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Recent Developments in the Battle over the Affordable Care Act’s Contraception Mandate

The Affordable Care Act (the “ACA”) requires most health plans to provide first dollar coverage of FDA-approved contraception methods.  Nearly nine years after the ACA’s enactment, this contraception mandate continues to be one of the most embattled provisions of the ACA.  This post covers recent rulemaking and court decisions impacting the contraception mandate.

History of the Contraception Mandate

The contraception mandate was controversial from enactment, and throughout the Obama administration the contraception mandate was modified (both through regulation and litigation) to provide various exemptions and accommodations for employers with religious or moral objections.  For a more detailed history of the contraception mandate’s course during the Obama administration, see our prior post

Interim Final Rules Expand the Exemption in October 2017

Following his election, President Trump took near immediate actions to further limit the contraception mandate.  On May 4, 2017, President Trump issued an executive order directing the Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) to expand the conscience-based exemptions to additional entities.  On October 6, 2017, the Departments issued a pair of interim final rules (the “IFRs”) providing a full exemption from the contraception mandate to any non-governmental plan sponsor objecting on religious grounds and to any small businesses and nonprofits objecting on non-religious moral grounds.

Immediate Legal Challenges to the IFRs

In the days and weeks following the publication of the IFRs, several states filed suit against President Trump and the Departments challenging the IFRs’ validity.

U.S. District Court for the Northern District of California

On October 6, 2017, the states of California, Delaware, Maryland, New York and Virginia filed a complaint in the U.S. District Court for the Northern District of California alleging that the IFRs violated the Administrative Procedures Act (the “APA”), the Establishment Clause, and the Equal Protection Clause.  This complaint was followed by a motion for preliminary injunction on November 9, 2017.  On December 21, 2017, the Northern District of California agreed with the plaintiffs and issued a nationwide injunction halting implementation of the IFRs.  Following an appeal, the Ninth Circuit largely upheld the injunction on December 13, 2018, but limited its scope to the plaintiff states. 

U.S. District Court for the Eastern District of Pennsylvania

In addition, the Commonwealth of Pennsylvania filed suit in the U.S. District Court for the Eastern District of Pennsylvania, alleging violations of the ACA similar to those presented in the Northern District of California cases and also seeking to enjoin enforcement of the IFRs.  On December 15, 2017, the Eastern District of Pennsylvania issued a preliminary injunction enjoining enforcement of the IFRs.  The defendants appealed the decision and were granted a motion to stay the proceedings while the appeal was pending.

U.S. District Court for the District of Massachusetts

The Commonwealth of Massachusetts also filed a suit challenging the validity of the October 6, 2017 rules.  On March 12, 2018, the U.S. District Court for the District of Massachusetts found that the Commonwealth failed to show that it had standing – i.e. that it would be injured by the Departments’ conduct - and dismissed the Commonwealth’s suit.  For more information about the Massachusetts claim, see our prior post

Rules Finalized On November 15, 2018; Challenges Follow

On November 15, 2018, the Departments issued Final Rules finalizing (and nearly identical to) the IFRs and providing exemptions on religious and moral grounds (the “Final Rules”). 

Response of the Northern District of California

On December 18, 2018, California, Delaware, Maryland, New York and Virginia - now joined by Connecticut, Hawaii, Illinois, Minnesota, North Carolina, Rhode Island, Vermont, Washington, and the District of Columbia - filed an amended complaint in the Northern District of California, alleging that the IFRs and the Final Rules violated the APA, the Establishment Clause, and the Equal Protection Clause.  This complaint was followed by a motion for preliminary injunction on December 19, 2018, seeking to halt implementation of the Final Rules.

On January 13, 2019, the Northern District of California again agreed with the plaintiffs and issued the requested injunction.  The scope of this injunction was again limited to the plaintiff states.  In its opinion, the court found that the plaintiff states had standing to sue because there was a reasonably probable threat to their economic interests.  More specifically, women who lose employer-sponsored contraceptive coverage could turn to state-funded programs to obtain contraceptive services, and a decrease in effective contraception could lead to unintended pregnancies, which would in turn result in increased costs borne by the plaintiff states.

Among the reasons for issuing the injunction, the court noted that the ACA did not delegate to the Departments the authority to make the exemptions from the contraception mandate. The contraception mandate further did not appear to place a substantial burden upon exercise of religion to the extent that religious exemptions were required under the Religious Freedom Restoration Act of 1993 (in addition to already available accommodations).  Plaintiff states were likely to suffer irreparable economic harm if the exemptions were to go forward. 

Response of the Eastern District of Pennsylvania

Immediately following the publication of the Final Rules, Pennsylvania – now joined by New Jersey – successfully moved to lift the stay on its initial proceedings and filed an amended complaint and a second motion for preliminary injunction in the Eastern District of Pennsylvania, seeking to stop enforcement of the Final Rules.  The states in this case argued that the Final Rules failed to comply with the APA, Title VIII of the Civil Rights Act, the Equal Protection Clause, and the Establishment Clause. 

On January 14, 2019, the Eastern District of Pennsylvania issued the requested preliminary injunction.  In its opinion, the court found that Pennsylvania and New Jersey had standing due to demonstrated injury in fact, causation and redressability.  More specifically, the Final Rules were likely to cause increased expenditures on state funded programs that provide contraceptive services, and that this harm could be redressed by enjoining the Final Rules.

In granting the injunction, the court noted that the Departments had failed to meet the APA’s notice and comment requirements when promulgating the IFRs and the Final Rules, that the Final Rules exceeded the scope of the Departments’ rulemaking authority under the ACA, and that the exemptions were not required by the Religious Freedom Restoration Act of 1993.  But unlike the Northern District of California, the Eastern District of Pennsylvania issued a nationwide injunction, finding that an injunction limited to Pennsylvania and New Jersey would not protect citizens working for out-of-state employers nor out-of-state students attending Pennsylvania and New Jersey schools.

What Next?

It is nearly certain that President Trump and the Departments will appeal these injunctions and continue to advocate for conscience-based exemptions to the contraception mandate.  For now, employers who want to avoid the contraception mandate may continue to rely on the exemptions and accommodation in effect prior to the IFRs and Final Rules, but the status of additional exemptions is far from clear.

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Author

Patricia A. Moran

Of Counsel

Patricia A. Moran is an experienced employee benefits attorney at Mintz. She advises clients on a variety of employee benefit plan matters. Patricia has also worked with the US Department of Labor Employee Benefits Security Administration, where she investigated employers on ERISA compliance.