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Commonwealth v. United States Department of Health and Human Services

United States District Court, D. Massachusetts

March 12, 2018

Commonwealth of Massachusetts, Plaintiff,
v.
United States Department of Health and Human Services; Alex M. Azar II, in his official capacity as Secretary of Health and Human Services; United States Department of the Treasury; Steven T. Mnuchin, in his official capacity as Secretary of the Treasury; United States Department of Labor; and R. Alexander Acosta, in his official capacity as Secretary of Labor, Defendants.

          MEMORANDUM & ORDER

          Nathaniel M. Gorton United States District Judge

         This case involves a dispute about the validity of two Interim Final Rules (“IFRs”) issued by the United States Department of Health and Human Services, the United States Department of the Treasury and the United States Department of Labor (collectively “defendants” or “the Departments”) on October 6, 2017. The IFRs expand the religious exemption to the contraceptive mandate of the Affordable Care Act (“ACA”) and create a new moral exemption to that mandate.

         The Commonwealth of Massachusetts (“plaintiff” or “the Commonwealth”) alleges that 1) the Departments did not engage in notice and comment rulemaking before issuing the IFRs in violation of the Administrative Procedure Act (“APA”), 5 U.S.C. § 553, 2) the IFRs are not in accordance with law and exceed the defendants authority in violation of the APA, 5 U.S.C. § 706, 3) the IFRs violate the Establishment Clause of the First Amendment of the United States Constitution and 4) the IFRs violate the equal protection guarantee of the Due Process Clause of the Fifth Amendment of the United States Constitution. The Commonwealth requests that this Court declare the IFRs unlawful and permanently enjoin their implementation on a nationwide, universal basis.

         Pending before the Court are plaintiff's motion for summary judgment and defendants' cross-motion to dismiss or for summary judgment. Because the Commonwealth has failed to set forth specific facts establishing that it will likely suffer future injury from the defendants' conduct, it lacks standing to prosecute this action and defendants' motion for summary judgment will therefore be allowed and plaintiff's motion for summary judgment will be denied.

         I. Background

         A. The contraceptive mandate

         The Patient Protection and Affordable Care Act generally requires that employer-sponsored healthcare plans include a range of preventive care services on a no-cost basis (“the preventive services requirement”). See 42 U.S.C. §§ 18022 & 300gg-13. That requirement mandates no-cost coverage

with respect to women, . . . as provided for in comprehensive guidelines supported by the Health Resources and Services Administration [“HRSA”].

S. Amdt. 2791, 111th Congress (2009-2010).

         Thus, instead of including specific preventive care services, Congress delegated authority to HRSA, an agency within the Department of Health and Human Services (“HHS”). HRSA and HHS enlisted the Institute of Medicine (“IOM”), which convened a committee to assess what preventive services should be included.

         The IOM recommended that the services include

the full range of Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity.

IOM Report at 104.

         Accordingly, when the HRSA promulgated its Women's Preventive Services Guidelines in August 2011, non-exempt employers were required to provide

coverage, without cost sharing, [for] [a]ll Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling (“the contraceptive mandate”). Those guidelines went into effect in August, 2012. The HRSA updated the Women's Preventive Services Guidelines in December 2016, reaffirming that the Guidelines should continue to require full coverage for contraceptive care and services.

         B. Accommodations for religious objections to the contraceptive mandate

         In 2011 and 2012, the Departments issued regulations automatically exempting churches and their integrated auxiliaries, conventions and associations of churches and the exclusively religious activities of religious orders from the contraceptive mandate. This “Church Exemption” corresponds to a category of employers defined in the Internal Revenue Code. See 77 Fed. Reg. 8725, 8726 (citing 26 U.S.C. §§ 6033(a)(3)(A)(i) and (iii)). The Departments recognized that “certain non-exempted, non-profit organizations” also had religious objections to covering contraceptive services but determined that exempting such employers was not required by RFRA and was inconsistent with the ACA. 77 Fed. Reg. 8725, 8728. Internal church decisions, the Departments explained in later regulations, are afforded a “particular sphere of autonomy” that does not extend to other religious employers. 80 Fed. Reg. 41, 318, 41, 325.

         In 2013, the Departments issued regulations providing an accommodation for objecting religious, non-profit organizations and institutions of higher education. The accommodation created a system whereby insurers and third parties paid the full cost of contraceptive care and employees received seamless coverage (“the accommodation process”). That process was expanded to cover closely held, for-profit companies in response to Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751 (2014), in which the Supreme Court held that the contraceptive mandate violated the Religious Freedom Restoration Act (“RFRA”) for certain closely-held, for-profit employers. The Court held that the “HHS contraceptive mandate substantially burden[ed] the exercise of religion.” Id. at 2775 (internal quotation omitted) (citing 42 U.S.C. § 2000bb-1(a)). The accommodation process, the Court explained, was a “less restrictive means” of furthering the government interest and thus RFRA required that the accommodation be expanded to include certain closely held corporations. Id. at 2780-82.

         In a separate series of cases, religious organizations such as universities and healthcare providers that did not perform “exclusively religious activities” challenged the legality of the accommodation process itself. See Zubik v. Burwell, 136 S.Ct. 1557 (2016). In May, 2016, those cases were remanded to their respective circuit courts for further consideration of whether the accommodation process could be altered to address the religious employers' concerns while still providing seamless contraceptive coverage. In January, 2017, after reviewing more than 50, 000 comments, the Departments announced that the answer was “No”. No alternative, the Departments explained, would pose a lesser burden on religious exercise while ensuring contraceptive coverage.

         C. The Interim Final Rules

         On May 4, 2017, the President issued an “Executive Order Promoting Free Speech and Religious Liberty.” Exec. Order No. 13, 798, 92 Fed. Reg. 21, 674 (May 4, 2017). That order instructed agencies

[to] consider issuing amended regulations, consistent with applicable law, to address conscience-based objections to the preventive-care mandate promulgated under section 300gg-13(a)(4).

Id.

         The Departments of the Treasury, Labor and HHS issued the two Interim Final Rules (“IFRs”) at issue in this case on October 6, 2017. See 82 Fed. Reg. 47, 799 (“Religious Exemption Rule”); 82 Fed. Reg. 47, 838 (“Moral Exemption Rule”).

         The IFRs create an expanded religious exemption. The HRSA exempts objecting entities “from any guidelines' requirements that relate to the provision of contraceptive services.” 45 C.F.R. § 147.132(a). The Religious Exemption Rule expands objecting entities to include any non-governmental plan sponsor that objects to

establishing, maintaining, providing, offering, or arranging (as applicable) coverage, payments, or a plan that provides coverage or payments for some or all contraceptive services, based on its sincerely held religious beliefs.

45 C.F.R. § 147.132(a)(2).

         The religious exemption also applies to institutions of higher education in their arrangement of student health insurance coverage to the extent of that institution's sincerely held religious beliefs. 45 C.F.R. § 147.132(a)(ii). It exempts all employers with a religious objection, as opposed to the prior Church Exemption covering churches, associations of churches and the exclusively religious activities of religious orders. It also affects religious non-profit organizations in that objecting organizations formerly subject to the accommodation process may now seek the exemption.

         Under the preceding Administration, no moral exemption to the contraceptive mandate existed in any form. The Moral Exemption Rule provides an exemption for nonprofit organizations and for-profit entities with no publicly traded ownership interests that object to

establishing, maintaining, providing, offering, or arranging (as applicable) coverage or payments for some or all contraceptive services, or for a plan, issuer, or third party administrator that provides or arranges such coverage or payments, based on its sincerely held moral convictions.

45 C.F.R. § 147.133(a)(2).

         D. Estimated Impact of the IFRs

         The Departments provided two estimates for the number of women who will likely be affected by the IFRs nationwide. The first, lower, estimate is derived largely from the Departments' experience litigating the contraceptive mandate, the Church Exemption and the accommodation.

         The Departments begin their estimate by excluding certain categories of employers as unlikely to avail themselves of the expanded exemptions. The Religious IFR estimates that, for certain categories of employers, no women of child bearing age that use contraception and had access to no-cost contraceptive care through their employer before the Religious IFR was put into effect would lose coverage because of the employer's availment of the Religious IFR. Although these employers would be transitioning from the accommodation to the exemption, the Departments estimated that the Religious IFR would have no effect on those employers' employees. That is because

the Departments continue to assume that such plans are similar to other objecting entities using self-insured church plans with respect to their third party administrators being unlikely to provide contraceptive coverage to plan participants and beneficiaries under the previous rule.

82 Fed. Reg. 47792, 47816.

         The Departments excluded certain categories of employers from their estimates because the Departments deemed those employers unlikely to avail themselves of the exemption. For instance, the Departments state that

although publicly traded entities could make use of exempt status under these interim final rules, the Departments do not expect that very many will do so.

82 Fed. Reg. 47792, 47816; see also 82 Fed. Reg. 47792, 47816 (“No publicly traded for-profit entities have filed lawsuits challenging the mandate.”).

         The Departments estimate that 209 entities will make use of the expanded religious exemption nationwide. This number was originally put forth in August 2014 and July 2015 as HHS's estimate of how many entities would avail themselves of the accommodation process. See 82 Fed. Reg. 47792, 47817. The figure was based on

122 eligible entities that had filed litigation challenging the accommodation process, and 87 closely held for-profit entities that had filed suit challenging the Mandate in general.

Id. (citing 79 Fed. Reg. 51096; 80 Fed. Reg. 41336).

         Overall, the Departments estimate that of the 209 previously accommodated litigating entities, 109 “will make use of their exempt status, and 100 will continue using the accommodation.” See id. In addition, the Departments assume that nine entities newly eligible for the accommodation “will use the voluntary accommodation moving forward.” See id.

         Assuming that some of the previously accommodated litigating entities will continue using the accommodation while others will use the exemption, the Departments estimate that

109 entities will use the voluntary accommodation moving forward, 100 of which were already using the previous accommodation, and that 109 entities that have been using the previous ...

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