Argument Preview: Does the Accommodation to the Contraception Requirement Violate Religious Freedom?

Steven D. Schwinn, John Marshall Law School

The Court will hear oral arguments tomorrow in, Zubik v. Burwell, the case challenging the government's accommodation to the Affordable Care Act's contraception requirement under the Religious Freedom Restoration Act. Here's my preview of the case for the ABA Preview of U.S. Supreme Court Cases, with permission:

ISSUE

Does the federal accommodation to the contraceptive-coverage requirement for religious nonprofits substantially burden their religious practices, and, if so, is the accommodation the least restrictive way to promote a compelling government interest?

FACTS

The Patient Protection and Affordable Care Act (the “Act,” “Affordable Care Act,” or sometimes called “Obamacare”) requires health insurers and employer-sponsored group health plans to provide certain preventive services to their customers without imposing copayments, deductibles, or other cost-sharing charges. Congress included this requirement in order to encourage individuals to get appropriate preventive care and, as a result, to improve public health. But the Act did not specify the exact preventive services to be covered; instead, Congress provided for coverage of services according to recommendations of medical experts.

The requirement included preventive services specific to women’s health. Congress included these gender-specific services in order to remedy a particular problem—that women pay significantly more for preventive care and thus often fail to seek preventive services. As with the more general preventive services, the Act did not specify the exact gender-specific preventive services to be covered; instead, Congress left this task to the experts, providing for coverage of “preventive care and screenings” specified in “comprehensive guidelines support by the Health Resources and Services Administration” (or “HRSA”), a component of the U.S. Department of Health and Human Services (“HHS”).

In developing the guidelines, HRSA relied on recommendations from the Institute of Medicine (“IOM”), a part of the National Academy of Sciences. IOM recommended including the full range of contraceptive methods approved by the Food and Drug Administration (“FDA”), including oral contraceptive pills, diaphragms, injections and implants, emergency contraceptive drugs, and intrauterine devices. IOM based this recommendation on extensive medical literature establishing that contraceptives greatly decrease the risk of unintended pregnancies and negative health outcomes. IOM cited the deterrent effect of copayments on the use of contraception, and concluded that “[t]he elimination of cost sharing for contraception therefore could greatly increase its use, including the more effective and longer-acting methods.”

HRSA adopted IOM’s recommendations and included all FDA-approved prescription contraceptive methods in its guidelines. The relevant federal agencies (HHS, the U.S. Department of Labor, and the U.S. Department of the Treasury) incorporated the HRSA guidelines in their regulations.

The Act’s preventive-services requirement applies to individual health insurance plans and employer-sponsored group plans. (The Act exempts a small and declining percentage of plans from certain reforms, including the preventive-services requirement. About 25 percent of plans were exempt in 2015.) The requirement is enforced against health insurers by state insurance regulators and HHS; it is enforced against employer-sponsored group health plans through the Employee Retirement Income Security Act (“ERISA”) and a tax penalty on employers with noncompliant plans.

Recognizing that some employers have religious objections to contraceptives, but at the same time that their employees should receive the same access to FDA-approved contraceptives as other individuals in employer-sponsored plans, the relevant departments created an accommodation. This accommodation applied specifically to religious nonprofits that opposed covering contraceptive services on religious grounds. The regulations allowed an objecting employer to opt out of any requirement by sending a simple form (EBSA Form 700) to the plan’s health insurer or third-party administrator (for self-insured plans), or by providing written notification to the Secretary of HHS. (The government adopted the latter procedure in light of the Court’s ruling in Wheaton College v. Burwell, 134 S. Ct. 2806 (2014). In that case, the Court granted an injunction pending appeal to Wheaton College, halting the use of the form, but requiring the plaintiff to inform HHS in writing that it satisfied the requirements for the accommodation. The latter procedure (the letter) is simply an extension of this procedure to all religious nonprofits.) Either method (EBSA Form 700, or written notification to the Secretary) requires an objecting employer to provide only essential information—the basis for its accommodation, the type of plan it offers, and contact information for the plan’s insurer or third-party administrator.

If an objecting employer opts out of the contraceptive-coverage requirement, either the employer’s insurer (for insured plans) or third-party administrator (for self-insured plans) must provide contraceptive coverage to the employer’s employees directly, independently of the objecting employer, and without additional cost to the employees. (Health insurers have to provide contraceptive services, anyway. But the accommodation requires them to provide those services under a plan that is separate and distinct from the objecting employer’s plan. As to third-party administrators to objecting employers: the Act gives them sole legal responsibility for providing contraceptive coverage under ERISA.)

A good number of religious nonprofits have taken advantage of the accommodation. In 2014, HHS provided user-fee reductions to compensate TPAs for making contraceptive coverage available to over 600,000 employees and beneficiaries. In 2015, more than 10 percent of all nonprofit organizations with 1,000 or more employees took advantage of the accommodation.

At the same time, however, more than two-dozen nonprofits objected. These included religious colleges and universities, other religious nonprofits (like Little Sisters), and three Catholic dioceses. (The Catholic dioceses are automatically exempt from the contraceptive-coverage requirement as houses of worship.) They brought nine separate suits in various federal courts around the country, arguing that the accommodation violated the federal Religious Freedom Restoration Act, or “RFRA.” The U.S. Courts of Appeals for the Third, Fifth, Tenth, and D.C. Circuits rejected these claims. (The U.S. Courts of Appeals for the Second, Sixth, and Seventh Circuits agreed, although those cases are not part of this consolidated appeal.) Only the Eighth Circuit ruled for the plaintiffs.

CASE ANALYSIS

The federal RFRA says that the government cannot “substantially burden a person’s exercise of religion” unless the burden is “the least restrictive means of furthering [a] compelling government interest.” 42 U.S.C. Sec. 2000bb-1(a) and (b)(2). The Act thus has two prongs: the “substantial burden” prong, and (2) the “fitness” prong, which requires a close fit between the means (here, the accommodation) and the government interest. The courts only consider the fitness prong if the plaintiffs can satisfy the substantial burden prong.

All the lower courts (with the sole exception of the Eighth Circuit) have ruled that the accommodation is not a “substantial burden” under RFRA. As a result, those courts have not even considered whether the accommodation is the least restrictive means to further a compelling interest. Here, the parties argue both.

The plaintiffs argue first that the accommodation is a substantial burden on their religious exercise, because it implicates them in the provision of contraception, contrary to their religious beliefs. In particular, the plaintiffs claim that the accommodation requires them to submit a document that authorizes their own insurance companies or TPAs to provide contraceptive coverage to their own employees and students, in violation of their religious beliefs. They say that the accommodation then requires them to maintain an ongoing relationship with an insurer or TPA that continues to provide contraceptive coverage, again in violation of their religious beliefs. The plaintiffs contend that the accommodation violates their sincerely held religious belief, and that the Court should defer to them on this question.

The plaintiffs argue next that the accommodation is not the least restrictive way that the government can further a compelling government interest. They claim that the government has already granted a number of exemptions from the contraceptive-coverage requirement, leaving out millions of people, for both religious and other, less important, and nonreligious reasons. They say that this shows that the government’s interest in applying the requirement to them (even with the accommodation) cannot be compelling. Moreover, they contend that the government has other ways to provide contraceptive coverage. For example, they claim that the government could provide contraceptive coverage through insurance exchanges, certain existing federal programs, or tax subsidies. Because the government has no compelling interest, and because it has alternative ways to provide contraceptive coverage, the accommodation fails the second prong of the RFRA test.

The government argues first that the accommodation is not a substantial burden on the plaintiffs’ religious beliefs. The government claims that the accommodation allows the plaintiffs to entirely opt out of the contraceptive-coverage requirement, and that the government itself then directly requires insurers or TPAs to provide contraceptive coverage, completely independently and separately from the coverage provided by the plaintiffs. (In this way, according to the government, the accommodation doesn’t force the plaintiffs to authorize the coverage; instead, the law itself requires coverage.) Moreover, the government contends that the plaintiffs’ sincere objections to the government’s independent requirement of third parties (the insurers and TPAs) cannot constitute a substantial burden under the RFRA. If it were otherwise, any religious accommodation could subject countless government programs to RFRA’s stringent second prong and “profoundly impair the government’s ability to accommodate religious objections.”

The government argues next that even if the accommodation amounts to a substantial burden, the accommodation serves a compelling government interest. In particular, the government says that it has a compelling interest in protecting the health of female employees, and that contraceptive coverage advances that interest. The government claims that the plaintiffs are wrong to argue that other exemptions mean that the government lacks a serious compelling interest. After all, it says, most laws have exceptions, and they don’t take away from a law’s purposes. Moreover, the government contends that other exemptions to the contraceptive mandate do not undermine its core purpose and compelling interest. Finally, the government argues that the accommodation serves its interest in the least restrictive way, because it ensures that female employees can automatically receive contraceptive coverage and that they can receive contraceptive services through their regular medical care, without having to sign up for a new and different plan or program (which does not currently exist in federal law).

SIGNIFICANCE

This is a strange case to wrap one’s head around. That’s because the plaintiffs are not complaining that the contraceptive coverage requirement itself violates their religious freedom. That claim might be understandable. And it would probably be an easy case, in light of the Court’s decision just two Terms ago in Burwell v. Hobby Lobby, holding that the contraceptive-coverage requirement violated the Religious Freedom Restoration Act as to a closely-held for-profit corporation.

But instead, the plaintiffs claim that the government’s effort to exempt them from the contraceptive-coverage mandate violates their religious beliefs. More particularly, they claim that the accommodation violates their religious beliefs, because it triggers the offending government policy. On the face of it, this kind of claim seems to turn the idea of an accommodation on its head. And moreover, as the government argues, it potentially subjects other religious accommodations in other policy areas to similar religious freedom challenges. This could put the government between the Scylla of a policy that might burden a religious practice and the Charybdis of an accommodation to that policy—with a result of forcing the government ship in the future to turn away from a policy altogether. It seems strange and surprising that the RFRA could frustrate this and other government policies this way.

Still, the question is open. The Supreme Court in Hobby Lobby identified the accommodation (the very one at issue here) as an example of how the government might exempt a closely-held, for-profit corporation from the contraceptive-coverage requirement. (The Court used this to show that the government had other, less restrictive ways to further its purpose under the fitness prong of RFRA.) But the Court consciously declined to say whether the accommodation violated the RFRA. As a result, the Court seemed to sanction the accommodation, even as it also seemed to invite this challenge to it.

And speaking of challenges, this is the fourth challenge to the ACA to reach the Court. The first involved challenges to the individual coverage requirement and Medicaid expansion. The Court in NFIB v. Sebelius, 567 U.S. __ (2012), upheld those provisions, with one caveat: the government could not withhold a state’s entire Medicaid budget if the state declined to expand Medicaid (although the government could withhold additional funding for the expansion itself). The second involved a challenge to the contraceptive coverage requirement. The Court in Hobby Lobby ruled that the requirement violated the First Amendment as applied to closely-held, for-profit corporations, although the government could create an accommodation. The most recent challenge involved the subsidies to help lower-income individuals purchase health insurance on the government exchanges. The Court in King v. Burwell, 576 U.S. __ (2015), upheld those subsidies. As a result, ACA challengers have gone 0 and 3, even as they have forced some important changes to implementation of the Act along the way.

There are more challenges in the pipeline, however. One of those involves a challenge to the tax penalty that enforces the individual coverage requirement. Challengers argue that the ACA did not originate in the House of Representatives (as the Constitution requires for revenue-raising bills), and thus the tax penalty is unconstitutional. Another involves a challenge to the government’s subsidies to health insurers to offset their costs in providing certain benefits under the Act. Challengers in the House of Representatives argue that the government spent money for this program without a congressional appropriation. There are others, too.

None of these (including the present case) is likely to threaten the Act in its entirety. But each one (again, including the present case) has the potential to chip away at, or significantly alter, a portion.