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From Health Law Daily, January 14, 2019

Court enjoins 2019 final rules for religious, moral exemptions

By Jeffrey H. Brochin, J.D.

A federal district court in California has issued a preliminary injunction preventing the implementation of HHS’s 2019 final rules regarding religious exemption and moral exemption for contraceptive coverage in the states which challenged the final rule. Among the reasons cited by the court was that the moral exemption rule was not in accordance with the Patient Protection and Affordable Care Act (ACA) (P. L. 111-148) and that the regulatory agencies involved did not follow the Administrative Procedures Act (APA) when issuing the Moral Exemption (California v. HHS, January 13, 2019, Gilliam, H.).

ACA and the Women’s Health Amendment. The court began by referencing the enactment of the ACA in 2010, and in particular the provision known as the Women’s Health Amendment which essentially provided that a group health plan and a health insurance issuer offering group or individual health insurance coverage was required to provide coverage for and not impose any cost sharing requirements for care and screenings as provided in the Health Resources and Services Administration (HRSA) guidelines, including for contraception.

The 2011 IFR and the Original Religious Exemption. In August 2011, after receiving considerable feedback regarding contraceptive coverage for women, the relevant regulatory agencies involved in promulgating rules to implement the ACA determined that it was appropriate that the HRSA, in issuing its 2011 guidelines, take into account the effect on the religious beliefs of certain religious employers if coverage of contraceptive services was required, and they provided the HRSA with additional discretion to exempt certain religious employers from the 2011 guidelines. Accordingly, the 2011 Interim Final Rule (IFR) went into effect after the agencies found that they had both statutory authority and good cause to forgo the APA’s advance notice and comment requirement.

Addressing conscience-based objections. In May 2017, President Trump directed the secretaries of the Departments of the Treasury, Labor, and HHS to consider issuing amended regulations—consistent with applicable law—to address conscience-based objections to the preventive care mandate. In response, the agencies issued the Religious Exemption IFR and the Moral Exemption IFR (the 2017 IFRs): the Religious Exemption IFR substantially broadened the scope of the religious exemption, extending it to encompass entities, and individuals, with sincerely held religious beliefs objecting to contraceptive or sterilization coverage, and making the accommodation process optional for eligible organizations; and the Moral Exemption IFR, expanded the exemption to include additional entities and persons that objected based on sincerely held moral convictions.

Preliminary Injunction Against the 2017 IFRs. On October 6, 2017, the states of California, Delaware, Maryland, and New York, and Virginia filed a complaint alleging that the 2017 IFRs violated Sections 553 and 706 of the APA, the Establishment Clause, and the Equal Protection Clause, and in response to their motion for a preliminary injunction, the court issued a nationwide preliminary injunction enjoining implementation of the 2017 IFRs.

The regulatory agencies along with intervenors, Little Sisters of the Poor, and March for Life, filed an appeal, and the Ninth Circuit issued an opinion largely affirming the court’s injunction but limiting its scope to encompass only the states that were plaintiffs at that time.

The 2019 Final Rules. On November 15, 2018, the agencies promulgated the Religious Exemption and Moral Exemption Final Rules—superseding the enjoined IFRs—which were scheduled to take effect on January 14, 2019. The court noted that in substance, the 2019 Final Rules were nearly identical to the 2017 IFRs. On December 18, 2018, the original petitioners filed a Second Amended Complaint, alleging that the IFRs and final rules violated Section 553 of the APA, and that the final rules violated Section 706 of the APA, the Establishment Clause, and the Equal Protection Clause. The original plaintiffs—the States of California, Delaware, Maryland, and New York, and the Commonwealth of Virginia—were joined by the States of Connecticut, Hawaii, Illinois, Minnesota, North Carolina, Rhode Island, Vermont, and Washington, and the District of Columbia. They again filed a motion for a preliminary injunction, seeking to enjoin the implementation of the final rules.

Maintaining the status quo. The court again granted the requested preliminary injunction stating that it was being granted in order to maintain the status quo pending resolution of the merits of the claims, but found that it could not conclude that the high threshold set by the Ninth Circuit for a nationwide injunction had been met. The court also found it significant that a judge in the District of Massachusetts found in 2018 that the state lacked standing to proceed as to claims similar to those brought in California, in an order that has been appealed to the First Circuit. This parallel litigation highlighted the potential direct legal conflicts that could result were the court to enter a nationwide injunction. Accordingly, the preliminary injunction was issued prohibiting implementation of the final rules in the plaintiff states only.

The case is No. 4:17-cv-05783-HSG.

Attorneys: Karli Ann Eisenberg, Office of the Attorney General, for State of California, State of Delaware, Commonwealth of Virginia and State of Maryland. Justin Michael Sandberg, U.S. Department of Justice, for Health and Human Services, U.S. Department of Labor and Secretary of United States Department of Labor.

Companies: State of California; State of Delaware; Commonwealth of Virginia; State of Maryland; Health and Human Services; U.S. Department of Labor

MainStory: TopStory CaseDecisions HealthReformNews CaliforniaNews

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