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After a Sweeping Decision on ACA Contraceptives, Focus Turns to the Fifth Circuit
Practical Law Legal Update w-022-4061 (Approx. 6 pages)
After a Sweeping Decision on ACA Contraceptives, Focus Turns to the Fifth Circuit
by Practical Law Employee Benefits & Executive Compensation
| Published on 15 Oct 2019 • USA (National/Federal) |
The US Court of Appeals for the Fifth Circuit has granted the government's request to stay its appeal of a district court ruling from June 2019 that broadly barred enforcement of the Affordable Care Act (ACA's) contraceptives mandate against objecting employers and individuals. The stay of the government's appeal is pending a decision by the Fifth Circuit on whether to dismiss a related appeal by the State of Nevada, which seeks to intervene in support of the contraceptives mandate. In another ACA decision, a Texas district court has vacated final regulations implementing the nondiscrimination requirements of ACA Section 1557.
In litigation challenging the Affordable Care Act's (ACA's) contraceptives mandate, the US Court of Appeals for the Fifth Circuit has granted the government's request to stay its appeal of a district court decision from June 2019 concluding that the contraceptives mandate violated the Religious Freedom Restoration Act of 1993 (RFRA) (DeOtte v. Azar, 393 F. Supp. 3d 490, 514 (N.D. Tex. June 5, 2019)). The government's appeal is stayed pending the Fifth Circuit's decision on whether to dismiss a related appeal by the State of Nevada, which seeks to intervene in the litigation in support of the contraceptives mandate (DeOtte, et al. v. Azar, et al., No. 19-10754 (5th Cir. Oct. 2, 2019); see Practice Note, Contraceptives Coverage Under the ACA). Although the government agreed with the district court's conclusion that the contraceptives mandate violated the RFRA, it appealed to preserve its right to participate in the event Nevada is allowed to intervene. On October 10, 2019, the Fifth Circuit declined to rule on the motion to dismiss and ordered briefing to resume.
Texas District Court Ruling Blocked Enforcement of Contraceptives Mandate
As background, the June 2019 district court ruling addressed a broad challenge to the ACA's contraceptives mandate by Christian individuals and employers claiming that the mandate violated the RFRA. The plaintiffs in this case are individuals and employers with religious objections to participating in, or making available to employees, health plans that cover contraceptives. Although the Trump administration had finalized regulations exempting employers with religious or moral objections from having to comply with the contraceptives mandate, implementation of those regulations was enjoined by district court decisions in early 2019 (one of which is nationwide) that were later upheld on appeal (see Legal Update, Third Circuit Upholds Nationwide Injunction Blocking Trump Administration's ACA Contraceptives Final Rules). As a result, the plaintiffs sued the government under the RFRA, alleging that the contraceptives mandate (as implemented under Obama-era guidance) forced:
- The plaintiff-individuals to choose between:
- forgoing health insurance; or
- violating their religious beliefs by participating in plans that subsidize contraceptives for others.
- The plaintiff-employers to choose between:
- violating their religious beliefs by offering plans with contraceptives coverage;
- violating their religious beliefs by completing the self-certification form required to invoke the accommodation process (see Practice Note, ACA Contraceptives: Religious Beliefs/Moral Convictions Exemption and Accommodation); or
- incurring significant penalties (see Practice Note, Contraceptives Coverage Under the ACA: Compliance Deadlines and Penalties).
In March 2019, the district court certified an individual class and an employer class – over the government's objection – and sought judgment and a permanent injunction of the contraceptives mandate. In May 2019, the State of Nevada requested to intervene in the litigation in support of the ACA contraceptives mandate.
In June, the district court ruled in the plaintiffs' favor in an order that barred the government from enforcing the contraceptives mandate against any group health plan or related health insurance coverage sponsored by the broadly defined classes of objecting individuals and employers. In doing so, however, the district court did not rule on Nevada's motion to intervene; Nevada therefore filed an appeal with the Fifth Circuit. In July 2019, the district court entered its final judgment ( (N.D. Tex. July 29, 2019)) and denied Nevada's motion to intervene ( (N.D. Tex. July 29, 2019)).
Contraceptives Mandate Violated the RFRA
On the merits, the government (under the Trump administration) conceded that the contraceptives mandate violated the plaintiffs' RFRA rights. The district court agreed, reasoning that:
- The contraceptives mandate, including the accommodation process for objecting employers, substantially burdened the plaintiffs' free exercise of religion.
- Assuming the government's interest in providing free access to contraceptives was compelling, the contraceptives mandate was not the least restrictive means of furthering that interest. Instead, the government could cover the cost of providing free contraceptives.
Permanent Injunction Was Warranted
Having found that the plaintiffs succeeded on the merits of their RFRA claims, the district court granted a class-wide permanent injunction enjoining enforcement of the contraceptives mandate against the class members. The court concluded that:
- An RFRA violation is irreparable harm under Fifth Circuit precedent.
- There was no adequate legal remedy, such as the payment of damages, for the RFRA violations.
- The balance of equities favored issuing the injunction, given the public's interest in protecting First Amendment rights and the government's access to less restrictive means of ensuring free access to contraceptives.
Appeals to the Fifth Circuit
After Nevada's appeal was docketed with the Fifth Circuit, the plaintiffs moved to dismiss Nevada's appeal on the grounds that Nevada lacked standing to challenge the district court's decision. The Fifth Circuit suspended briefing. The government also appealed but asked to stay its appeal pending resolution of the motion to dismiss. In its motion to stay, which was granted, the government indicated that it appealed to "preserve [its] rights to participate in full in proceedings" before the Fifth Circuit and that it planned to dismiss its appeal if the Fifth Circuit dismissed Nevada's appeal. It did not challenge the merits of the district court's decision.
On October 10, 2019, the Fifth Circuit ordered:
- That the plaintiffs' motion to dismiss Nevada's appeal would be carried with the case.
- Briefing to resume.
Practical Impact; Vacatur of ACA Section 1557 Final Regulations
All eyes are on the Fifth Circuit as we wait to see how it will handle not only this appeal of the district court's sweeping decision on ACA contraceptives but also the TCJA-related challenge to the ACA (which could potentially uphold a district court ruling striking the ACA in its entirety, issued by the same district court judge) (see Legal Updates, ACA Individual Mandate Is Unconstitutional and ACA Is Invalid: Texas District Court and Texas Ruling Invalidating ACA Is Appealed to the Fifth Circuit; US House Moves to Intervene).
In another ACA development, on October 15, 2019, a Texas district court ruled that final regulations implementing ACA Section 1557:
- Violate RFRA and the Administrative Procedure Act (APA).
- Are vacated and remanded for further consideration.
We will cover this ACA Section 1557 development in next week's Employee Benefits & Executive Compensation Newsletter.