Case No. 19-431 | 3d Cir.
May 6, 2020
Preview by Emma Liggett, Online Editor
In 2017, the Departments of Health and Human Services, Labor, and the Treasury (“the agencies”) issued two interim final rules (“2017 IFRs”) allowing employers, educational institutions, non-profits, and closely-held entities to self-exempt from the Affordable Care Act’s (ACA) contraceptive mandate based on “sincerely held religious beliefs” or “moral convictions.” 82 Fed. Reg. 47,808-11, 47,850-51 (Oct. 13, 2017). Pennsylvania successfully sued President Trump to enjoin enforcement of the 2017 IFRs. Pennsylvania v. Trump, 281 F. Supp. 3d 553, 585 (E.D. Penn. 2017). Petitioners, non-profit religious employer Little Sisters of the Poor (“Little Sisters”), moved to intervene to defend the rules but were denied. The agencies and the Little Sisters appealed, and the agencies promulgated new rules (2018 final rules) nearly identical to the 2017 IFRs. See 83 Fed. Reg. 57,536, 57,592 (Nov. 15, 2018). In response, Pennsylvania, joined by New Jersey, sought a nationwide injunction against the final rules, which the district court granted.
The Third Circuit consolidated all appeals and affirmed the nationwide injunction. The court also concluded that the Little Sisters lack appellate standing because another district court granted them a permanent injunction, meaning they are “no longer aggrieved by the District Court’s ruling.” Pennsylvania v. President, 930 F.3d at 559 n.6 (July 12, 2019); see Little Sisters of the Poor v. Azar, No. 1:13-cv-02611, Dkt. No. 82 at 2–3 (D. Colo. May 29, 2018).
The Court will address two main issues: (1) Does a litigant who is directly protected by an administrative rule and has been allowed to intervene to defend it lack standing to appeal a decision invalidating the rule if the litigant is also protected by an injunction from a different court? (2) Did the federal government lawfully exempt religious objectors from the regulatory requirement to provide health plans that include contraceptive coverage?
Little Sisters’ argument is three-fold. First, they have appellate standing because “[t]hey have a direct stake in the legality of the religious exemption,” which protects their religious beliefs when administering health insurance to their employees. Brief for Petitioner at 20, Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, No. 19-431 (U.S. filed Mar. 2, 2020). Second, the government is obligated by the Religious Freedom Restoration Act (RFRA) to exempt “objecting religious employers” entirely from the contraceptive mandate, because the exemption is “the most straightforward means” for rectifying the burden the mandate places on employers as recognized in Burwell v. Hobby Lobby Stores, Inc, 573 U.S. 682, 683 (2014). Brief for Petitioner at 28. Even without the RFRA, Petitioners continue, the ACA “independently authorize[s]” the final rule because it “grants the executive branch substantial discretion with respect to the preventive-services mandate from which the contraceptive mandate springs.” Id. at 22.
Finally, Petitioners argue that the final rule does not violate the Administrative Procedure Act (APA) because the agencies had “good cause” in issuing the IFR without notice-and-comment because of the Court’s “extraordinary remand and injunction” in Zubick v. Burwell, 136 S. Ct. 1557 (2016). Id. at 46–47. In Zubick, the Court declined to reach the merits of a challenge under the RFRA to a religious employer accommodation for the contraceptive mandate, instead enjoining the mandate’s application to employers and ordering the parties to seek a balanced solution. 136 S. Ct. at 1559–60. The Trump administration echoes that the final rules are procedurally valid and that the ACA and RFRA authorize the expanded religious exemptions. See Brief of Donald J. Trump, President of the United States, et al. at 32, 15–22, Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, No. 19-454 (U.S. filed Mar. 2, 2020).
Respondent replies with five main arguments. First, the agencies violated the APA by promulgating two procedurally invalid rules. Brief for Respondent at 19. The agencies had no express statutory authority to promulgate the 2017 IFRs, nor good cause to bypass notice-and-comment procedures. Thus, the 2018 final rules were invalid because the agencies “received comments on [the invalid 2017 IFRs] before promulgating the 2018 [final] rules,” making the 2018 final rules invalid as a result. Id. at 24.
Second, the ACA does not authorize the 2018 final rules because it gave HRSA the authority to define “what preventive services for women must be covered, not who must cover them.” Id. at 29 (emphasis in original). Third, the RFRA does not justify the 2018 final rules . The exemption is not required for compliance with the RFRA as objecting employers can use the preexisting accommodation to opt-out of covering contraceptives. Additionally, the “RFRA is a limitation on government power, not a grant of it,” and there is no RFRA violation here to justify government action. Id. at 48.
Fourth, the nationwide injunction is an appropriate remedy because anything more limited would “expose respondent states to continuing harm” by making them “bear the cost of contraceptive care for persons covered under exempted out-of-state health plans.” Id. at 54–55. Finally, Respondents argue that the Little Sisters lack appellate standing because they are protected from an injunction in Colorado and thus not required to comply with the mandate or claim a religious exemption. Id. at 55.
Each side argues for a circumstance that seems to fundamentally oppose the other. Freedom of religion is of vital importance in our society, but we also live in a society that ties health care coverage to employment. Both of these interests are of immense importance, and how the Court chooses to balance them will be telling of which interest (ostensibly) deserves more respect.