On March 28, 2018, the US District Court for the Eastern District of Missouri issued:

(Sharpe Holdings, Inc. v. U.S. Dep't of Health & Human Servs., (E.D. Mo. Mar. 28, 2018).)

In implementing the ACA's contraceptives mandate, the DOL, HHS, and Treasury (the Departments) provided an exemption for religious employers and an accommodation for certain nonprofit "eligible organizations" that objected to covering contraceptives but were ineligible for the exemption (see Group Health Plans Toolkit). The Departments' accommodation has been the topic of extensive and ongoing litigation (see Practice Note, Contraceptives Coverage Under the ACA: Litigation Involving the Accommodation for Nonprofit Entities). The plaintiffs in this case challenged the contraceptives mandate and its enforcement under the RFRA, and the district court granted the plaintiffs' request for a temporary restraining order and preliminary injunction.

The Eighth Circuit affirmed the district court on appeal, holding that the accommodation substantially burdened religious exercise and could not survive strict scrutiny (Sharpe Holdings, Inc. v. U.S. Dep't of Health & Human Servs., 801 F.3d 927, 945-46 (8th Cir. 2015)). This created a split among the circuits courts of appeals, and in 2016 the US Supreme Court vacated the circuits' decisions and instructed the parties to find an alternative solution (Zubik v. Burwell, 136 S. Ct. 1557 (2016); see Legal Update, Supreme Court Returns Contraceptives Cases to the Courts of Appeals). In doing so, the Supreme Court expressed no opinion on the merits of the cases. On remand, the Eight Circuit vacated its prior ruling and reopened the case.

In October 2017, the Departments – under the Trump Administration – issued two companion interim final regulations that included an expanded exemption and accommodation from the ACA's contraceptives rules for entities and individuals with objections based on sincerely held religious beliefs or moral convictions (see Practice Note, ACA Contraceptives: Religious Beliefs/Moral Convictions Exemption and Accommodation and Legal Update, Trump Administration Adds Moral Convictions Exemption in Revised Contraceptives Rules). The 2017 regulations were effective immediately.

After the 2017 regulations were issued, the Departments dropped their appeal in this case, and the plaintiffs moved for a permanent injunction in the district court. The Departments argued that the case was moot in light of the 2017 regulations. While the plaintiffs' motion was pending, however, two district courts issued preliminary injunctions blocking enforcement of the 2017 regulations (see Legal Update, Two District Courts Block Enforcement of the Trump Administration's October 2017 Contraceptives Rules). In response, the Departments dropped their mootness objection.

With enforcement of the 2017 regulations enjoined, the parties' litigation was governed by the Obama-era regulations (including the exemption and accommodation). Agreeing with the reasoning of the Eighth Circuit's previously vacated decision, the district court held that requiring the plaintiffs' participation process under threat of monetary penalty was a substantial burden on their exercise of religion. The district court:

As a result, the court concluded that the nonprofit entities were:

The court also held that the plaintiffs, having achieved actual success on the merits, were entitled to a permanent injunction.

The injunctive relief in the district court's decision, applicable only to the plaintiffs involved in this litigation, is more narrow than recent rulings involving the Trump administration's 2017 regulations, but nonetheless reflects the ongoing volatility concerning enforcement of the ACA's contraceptives mandate. The district court noted that its decision was based in part on the Departments' changed litigation perspective regarding the mandate (that is, the government is no longer offering a substantive defense of its accommodation process).