What to expect from the Zubik remand: a possible solution for "church plans," but otherwise no obvious common ground

Marty Lederman

This much is clear about the Court's per curiam disposition in Zubik v. Burwell yesterday:  It does not resolve any of the important, outstanding interpretive questions regarding RFRA.  Indeed, the Court was careful to insist that its remand "does not decide whether petitioners’ religious exercise has been substantially burdened, whether the Government has a compelling interest, or whether the current regulations are the least restrictive means of serving that interest."  The Zubik case, therefore, will not have any impact on the application of RFRA outside the context of the contraception regulation--not yet, anyway.  (I discuss some of the more important outstanding issues in this article.)

The Court's order is also unlikely to lead to voluntary resolution of many of the dozens of pending "nonprofit" cases challenging the contraception regulation, as well as such cases that for-profit employers might yet bring in the future.  As I explain below, I believe that although some of the cases (those involving "church plans") ought to be resolved amicably in the lower courts, there will remain at least some cases--probably quite a few--in which the parties are unable to reach an agreed-upon compromise.  Therefore, unless all of the courts of appeals reject the remaining RFRA claims--which is a possible, but by no means certain, outcome--at least some of those cases are likely to find their way back to the Court in the next year or two, at which point a full complement of nine Justices would be able to resolve the outstanding disputes.

Once again, in order to understand what is likely to happen to the cases as they return to the lower courts, it is necessary to distinguish among the three very different types of health insurance plans at issue in the cases, which I'll do in a bit more detail below.

The gist of my preliminary assessment is this:  For reasons I have explained before, I think that the cases involving ERISA "church plans" (including the suit brought by Little Sisters of the Poor) can probably be settled below, because there was never much at stake in them to begin with:  The government has long conceded that, under its own regulatory accommodation, it cannot require the third-party administrators of such plans to provide contraceptive payments.  The plaintiff organizations in such cases thus have the power to preclude such payments, and therefore they have nothing to complain about.  When that much becomes clear on remand, it ought to facilitate a quick resolution of those cases.  I am not as sanguine as the Court appears to be, however, about the prospects of settlement of the remainder of the cases, involving "insured" plans and "self-insured" plans that are not church plans, because many or all of the plaintiffs in those cases continue to insist that their religious exercise would be substantially burdened unless obstacles are put in the way of the insurance companies' payments to women; and, understandably, the government is unlikely to accept any solution that includes such obstacles.

The most vexing question on remand--and the one the lower courts presumably will have to grapple with sooner rather than later--is what the status quo should be during the year or two before the unresolved cases make their way back to the Supreme Court (or are otherwise resolved on the merits).  In this regard, one sentence of the Court's order yesterday stands out:  "Nothing in this opinion, or in the opinions or orders of the courts below, is to affect the ability of the Government to ensure that women covered by petitioners’ health plans 'obtain, without cost, the full range of FDA approved contraceptives.'"  

I read this as an unambiguous directive from the Court (without apparent dissent) that the lower courts should not impose any obstacles to the government's ability to implement its regulations so as to "ensure that women covered by petitioners’ health plans 'obtain, without cost, the full range of FDA approved contraceptives,'" during the pendency of the litigation.
    
Currently, however, there are injunctions in place in almost all of the lower court cases that do "affect the ability of the Government to ensure that women covered by petitioners’ health plans 'obtain, without cost, the full range of FDA approved contraceptives,'" by preventing the federal agencies from enforcing their regulations against the plaintiff organizations.  In accord with the Court's order, the lower courts should lift those injunctions straight-away.  Even in the absence of the injunctions, however, there might be a host of tricky questions concerning how the government might ensure that the insurance companies in question make payments to the women covered by petitioners’ health plans while the petitioners' RFRA objections remain pending.  I'll briefly discuss some of those lurking questions in my discussion below.


Church plans

ERISA defines certain sorts of self-insured insurance plans, established by churches and maintained by churches or related religious organizations, as "church plans" that are exempt from ERISA.  Some plaintiff organizations, including Little Sisters of the Poor, offer their employees access to plans that are said to be such "church plans."  As I've explained previously (see, e.g., this post), and as Justice Sotomayor noted in footnote 6 of her dissenting opinion in Wheaton College, the government does not have the legal authority to require the third-party administrators (TPAs) of church plans to provide payments for contraceptive services once the employers opt out--it can only request the TPAs to do so voluntarily.

Many employers with church plans will conclude that their religious obligations are not violated if and when the TPAs provide payments voluntarily, outside the auspices of the church plan, as long as the employers themselves are not required to participate in any way.  In those run-of-the-mine church plan cases, the government must know which TPAs to contact with the request to make payments, and therefore the government requires the employers to identify the TPAs--something that is not religiously objectionable for those employers.

In other cases, however, the TPAs of the church plans, such as the Christian Brothers Employee Benefit Trust (one of Little Sisters' TPAs), "share[] the religious beliefs of the church with which the employer is affiliated and has crafted a plan specifically designed to be consistent with those beliefs."  And in still other cases, even if the TPA of a church plan does not share the employer's beliefs, the employer itself, if it has a religious objection to a TPA's voluntary contraception payments, can simply preclude that TPA from making such payments, as a term of its contract with the TPA.

In all events, then, an employer using a church plan can control whether its employees will be able to receive cost-free contraception:  employees' contraceptive use will not be subsidized unless both the employer and the TPA do not object to such payments.  In this respect, employers that object to such TPA payments truly are, in all practical respects, already exempt from the regulation and thus, as I've argued previously, there is nothing at stake in the RFRA claims brought by employers who use church plans, such as Little Sisters.  (Indeed, it follows that the accommodation regulation cannot possibly impose a substantial burden on such employers' religious exercise, because if their employees do not receive coverage, there will be no purportedly immoral conduct in which the petitioners could possibly be complicit.  See Little Sisters of the Poor Home for the Aged v. Burwell, 794 F.3d 1151, 1189 (10th Cir. 2015) ("The lack of substantial burden is especially evident when the group health plan is administered by a TPA that has made clear it will not provide contraceptive coverage . . . .").)

At this point, you might well be wondering:  So what's at stake in Little Sisters and the other church plan cases?  The honest answer is:  nothing.  Or at least, nothing will be at stake if and when Little Sisters and other such employers ensure that all of their TPAs will decline to provide payments for contraception.  Ideally, what would happen in those cases is that the employers would withdraw their RFRA objections (since there'd be no risk of any payments being made to their employees), or, alternatively, that the courts would dismiss them for lack of any substantial burden (as the Tenth Circuit did).  If, however, plaintiffs such as Little Sisters continue, for some inscrutable reason, to press their RFRA claims, even when there is no risk that their employees will be compensated for contraception, it would not surprise me if the government agrees to settle such cases by disclaiming any intent to impose a fine on such organizations in cases where the organization attests to the government that none of its TPAs will provide contraception payments.  Indeed, that is what I understood Solicitor General Verrilli to be saying at oral argument when he answered "no" to Justice Alito's question about whether, "in that situation," Little Sisters would "still be subject to fines for failing to comply."

For these reasons, I think it is likely that the church plan cases, such as Little Sisters, will be amicably resolved in the lower courts, and will not make their way back to the Supreme Court.  Those cases have, from the start, been much ado about nothing.

Before moving on to the other two types of insurance plans, however, it's important to note one further complication about the church plan cases:  Some of them might turn out not to involve church plans after all.

ERISA defines a "church plan" as "a plan established and maintained . . . by a church or by a convention or association of churches which is exempt from tax under section 501 of title 26."  In recent years, many plans established by church-affiliated organizations have held themselves out to be "church plans."  In a recent series of cases, however, courts have begun to hold that a church plan must be established by a church (or by a convention or association of churches), as the statutory language indicates.  See, especially, Stapleton v. Advocate Health Care Network, 817 F.3d 517 (7th Cir. 2016), and Kaplan v. St. Peter's Healthcare Sys., 810 F.3d 175 (3d Cir. 2015).  If these rulings are sustained--as they are likely to be--then plans established by church-affiliated institutions will not qualify as "church plans."

It may that some of the self-described "church plans" in the contraception cases are not, in fact, church plans, under the reasoning of these recent cases.  (I do not know offhand which of them were established by churches and which were not.)  If and when that change of status is confirmed, they will be treated as "ordinary" self-insured plans, which I discuss below.

Insured plans

Some of the contraception cases involve "insured" health care plans, in which an employer (or school) purchases an employee insurance policy from an insurance company, or issuer, such as Aetna or Blue Cross/Blue Shield, and the issuer itself then bears the costs of reimbursing beneficiaries (including employees and/or students) for their health care expenses.  (Six of the petitioner employers in Zubik use one or more insured plans:  Catholic University (employee and student plans), Geneva College (employee and student plans), Oklahoma Baptist University (employee and student plans), Oklahoma Wesleyan University (employee plan), Priests for Life (employee plan), and Southern Nazarene University (student plan).)  

The insurance companies that issue "insured" plans have a legal obligation, distinct from the employer's (or school's) obligation, to make payments for the costs of contraception.  And when the employer or school opts out, the insurance company must make those payments entirely separate from the plan itself--indeed, such payments are not made as part of a plan, or insurance policy, at all, under the current accommodation regulation.

Once the lower courts lift the current injunctions, as they should (see above), the government can simply begin to require the insurance companies of such insured plans to make the payments in question (and to penalize those that fail to do so).  And once that happens, it will, in the Court's words, "ensure that women covered by petitioners’ health plans 'obtain, without cost, the full range of FDA approved contraceptives,'" even without the need for the employers/schools to do anything more.  Indeed, this would appear to be precisely the sort of compromise settlement that the Court is contemplating, and hoping for.

There are, however, at least two complications.

First, the government does not know which insurance companies are the issuers for all of the insured plans in question.  (It can identify some of them, in part because such information has been disclosed in some of the litigation.  But not all.)  It could deal with this problem in one or more of the following three ways.

i.  The government could continue to insist that the objecting organizations themselves identify the insurance companies to the government (as the regulatory accommodation requires), upon pain of monetary penalties if they refuse to do so.  That might work in some--perhaps many--cases, particularly those in which the organizations do not object to such a ministerial transmission of information.  In other cases, however, some organizations will resist, and might even insist that such identification itself makes them complicit in the eventual use of contraceptives.  That latter set of cases would likely not be resolved until the RFRA challenges get back to the Supreme Court; and in the meantime, the women in question might not be able to obtain, without cost, the full range of FDA approved contraceptives, unless the government uses another means of ensuring that the insurance companies in question make the payments.

ii.  The government could alternatively, or in addition, try to identify the insurance companies through other publicly available information, and/or information in the government's possession.  Again, that might suffice in some cases, but presumably not in all.

iii.  Independent of any efforts to contact insurance companies in order to instruct them to provide payments, the government would probably need to amend the existing regulation in order to require the insurance companies to make contraception payments whenever they learn that contraception coverage is excluded from an insured plan because of the employer's (or school's) religious objection, even if the employer or school does not file one of the "triggering" forms the regulation currently requires for an opt-out.  This was, in effect, the proposal the Court offered in its request for supplemental briefing.

As I explained in this post, the government has concluded that such a scheme, although not as administratively efficient as the current accommodation, would not prevent it from advancing its compelling interests:  women would still receive seamless, cost-free access to the full range of contraceptive services, and would have access to needed health care that is equal to that of their male counterparts.  Accordingly, I think it is very possible that the government will promulgate such a regulation, at least for the purpose of ensuring payments during the course of the ongoing RFRA litigation.  Whether such a regulation could go into effect without substantial delay, however, is another question that will depend on exactly how the government proceeds.

The government may well also propose such an amended regulatory scheme--which was, after all, the Court's own proposal--as a solution for settlement of the pending RFRA cases.  That, however, would trigger the second complication, which is that at least some plaintiff organizations with pending RFRA suits--including most or all of the half-dozen Zubik petitioners with insured plans--will continue to insist that such a plan violates RFRA, and therefore presumably will ask the lower courts to enjoin such a scheme, by issuing (or retaining) injunctions to prevent the insurance companies from making the payments in question.

Intriguingly, the Court's order yesterday is written as though there is no such obstacle:  According to the Court, the "Petitioners have clarified that their religious exercise is not infringed where they 'need to do nothing more than contract for a plan that does not include coverage for some or all forms of contraception,' even if their employees receive cost-free contraceptive coverage from the same insurance company" (quoting Supplemental Brief for Petitioners at 4).

Alas, as I explained in detail in both of these posts, that is not what the petitioners "clarified" at all:  Instead, they argued in their supplemental briefs that requiring them to do "nothing more" would be necessary, but not sufficient, to eliminate the alleged substantial burdens on their religious exercise, if their employees continue to receive cost-free contraceptive coverage from the same insurance company that runs the insured plan in question.

As of now, the six petitioners at issue--Catholic University, Geneva College, Oklahoma Baptist University, Oklahoma Wesleyan University, Priests for Life, and Southern Nazarene University--have explained that they would only be mollified if, in addition, the insurance companies are required to establish a "separate[] contract" for contraception payments--presumably a separate insurance policy--and that this second policy must have a "separate enrollment process[]," such that the female beneficiaries would not "automatically receive free contraceptive coverage solely by virtue of their enrollment in petitioners’ plans."  In other words, petitioners would require that the covered women be required to (i) opt in (ii) to a new insurance contract with the insurer.  That is to say, they are insisting upon particular forms of the relationship between third parties--the employees and the insurers--that have nothing to do with any involvement by the petitioners themselves.  (Why?  They do not say.  Nor have they explained why such an "opt in to a new insurance policy" arrangement, wholly among third parties, would be "essential to avoid [their own] moral complicity" in the women's use of contraception, or otherwise necessary in order to alleviate any burdens, substantial or otherwise, on their own exercise of religion.)

It is very unlikely the government would agree to such an arrangement.  As the government explained in its supplement briefs and as I summarized in these posts, to require the insurance companies to provide separate insurance policies, rather than simple independent payments, and to require the women in question to take a superfluous and burdensome "extra step" of "opting in" to such policies (or to eligibility for "coverage"), even before they make any claims for payment relating to contraceptive services, would not only serve no purpose in terms of alleviating burdens on the employers' religious exercise, but would also impose unnecessary and costly burdens on the insurance companies and on the women -- barriers that are never imposed upon men in order to receive their health-care coverage, and that would result in fewer women having access to effective contraception.

It is, of course, possible, that one or more of these six plaintiffs, and/or others with RFRA claims in the lower courts, will now take up the Court's pointed suggestion, and will accept a scheme in which the insurance companies make such payments automatically, without a separate policy and without any pre-payment "opt-in" requirement for women.  To be sure, that would be flatly inconsistent with what they have recently represented about what their religion forbids--but then again, those representations have been ever-evolving (as the Court politely but euphemistically put it, the arguments have been "significantly clarified"), and the prospects of losing their RFRA claims when they get back to the Court might well be enough to prompt yet another re-evaluation of their theories of forbidden complicity.  I would not be surprised if some plaintiffs with insured plans accept such a solution.  Even so, I think it is unlikely that all of the plaintiffs with insured plans will do so.  Accordingly, the RFRA question as applied to insured plans is likely to require judicial resolution.

If all of the courts of appeals reject the RFRA claims with respect to insured plans, as they should, the Supreme Court will probably never re-engage with the question.  But if even one court of appeals credits such RFRA claims, the issue will be back in the Justices' laps within the next year or two.

Self-insured plans

A voluntary settlement in the lower courts is least likely with respect to cases involving "self-insured" plans other than church plans.

In a self-insured plan, the employer itself—not an issuer—bears the financial risk of paying claims, and (typically) an insurance company acts as a "third-party administrator" (TPA), performing functions such as developing networks of providers, negotiating payment rates, and processing claims.  Only three of the 37 Zubik petitioners--East Texas Baptist University, Southern Nazarene University and Thomas Aquinas College--offer their employees participation in such self-insured plans.  But many of the plaintiffs who were not before the Court, including prospective for-profit companies that might yet raise RFRA objections to the government's accommodation, might also use self-insured plans that are not church plans.

The agencies' accommodation with respect to self-insured plans is in most respects identical to the accommodation in the case of an insured plan, except that the TPA—rather than an issuer—must provide or arrange payments for contraceptive services to the plan beneficiaries.  However, because of certain facets of ERISA, the contraception payments in the case of a self-insured plan are, in a purely legal sense, offered "through" the plan itself (something that's not true in the case of objecting employers with insured plans), albeit without any involvement, payment, or administration by the objecting employer.

The Court's proposed post-argument solution was specifically tailored to insured plans--presumably because the Justices realized that it would not work in the case a self-insured plan, something the parties confirmed in their briefing:  The parties agreed that no proposal such as the Court's would resolve the RFRA disputes with respect to self-insured plans, because, under ERISA, the government lacks any authority to require TPAs to provide coverage that is legally not part of the underlying employee plan.

It is difficult to see how the parties might craft a mutually acceptable solution as applied to self-insured plans.  The government argues, correctly, that the plaintiffs themselves have the means to eliminate the purported problem:  they "could avoid any objectionable features of the regulations applicable to such [self-insured] plans by switching to insured plans."  One hopes that this option might, indeed, be amenable to some of the RFRA plaintiffs, including Southern Nazarene University, which already offers an insured plan to its students, and presumably could do likewise for its employees.  Again, however, it is unlikely to that all of the plaintiffs with self-insured plans will cotton to such a switch.

Indeed, their supplemental reply brief, the Zubik petitioners stated an objection to that option:  Use of a self-insured plan, they said (pp. 8-9), "is often the only way to avoid the many state-law mandates that violate their religious beliefs, such as those requiring coverage of surgical abortions."  (State law presumably would apply by virtue of such a switch because whereas ERISA preempts state law regulation of self-insured plans, it does not preempt state-law regulation of insured plans.)

The plaintiffs in question thus far have not offered much in support of this argument.  In particular, the three Zubik petitioners at issue did not introduce any evidence or argument that the States of Texas, Oklahoma and/or California (regulating East Texas Baptist University, Southern Nazarene University and Thomas Aquinas College, respectively) regulate insured plans in a way that would cause them to violate their religious obligations if they switched over to such plans.  And it's noteworthy that many religious schools with similar moral beliefs do use insured plans, including several of the other Zubik petitioners, two of which are in Oklahoma, as well as Southern Nazarene University itself, which currently offers an insured plan to its students.

The lower courts therefore should press the plaintiffs in question about exactly why that option is not available to them, too--and should be skeptical of the argument that such a switch would itself impose any substantial burdens on their religion--let alone any government-imposed substantial burdens.

Nevertheless, I would be very surprised if all of the plaintiffs with self-insured plans were to agree that a switch to an insured plan would not itself impose new burdens on their religious exercise.  And as long as some of them do not embrace that solution, the lower courts will be required to adjudicate the merits of their RFRA claims.

In the meantime--i.e., until the RFRA claims are resolved--how can the government, in the Court's words, "ensure that [the] women covered by [these self-insured] health plans 'obtain, without cost, the full range of FDA approved contraceptives'"?  As far as I am aware, it is not an option (as it is in the case of insured plans) for the government simply to promulgate a regulation instructing the TPAs of such plans to provide payments.  As the government explained in its opening supplemental brief:

If an employer has a self-insured plan, the statutory obligation to provide contraceptive coverage falls only on the plan—there is no insurer with a preexisting duty to provide coverage.  42 U.S.C. 300gg-13(a)(4).  Accordingly, to relieve self-insured employers of any obligation to provide contraceptive coverage while still ensuring that the affected women receive coverage without the employer’s involvement, the accommodation establishes a mechanism for the government to designate the employer’s TPA as a “plan administrator” responsible for separately providing the required coverage under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq.  That designation is made by the government, not the employer, and the employer does not fund, control, or have any other involvement with the separate portion of the ERISA plan administered by the TPA.

The government, therefore--in particular, the Department of Labor--must designate a self-insured plan TPA as the “plan administrator” responsible for separately providing the required contraceptive coverage through the plan.  And in order to do that, the government must know the identity of at least one plan TPA.

I believe that the TPAs of the three self-insured plans in the Zubik cases are known to the government, from the parties' own pleadings:  Benefit Allocation Systems administers the Thomas Aquinas College plan; Mutual Assurance Administrators, Inc., administers the plan for East Texas Baptist University; and BlueCross BlueShield of Oklahoma administers the self-insured plan used by Southern Nazarene University.  DOL presumably will designate those TPAs as plan administrators for purposes of contraception coverage, and inform them that they must begin to offer such coverage to plan beneficiaries, notwithstanding the employer schools' RFRA objections.

The interim procedure will be trickier, however, if there are cases pending in the lower courts involving other self-insured plans as to which the government does not know the identity of the TPAs.  In such cases, I assume the government will make efforts, based upon public-domain information, to discover which companies are administering those plans, and then designate them as plan administrators for contraception coverage.  But if those efforts are unavailing, the government might have to resort to requiring the employers themselves to identify the TPAs.  Presumably some such employers will refuse to do so, in accord with their RFRA claims.  At that point, the lower courts ought to enjoin the employers to make such identifications, at least absent any finding that the employers are likely to prevail on their RFRA claims.  Otherwise, the lower courts would fail to abide by the directive of the Supreme Court that "[n]othing . . . in the opinions or orders of the courts below, is to affect the ability of the Government to ensure that women covered by petitioners’ health plans 'obtain, without cost, the full range of FDA approved contraceptives.'"


Compendium of posts on Hobby Lobby, Zubik, and related cases


Posted 11:03 AM by Marty Lederman [link]