Thursday, July 24, 2014

Confirmation that the Supreme Court's suggested fix will almost certainly not mollify the plaintiffs: Recent developments in the nonprofit challenges to the contraceptive coverage accommodation

Marty Lederman

As I've discussed, the Supreme Court in Hobby Lobby in effect redirected the most contentious questions in the contraceptive-coverage challenges to those cases in which nonprofit organizations are challenging the government's regulatory accommodation for objecting religious nonprofit organizations.  Subsequently, in its order in the Wheaton College case, the Court invited the federal government to develop a regulatory fix that might both satisfy the nonprofit challengers to the contraceptive coverage rule and at the same time guarantee that the women who work for those employers will continue to receive cost-free contraceptive coverage. 

I've suggested that the Court’s proposal (or plea, or hope) for such a cost-free regulatory solution might be far easier said than done, since some of the objecting organizations are likely to continue to raise RFRA objections even to the sort of compromise that the Court appears to contemplate.

Now, we have the first two important moves in the next phase of litigation challenging the accommodation . . . the first of which announces that the government is accepting the Court's invitation to modify the accommodation, and the second of which confirms that such a modification will not fully bridge the gap, and that the RFRA challenges will continue nonetheless.

1.  The U.S. Court of Appeals for the Tenth Circuit currently has three nonprofit cases before it.  It directed the parties to file supplemental briefs addressing the impact of Hobby Lobby on the pending cases.  The parties filed those briefs on Tuesday. 

Two of the three cases in the Tenth Circuit--Little Sisters of the Poor Home for Aged v. Burwell, No. 13-1540, and Reaching Souls Int'l, Inc. v. Burwell, No. 14-6028--involve organizations that use "church plans" [a technical ERISA category] for their employee insurance coverage.  In neither of those cases is there any reason to think the third-party administrator of the plans would voluntarily offer contraceptive coverage if and when the employers opt out (indeed, in Little Sisters, the TPA has expressly refused to do so).  Thus, as I've explained, there is nothing at stake in such cases, since the government concedes that it does not presently have the authority to compel the TPAs of such church plans to provide contraceptive coverage.  There's no theory under which the organizations' submission of their opt-out--of their self-certification that they are eligible for the accommodation--could possibly make them complicit in employees' use of contraceptives, since federal law will not ensure that their employees receive cost-free contraceptive coverage in any event.  The fight about whether such organizations must opt out by using Form 700 or some other form, in other words, is of no moment or significance.  (Precisely because nothing is at stake, it would not surprise me if the government amends its regulations to afford such organizations with church plans an alternative means of certifying their objection, in addition to Form 700.)  These cases therefore can and should be swiftly resolved. 

The third case pending in the Tenth Circuit, on the other hand, Southern Nazarene University, et al. v. Burwell, No. 14-6026, is a RFRA challenge brought by four nonprofit universities that are entitled to the accommodation but that do not use church plans.  At least two of those four universities offer "insured" plans to their employees; while it is possible (the pleadings don't offer much specificity) that one or both of the other two universities use "self-insured" plans.  (For more information on the distinction between the two sorts of plans--which may raise quite different RFRA questions--see this post.)  They all claim that the accommodation does not eliminate their RFRA complaints.

The supplemental briefs filed by the government and by Southern Nazarene on Tuesday do not contain anything that should come as much of a surprise to readers who have been following the Hobby Lobby discussion here on Balkinization.*  

The government's brief does include one important sentence, however, relating to the Court's order in Wheaton College:  "[T]he Departments responsible for implementing the accommodations have informed us that they have determined to augment the regulatory accommodation process in light of the Wheaton College injunction and that they plan to issue interim final rules within a month."

In an earlier post, I speculated on a couple of different forms that such an "augmentation" might take.  It appears that we will know what the government decides to do on or before August 22.

Which brings us to our other recent development . . . 

2.  The only nonprofit cases that are already argued and submitted for decision in a court of appeals, even as to preliminary relief, are the consolidated cases Priests for Life v. HHS, No. 13-5368, and Roman Catholic Archbishop of Washington v. BurwellNo. 13-5371, which were argued on May 8th before a panel of the Court of Appeals for the D.C. Circuit (Rogers, Pillard and Wilkins, JJ.).

There are eleven plaintiffs in these two cases.  One of them, the Roman Catholic Archbishop of Washington, is exempt altogether from the contraceptive-coverage provision.  Seven others offer health coverage under the D.C. Archdiocese’s self-insured plan, which is alleged to be a “church plan” under ERISA--and, as with Little Sisters, there's no evidence that the church plan's third-party administrator would voluntarily offer contraceptive coverage.  Therefore, there's nothing really at stake in the RFRA claims of these eight plaintiffs.

Two of the plaintiffs in the D.C. Circuit case, however--Priests for Life and Catholic University--offer health coverage to employees (and in the case of Catholic U., to students) under insured plans; and a third, Thomas Aquinas College, offers health coverage to its employees under a self-insured plan that is not alleged to be a “church plan.”  Therefore the court of appeals must consider more closely the RFRA cases of these three plaintiffs.

On July 8th, plaintiffs' counsel in those cases submitted a supplemental letter to the court of appeals concerning the impact of the Supreme Court's decision in Wheaton College.  That letter includes the following important sentences:

"Appellants have asserted an undisputed sincere religious objection not only to signing and submitting the self-certification [i.e., Form 700], but also to offering health plans through an insurance company or third-party administrator authorized to provide contraceptive coverage to students and employees who are “are enrolled in [those] plan[s].” 29 C.F.R. § 2590.715-2713A(d); 45 C.F.R. § 147.131(c)(2)(i)(B); Appellants’ Br. at 26-27.  The Government has offered no way for Appellants to avoid that religiously impermissible course of action."
This letter confirms that these plaintiff organizations would persist with their RFRA claims even if the government "augments" the accommodation, as the Court contemplated in Wheaton College, to eliminate the requirement that they sign and submit Form 700.  Indeed, it appears that both the plaintiff with a self-insured plan (Thomas Aquinas College) and those with insured plans (Priests for Life and Catholic University) would continue to object, and that they would do so even if the new regulation does not result in a designation of the plan TPA or issuer as an ERISA "plan administrator."  (In an earlier post, I tentatively floated the idea that perhaps the government might be able to come up with a regulation that does just that; but it remains to be seen whether that is a possibility.)

In other words--and this is the important news--we now know for sure that at least some plaintiffs will not abandon their RFRA claims, no matter what the government does, as long as the government continues to require plan issuers or TPAs to offer contraceptive coverage to the objecting employer's employees when the employer opts out.

Why?  What is the theory under which the accommodated organization would be complicit in the employees' use of contraceptives in such a case?

From the looks of the July 8 letter, and the pages it cites from the Priests for Life brief, the plaintiffs are objecting to the accommodation because it allegedly requires them to "offer[] health plans through an insurance company or third-party administrator" at a time when that same issuer company or TPA is also providing contraceptive coverage to the organization's employees.  Note that this is not a claim that the organization itself is offering coverage, or paying for it, or facilitating it.  Nor is it even a claim that the organization's action is a "but-for" cause of the employees' access to such coverage or eventual use of contraception:  As I've stressed on several occasions, the employees will receive the coverage in any event--that's the whole point of the "preventive services" provision of the ACA--and these plaintiffs presumably would not conclude that they were complicit if their opting out caused the government itself to offer the coverage to those same employees.

Instead, the theory of complicity appears to be that the accommodation requires the organization to contract with an issuer or a TPA, and that the organization's choice of contractor, together with its employee hiring decisions, will be responsible for the fact that a particular insurance company offers contraceptive coverage to a particular set of employees.  As the brief puts it:  "Plaintiffs’ insurance company or TPA will provide the objectionable coverage to Plaintiffs’ employees only by virtue of their enrollment in Plaintiffs’ health plans and only 'so long as [they] are enrolled in [those] plan[s].'”  For example, if Thomas Aquinas College had contracted with Aetna, rather than with Benefits Allocation Systems, to be its plan's third party administrator, then it would be Aetna, rather than BAS, that would offer coverage to Aquinas employees under the accommodation.  And if any one of those employees left Thomas Aquinas College employment next month, they would then receive coverage from another party, other than BAS. 

The premise of this argument is mistaken:  The regulation does not require the organizations to contract with an issuer or a TPA--and if they do not do so, then the government currently has no way of ensuring contraceptive coverage for their employees (see the discussion of "Theory Seven" in this post).  But even if that were not the case--i.e., even if federal law coerced the organizations to contract with such an issuer or TPA--Thomas Aquinas College and the other plaintiffs haven't offered any explanation for why, according to their religion, the College's responsibility for this particular match between TPA and employees would render the College itself morally responsible for the employees' eventual use of contraceptives, when (i) such employees would have the same coverage if Aquinas had contracted with a different TPA; (ii) such employees would continue to have coverage if they left the College; and (iii) the College itself does not provide, subsidize, endorse, distribute, or otherwise facilitate the provision of, its employees' contraceptive services.

Be that as it may, it appears that this is now the primary argument the court of appeals will have to contend with in Priests for Life/Thomas Aquinas College--and that other courts will be required to adjudicate in other cases, presumably even after the government augments its accommodation regulation in accord with the Supreme Court's suggestion in Wheaton College


* One minor but substantive quibble about the government's brief:  It states (p.4) that "[t]he Supreme Court held [in Hobby Lobby] that application of the contraceptive coverage requirement to the plaintiffs in that case—closely held companies that were not eligible for the regulatory opt-out—violated their rights under RFRA."  That's not correct.  The Court held, at most, that Hobby Lobby and the other plaintiffs were entitled to a preliminary injunction.  At least one important question, however, remains undecided in Hobby Lobby (and in all the other cases)--namely, whether the plaintiffs can satisfy their burden of demonstrating that federal law imposes "substantial pressure" on them not to take advantage of one of the lawful choices available to them:  discontinuing their employee plans.  As I explained in this post, this question remains an open one even after Hobby Lobby, at least if the government chooses to put the plaintiffs to their proof; indeed, the Court referred to it as an “intensely empirical” question, one that presumably must be adjudicated on the specific facts unique to each employer’s situation.

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