Federal Courts Temporarily Block Contraceptive Mandate

Federal courts in Colorado and Michigan have temporarily blocked the enforcement of a health care reform rule requiring certain health plans to cover contraceptives without copays or other cost-sharing. These rulings apply only to the specific businesses involved in the lawsuits and do not stop the rule from going into effect.These are only a few of many lawsuits challenging the mandate, and could signal the beginning of an extended period of litigation. Also, court rulings on the contraceptive coverage mandate are mixed so far. Other federal courts, such as an Oklahoma federal district court, have rejected employers’ challenges to the contraceptive coverage mandate. However, a federal court of appeals reversed this decision and sent the case back to the district court with specific instructions to reassess whether the injunction should be granted.Employers should be aware of potential changes to the contraceptive rule that could result from these lawsuits. The Horton Group, Inc.  will monitor any legal actions and rulings related to this issue.

background

The health care reform law requires non-grandfathered health plans to cover preventive health services without imposing cost-sharing requirements. This mandate generally became effective for plan years beginning on or after Sept. 23, 2010. The preventive care services that must be covered are described in a series of guidelines.Plans and issuers must also comply with additional preventive care guidelines for women, effective for plan years beginning on or after Aug. 1, 2012. These additional guidelines require non-grandfathered health plans to cover women’s preventive health services, including contraceptives, without charging a copayment, a deductible or coinsurance.Under the guidelines, plans must cover all Food and Drug Administration-approved contraceptive methods, sterilization procedures and patient education and counseling for all women with reproductive capacity. According to the Department of Health and Human Services (HHS), the recommendations do not include abortifacient drugs.

Contraceptive Services and Religious Employers

Group health plans sponsored by certain religious employers (such as churches), and group health insurance coverage in connection with these plans, are exempt from the requirement to cover contraceptive services. An employer that is organized and operates as a nonprofit entity and is referred to in Internal Revenue Code section 6033(a)(3)(A)(i) or (iii) would be considered a religious employer for purposes of the religious employer exemption.This exemption does not extend to nonprofit employers (such as universities, hospitals and charities) that do not qualify as religious employers under this definition. It also does not apply to private employers that simply object to providing contraceptive coverage on a religious basis (or for any other reason). HHS has delayed the application of the rule for these nonprofit employers for plan years beginning before Jan. 1, 2014, while a compromise is explored. However, no such delay is available for private employers.

Court Rulings

There are more than three dozen reported lawsuits that have been filed attempting to strike down the contraceptive mandate. Many of these suits involve nonprofit employers that are affiliated with a religious organization. Courts in Colorado and Michigan have handed down rulings benefitting specific private employers.Colorado – Hercules Industries, Inc. v. SebeliusOn July 27, 2012, a federal court in Colorado issued a preliminary injunction blocking the enforcement of the contraceptive mandate against Hercules Industries, a private Colorado HVAC company owned by a Catholic family.The owners of Hercules Industries stated that their religious beliefs prohibit the use of contraceptives, and that they seek to run their business in a manner that reflects those beliefs. They argued that the birth control mandate violates their First Amendment rights by interfering with their ability to freely practice their religion.The judge did not rule on the merits of the case. He has not yet determined whether the contraceptive requirement is, in fact, a violation of the First Amendment. However, the judge found that the rule should not apply to Hercules Industries while the case is being decided and granted a temporary injunction to keep the rule from being enforced. The judge concluded that the possible harm to Hercules Industries in having to implement the rule far outweighed the potential harm of temporarily blocking the requirement.The judge also made clear that his ruling applies only to Hercules Industries and not to any other case or employer. He stated that the injunction does not relate to any other party’s free exercise of religion and does not affect enforcement of the preventive care mandate against any other party.The federal government has appealed this ruling, arguing that the Colorado company should not be granted an exemption because it would undermine the government’s goal of improving women’s health. If the government is successful in their appeal, Hercules Industries would be required to offer the insurance coverage this year.A copy of the court’s ruling can be found by clicking here.Michigan – Legatus et al. v. SebeliusOn Oct. 31, 2012, a federal court in Detroit, Michigan, became the second court to issue an order blocking the enforcement of the contraceptive mandate against a private company. This case involves Weingartz Supply Company, a private, for-profit company that sells outdoor power equipment, and its owner, Daniel Weingartz.Mr. Weingartz, a Roman Catholic, stated that he designed a health insurance policy for his employees that specifically excludes contraception, in accordance with his religious beliefs. He argued that the contraceptive mandate substantially burdens his First Amendment right to free exercise of religion by forcing him to choose between providing health insurance that includes contraception without cost-sharing or face a financial penalty.Again, the judge did not rule on the merits of the case, but instead found that the rule should not apply to Mr. Weingartz and his business while the case is being decided. The judge concluded that the risk that the mandate would substantially infringe on the sincere exercise of religious beliefs strongly outweighed the potential harm in delaying the mandate’s implementation.A copy of the court’s ruling can be found by clicking here.Oklahoma – Hobby Lobby Stores, Inc. v. SebeliusOn June 27, 2013, the Tenth Circuit Court became the first federal court of appeals to rule on the contraceptive mandate. The federal appeals court reversed a district court in Oklahoma’s decision to deny a preliminary injunction that would block the enforcement of the contraceptive mandate against Hobby Lobby Stores and Mardel, Inc.,affiliated private retail stores that are owned by the Green family, who run their businesses according to strongly held religious convictions.Because of their belief that human life begins when a sperm fertilizes an egg, the Green family specifically objects on religious grounds to methods of contraception that would lead to the death of an embryo. They argued that the health care reform mandate violates the Religious Freedom Restoration Act (RFRA) and the U.S. Constitution’s Free Exercise Clause by requiring them to provide insurance coverage through their health plan for methods of contraceptive that are contrary to their religious beliefs.The federal court of appeals ruled that some for-profit corporations are “persons” that can have their own religious beliefs and exercise those beliefs. The court believed that corporations absorb, as their own, the religious views of their owners and then conduct their businesses as a way to express those convictions. The court held that it is likely that the Green family’s rights under the RFRA are substantially burdened by the contraceptive mandate and that they would suffer irreparable harm in the form of millions of dollars in penalties if an injunction was not issued.As a result of the Tenth Circuit Court’s ruling, the case was sent back to the district court with specific instructions to reassess whether the injunction should be granted. Although the court’s decision did not block the mandate from being enforced against these companies, that outcome is likely based on the court’s instructions.A copy of the court’s ruling can be found here.

MORE INFORMATION

Please contact The Horton Group, Inc.  for more information on ACA’s required preventive care coverage.

Revised: 6.28.13