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Hobby Lobby’s Reach Spreads Further

By Allen Smith  7/8/2014
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Religious nonprofits opposed to the “religious nonprofit accommodation” in Patient Protection and Affordable Care Act (PPACA) regulations have reason to hope the regulatory compromise over contraceptives coverage may be struck down one day. In a July 3, 2014, order, the U.S. Supreme Court enjoined the U.S. Department of Health and Human Services (HHS) from enforcing the accommodation’s paperwork requirements.

The one-page order—another blow to women’s reproductive health proponents and victory for religious rights activists—was accompanied by a lengthy dissent from all of the court’s female justices, all of whom also dissented from the Supreme Court’s 5-4 decision in Hobby Lobby.

Don Mazursky, an attorney with Mazursky Constantine in Atlanta, said the decision also is a display of the Supreme Court placing limits on government rules that aren’t necessarily based in the statute. “It’s not just striking a good note for religious rights or against women’s rights, but limiting agencies’ ability to make rules,” he remarked. While the Court upheld the constitutionality of the PPACA’s individual health insurance mandate in 2012, it will be more critical of rules that pull requirements out of thin air, like the paperwork requirements in this case, Mazursky predicted.

Those paperwork requirements—specifically a form (Employee Benefits Security Administration [EBSA] Form 700) that nonprofits were to file to their insurers to alert them of their religious objections to contraceptives—were, some thought, to be the Obama administration’s solution for for-profit companies with religious objections to contraceptives following Hobby Lobby. This latest Supreme Court order now places that potential solution into serious doubt, according to Jesse Gelsomini, a benefits attorney with Haynes and Boone in Houston.

Accommodation Opposed

With the religious nonprofit accommodation, when a nonprofit uses EBSA Form 700 and sends it to health insurance issuers or third-party administrators, the insurers are required to cover, without cost-sharing, contraceptive coverage for female employees. That way, at least in theory, the nonprofit doesn’t have to provide contraceptives it objects to on religious grounds, only its insurer does.

In the case before it, Wheaton College determined this was a distinction without a difference and declined to use EBSA Form 700 or send copies to health insurance issuers or third-party administrators, reasoning that the accommodation—the use of this form—violated the Religious Freedom Restoration Act (RFRA) by triggering contraceptive coverage.

Appeals courts are divided on whether to enjoin the requirement that religious nonprofit organizations use the form.

In an interim order, the Supreme Court enjoined HHS from requiring Wheaton to submit the form when the college already had notified HHS that it was a nonprofit with religious objections to contraceptives.

Employees and students at Wheaton still will be able to get the full range of Food and Drug Administration-approved contraceptives without cost, the court said.

The government argued that the health insurance issuer and third-party administrator are required by federal law to provide full contraceptive coverage regardless of whether the form has been completed by the religious nonprofit. The court observed that the college already had notified the government that it meets the requirements for exemption from the contraceptive coverage requirement as a religious nonprofit; that’s enough for the government (and not the college) to facilitate the provision of full contraceptive coverage under the act.

But the court cautioned that in granting the emergency injunction pending final disposition of appellate review, its order “should not be construed as an expression of the court’s views on the merits.”

‘Fairly Limited Application’

Ultimately, the Wheaton College order, like Hobby Lobby, “has a fairly limited application,” commented Stacy Barrow, an attorney with Proskauer in Boston. In Wheaton College, there was “just an injunction” dealing with a religious nonprofit, while Hobby Lobby involved a closely held company that operates under religious tenets, and there are only a limited number of such companies.

Lengthy Dissent

Still, the order might be interpreted to signify something, as it did to the female justices on the court.

In a 16-page dissent (lengthy in response to an order as distinct from an actual opinion of the court), Justice Sonia Sotomayor, joined by Justices Ruth Bader Ginsburg and Elena Kagan, noted that Wheaton College objected to the filing of the self-certification form as being in violation of RFRA because, Wheaton argued, that made it complicit in the provision of contraceptives by triggering the obligation for someone else to provide the services.

Sotomayor disagreed with this reasoning, saying, “Wheaton has not stated a viable claim under RFRA. Its claim ignores that the provision of contraceptive coverage is triggered not by its completion of the self-certification form, but by federal law.”

She noted that the Hobby Lobby decision approved the religious nonprofit accommodation. The Supreme Court concluded that it “constitutes an alternative that achieves all of the government’s aims while providing greater respect for religious liberty.”

Sotomayor criticized the court from backing away from this stance, saying, “Those who are bound by our decisions usually believe they can take us at our word. Not so today.”

Granting an emergency injunction, as the court did in this case, is rare, she noted, and should be granted only when entitlement to relief is indisputably clear.

Entitlement to relief isn’t indisputably clear here, she asserted. While Sotomayor did not doubt that Wheaton College believes that signing the self-certification form is contrary to its religious beliefs, she emphasized that “thinking one’s religious beliefs are substantially burdened—no matter how sincere or genuine that belief may be—does not make it so.”

She went on to state that “if the government cannot require organizations to attest to their views by way of a simple self-certification form and notify their third-party administrators of their claimed exemption, how can it ever identify the organizations eligible for the accommodation and perform the administrative tasks necessary to make the accommodation work? The self-certification form is the least intrusive way for the government to administer the accommodation.”

But Gelsomini said Wheaton College identified one way that is even less intrusive: simply writing a letter to the government as it did and, in essence, telling the government, “You deal with it.”

Courts Digesting Huge Law

The government has to show that it has a compelling state interest in its regulations in these cases and that it has chosen the least restrictive alternative, noted Peter Marathas, an attorney with Proskauer in Boston.

“Factually and legally, these cases are distinct. We’re not done yet,” he remarked. “This is a huge law. Every huge law gets reviewed by the courts.”

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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