In its continuing consideration of the proper balance of religious freedom against government mandated women’s contraceptive health benefits, the U.S. Supreme Court vacated the 7th Circuit Court of Appeals’ 2014 decision against the University of Notre Dame’s religious objections to the Affordable Care Act’s mandated women’s contraceptive health benefits. University of Notre Dame vs. Burwell, U.S. Supreme Court No. 14-392 (Cert. Granted, March 9, 2015). The Supreme Court remanded the case back to the 7th Circuit for further consideration in light of its decision in Burwell v. Hobby Lobby Stores, Inc., 573 U.S. ___ (June 30, 2014), in which the court found the government’s regulations mandating contraceptive benefits substantially burdened the exercise of religion in violation of the Religious Freedom Restoration Act, 42 U.S.C. § 2000bb-1 (“RFRA”).

Case Background

The University of Notre Dame challenged on religious grounds the Affordable Care Act requirement that health insurance (including self-insured health plans) must cover women’s contraceptive methods, sterilization procedures and related patient education and counseling as preventative health services. Notre Dame claimed that government regulations promulgated to administer a religious exemption under the ACA’s mandate violates RFRA. RFRA provides that the government must not substantially burden a person’s exercise of religion unless it demonstrates that application of the burden to the person: (i) is in furtherance of a compelling governmental interest; and (ii) is the least restrictive means of furthering the governmental interest.

In 2012, the government promulgated administrative regulations establishing a religious exemption from the women’s contraceptive mandate, but those regulations were challenged in court. New regulations were issued in July 2013 enlarging the religious exemption. The new regulations required religious nonprofit organizations like Notre Dame to file a certification form (EBSA Form 700) to certify its religious objection to providing coverage for the mandated contraceptive services. The certification form was intended to notify health insurers and third party administrators of self-funded plans that they will be required to pay for the ACA-mandated women’s contraceptive benefits, not the nonprofit religious organization due to religious objections. The certification process was intended as an accommodation to balance the government’s interest in providing the women’s contraceptive services against the RFRA requirements outlined above.

Before the regulations were set to take effect on Jan. 1, 2014, Notre Dame filed suit in federal district court and sought a preliminary injunction against enforcement of the regulations. The federal district court denied Notre Dame’s request for preliminary injunction, and Notre Dame appealed to the 7th Circuit Court of Appeals, which heard arguments on Feb. 12, 2014, and issued its decision on Feb. 21, 2014. University of Notre Dame v. Sebelius, 743 F3d 547 (7th Cir. 2014). In denying its request for injunction, Circuit Judge Posner found that Notre Dame was not “substantially burdened” by the requirement of completing the certification form. Notre Dame argued that compliance with the certification process would make Notre Dame complicit in a grave moral wrong and undermine its ability to give witness to the moral teachings of the Catholic church and, thus, create scandal under church law. In the decision, Judge Posner estimated that penalties for failure to comply with the regulation would cost Notre Dame roughly $250 million annually and that, alternatively, Notre Dame could have dropped its employee health plan entirely, facing an ACA penalty of roughly $10 million annually. For these reasons, Notre Dame sought relief from the U.S. Supreme Court.

RFRA Violation

While the Notre Dame appeal was pending, the U.S. Supreme Court decided the Hobby Lobby case and separately granted an injunction pending final disposition of appellate review in the case of Wheaton College v. Burwell, No. 13A1284 (July 3, 2014). In Hobby Lobby, the Supreme Court notably extended RFRA protection to closely held corporations, but, importantly for purposes of the Notre Dame case, found that the administrative regulations for ACA-mandated women’s contraceptive services violated RFRA. Writing for the majority in Hobby Lobby, Justice Alito found that the women’s contraceptive service regulations substantially burdened the exercise of religion and that HHS failed to show the contraceptive mandate is the least restrictive means of furthering the government’s interest in providing access to contraceptive services.

Several days following the Hobby Lobby ruling, in a case very similar to the Notre Dame case, the Supreme Court granted Wheaton College’s temporary injunction against enforcement of the contraceptive regulations pending further litigation on the merits. Like Notre Dame, Wheaton College is a religious nonprofit organization that has religious objections to providing coverage for women’s contraceptive services. In response to these decisions, HHS promulgated additional regulations setting forth an alternative pathway for a religious nonprofit to provide notice to HHS of its religious objection. HHS and the Department of Labor, in turn, would notify the insurer or third party administrator.

Significance

This U.S. Supreme Court ruling directs lower courts to follow the Hobby Lobby approach articulated by Justice Alito regarding the “substantial burden” and “least restrictive means” tests under RFRA in the context of religious nonprofit organizations. In that regard, Justice Alito stated in Hobby Lobby that he had “little trouble” concluding that the HHS contraceptive mandate “substantially burdens” the exercise of religion and directed the federal courts to avoid focusing on whether sincerely-held religious beliefs asserted in a RFRA case are reasonable. As such, it provides support for similar religious nonprofit organizations in numerous other pending cases also claiming conflict between religious beliefs and the ACA-mandated women’s contraceptive regulations. And, it may lead ultimately to HHS consideration of a different regulatory approach to establish the “least restrictive means” of furthering the governmental interest of women’s contraceptive benefits in this context (beyond the approach set forth in regulations following the Hobby Lobby decision).

For more information on this decision, please contact Taft partner Dave Bromund.