Appeals Courts Split on Contraceptive Mandate ‘Opt-Out’

By Allen Smith Sep 24, 2015
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Sometimes an accommodation doesn’t really make things better.

Religious organizations are taking aim at an accommodation intended to make the Affordable Care Act’s (ACA’s) contraceptive mandate workable for entities that equate emergency contraceptives with abortion.

They recently won support in the 8th U.S. Circuit Court of Appeals. However, the court’s decision created a split at the appellate court level over whether the accommodation—an “opt-out” process—violates the federal Religious Freedom Restoration Act (RFRA). (The RFRA bars the federal government from placing substantial burdens on anyone’s exercise of religion, unless necessary for a compelling government interest and the government has chosen the least restrictive way to advance its interest.)

The U.S. Supreme Court may have to resolve the split.

The religious groups’ objection? They think the accommodation still makes them complicit in providing or facilitating abortions.

If the Supreme Court reviews the case and affirms the 8th Circuit, employees at religious entities could have a hard time procuring contraceptives, said Steven Friedman, an attorney with Littler in New York City.

Opt-Out Accommodation

On Sept. 21, 2015, the 8th Circuit affirmed a preliminary injunction halting the government from enforcing ACA penalties against religious employers that refuse to comply with either the contraceptive mandate or the opt-out.

The opt-out lets religious entities deny contraceptive coverage in their health plans, without being penalized, if they notify their third-party administrators (TPAs) that they are religious nonprofit entities with religious objections to providing the contraceptives. Or a religious organization may notify the U.S. Department of Health and Human Services (HHS) of its objection and provide HHS with the TPA’s name and contact information. The TPA must then provide or arrange payments for contraceptive services.

CNS International Ministries and Heartland Christian College—nonprofit religious organizations—argued that the contraceptive mandate and the accommodation process impose a substantial burden on their exercise of religion in violation of the RFRA. The organizations said they were being threatened with severe monetary penalties unless they either directly provided contraceptives through their group health plans or indirectly facilitated their provision through the TPAs.

The government responded that the accommodation process could not substantially burden the ministries’ or college’s exercise of religion because the opt-out does not trigger, facilitate or make the organizations complicit in the provision of that coverage. That’s because the ACA already imposes an obligation on TPAs to provide contraceptive coverage to employees and plan beneficiaries. A number of appeals courts, including the 2nd, 3rd, 5th, 6th, 10th and D.C. circuits, have ruled in favor of the government.

Less-Restrictive Options

However, the 8th Circuit said that, under the Supreme Court’s ruling last year in Hobby Lobby, courts must accept a religious organization’s assertion that the accommodation process would violate its sincerely held beliefs. Concluding that the entities showed that the contraceptive mandate and accommodation process likely conflicted with their religious beliefs, the 8th Circuit examined whether the government established a compelling interest and whether it has used the least restrictive means to advance the interest.

The government asserted its compelling interests in safeguarding public health and ensuring that women have equal access to health care, saying these interests were furthered by the contraceptive mandate and accommodation process.

The 8th Circuit concluded that there were less-restrictive options to advance the government’s interests than the accommodation process. These options included the government paying for the distribution of contraceptives at community health centers, public clinics and hospitals. “On the minimal record thus far developed, the government has not shown that these alternatives are infeasible,” the 8th Circuit stated.

“It’s always significant to see attacks on the ACA that are working,” Friedman said. While many provisions are unpopular, he added, it is rare to see entities other than religious organizations defy the law’s provisions.

This case is Sharpe Holdings v. U.S. Department of Health and Human Services, No. 14-1507 (8th Cir. 2015).

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

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