Federal Courts Block New Exceptions to the ACA’s Contraceptives Mandate
Last month, two federal district judges blocked the implementation of regulations that broaden exceptions to the Affordable Care Act’s (ACA’s) contraceptives mandate. The final regulations were issued by the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, the Departments) in November 2018 to finalize interim regulations issued in October 2017. The new regulations expand opportunities for employers and insurers to invoke religious or moral beliefs to avoid the ACA’s requirement that birth control pills and other contraceptives be covered by insurance as part of preventive care.
Background: The Contraceptives Mandate
Under the ACA, non-grandfathered group health plans and insurers are required to provide coverage for specified preventive health services without cost-sharing, including preventive care and screenings for women under guidelines supported by the Health Resources and Services Administration (HRSA) (an agency under HHS). As part of the ACA’s preventive health services requirement, plans and health insurers are generally required to provide coverage for FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity.
Under regulations issued by the Departments during the Obama Administration, the Departments initially provided an exemption for group health plans of religious employers and an accommodation for certain religious nonprofit organizations that did not qualify for the religious exemption. The Supreme Court subsequently extended the accommodation to certain closely held, for-profit entities in Burwell v. Hobby Lobby Stores, Inc.
Trump Administration Issues Regulations to Narrow the Contraceptives Mandate
In October 2017, the Departments issued interim final regulations further expanding exceptions to the ACA’s contraceptives mandate. The regulations were initiated by an executive order issued by President Trump in May 2017 called “Promoting Free Speech and Religious Liberty,” in which he declared that entities with conscience-based objections should be excluded from the ACA mandate. The new regulations (1) expanded the existing exemption under the ACA’s contraceptives mandate to make it available to additional employers, insurers, and other entities and individuals that object to contraceptives coverage based on sincerely held religious beliefs; and (2) established a new exemption for certain entities and individuals with sincerely held moral objections to contraceptives coverage. Under the new regulations, a religious or moral exception was now available to nonprofit organizations, for-profit companies (including those that are publicly traded), higher education institutions that arrange for insurance for their students, as well as individuals whose employers are willing to provide health plans consistent with their beliefs. The interim regulations were effective immediately and finalized without significant change in November 2018.
Federal Courts Halt Implementation of the New Regulations
Following issuance of the interim regulations, the States of California, Delaware, Maryland, New York, and Virginia (later joined by Connecticut, Hawaii, Illinois, Minnesota, North Carolina, Rhode Island, Vermont, Washington, and the District of Columbia) filed a complaint in the Northern District of California to stop enforcement of the interim rules. The states alleged violations of the Administrative Procedure Act (APA) and the Establishment Clause and the Equal Protection Clause of the Constitution. The states of Pennsylvania and New Jersey also filed a lawsuit with similar allegations in the Eastern District of Pennsylvania around the same time. The plaintiff-states in both federal courts subsequently amended their complaints to oppose implementation of the final rules, which were set to take effect on January 14, 2019.
On January 13, 2019, the Northern District of California granted a partial preliminary injunction that blocked implementation of the final regulations in the plaintiff-states. The Eastern District of Pennsylvania followed suit on January 14, 2019 issuing a preliminary injunction that halted implementation of the final regulations nationwide. Importantly, the scope of the California court’s injunction is limited to the plaintiff-states because the Ninth Circuit had specifically found that a nationwide preliminary injunction was not appropriate. Accordingly, the scope of the Pennsylvania court’s nationwide injunction may not be on firm footing.
What This Means for Employers
The District Courts’ decisions delay implementation of the new rules, but the legal proceedings will continue for the foreseeable future. Both orders have been appealed and regardless of the outcome we expect that the losing party will appeal to the Supreme Court. Employers hoping to carve out coverage of contraceptives under the expanded rules should consult legal counsel to evaluate the risks until the legal proceedings are resolved.
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