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From Health Law Daily, April 26, 2018

Little Sisters of the Poor had significantly protectable interest, intervention allowed

By Jeffrey H. Brochin, J.D.

The U. S. Court of Appeals for the Third Circuit has ruled that the Little Sisters of the Poor Saints Peter and Paul Home (Little Sisters) demonstrated sufficient interest in federal litigation involving portions of the religious exemption interim final rule (IFR) to warrant their intervention in defense of the IFR. The Commonwealth of Pennsylvania’s civil action challenging the IFR posed a tangible threat to the Little Sisters’ interests, and Pennsylvania’s contentions were based on an incomplete reading of precedent. Furthermore, the court concluded that the Little Sisters’ interests may not be adequately represented by the federal government (Commonwealth of Pennsylvania v. President United States, April 24, 2018, Hardiman, T.).

Background. The Little Sisters of the Poor are an international Roman Catholic congregation which operates more than 25 homes for the elderly in the United States, all of which adhere to the same religious beliefs. The Little Sisters’ interest in regulations implementing the Patient Protection and Affordable Care Act (ACA) (P. L. 111-148) has resulted in their being involved in litigation regarding the ACA for years, specifically with regard to the contraceptive mandate.

In July, 2013, HHS, along with the United States Departments of Labor and Treasury (collectively, the Departments) altered the definition of an eligible religious employer and provided an accommodation process whereby a religious nonprofit organization could avail itself of the accommodation if it: (1) had religious objections to providing coverage for some or all of the required contraceptive services; (2) was organized and operated as a nonprofit entity; (3) held itself out as a religious organization; and (4) self-certified that it satisfied the first three criteria.

Following considerable litigation in response to the IFRs, in May, 2017, President Trump issued an executive order that directed the Departments to consider issuing amended regulations, consistent with applicable law, to address conscience-based objections to the preventive-care mandate. The Departments then issued two IFRs, one providing for a "religious exemption" and the other providing for a "moral exemption", and the commonwealth filed a civil action alleging that the IFRs violated the Equal Protection and Establishment Clauses of the Constitution, Title VII of the Civil Rights Act, the Pregnancy Discrimination Act, and procedural and substantive provisions of the APA. The commonwealth sought a declaratory judgment that both IFRs were unlawful, and for other relief. The Little Sisters moved to intervene either as of right under Rule 24(a) of the Federal Rules of Civil Procedure, or, alternatively for permissive intervention under Rule 24(b). The district court denied the motion (see Little Sisters may not intervene in lawsuit challenging contraception coverage exemptions, December 12, 2017).

Interest capable of definition. The court noted that the Little Sisters sought to intervene to defend only the portions of the religious exemption IFR that applied to them, and they found that contrary to the district court’s decision, the Little Sisters demonstrated that their interest in preserving the religious exemption was concrete and capable of definition. The appellate court also agreed that the relationships among the various homes run by the Little Sisters of the Poor Congregation, including the two entities that were parties in the previous litigation of Zubik v. Burwell, 136 S. Ct. 1557 (2016) (Zubik), confirmed that the Little Sisters had a unique interest compared to other religious objectors who might wish to intervene. The court therefore concluded that those interests were significantly protectable, that the current litigation implicated their legally cognizable interests relating to both the religious exemption IFR and Zubik, and, that the district court had erred in discounting that interest.

Element of jeopardy in the litigation. The court next considered whether the interest of the Little Sisters in the litigation was "in jeopardy in the lawsuit." To satisfy that element, the Little Sisters needed to demonstrate that its legal interests may be affected or impaired as a practical matter by the disposition of the action. It was not sufficient that their claim be incidentally affected; rather, there must have been a tangible threat to their legal interest. In arguing that no threat existed, the commonwealth claimed that the injunctive and declaratory relief it sought would simply preserve the status quo under which Zubik fully protected the Little Sisters from the imposition of fines. To support that argument, the commonwealth emphasized that the Little Sisters had not lost their protection under Zubik in the months since the district court granted preliminary injunctive relief, and that therefore, no outcome in the case presented a ‘tangible threat’ to the Little Sisters’ legally cognizable interests.

However, the appellate court disagreed with that view, finding that the commonwealth’s contentions were based on an incomplete reading of Zubik: far from providing permanent protection, Zubik afforded the parties merely "an opportunity" to arrive at a suitable compromise. The court determined that the Little Sisters demonstrated that they may be practically disadvantaged by the disposition of the action, that the commonwealth’s civil action posed a tangible threat to the Little Sisters’ interests, and that they therefore met the impairment requirement.

The appellate court reversed the district court’s order denying the Little Sisters’ motion to intervene under Rule 24(a), and remanded the case to permit intervention for the purpose of defending the portions of the religious exemption IFR that apply to religious nonprofit entities.

The case is No. 17-3679.

Attorneys: Nicole J. Boland, Office of Attorney General of Pennsylvania, for Commonwealth of Pennsylvania.

Companies: Commonwealth of Pennsylvania; U.S. Department of Health and Human Services

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