District Court: ACA's HIV/PrEP Coverage Mandate Violates the RFRA

Practical Law Legal Update w-036-8665 (Approx. 6 pages)

District Court: ACA's HIV/PrEP Coverage Mandate Violates the RFRA

by Practical Law Employee Benefits & Executive Compensation

Preventive Health Services Under the ACA

As background, the ACA requires group health plans and health insurers to cover preventive care and screenings without cost-sharing. Plans and insurers must provide first-dollar coverage for the following four general categories of preventive health services:

Evidence-based items or services with a rating of "A" or "B" under current recommendations from the US Preventive Services Task Force (USPSTF), including PrEP drugs to prevent HIV infections.
Routine immunizations recommended by the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC), including the human papillomavirus (HPV) vaccine.
Preventive care and screenings for infants and children through age 21 under guidelines supported by the Health Resources and Services Administration (HRSA), including screenings and counseling related to tobacco use, obesity, alcohol abuse, and sexually transmitted infections (STIs).
Preventive care and screenings for women under HRSA guidelines, including contraceptives (see Practice Note, Contraceptives Coverage Under the ACA and Abortion and Contraceptives Services for Group Health Plans Toolkit).

For more information on the ACA's preventive health services rules, see Practice Notes, Affordable Care Act (ACA) Overview and Preventive Health Services Under the ACA, Other Than Contraceptives. Regarding coverage of PrEP and STI screenings, see Legal Update, FAQs Address Coverage of PrEP, Related STI Screening and Hepatitis Testing, and More.

The plaintiffs in this case included six individuals and two employers that objected on religious grounds to obtaining or providing health insurance coverage that included HPV vaccines, STI and drug-related screenings and counseling, PrEP, and contraceptives. The employers and individuals sued the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (collectively, Departments) alleging that:

The USPSTF, ACIP, and HRSA violated requirements under the US Constitution's Appointments Clause and nondelegation doctrine (among other provisions).
The PrEP coverage mandate violated RFRA.

The parties requested judgment without a trial.

Employer Had Standing to Sue

Before reaching the merits, the district court addressed whether one of the plaintiffs, an employer that sponsored a self-funded health plan, had Article III standing to bring suit. The court concluded that the employer had suffered injuries sufficient to have standing based on:

Not being able to choose which preventive services its plan covered.
An inability to impose cost-sharing regarding the preventive health services it found objectionable.
Having to cover services it objected to on religious grounds (that is, a "dignity harm" under which the employer viewed itself as complicit in providing the objectionable coverage).
Having to choose between complying with the ACA's requirements or paying a penalty, including related excise taxes under the Internal Revenue Code (26 U.S.C. § 4980D; see Practice Note, Excise Tax Reporting for Group Health Plans (IRS Form 8928)).

The Departments conceded the employer's alleged injuries were fairly traceable to the coverage mandates and were likely redressable by the employer's requested relief. The court therefore concluded that the employer had standing (but did not address the other plaintiffs' standing).

Appointments Clause

The employers and individuals argued that the appointment process for USPSTF, ACIP, and HRSA members violated the Appointments Clause of the US Constitution (U.S. Const. art. II, § 2, cl. 2). Under the Appointments Clause:

Principal officers must be nominated by the President and confirmed by the Senate.
Congress may authorize the President, courts, or department heads to appoint lower officers.

The employers and individuals asserted that the members of the USPSTF, ACIP, and HRSA entities were "principal officers" who should have been—but were not—appointed by the President and confirmed by the Senate.

HHS Ratified ACIP's and HRSA's Recommendations

Regarding ACIP and HRSA, which both fall under HHS's supervision, the district court held that HHS ratified the challenged ACIP recommendation and HRSA guidelines, and therefore cured any improper appointments.

Appointment of USPSTF's Members Violated Appointments Clause

However, the court concluded that HHS lacked authority to direct USPSTF's decisions regarding which services receive an "A" or "B" rating, and therefore could not ratify those recommendations.

As a result, the court analyzed whether the USPSTF's members were officers of the US and therefore subject to the constitutional appointment requirements. The court concluded that the USPSTF's members are officers of the US because they:

Occupy a continuing position established by law.
Exercise significant authority to determine which preventive health services that plans or insurers must cover (that is, all services having an A or B rating).

Characterizing the members' power as significant, the court observed that their authority:

Resembled that of a legislative body.
At a minimum was on par with agency actions that typically require notice and comment rulemaking.

As a result, the court concluded that the USPSTF members' appointments needed to comply with the Appointments Clause.

Regarding the question of which appointment process applied, the court held that the USPSTF members are principal officers. The court reasoned that USPSTF is not part of HHS or another agency and its members are not directed or supervised by someone appointed by the President and confirmed by the Senate. Because the USPSTF members were not appointed by the President, the court held that their appointments violated the Appointments Clause.

Coverage Mandates Did Not Violate Nondelegation Doctrine

The employers and individuals also argued that the preventive health services mandates violated the Constitution's nondelegation doctrine because they lacked standards to guide the USPSTF, ACIP, and HRSA in their decision-making. Rejecting this argument, the district court reasoned that Congress:

Set out its general policy regarding coverage for preventive health services in the statutory provision.
Identified USPSTF, ACIP, and HRSA as the entities responsible for applying the policy.
Limited the authority delegated to the USPSTF, ACIP, and HRSA (for example, by restricting ACIP's authority to immunizations and specifying how USPSTF must develop its recommendations).

Although the court acknowledged that Congress's guidance for the entities was minimal, it concluded that the guidance was sufficient under Supreme Court and Fifth Circuit precedent.

PrEP Coverage Mandate Violated the RFRA

Regarding one of the employers, the district court held that the PrEP coverage mandate violated the employer's rights under the RFRA. (The court did not rule on the other plaintiffs' rights.)

In the court's view, the coverage mandate substantially burdened the employer's religious exercise. The court emphasized that it was the employer's belief that:

The availability of PrEP facilitated behaviors (for example, as characterized by the employer, sexual activity outside of marriage between one man and one woman) that conflicted with the employer's religious beliefs.
Providing coverage for PrEP made the employer complicit in these behaviors.

The PrEP coverage mandate, the court concluded, required the employer to cover PrEP or face a monetary penalty.

The court rejected the Departments' argument that the employer had to show a connection between PrEP and the behaviors the employer found objectionable. The court reasoned that this argument challenged the correctness, rather than the sincerity, of the employer's beliefs.

The court noted that the employer did not dispute that generally preventing the spread of HIV is a compelling governmental interest. At issue, however, was whether the Departments had a compelling governmental interest in enforcing the PrEP coverage mandate against private, religious employers. In concluding that the Departments failed to carry their burden, the court reasoned that:

The Departments failed to show what effect an exemption for religious employers would have on PrEP coverage or HIV rates in the affected communities.
The exemptions from the ACA's preventive health services requirements for grandfathered health plans and employers with fewer than 50 employees undermined the Departments' position concerning the importance of access to PrEP (see Practice Note, Grandfathered Health Plans Under the ACA).

Finally, the court held that even if the Departments had a compelling governmental interest, they failed to show that the PrEP coverage mandate was the least restrictive means of satisfying that interest. According to the court, the government could have opted for the less restrictive method of paying for PrEP for individuals who could no longer obtain it through their employers' plans.

Practical Impact

The court expressly declined to rule on the appropriate remedies for the Appointments Clause and RFRA violations found to exist in its decision. As a result, we do not yet know the scope of those remedies—including whether there will be an attempt to balance the needs of individuals who need to obtain the drugs viewed as objectionable. For more information on accommodation-related issues in the context of the ACA's contraceptives mandate, see Practice Note, Contraceptives Coverage Under the ACA: Accommodation for Nonprofit and Certain For-Profit Entities.

District Court: ACA's HIV/PrEP Coverage Mandate Violates the RFRA | Practical Law