plaintiffs and preserving the status quo pending a full resolution on the merits.

It is important to stress that this decision is only preliminary, and it is unknown what the final outcome may be. The decision is also narrow and, as the court took pains to emphasize, applies only to the particular case at hand, not to any other party’s argument about free exercise of religion. And, of course, it is certainly possible that this controversy may be mooted by additional executive or regulatory action in the year before the requirement to provide contraceptive coverage becomes enforceable as to this category of employers. Nonetheless, this case remains notable, even given its narrow application, because it suggests that courts may well be receptive to challenges to ACA on religious grounds, when and if such challenges become ripe.