Ninth Circuit Upholds Injunction Blocking Trump Administration's ACA Contraceptives Rules

Practical Law Legal Update w-022-5863 (Approx. 6 pages)

Ninth Circuit Upholds Injunction Blocking Trump Administration's ACA Contraceptives Rules

by Practical Law Employee Benefits & Executive Compensation

Trump Administration Regulations Challenged in the Ninth and Third Circuits

This ACA contraceptives litigation involves Trump administration interim final regulations (IFRs) jointly issued in October 2017 by the Departments of Labor, Health and Human Services, and Treasury (collectively, the Departments) and finalized without significant change in November 2018 (see Practice Note, ACA Contraceptives: Religious Beliefs/Moral Convictions Exemption and Accommodation and Article, Trump Administration Religious Beliefs and Moral Convictions Exemptions to the ACA's Contraceptives Mandate). The regulations:

Expanded an 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.
Added a moral convictions exemption for certain entities and individuals with sincerely held moral objections to contraceptives coverage.

In December 2017, district court judges in California and Pennsylvania granted preliminary injunctions blocking enforcement of the IFRs. In November 2018, while appeals of those preliminary injunctions were pending, the Departments finalized the IFRs (see Legal Update, Final Contraceptives Rules Include Religious and Moral Convictions Exemptions).

The Departments appealed the California district court's injunction, and in December 2018 the Ninth Circuit upheld the injunction but concluded that its geographic scope was overbroad (see Legal Update, Two District Courts Block Trump Administration's Final ACA Contraceptives Rules: Ninth Circuit Limits Geographic Scope of California Injunction). The Ninth Circuit limited the injunction's geographic scope to the plaintiff-states in the litigation.

In December 2018, the plaintiff-states in the California litigation (joined by additional states) filed an amended complaint alleging that the Trump administration regulations violated the Administrative Procedure Act (APA). A district court issued a partial preliminary injunction in the states' favor. Citing the Ninth Circuit's decision, the district court limited the scope of the injunction to the plaintiff-states and the District of Columbia.

(For a discussion of the Pennsylvania district court's nationwide injunction, which was affirmed by the Third Circuit, see Legal Update, Third Circuit Upholds Nationwide Injunction Blocking Trump Administration's ACA Contraceptives Final Rules.)

Ninth Circuit: Obama-Era Accommodation Process Likely Does Not Violate RFRA

The Ninth Circuit affirmed the district court on appeal, concluding that:

The states had standing to sue.
The appeal was not rendered moot by the nationwide injunction issued in the Pennsylvania litigation.
A preliminary injunction was warranted.

Appeal Was Not Rendered Moot by Nationwide Injunction

After concluding that the states had standing to sue, the Ninth Circuit addressed whether the case before it was mooted by a similar injunction – though nationwide in scope – subsequently issued by a district court in Pennsylvania. In a dissenting judge's view, the nationwide injunction from Pennsylvania (which was affirmed by the Third Circuit) rendered the appeal in this case moot because "[n]othing the district court in our case did, or that we do, matters." The majority, however, reasoned that an injunction imposed by one district court against a defendant does not deprive all other federal courts of subject matter jurisdiction in a dispute where a plaintiff seeks similar equitable relief against the same defendant.

According to the majority, the dispute fell within the "capable of repetition, yet evading review" exception to mootness because:

The two district court injunctions were issued only one day apart.
There was a reasonable expectation that the Departments would be subject to the injunction in this case again (for example, if the US Supreme Court limited the scope of the nationwide injunction).

Acknowledging that it was in "uncharted waters," the Ninth Circuit welcomed Supreme Court guidance addressing the effect of a nationwide preliminary injunction on an appeal involving a preliminary injunction of limited scope.

Preliminary Injunction Was Warranted (Likelihood of Success on the Merits)

The Ninth Circuit also affirmed the district court's ruling that the states were entitled to a preliminary injunction. The court analyzed several issues concerning the requirement for obtaining a preliminary injunction under which a party must show that it is likely to succeed on the merits of its claim. The Ninth Circuit held that the district court did not err in concluding that the plaintiff-states are likely to succeed on the merits of their APA claim.

First, the court rejected the Departments' argument that they had "significant discretion" under the ACA regarding the preventive care guidelines issued by the Health Resources and Services Administration (HRSA) (see Practice Note, Contraceptives Coverage Under the ACA: Scope of Required Contraceptive Services). In the court's view, the ACA's limited delegation of authority to the HRSA to issue guidelines on which types of preventive care were covered did not include the authority to exempt entities from the ACA. The court also held that, at the preliminary injunction stage, a core purpose of the ACA's preventive health services requirement (from which the contraceptives mandate derived) was to provide free contraceptive services (see Practice Note, Preventive Health Services Under the ACA, Other Than Contraceptives).

Regarding the "likelihood of success on the merits" and RFRA, the Ninth Circuit concluded that RFRA likely did not authorize the Departments' religious exemption under the Trump administration's contraceptives regulations. (This assumed the Departments were authorized to provide this process for resolving a perceived RFRA violation in the first place.) Also, the Ninth Circuit expressly held that the accommodation process under Obama-era regulations likely does not substantially burden the exercise of religion. The Ninth Circuit reasoned that the act of completing the self-certification form is merely a "de minimis burden" on entities (see Legal Update, Supreme Court Returns Contraceptives Cases to the Courts of Appeals).

Other Preliminary Injunction Factors

Additionally, the court agreed that:

The states would likely suffer irreparable harm in the absence of the preliminary injunction because they would:
- likely suffer economic harm; and
- not be able to recover monetary damages resulting from the regulations.
The balance of equities and public interest weighed in favor of the injunction.

Practical Impact

As the dissenting judge in this litigation notes, the Trump administration regulations under the ACA's contraceptives mandate continue to be enjoined by a nationwide preliminary injunction that was affirmed by the Third Circuit this past July (see Legal Update, Third Circuit Upholds Nationwide Injunction Blocking Trump Administration's ACA Contraceptives Final Rules). In addition, this past June a Texas district court judge issued a permanent injunction order barring the government from enforcing the ACA's contraceptives mandate against any group health plan or related health insurance coverage sponsored by a broadly defined, nationwide class of objecting employers (see Legal Update, After a Sweeping Decision on ACA Contraceptives, Focus Turns to the Fifth Circuit). The Texas ruling, which involves a RFRA challenge to the contraceptives mandate, has been appealed to the Fifth Circuit. For now, however, employers and individuals covered by the Texas injunction need not comply with the contraceptives mandate.

Ninth Circuit Upholds Injunction Blocking Trump Administration's ACA Contraceptives Rules | Practical Law