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Mealey's-Affordable-Care-Act-report-sample-issue

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Download the first issue of Mealey's Affordable Care Act Report, March 2014. To order, call 800.223.1940 or visit the LexisNexis Store at …

Download the first issue of Mealey's Affordable Care Act Report, March 2014. To order, call 800.223.1940 or visit the LexisNexis Store at

MORE > This monthly newsletter follows federal and state court litigation involving the Patient Protection and Affordable Care Act, including challenges to the law and its implementation. The reports also covers federal and state regulatory and legislative developments, as well as guidance and rulings by administrative agencies tasked with implementing the ACA. Available in print and eBook format.

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  • 1. MEALEY’STMTM Affordable Care Act Report March 2014 Volume 1, Issue #1 High Court Hears Arguments In Birth Control Mandate Cases WASHINGTON, D.C. — The U.S. Supreme Court on March 25 heard arguments in two cases that will decide whether for-profit, secular businesses have to provide contraceptive services as part of their health insurance packages to employees even if they oppose such measures on religious grounds. SEE PAGE 4. Plaintiffs Urge High Court To Affirm Injunctions In Birth Control Cases WASHINGTON, D.C. — Secular, for-profit companies and their owners filed separate briefs on Feb. 27, urging the U.S. Supreme Court to affirm an appeals court decision reversing the denial of a preliminary injunction in their cases challenging the birth control mandate contained in the Patient Protection and Affordable Care Act (ACA). SEE PAGE 6. Government Asks Florida Federal Court To Nix Contraceptive Mandate Challenge MIAMI — The Patient Protection and Affordable Care Act (ACA) provides a simple opt-out procedure for employers with religious objections to the contraceptive mandate, and those with such objections should not be permitted to bar insurers from complying with the law, the government told a Florida federal judge in a March 10 motion to dismiss. SEE PAGE 8. 8th Circuit Urged To Affirm Denial Of Injunction In Birth Control Case ST. LOUIS — The federal government on Feb. 27 filed a brief with the Eighth Circuit U.S. Court of Appeals, urging the court to affirm the denial of a preliminary injunction in a case brought by a Missouri family challenging the birth control mandate contained in the Patient Protection and Affordable Care Act (PPACA). SEE PAGE 13. Order Of Catholic Nuns Asks 10th Circuit To Overturn Denial Of Injunction DENVER — An order of Catholic nuns protesting the denial of a preliminary injunction in their challenge to the birth control mandate contained in the Patient Protection and Affordable Care Act (PPACA) filed a brief Feb. 24 with the 10th Circuit U.S. Court of Appeals, asking the court to overturn the decision. SEE PAGE 14. 6th Circuit Asked To Affirm Denials Of Injunctions In Birth Control Cases GRAND RAPIDS, Mich. — The federal government on Feb. 20 urged the Sixth Circuit U.S. Court of Appeals to affirm the denials of preliminary injunctions sought by two groups of Catholic organizations in their challenges to the birth control mandate contained in the Patient Protection and Affordable Care Act (PPACA). SEE PAGE 16. Split 7th Circuit Affirms Denial Of Injunction In Birth Control Case CHICAGO — A divided Seventh Circuit U.S. Court of Appeals panel on Feb. 21 affirmed a decision denying the University of Notre Dame’s motion for a preliminary injunction in its case challenging the birth control mandate contained in the Patient Protection and Affordable Care Act. SEE PAGE 17. Judge: Cash-Only Physicians’ Alleged Injury Too Remote From ACA Mandate MILWAUKEE — The alleged reduction in clients physicians who accept only cash might face from the delayed implementation of the Patient Protection and Affordable Care Act (ACA)’s employer mandate is too attenuated to provide standing to sue the Internal Revenue Service, a Wisconsin federal judge held March 18. SEE PAGE 19. District Of Columbia Appeals Panel Affirms Dismissal Of ACA Suit WASHINGTON, D.C. — Plaintiffs cannot squeeze the individual insurance mandate in the Patient Protection and Affordable Care Act (ACA) into an ‘‘arbitrary as-applied’’ exemption to Congress’ taxing power, a panel of the District of Columbia Circuit U.S. Court of Appeals affirmed March 7. SEE PAGE 20.
  • 2. Bryan Redding editor Thomas E. Moylan managing editor Jennifer Hay copy desk manager Amy Bauer marketing brand manager Toria Dettra production associate To contact the editor: Bryan Redding (215) 988-7741 email: bryan.redding@lexisnexis.com The Report is produced monthly by LexisNexisâ Mealey’sä 1600 John F. Kennedy Blvd., Suite 1655 Philadelphia, PA. 19103 (215) 564-1788 Customer Service: 1-800-MEALEYS (1-800-632-5397) Email: mealeyinfo@lexisnexis.com Web site: www.lexisnexis.com/mealeys Print: $1357* for a full year * Plus sales tax, shipping and handling where applicable. An online version of this report with email delivery is also available through LexisNexis on www.lexis.com. Contact your LexisNexis representative or call 1-800-223-1940 for details. PRINT ISSN 2333-9985 ONLINE ISSN EBOOK ISBN 9781630443351 LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Prop- erties Inc., used under license. Mealey’s is a trademark of LexisNexis, a division of Reed Elsevier Inc. ª 2014, LexisNexis, a division of Reed Elsevier Inc. All rights reserved. MEALEY’STMTM Affordable Care Act Report March 2014 Volume 1, Issue #1 Cases in this Issue Page Kathleen Sebelius, et al. v. Hobby Lobby Stores Inc., et al., No. 13-354, U.S. Sup.; Conestoga Woods Specialties Corp., et al. v. Kathleen Sebelius, et al., No. 13-356, U.S. Sup. .......................................................... 4 Kathleen Sebelius, et al. v. Cyril B. Korte, et al., Kathleen Sebelius, et al. v. William D. Grote III, et al., No. 13-937, U.S. Sup........................................... 6 Ave Maria School of Law v. Kathleen Sebelius, et al., No. 13-795, M.D. Fla. ......... 8 Kathleen Sebelius, et al. v. William Newland, et al., No. 13-919, U.S. Sup............. 9 Reaching Souls International Inc., et al. v. Kathleen Sebelius, et al., No. 13-1092, W.D. Okla. .................................................................................. 10 Priests for Life, et al. v. U.S. Department of Health and Human Services, et al., No. 113-5368 D.C. App.; Roman Catholic Archbishop of Washington, et al. v. Kathleen Sebelius, et al., No. 13-5371, D.C. App................................. 11 Paul Wieland, et al. v. U.S. Department of Health and Human Services, No. 13-3528, 8th Cir.......................................................................................... 13 Little Sisters of the Poor Home for the Aged, et al. v. Kathleen Sebelius, et al., No. 13-1540, 10th Cir........................................................................................ 14 Michigan Catholic Conference, et al. v. Kathleen Sebelius, et al., No. 13-2723, 6th Cir.; The Catholic Diocese of Nashville, et al. v. Kathleen Sebelius, et al., No. 13-6640, 6th Cir................................................................................ 16 University of Notre Dame v. Kathleen Sebelius, et al., No. 13-3853, 7th Cir.......... 17 Association of American Physicians & Surgeons Inc., and Robert T. McQueeney v. John Koskinen, commissioner of the Internal Revenue Service, in his official capacity, No. 13-1214, E.D. Wis..................................... 19 Association of American Physicians & Surgeons Inc., et al. v. Kathleen G. Sebelius, et al., No. 13-5003, D.C. Cir. ........................................................ 20 Jacqueline Halbig, et al. v. Kathleen Sebelius, et al., No. 14-5018, D.C. Cir. .......... 21 David King, et al. v. Kathleen Sebelius, et al., No. 14-1158, 4th Cir. ...................... 23 State of Oklahoma, ex rel. Scott Pruitt v. Kathleen Sebelius, et al., No. 11-30, E.D. Okla............................................................................................................ 24 Jacqueline Halbig, et al. v. Kathleen Sebelius, et al., No. 14-5018, D.C. Cir. .......... 26 St. Louis Effort for Aids, et al. v. John Huff, director of the Missouri Department of Insurance, Financial Institutions and Professional Registration, No. 13-4246, W.D. Mo. ............................................................... 28 David King, et al. v. Kathleen Sebelius, et al., No. 14-1158, 4th Cir. ...................... 30 John East, et al. v. Blue Cross and Blue Shield of Louisiana, et al., No. 14-115, M.D. La............................................................................................................... 32 Senator Ron Johnson, et al. v. U.S. Office of Personnel Management, et al., No. 14-09, E.D. Wis........................................................................................... 32 Edward Gaines, Gaines Insurance Agency Inc., et al. v. Peter Lee, in his official capacity as Executive Director of the California Health Benefit Exchange, et al., No. BS147414, Calif. Super., Los Angeles Co........................ 34 Thomas and Wanda Carruth v. The Outsource Group, et al., No. 14-33, S.D. Miss..... 34 The Catholic Benefits Association LCA, et al. v. Kathleen Sebelius, et al., No. 14-240, W.D. Okla. .................................................................................... 36 Published document is available at the end of the report. For other available documents from cases reported on in this issue, visit www.mealeysonline.com or call 1-800-MEALEYS.
  • 3. In this Issue Contraceptive Mandate High Court Hears Arguments In Birth Control Mandate Cases............................ page 4 Plaintiffs Urge High Court To Affirm Injunctions In Birth Control Cases................... page 6 Government Asks Florida Federal Court To Nix Contraceptive Mandate Challenge .......................................................... page 8 Federal Government Files Petition With High Court In Birth Control Case.................... page 9 Judge: Likelihood Of Success Demonstrated In Contraceptive Mandate Case.......................... page 10 Catholic Groups Urge Appeals Court To Reverse Dismissal Of Birth Control Cases............................................................... page 11 8th Circuit Urged To Affirm Denial Of Injunction In Birth Control Case.................... page 13 Order Of Catholic Nuns Asks 10th Circuit To Overturn Denial Of Injunction................. page 14 6th Circuit Asked To Affirm Denials Of Injunctions In Birth Control Cases................. page 16 Split 7th Circuit Affirms Denial Of Injunction In Birth Control Case.................... page 17 Individual/Employer Mandate Judge: Cash-Only Physicians’ Alleged Injury Too Remote From ACA Mandate...................... page 19 District Of Columbia Appeals Panel Affirms Dismissal Of ACA Suit....................... page 20 Premium Credits Government Asks Appeals Court To Affirm Judgment In Birth Control Suit ......................... page 21 4th Circuit Briefed On ACA Exchange Credit Challenge ............................................. page 23 Oklahoma, HHS Seek Summary Judgment On ACA Premium Credits Issue..................... page 24 Health Care Exchanges Government: Bulletin Clarifies Enrollment In Exchange May Be Retroactive .................... page 26 Mo. Federal Judge Grants Injunction, Halts Law Regulating Insurance Exchanges........................................................ page 28 4th Circuit Briefed On ACA Exchange Credit Challenge ............................................. page 30 Coverage Judge Enjoins Insurers From Rejecting Funds From HIV Program.............................. page 32 ACA Regulations Covering Senators Don’t Provide Injury, Government Argues................ page 32 New Complaints Calif. Senator Sues State, Claiming Improper Cancellation Of Insurance Policies............................................ page 34 Couple Sues In Mississippi Federal Court, Says Coverage Wrongfully Canceled ............... page 34 Oklahoma City Archdiocese Sues HHS Over Contraceptive Mandate .......................... page 36 Regulations HHS: ACA Plans Must Accept Specialty Support Programs............................................ page 37 HHS Issues Guidelines For Basic Health Programs, Same-Sex Households ..................................................... page 37 HHS Issues Proposed Rule On Product Modifications, Risk Corridors, Civil Penalties.......................................................... page 37 HHS Sets Parameters For Reinsurance, Coinsurance, Exchange User Fees ................... page 38 ACA Insurance Plans To Offer Same-Sex Coverage In 2015, HHS Says ......................... page 38 Legislation U.S. House Passes ACA Individual, Employer Mandate Exemption Bills............................................... page 38 U.S. House Passes Bill Delaying ACA Mandate Penalties ........................................... page 39 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 Cite as Mealey’s Affordable Care Act Report, Vol. 1, Iss. 1 (3/14) at p.___, sec.___. 3
  • 4. News High Court Hears Arguments In Birth Control Mandate Cases WASHINGTON, D.C. — The U.S. Supreme Court on March 25 heard arguments in two cases that will decide whether for-profit, secular businesses have to provide contraceptive services as part of their health insurance packages to employees even if they oppose such measures on religious grounds (Kathleen Sebelius, et al. v. Hobby Lobby Stores Inc., et al., No. 13-354, U.S. Sup.; Conestoga Woods Specialties Corp., et al. v. Kathleen Sebelius, et al., No. 13-356, U.S. Sup.). (Transcript in Section B. Document #31-140402- 011T.) Justices heard 90 minutes of arguments in Hobby Lobby Stores Inc., et al. v. Kathleen Sebelius, et al. and Conestoga Woods Specialties Corp., et al. v. Kath- leen Sebelius, et al. In both cases, the plaintiffs allege that the birth control mandate contained in the Patient Protection and Affordable Care Act (ACA) violates their rights to freedom of religion, speech and asso- ciation as secured by the First and Fifth Amendments to the U.S. Constitution and the Religious Freedom Restoration Act (RFRA). Under the ACA, all group health plans and health insurance issuers that offer nongrandfathered group or individual health coverage are required to provide coverage for certain preventive services without cost- sharing, including for the full range of U.S. Food and Drug Administration-approved contraceptive methods, sterilization procedures and patient education and counseling for women with reproductive capacity. Companies that don’t provide coverage face fines. The justices are considering ‘‘whether RFRA allows a for-profit corporation to deny its employees the health coverage of contraceptives to which the employees are otherwise entitled by federal law, based on the religious objections of the corporation’s owners’’ and ‘‘[w]hether the religious owners of a family business, or their closely-held, for-profit corporation, have free exercise rights that are violated by the application of the con- traceptive-coverage Mandate of the ACA.’’ Cases In Hobby Lobby, Hobby Lobby Inc., Mardel Inc. and the companies’ owners David Green, Barbara Green, Steve Green, Mart Green and Darsee Lett sued the government in the U.S. District Court for the Western District of Oklahoma. In July, the District Court reversed a previous decision and granted summary judgment in favor of the plaintiffs. The plaintiffs had appealed the District Court’s initial decision denying preliminary injunction, and in June, a majority of the 10th Circuit U.S. Court of Appeals held that Hobby Lobby and Mardel have standing to sue and that the Anti-Injunction Act (AIA) does not apply to the case. As to the merits, the majority held that the District Court erred in concluding that Hobby Lobby and Mardel had not demonstrated a likelihood of success of their RFRA claim, while three other judges would have affirmed the District Court on the issue. The majority also held that Hobby Lobby and Mardel satisfied the irreparable harm prong for the preliminary injunction standard. The District Court, however, did not consider all the fac- tors required for a preliminary injunction. The court remanded the case with instructions for the District Court to address all required factors. Upon remand, the District Court granted the injunction. In Conestoga Wood, Norman Hahn, Elizabeth Hahn, Norman Lemar Hahn, Anthony H. Hahn and Kevin Hahn and Conestoga Wood Specialties Corp. sued the government in the U.S. District Court for the Eastern District of Pennsylvania. In January 2013, the District Court denied the plaintiffs’ request for a preliminary Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 4
  • 5. injunction, and the Third Circuit U.S. Court of Appeals affirmed. Corporations Arguments Attorney Paul D. Clement argued for Hobby Lobby and Conestoga Wood, but before he could get through two sentences of his opening arguments, Justice Sonia Sotomayor jumped in, asking whether the claim was limited to materials such as contraceptives or whether it would include items such as vaccinations or blood transfusions. Many people have religious objections to vaccinations and various other medical treatments, Justice Elena Kagen noted. Clement responded that the first step would be to ask whether there was a substantial burden on religious exercise. This case is ‘‘one where it’s so religiously sen- sitive, so fraught with religious controversy, that the agency itself provides a certain number of exemptions and accommodations.’’ Once past the substantial bur- den step of the analysis, the next step would be the compelling interest and least restrictive alternatives ana- lysis and every case would have to be analyzed on its own, Clement said. Justice Sotomayor later asked how courts were sup- posed to know whether a corporation holds a particular religious belief. She also asked what would happen to minority members or shareholders of a corporation who did not share the majority’s religious beliefs and how much of a business has to be dedicated to religion. Clement responded, ‘‘I think the way to approach those cases would be the same basic way you approach other questions of corporate intent or corporate motivation. You look to the governance doctrines, if any of this is put at issue.’’ It’s a critical question that goes the level of sincerity, Clement said. Justice Sotomayor interrupted him to say that that question was the ‘‘most dangerous piece’’ and one that courts have ‘‘resisted in all our exercise jurisprudence, to measure the depth of some- one’s religious beliefs.’’ Justices Sotomayor and Kagan also noted that com- panies objecting to the contraception requirement could avoid the issue by deciding not to offer health care coverage and choosing to pay the penalty. Because there’s a choice, Justice Kagan said the question is ‘‘why is there a substantial burden at all.’’ Clement responded that Hobby Lobby would be hurt if it didn’t provide health insurance to its employees and that in order to compensate for that, it would have to increase wages. In response to questioning from Chief Justice John G. Roberts Jr., Clement also agreed that providing health insurance to its employees was part of the religious commitment of the owners. Justice Anthony M. Kennedy asked Clement how the court should take into account the religious rights of employees who may have different religious views than their employer. The employee may not agree with the religious beliefs of the employer, so Justice Kennedy asked whether religious beliefs of the em- ployer just trump those of the employees. Clement responded this is not about access to contraception, but about who will pay for the government’s preferred subsidy. Government Arguments Solicitor General Donald B. Verrilli Jr. argued for the government in both cases, quoting from Prince v. Massachusetts in saying, ‘‘Limitations which of neces- sity bound religious freedom begin to operate when- ever activities begin to affect or collide with the liberties of others or of the public. Adherence to that principle is what makes possible the harmonious functioning of a society like ours, in which people of every faith live and work side by side.’’ Chief Justice Roberts interrupted to say that in en- acting the RFRA, Congress wanted to provide excep- tions for the religious views of a particular group. Verrilli responded that the court must take into ac- count the way in which the requested accommodation will affect the rights and interests of third parties. Justices Samuel A. Alito Jr. and Antonin Scalia directed questions as to why the government believed that for- profits corporations could not raise free-exercise of religion claims and whether there was something about the corporate form that was inconsistent with the free exercise claim. Verrilli responded that churches can bring claims, but engaging in a for-profit activity is inconsistent with free exercise claims. Justice Kennedy pointed out that the government already has exempted many employers from the act’s MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 5
  • 6. requirement for no co-pay preventative services. He asked ‘‘what kind of constitutional structure do we have if the Congress can give an agency the power to grant or not grant a religious exemption based on what the agency determined.’’ Verrilli countered that it was appropriate for the agency to take into account the ‘‘special solicitude’’ that churches receive, but all the government has done is say that churches, because of that special solicitude, get an exemptions. Nonprofit religious organizations don’t get an exemption, but they do get an accommodation, Verrilli said. Also, there are no exemptions for small employers and should those companies choose to offer insurance to their em- ployees, they must provide the minimum coverage spe- cified by the regulations, including contraceptives, he added. Justice Kennedy said that under the government’s legal theory, a for-profit corporation could be forced to pay for abortions. Verrilli said there is no such law on the books, but Justice Roberts said that Hobby Lobby and Conestoga Wood believe that emergency contraception is a form of abortion. Emergency contraception is one of the required products under the mandate. Mark L. Rienzi and S. Kyle Duncan of The Beckett Fund for Religious Liberty in Washington and Clem- ent of Bancroft in Washington represented the plain- tiffs in Hobby Lobby. David A. Cortman of Alliance Defending Freedom in Lawrenceville, Ga., and Clem- ent represent Conestoga Wood. Verrilli represented the government in both cases. (Additional documents available: Government’s peti- tion in Hobby Lobby. Document. #31-131002-028B. Respondents’ brief in Hobby Lobby. Document #31- 131106-013B. Government’s brief in Hobby Lobby. Document #31-140205-034B. Conestoga Woods’ opening brief. Document #31-140205-035B. Gov- ernment’s reply brief. Document #93-140326-031B. Appeals court decision in Hobby Lobby. Document #31-130703-017Z. District Court’s decision in Hobby Lobby. Document #31-130807-006Z. Appeals court decision in Conestoga Wood. Document #31- 130807-015Z. Conestoga Wood petition for writ of certiorari. Document #31-131120-031B. Govern- ment’s respondents’ brief in Conestoga Wood. Docu- ment #31-131106-034B. District Court opinion in Conestoga Wood. Document #31-130123-011Z.) I Plaintiffs Urge High Court To Affirm Injunctions In Birth Control Cases WASHINGTON, D.C. — Secular, for-profit com- panies and their owners filed separate briefs on Feb. 27, urging the U.S. Supreme Court to affirm an appeals court decision reversing the denial of a preli- minary injunction in their cases challenging the birth control mandate contained in the Patient Protection and Affordable Care Act (ACA) (Kathleen Sebelius, et al. v. Cyril B. Korte, et al., Kathleen Sebelius, et al. v. William D. Grote III, et al., No. 13-937, U.S. Sup.). (Kortes’ respondent brief available. Document #93- 140326-036B.) Denials Reversed The PPACA and the Health Care and Education Re- conciliation Act (collectively, PPACA) contain a man- date that requires most health care plans to provide free ‘‘preventative’’ services. Those services include vac- cines and routine screenings such as cholesterol check- ups and mammograms, as well as contraception and sterilization procedures. In separate cases, Cyril and Jane Korte, owners of Korte & Luitjohan Contractors Inc.; William D. Grote III, William Dominic Grote IV, Walter F. Grote Jr., Michael R Grote, W. Frederick Grote III and John R. Grote (collectively, the Grotes); and Grote Industries LLC and Grote Industries Inc. (col- lectively, Grote Industries) sued Kathleen Sebelius, secretary of Health and Human Services (HHS); the Department of Health and Human Services; Hilda Solis, secretary of Labor; the U.S. Department of Labor; Timothy Geithner, secretary of Treasury; and the Department of Treasury in the U.S. District Court for the Southern District of Illinois, alleging that the mandate violates their rights to freedom of religion, speech and association as secured by the First and Fifth Amendments to the U.S Constitution, the Reli- gious Freedom Restoration Act (RFRA) and the Ad- ministrative Procedure Act (APA). The plaintiffs seek a preliminary injunction to prohibit the defendants from enforcing the mandate against them when it goes into effect. The plaintiffs in each suit are Catholic families and their closely held corporations. The businesses are secular Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 6
  • 7. and for profit, but the plaintiffs say they operate the businesses in conformity with their faith commitments. The plaintiffs object for religious reasons to providing the mandated coverage. The District Court denied motions by the plaintiffs in each case for preliminary injunction. The cases were consolidated for appeal in the Seventh Circuit U.S. Court of Appeals. In November, a divided Seventh Circuit reversed the denial of the preliminary injunctions, with the majority saying ‘‘[t]he federal government has placed enormous pressure on the plaintiffs to violate their religious beliefs and conform to its regulatory mandate. Refusing to comply means ruinous fines, essentially forcing the Kortes and Grotes to choose between saving their com- panies and following the moral teachings of their faith.’’ Petition Filed On Feb. 21, the federal government filed a petition for a writ of certiorari with the U.S. Supreme Court, challenging a Seventh Circuit decision reversing the denial of preliminary injunction in the two cases. In its petition, the government says the question presented is ‘‘whether RFRA allows a for-profit corporation to deny its employees the health coverage of contracep- tives to which the employees are otherwise entitled by federal law, based on the religious objections of the corporation’s owners.’’ The Seventh Circuit’s decision that the RFRA allows a for-profit corporation to deny its employees the health coverage of contraceptives to which they are otherwise entitled by federal law, based on the religious objec- tions of the corporation’s owners, is incorrect, the gov- ernment says. The same question is pending before the court in Hobby Lobby v. Sebelius, et al. (Sup., No. 13-354) and Conestoga Woods Specialties Corp. v. Kathleen Sebelius, et al. (Sup., No. 13-356), with oral arguments held March 25. The government asked the court to hold the instant petition for a writ of certiorari pending the court’s decision in Hobby Lobby and Conestoga Wood and then to dispose of the petition as appropriate in light of the court’s decision in those cases. Question Presented The plaintiffs in the Korte case agree with the govern- ment that the court should hold the petition pending disposition of Hobby Lobby and Conestoga Wood and then dispose of the petition in light of the deci- sions in those cases. The Korte plaintiffs, however, say the government’s characterization of the question presented is ‘‘seriously distorted.’’ Their counterstatement of the question presented is ‘‘[w]hether the HHS regulation that compels the individual owners of a closely held cor- poration to direct their corporation to offer insurance coverage of abortion-inducing drugs and devices, other birth control drugs and devices, and sterilization, con- trary to the owners’ religious beliefs, violates the Reli- gious Freedom Restoration Act as applied to them.’’ Mandate Not Required The Korte plaintiffs also say ‘‘that the government com- pulsion here might pass strict scrutiny under RFRA is fanciful.’’ Under RFRA strict scrutiny, the govern- ment bears the burden of demonstrating a compelling interest to support its restrictions on religious exercise, but it cannot do so, the plaintiffs say. The ACA ‘‘does not even require the challenged HHS mandate,’’ the plaintiffs say. Rather, Congress required coverage of preventive care ‘‘‘as provided for in comprehensive guidelines supported by the Health Resources and Services Administration’ (HRSA), which is a component of the Department of Health and Human Services (HHS),’’ the plaintiffs say. The HRSA did not have comprehensive guidelines for preventive services for women, including the objectionable drugs, devices and services at issue here, they added. The Institute of Medicine formulated ‘‘recommendations’’ that in- cluded the objectionable drugs and devices, and HRSA adopted those recommendations and then three federal agencies adopted regulations requiring the ‘‘recommended services,’’ the plaintiffs say. ‘‘It strains credulity to say that the government has a compelling interest in forcing coverage of something that it did not even identify as essential but merely left to various agencies to recommend,’’ the plaintiffs say. Multiple Exceptions Further, ‘‘the regulatory scheme does not reflect a view that employer coverage of the required drugs, devices, and services are essential to the degree of being MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 7
  • 8. ‘compelling’ for purposes of strict scrutiny’’ because the ‘‘‘requirement’ does not apply at all to grandfathered plans, to small employers, to exempt religious em- ployers, or to large employers that decline to provide insurance,’’ the plaintiffs say. Multiple exceptions have been made, which profoundly undercuts the govern- ment’s claim that its interest is compelling, the plain- tiffs added. The government’s ‘‘general interest in promoting public health and safety’’ does not translate ‘‘into a compelling interest in coercing unwilling employers to violate their religious beliefs in order to provide an agency’s ‘recommended’ services,’’ the plaintiffs say. Edward Lawrence White of American Center for Law & Justice in Ann Arbor, Mich., represents the Korte plain- tiffs. Michael A. Wilkins of Broyles Kight & Ricafort in Indianapolis represents the Grote plaintiffs. Solicitor General Donald B. Verrilli Jr., Assistant Attorney General Stuart F. Delery, Deputy Solicitors General Ian Heath Gershengorn and Edwin S. Kneedler, Assis- tant to the Solicitor General Joseph R. Palmore and Attorneys Mark B. Stern and Alisa B. Klein, all of the Department of Justice in Washington, represent the government. (Additional document available. Petition. Document #31-140305-024B.) I Government Asks Florida Federal Court To Nix Contraceptive Mandate Challenge MIAMI — The Patient Protection and Affordable Care Act (ACA) provides a simple opt-out procedure for employers with religious objections to the con- traceptive mandate, and those with such objections should not be permitted to bar insurers from complying with the law, the government told a Florida federal judge in a March 10 motion to dismiss (Ave Maria School of Law v. Kathleen Sebelius, et al., No. 13- 795, M.D. Fla.). (Memosupportingmotiontodismissavailable.Docu- ment #93-140326-011B. Proposed amicus brief by the American Civil Liberties Union available. Docu- ment #93-140326-012B.) Ave Maria School of Law sued U.S. Department of Health and Human Services Secretary Kathleen Sebelius and others in the U.S. District Court for the Middle District of Florida in November, challenging the contraceptive coverage mandate in the ACA. Ave Maria conceded that it could opt out of the man- date by informing its insurer of eligibility for religious exemption. However, Ave Maria claimed that opting out merely shifted the mandate to a third party and, thus, violated its Religious Freedom Restoration Act (RFRA) rights. Opt Out In moving for dismissal or summary judgment, the defendants argue that the ‘‘plaintiff cannot transform its right, as an eligible organization, not to provide contraceptive coverage into a substantial burden by characterizing its decision to opt out as ‘a trigger’ for a third party to provide such coverage.’’ If Ave Maria opts out, a third-party insurance issuer will provide coverage, the defendants argue. While the ACA’s mandate that insurers must cover contra- ceptive coverage for employers who opt out may offend Ave Maria, it does not burden Ave Maria’s beliefs, the defendants argue. In short, Ave Maria is not obligated to undertake actions it finds offensive, but the fact that it finds them offen- sive does not prevent the government or a third-party insurer from engaging in them, the defendants argue. No Substantial Burden ‘‘The contraceptive coverage requirements, and in par- ticular the accommodations for eligible organizations like plaintiff, do not impose a substantial burden on plaintiff’s religious exercise. And even if they did, the regulations would not violate RFRA because they are narrowly tailored to serve compelling governmental interests in public health and gender equality,’’ the defendants argue. The defendants also urged the court to reject Ave Maria’s free speech, Fifth Amendment due process and equal protection claims. ACLU In a March 10 proposed amicus brief, the American Civil Liberties Union and the American Civil Liberties Union of Florida argue that the RFRA claims fail. Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 8
  • 9. To receive an exemption under the mandate, a qualified entity need only file a two-page form with its insurer, which must then bear the burden of fulfilling the man- date, the ACLUs argue. Ave Maria likely already filed such a form with its insurer, the ACLUs argue. Secondly, the right to religious liberty does not give those entities the ability to infringe on the rights of, or impose their beliefs on, others, the ACLUs argue. ‘‘This Court should reject Plaintiff’s attempt to do the same here. The contraception rule is a significant advancement in women’s equality,’’ the ACLUs argue. Assistant Attorney General Stuart F. Delery, U.S. Attorney A. Lee Bentley III, Department of Justice Director Jennifer Ricketts and Deputy Director Shiela M. Lieber and Trial Attorney Adam Grogg in Washington, D.C., represent the defendants. David Andrew Cortman of Alliance Defense Fund in Law- renceville, Ga.; Gregory S. Baylor and Matthew S. Bowman of Alliance Defending Freedom in Washing- ton, Jeremy D. Tedesco of its Scottsdale, Ariz., office, and Kevin Hayden Theriot of its Leawood, Kan., office; and Roger K. Gannam of Lindell & Farson in Jack- sonville, Fla., represent Ave Maria. Daniel Tilley of the American Civil Liberties Union Foundation of Florida in Miami, Jennifer Lee and Brigitte Amiri of the Amer- ican Civil Liberties Union Foundation in New York and Daniel Mach of its Washington office represent the ACLUs. I Federal Government Files Petition With High Court In Birth Control Case WASHINGTON, D.C. — The federal government on Jan. 31 filed a petition for writ of certiorari with the U.S. Supreme Court, seeking to have overturned the granting of a preliminary injunction in a case chal- lenging the birth control mandate contained in the Patient Protection and Affordable Care Act (PPACA) (Kathleen Sebelius, et al. v. William Newland, et al., No. 13-919, U.S. Sup.). (Petition available. Document #31-140219-017B.) The government, however, has asked the Supreme Court to hold the petition pending the court’s decision in two cases raising similar issues that are already sched- uled for oral argument. Religious Violations Hercules Industries Inc. manufactures and distri- butes heating, ventilation and air conditioning products and equipment. The company is owned by siblings William Newland, Paul Newland, James Newland and Christine Ketterhagen. William Newland serves as president, and his son, Andrew Newland, serves as vice president. Although the company is a for-profit secular employer, the Newlands say they adhere to the Catholic denomination of the Christian faith, and ‘‘they seek to run Hercules in a manner that reflects their sincerely held religious beliefs.’’ The company maintains a self-insured group plan for its employees, but because the Catholic Church condemns the use of contraception, the self-insured plan does not include abortifacient drugs, contraception or sterilization. As part of the PPACA signed into law in March 2010, the act requires group health plans to provide no-cost coverage for preventive care and screening for women, including services for birth control and sterilization. The Hercules plan is not ‘‘grandfathered’’ under the PPACA, and because it is a secular, for-profit cor- poration, Hercules does not qualify as a ‘‘religious employer’’ within the meaning of the preventive care regulations. The company’s owners say the company also cannot seek refuge in the enforcement ‘‘safe har- bor,’’ so the company will be required to include no- cost coverage for contraception in its group health plan or face monetary penalties. In April 2012, Hercules and the Newlands sued Kathleen Sebelius in her official capacity as secretary of Health and Human Services, Hilda Solis in her official capacity as secretary of Labor, Timothy Geith- ner in his official capacity as secretary of the Treasury, and the Department of Health and Human Services (DHHS), Department of Labor (DOL) and Depart- ment of the Treasury (DOT) in the U.S. District Court for the District of Denver for violations of the Religious Freedom Restoration Act (RFRA), the free exercise clause, the establishment clause and the free speech clause contained in the First Amendment, the due pro- cess clause contained in the Fifth Amendment and the Administrative Procedure Act. Injunction Orders In July 2013, the District Court granted the plain- tiffs’ motion for preliminary injunction, and the federal MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 9
  • 10. government appealed. The case was stayed in the 10th Circuit U.S. Court of Appeals pending the appeals court resolution of Hobby Lobby Stores Inc., et al. v. Kathleen Sebelius, et al. In Hobby Lobby, the appeals court reversed an Oklahoma district court’s denial of Hobby Lobby’s request for a preliminary injunction, holding that the corporations were ‘‘persons’’ within the meaning of RFRA, that compliance with the reg- ulation would substantially burden the corporations’ religious exercise and that the regulation was not nar- rowly tailored to achieve a compelling interest. The appeals court determined in Hobby Lobby that the plaintiffs had satisfied two of the four preliminary injunction facts and remanded for the District Court to consider whether the likely harm to plaintiffs with- out the preliminary injunction outweighed any likely harm to DHHS as a result of the injunction and whether the injunction was adverse to the public interest. On remand, the District Court reversed its previous decision and granted a preliminary injunction in favor of Hobby Lobby. DHHS filed a petition for certiorari with the U.S. Supreme Court (No. 13-354), which is scheduled for oral argument March 25 along with Conestoga Wood Specialties Corp. v. Kathleen Sebe- lius. (No. 13-356). In Conestoga Wood, Norman Hahn, Elizabeth Hahn, Norman Lemar Hahn, Anthony H. Hahn and Kevin Hahn and Conestoga Wood Specialties Corp. sued the government in the U.S. District Court for the Eastern District of Pennsyl- vania. In January 2013, the District Court denied the plaintiffs’ request for a preliminary injunction, and the Third Circuit U.S. Court of Appeals affirmed. In their petition for writ of certiorari, the plaintiffs in Conestoga Wood ask the court ‘‘[w]hether the reli- gious owners of a family business, or their closely-held, for-profit corporation, have free exercise rights that are violated by the application of the contraceptive- coverage Mandate of the [PP]ACA.’’ The plaintiffs con- tend that their rights have been violated. Petition Held In the instant petition, the government says the ques- tion to be presented is ‘‘whether RFRA allows a for- profit corporation to deny its employees the health coverage of contraceptives to which the employees are otherwise entitled by federal law, based on the religious objections of the corporation’s owners.’’ The 10th Circuit’s decision holding that RFRA allows a for-profit corporation to deny its employees the health coverage of contraceptives to which they are otherwise entitled by federal law based on the religious objec- tions of the corporation’s owners is incorrect, as is the appellate court decision in Hobby Lobby, the govern- ment says. The question asked in the instant case is the same question pending before the court in Hobby Lobby and Conestoga Wood, and the government says the petition in this case should be held pending decisions in those cases. The petition in this case can then be disposed of as appropriate in light of the court’s decision in Hobby Lobby and Conestoga Wood, the govern- ment says. David Andrew Cortman of Alliance Defending Freedom-Lawrenceville in Lawrenceville, Ga.; Erik William Stanley and Kevin H. Theriot of Alliance Defending Freedom-Leawood in Leawood, Kan.; Gre- gory S. Baylor, Matthew Scott Bowman and Steven H. Aden of Alliance Defending Freedom-DC in Washington; and Michael Jeffrey Norton of Alliance Defending Freedom-Greenwood Village in Green- wood Village, Colo., represent the plaintiffs. Solicitor General Donald B. Verrilli Jr., Assistant Attorney General Stuart F. Delery, Deputy Solicitors General Ian Heath Gershengorn and Edwin S. Kneedler, Assis- tant to the Solicitor General Joseph R. Palmore and Attorneys Mark B. Stern and Alisa B. Klein, all of the U.S. Department of Justice in Washington, represent the defendants. I Judge: Likelihood Of Success Demonstrated In Contraceptive Mandate Case OKLAHOMA CITY — Religious groups demon- strate a substantial likelihood of success in their Reli- gious Freedom Restoration Act of 1993 (RFRA) challenge to the Patient Protection and Affordable Care Act (ACA)’s contraceptive mandate, an Oklahoma federal judge held March 10 (Reaching Souls Inter- national Inc., et al. v. Kathleen Sebelius, et al., No. 13-1092, W.D. Okla.; 2014 U.S. Dist. LEXIS 30497). (Opinion available. Document #93-140326-007Z.) Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 10
  • 11. Nonprofits Reaching Souls International Inc. and Truett-McConnell and self-insured church plan Guide- Stone Financial Resources of the Southern Baptist Convention filed a class action suit in the U.S. District Court for the Western District of Oklahoma, seeking an injunction against Patient Protection and Affordable Care Act (ACA) regulations requiring coverage for birth control. Jurisdiction The government moved for dismissal for lack of juris- diction and summary judgment, arguing that organiza- tions could avoid the regulations by certifying that it meets eligibility requirements, at which time its issuer or third-party administrator assumes responsibility for providing the services. The plaintiffs opposed the motion and filed a separate motion seeking to defer a ruling pending further discovery. In December 2013, Judge Timothy D. DeGiusti denied the motion to dismiss for lack of jurisdiction and granted plaintiffs a preliminary injunction, con- cluding that they demonstrated a substantial likelihood of succeeding on their RFRA as amended, 42, U.S. Code Section 2000bb et. seq. (RFRA) claim. The defen- dants filed an interlocutory appeal. RFRA In denying summary judgment, Judge DeGiusti said his previous finding that plaintiffs had shown a sub- stantial likelihood of success on their RFRA claim also dooms the defendants’ argument that the plaintiffs failed to state a claim on which relief could be granted. Judge DeGiusti gave the parties 14 days to file briefs on whether the case should be stayed. Benjamin L. Berwick of the U.S. Attorney’s Office in Washington represents defendants Department of the Treasury, Department of Health and Human Services, Department of Labor, Jacob J. Lew, Kathleen Sebelius and Thomas E. Perez. Daniel H. Blomberg of The Becket Fund for Religious Liberty in Washington, D.C., represents the plaintiffs. (Additionaldocumentsavailable: Openingbrief.Docu- ment #93-140326-008B. Response. Document #93- 140326-009B. Order on injunction. Document #93- 140326-010Z.) I Catholic Groups Urge Appeals Court To Reverse Dismissal Of Birth Control Cases WASHINGTON, D.C. — Two groups of religious institutions on Feb. 28 filed a joint principle brief with the District of Columbia Circuit U.S. Court of Appeals, urging the court to reverse the dismissal of their suits challenging the birth control mandate con- tained in the Patient Protection and Affordable Care Act (ACA) (Priests for Life, et al. v. U.S. Department of Health and Human Services, et al., No. 113-5368 D.C. App.; Roman Catholic Archbishop of Washing- ton, et al. v. Kathleen Sebelius, et al., No. 13-5371, D.C. App.). (Joint brief available. Document #93-140326-021B.) The PPACA requires all group health plans and health insurance issuers that offer non-grandfathered group or individual health coverage to provide coverage for certain preventive services without cost sharing, including, ‘‘all Food and Drug Administration approved contraceptive methods, sterilization proce- dures, and patient education and counseling for women with reproductive capacity.’’ Certain exemptions exist for religious employers. Nonprofit religious organizations that do not qualify for the exemption may qualify for an accommodation. Under the accommodation, a nonprofit religious orga- nization can self-certify to its health insurance issuer that it has a religious objection to providing coverage for contraceptive services as part of its health insurance plan. Once the issuer receives the self-certification, the nonprofit organization is exempt from the mandate. The organization’s employees will receive coverage for contraceptive services, but that coverage will be pro- vided directly through the issuer. The coverage is excluded from the employer’s plan of benefits, and the issuer assumes the full costs of coverage and is pro- hibited from charging any co-payments, deductibles, fees, premium hikes or other costs to the organization for its employees. Dismissals Challenged In separate cases, the Priests for Life, a nonprofit religious organization, and three of its employees and the Roman Catholic Archbishop of Washington, the Consortium of Catholic Academies of the Archdiocese MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 11
  • 12. of Washington Inc., Archbishop Carroll High School Inc., Don Bosco Cristo Rey High School of the Arch- diocese of Washington Inc., Mary of Nazareth Roman Catholic Elementary School Inc., Catholic Charities of the Archdiocese of Washington Inc., Victory Hous- ing Inc., the Catholic Information Center Inc., Catho- lic University of America and Thomas Aquinas College sued the federal government in the U.S. District Court for the District of Columbia. Both cases allege that the contraceptive mandate vio- lates the RFRA, the free exercise clause, the free speech clause, the establishment clause and the Administrative Procedure Act (APA). On Dec. 19, the District Court dismissed Priests for Life’s challenge to the mandate, saying that accom- modations made to the mandate for religious employers do not violate their religious rights. On Dec. 20, the District Court partially granted summary judgment motions filed by both parties in the Roman Catholic Archbishop’s case. The District Court granted the defendants’ motion with respect to Catholic University’s RFRA claim and all of the plain- tiffs’ free exercise claims, compelled speech claims, denominational preference claims, internal church governance claims and APA claims. The court also dis- missed the RFRA claims advanced by plaintiffs covered under the Archdiocese’s health care plan and all of the plaintiffs’ establishment clause challenges to Internal Revenue Service regulations and APA erroneous inter- pretation claims for lack of jurisdiction. The court granted Thomas Aquinas College’s cross-motion for summary judgment on its RFRA claim and all of the plaintiffs’ cross-motions for summary judgment on their free speech claims. The court went on to find that the rest of the plaintiffs lacked standing to raise a RFRA claim. Plaintiffs in both suits appealed to the District of Columbia Circuit U.S. Court of Appeals, and the cases were consolidated for purposes of appeal. Substantial Burden In their joint brief, the plaintiffs say that the resolution of the cases turns on the answer to the question of whether ‘‘absent interests of the highest order, may the Government force Plaintiffs to take actions that violate their religious beliefs.’’ Under the RFRA the answer is ‘‘no,’’ the plaintiffs say. In Gilardi v. U.S. Department of Health and Human Services (733 F.3d 1208 [D.C. Cir. 2013]), the appeals court held that the mandate imposes a substantial burden on religious exercise by placing ‘‘substantial pressure on [plaintiffs] to modify [their] behavior and to violate [their] beliefs,’’ the plaintiffs say. As in Gilardi, the mandate forces them to choose between ‘‘violating their religious beliefs’’ or ‘‘paying onerous penalties,’’ the plaintiffs say. ‘‘This is, therefore, a textbook case of a ‘substantial burden’ that may be imposed only in accordance with strict scrutiny,’’ the plaintiffs say. ‘‘Because the Govern- ment concedes that Gilardi forecloses its strict scrutiny argument, the Mandate must be enjoined.’’ The plaintiffs say that the only relevant question is whether they are being substantially pressured to take the actions required by the mandate. The District Court held, however, that the plaintiffs do not really object to the actions required by the mandate, but rather to the actions the mandate requires of third parties. The District Court’s ‘‘forays into ‘the theology behind Catholic precepts on contraception’ were mani- festly improper (and incorrect),’’ the plaintiffs say. ‘‘As the Supreme Court has repeatedly admonished, ‘[i]t is not within the judicial function’ to determine whether a plaintiff ‘has the proper interpretation of [his] faith,’’ the plaintiffs say. As such, it is clear the mandate imposes a substantial burden on their religious beliefs, and the dismissals of their cases must be reversed, they added. Eric S. Dreiband and Noel John Francisco of Jones Day represent the plaintiffs in Roman Catholic Arch- bishop of Washington. Jacek Pruski of the U.S. Depart- ment of Justice represents the federal government in Roman Catholic Archbishop of Washington. All are in Washington. David Eliezer Yerushalmi of the American Freedom Law Center in Washington and Robert J. Muise of the American Freedom Law Center in Ann Arbor, Mich., represent the plaintiffs in Priests for Life. Benjamin Leon Berwick of the U.S. Department of Justice in Washington represent the defendants in Priests for Life. (Additional document available. Amicus curiae brief of Association of Gospel Rescue Mission. Document #93-140326-022B.) I Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 12
  • 13. 8th Circuit Urged To Affirm Denial Of Injunction In Birth Control Case ST. LOUIS — The federal government on Feb. 27 filed a brief with the Eighth Circuit U.S. Court of Appeals, urging the court to affirm the denial of a pre- liminary injunction in a case brought by a Missouri family challenging the birth control mandate contained in the Patient Protection and Affordable Care Act (PPACA) (Paul Wieland, et al. v. U.S. Department of Health and Human Services, No. 13-3528, 8th Cir.; See 2/5/14, Page 11). (Appellee brief available. Document #31-140305- 031B.) Birth Control Opposition As a benefit of his employment with the State of Missouri as a member of the House of Representatives, Paul Joseph Wieland has health insurance provided through the Missouri Consolidated Health Care Plan (MCHCP) for himself and his wife and daughters. Before Aug. 1, 2013, Wieland’s coverage under the plan did not cover contraception, sterilization or abor- tifacients. However, in July 2013, MCHCP notified Wieland that because of the implementation of the PPACA, it must provide contraception and sterilization coverage in all of its medical plans and that, effective Aug. 1, 2013, he would be placed in the ‘‘corresponding medical plan that includes contraception and steriliza- tion coverage in accordance with federal law.’’ As a result of the additional coverage, the premiums increased. Wieland contends that because of his family’s religious principles and beliefs, they oppose the use, funding, pro- vision or support of contraceptives, sterilization and abortifacients. Wieland alleges that the federal govern- ment issued a mandate pursuant to the PPACA requir- ing group health plans to cover, without cost sharing, ‘‘all Food and Drug Administration-approved contra- ceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity.’’ Wieland contends that this forces his family to ‘‘treat contraceptives, sterilization, abortifacients, and related education and counseling as health care and ‘subverts’ [their] religious beliefs.’’ Further, the mandate forces his family to violate their sincerely held religious beliefs under threat of having to forfeit the job benefit of employer-sponsored health insurance coverage for the family, Wieland says. Also, the mandate forces the family to fund government- dictated speech and religious beliefs and practices and unconstitutionally interferes with his and his wife’s parental rights and fundamental right to family integrity, Wieland says. Case Dismissed Wieland and his wife sued the federal government in the U.S. District Court for the Eastern District of Missouri, alleging that the defendants’ conduct violates the Religious Freedom Restoration Act (RFRA), the free exercise clause of the U.S. Constitution, their parental rights/family integrity rights under the Fifth Amendment to the Constitution and the Adminis- trative Procedure Act. The family seeks declarative and injunctive relief. The plaintiffs also moved for a temporary restraining order, enjoining the defendants from enforcing the mandate. On Oct. 16, the District Court granted the govern- ment’s motion to dismiss the case, saying the plaintiffs lacked standing. The Wielands appealed to the Eighth Circuit, arguing that several federal circuit courts, including the Eighth Circuit, have ruled that employers are entitled to pre- liminary injunctive relief against enforcement of the mandate. The Wielands say they have the same claim as the employers, ‘‘except that it is more obvious and direct than the claims made by the employers.’’ The mandate requires them to provide religiously abhorrent contraceptive coverage not for employees but for their own daughters, the Wielands say. By exempting churches and religious orders and providing an accommodation for religious nonprofit organi- zations, the government has acknowledged that the mandate burdens the religious freedom of the Catholic Church and other churches, but it has denied that the mandate burdens individual Catholics, the Wie- lands say. Claims Fail The federal government responds that the District Court’s decision should be affirmed, saying the District Court correctly held that the plaintiffs failed to meet their burden to establish standing, the government says. Even if the plaintiffs have standing, their claims are meritless. The Wielands have relied on decisions MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 13
  • 14. upholding the RFRA claims by employers that sought to exclude contraceptives from their plans on a plan- wide basis, but no court has allowed an individual to demand that the group health plan through which he receives coverage be tailored to reflect his religious beliefs, the government says. ‘‘No one is required to use his health coverage for ser- vices that he does not want, and it is not a burden on a person’s religion to have a plan that includes coverage of services that he or his family members will not use,’’ the government says. The Wielands’ RFRA claim would fail even if strict scrutiny were applicable because insurance markets could not function if employers had to tailor their group health plans to specific needs and desires of each individual plan participant and beneficiary, the government says. ‘‘The scheme that plaintiffs envision would all but lead to the end of group health coverage, which relies on common coverage for a set of insured individuals.’’ Likewise, the Wielands’ constitutional claims are with- out merit, the government says. The free exercise claim fails because the contraceptive-coverage provision is a neutral law of general applicability that does not target religious exercise for disfavored treatment, and the sub- stantive due process claim fails because having a health insurance plan that includes coverage of contraceptives does not implicate their right ‘‘to direct the upbringing and education of children under their control,’’ the government says. Peter C. Breen and Thomas L. Brejcha of Thomas More Society in Chicago and Timothy Belz of Ottsen and Leggat in St. Louis represent the Wielands. Michelle R. Bennett of the U.S. Department of Justice in Washington, D.C., represents the government. (Additional document available. Appellants’ brief. Document #31-140205-033B.) I Order Of Catholic Nuns Asks 10th Circuit To Overturn Denial Of Injunction DENVER — An order of Catholic nuns protesting the denial of a preliminary injunction in their challenge to the birth control mandate contained in the Patient Protection and Affordable Care Act (PPACA) filed a brief Feb. 24 with the 10th Circuit U.S. Court of Appeals, asking the court to overturn the decision (Lit- tle Sisters of the Poor Home for the Aged, et al. v. Kathleen Sebelius, et al., No. 13-1540, 10th Cir.). (Appellant brief available. Document #31-140305- 023B.) Little Sisters of the Poor is a group of Denver nuns that runs nursing homes for the poor. Little Sisters sued the federal government in the U.S. District Court for the District of Colorado, challenging the birth control mandate, which requires all group health plans and health insurance issuers that offer non- grandfathered group or individual health coverage to provide coverage for certain preventive services with- out cost sharing, including ‘‘all Food and Drug Admin- istration approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity.’’ Exemptions Certain exemptions exist for religious employers. Nonprofit religious organizations that do not qualify for the exemption may qualify for an accommodation. Under the accommodation, a nonprofit religious orga- nization can self-certify to its health insurance issuer that it has a religious objection to providing coverage for contraceptive services as part of its health insurance plan. Once the issuer receives the self-certification, the nonprofit organization is exempt from the mandate. The organization’s employees will receive coverage for contraceptive services, but that coverage will be provided directly through the issuer. The coverage is excluded from the employer’s plan of benefits, and the issuer assumes the full costs of coverage and is pro- hibited from charging any co-payments, deductibles, fees, premium hikes or other costs to the organization for its employees. Under the regulations, the nuns are eligible for an accommodation but contend that signing a form stat- ing their objections and providing it to their third-party health insurance administrator makes them complicit in providing contraceptive coverage and violates their religious beliefs. On Dec. 27, the plaintiffs were denied a prelimi- nary injunction. On Dec. 31, they asked Justice Sonia Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 14
  • 15. Sotomayor for an injunction pending appellate review by the 10th Circuit. The federal government opposed the emergency injunction pending the appellate review. In a two-sentence order issued Dec. 31, Justice Soto- mayor temporarily enjoined the federal government from enforcing the mandate and related regulations against the plaintiffs. The ruling applied to Little Sisters and more than 200 other faith-based groups that use insurance offered by Christian Brothers Employee Benefit Trust. On Jan. 24, the full court enjoined the federal govern- ment from enforcing the birth control mandate against Little Sisters pending final disposition of an appeal by the 10th Circuit U.S. Court of Appeals. Questions Presented Little Sisters have asked the 10th Circuit to consider the following questions: Whether the District Court correctly concluded that the mandate does not ‘‘substantially burden’’ their ‘‘religious exercise of refusing to provide the coverage or sign the form.’’ Whether the mandate impermissibly discriminates ‘‘among religious organizations by making eligibility for the ‘religious employer’ exemption dependent on the structure of the religious organization and the government’s assumptions about the organization’s religious beliefs.’’ Whether the mandate’s ‘‘requirements that Appel- lants (a) must sign and deliver the form, and (b) ‘must not, directly or indirectly, seek to influence the third party administrator’s decision’ to provide the coverage at issue, violate the First Amendment.’’ Whether the District Court correctly denied Little Sisters’ motion for preliminary injunction. Religious Belief In their brief, Little Sisters say that as a matter of reli- gious exercise, they cannot either provide the required coverage in their health plans or sign the accommoda- tion, meaning they will be subject to severe penalties. The government claims that it has not burdened Little Sisters because the government cannot use the Em- ployee Retirement Income Security Act to force third parties — the administrators of the church plan through which Little Sisters provide benefits — to act on Little Sisters’ accommodation form. As the govern- ment sees it, this absence of ERISA enforcement au- thority against others should fully resolve Little Sisters’ religious concerns, but Little Sisters say it does not. The District Court essentially agreed with the govern- ment that Little Sisters should not object to the form in absence of ERISA enforcement authority, but such an approach was error because it overstates the impor- tance of ERISA and because it essentially rewrites the Little Sisters’ religious beliefs for them, Little Sisters say. ‘‘Standard moral reasoning underpins the Little Sisters’ refusal to designate, authorize, incentivize, and obligate a third party to do that which the Little Sisters may not do directly,’’ Little Sisters say. ‘‘And regardless of what the trial court and the government think the Little Sisters should believe, the undisputed fact is that they do believe their religion forbids them from signing EBSA Form 700 [the accommodation form].’’ Substantial Burden Little Sisters say that under Religious Freedom Restora- tion Act (RFRA) precedent, their mandate’s require- ments easily qualify as a ‘‘substantial burden’’ on them. The required analysis is straightforward — ‘‘to determine whether the claimant’s belief is sincere, and if so, whether the government has applied sub- stantial pressure on the claimant to violate that belief,’’ Little Sisters say. ‘‘Here, the mandate’s severe financial penalties impose enormous pressure on the Little Sisters to give up their religious exercise and sign and send,’’ Little Sisters say. Little Sisters says the government also has violated their rights under the religion clauses and free speech clauses of the First Amendment because the govern- ment is unconstitutionally discriminating among reli- gious organizations and unconstitutionally compelling the Little Sisters to say things that they do not want to say and not to say things that they want to say. Mark Rienzi, Daniel Blomberg and Adele Keim of The Becket Fund for Religious Liberty in Washington, Carl C. Scherz and Seth Roberts of Locke Lord in Dallas and Kevin C. Walsh of University of Rich- mond School of Law in Richmond, Va., represent the MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 15
  • 16. plaintiffs. Assistant Attorney General Stuart F. Delery, U.S. Attorney General John F. Walsh, Director Jenni- fer Ricketts, Deputy Director Sheila M. Lieber and Michelle R. Bennett, all of the U.S. Justice Department in Washington, represent the government. I 6th Circuit Asked To Affirm Denials Of Injunctions In Birth Control Cases GRAND RAPIDS, Mich. — The federal government on Feb. 20 urged the Sixth Circuit U.S. Court of Appeals to affirm the denials of preliminary injunctions sought by two groups of Catholic organizations in their challenges to the birth control mandate contained in the Patient Protection and Affordable Care Act (PPACA) (Michigan Catholic Conference, et al. v. Kathleen Sebelius, et al., No. 13-2723, 6th Cir.; The Catholic Diocese of Nashville, et al. v. Kathleen Sebe- lius, et al., No. 13-6640, 6th Cir.). (Appellee brief available. Document #31-140305- 030B.) In separate cases, the Michigan Catholic Conference and Catholic Family Services d/b/a Catholic Charities Diocese of Kalamazoo and the Catholic Diocese of Nashville, Catholic Charities of Tennessee, Camp Marymount, Mary, Queen of Angels, St. Mary Villa, Dominican Sisters of St. Cecilia Congregation and Aquinas College Kalamazoo sued the federal govern- ment in the U.S. District Court for the Western Dis- trict of Michigan, seeking to enjoin the defendants from enforcing provisions of the PPACA related to contraceptive coverage. The plaintiffs in both cases allege that they are Catholic religious entities that uphold and follow the teachings of the Catholic Church and that their sincerely held religious beliefs make it unacceptable to provide, pay for and/or facilitate access to abortion, sterilization or the use of contraception. The plaintiffs contend that the mandate and the PPACA force them to violate the church’s teachings. They assert violations of the Reli- gious Freedom Restoration Act (RFRA), the First Amendment free exercise clause, free speech clause, establishment clause, religion clause and the Adminis- trative Procedure Act (APA). The District Court denied motions for preliminary injunctions filed by both groups of plaintiffs. Both groups of plaintiffs appealed to the Sixth Circuit, and the cases were consolidated for purposes of appeal. No Substantial Burden In its brief, the government says that the plaintiffs acknowledge that either they are automatically exempt from the mandate’s requirement because they are houses of worship or that they may opt out of the coverage requirement by informing their insurance issuer or third-party administrator that they are eligible for a religious accommodation and, therefore, are not required ‘‘to contract, arrange, pay, or refer for con- traceptive coverage.’’ The plaintiffs have said that they do not object to informing insurance issuers or third-party administra- tors of their decision not to provide contraceptive cov- erage but instead object to requirements imposed on the insurance issuers and third-party administrators, the government says. When an eligible organization elects not to provide coverage for religious reasons, the insurance company that issues policies for that organization’s employees is required to provide or arrange separate payments for contraceptive services for the employees, the government says. In the case of a self-insured plan, these requirements generally must be met by the third-party administrator that operates the plan, the government says. In all cases, the organization eligible for a religious accommoda- tion does not administer this coverage and does not bear any direct or indirect costs of this coverage, the government says. ‘‘[T]he plaintiffs cannot transform their right, as eligible organizations, not to provide coverage into a substantial burden by characterizing their decision to opt out as ‘a permission slip’ for third parties to pro- vide the contraceptive coverage,’’ the government says. ‘‘These third parties provide coverage as a result of legal obligations imposed on themselves, not on the plaintiffs.’’ As the District Court held in Michigan Catholic Con- ference, et al. v. Kathleen Sebelius, et al., ‘‘[t]he fact that the scheme will continue to operate without them may offend Plaintiffs’ religious beliefs, but it does not sub- stantially burden the exercise of those beliefs,’’ the gov- ernment says. Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 16
  • 17. No Merit The government also says that the requirement that non-grandfathered plans cover recommended preven- tive health services without cost sharing does not target religious practices in contravention of the free exercise clause. Further, the plaintiffs’ assertion that the regulations unconstitutionally compel speech fails for the same reasons their RFRA claims fail, the government says. Even if they could not opt out of providing contra- ceptive coverage, ‘‘covering medical services that involve speech does not entangle plaintiffs with such speech or endorse any medical advice that is given,’’ the govern- ment says. The regulations also do not favor some churches or denominations over others in violation of the establish- ment clause, the government says. Alison Kilmartin of Jones Day in Pittsburgh; Jennifer Brinkman Flannery and Paula Batt Wilson of Jones Day in Cleveland; Rebecca D’Arcy O’Reilly of Bodman in Detroit; Thomas Van Dusen of Bodman in Troy, Mich.; and Matthew Anthony Kairis of Jones Day in Columbus, Ohio, represent the plaintiffs in Michigan Catholic. Matthew A. Kairis, Brandy H. Ranjan and Melissa D. Palmisciano of Jones Day in Columbus, L. Gino Marchetti Jr., Matthew C. Pietsch and Antonio J. Aguilar of Taylor, Pigue, Marchetti in Nashville, Tenn., and Robb S. Harvey and Lauran Sturm of Waller Lansden Dortch Davis in Nashville represent the plaintiffs in Catholic Diocese of Nashville. Assistant Attorney General Stuart F. Delery, U.S. Attorneys Patrick A. Miles Jr. and David Rivera, Deputy Assistant Attorney General Beth S. Brinkmann and Attorneys Mark B. Stern, Alisa B. Klein and Adam C. Jed, all of the Department of Justice in Washington, D.C., represents the defendants. I Split 7th Circuit Affirms Denial Of Injunction In Birth Control Case CHICAGO — A divided Seventh Circuit U.S. Court of Appeals panel on Feb. 21 affirmed a decision deny- ing the University of Notre Dame’s motion for a pre- liminary injunction in its case challenging the birth control mandate contained in the Patient Protection and Affordable Care Act (University of Notre Dame v. Kathleen Sebelius, et al., No. 13-3853, 7th Cir.; 2014 U.S. App. LEXIS 3326.). (Opinion available. Document #31-140305-014Z.) On Dec. 3, University of Notre Dame, a Catholic university, sued the federal government in the U.S. District Court for the Northern District of Indiana, saying a mandate contained in the PPACA requiring employers to provide employees with health insurance that covers contraceptive care violates its religious beliefs. A previous challenge by the university to the mandate was dismissed. In the new complaint, filed after the government issued final regulations concerning the mandate, the university says that ‘‘instead of recognizing the in- alienable rights of religious organizations, the Govern- ment has instead acknowledged and exempted only a small class of religious entities, and required the rest — like Notre Dame — to ‘certify’ its beliefs in a way never before required, and nonetheless to participate and be- come entangled in a program antithetical to its faith.’’ Under the accommodation, institutions such as Notre Dame can sign a certificate indicating that they oppose providing coverage for some or all contraceptive services based on religious objections. On Dec. 20, the District Court denied Notre Dame’s request for a preliminary injunction. Notre Dame appealed to the Seventh Circuit, arguing that the District Court’s decision cannot be reconciled with the Religious Freedom Restoration Act (RFRA) as interpreted by the Seventh Circuit in Cyril B. Korte, et al. v. Kathleen Sebelius, et al. (735 F.3d 654 [2003]; 2013 U.S. App. LEXIS 22748). The RFRA prohibits the government from imposing a ‘‘substantial burden’’ on ‘‘any exercise of religion unless the burden is the least restrictive means of advancing a compelling govern- ment interest,’’ and in Korte, the Seventh Circuit held that the mandate as applied to for-profit corpora- tions violated RFRA, Notre Dame says. Form Signed On Dec. 31, the last day before it would be penalized for violating the regulation, Notre Dame signed ‘‘EBSA Form 700,’’ thereby opting out of paying contraceptive MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 17
  • 18. coverage for its employees. Notre Dame provided the form to Meritain Health Inc., its third-party adminis- trator, and Aetna Inc., its insurer. Following its filing of the appeal, six students moved to intervene, which the court granted. Notre Dame then moved to dismiss the appeal so it could conduct additional discovery related to the intervenors in the District Court. Before rendering its decision, the appeal court noted that it wasn’t sure what Notre Dame wanted enjoined at this stage given that it has gone ahead and signed the accom- modation and sent copies to its health insurer and third- party administrator. As such, Notre Dame has complied with the statute, the court said. ‘‘We imagine that what the university wants is an order forbidding Aetna and Meritain to provide any contra- ceptive coverage to Notre Dame staff or students pend- ing final judgment in the district court,’’ the court said. ‘‘But we can’t issue such an order; neither Aetna nor Meritain is a defendant (the university’s failure to join them as defendants puzzles us), so unless and until they are joined as defendants they can’t be ordered by the district court or by this court to do anything.’’ The question before the court remains whether Notre Dame is entitled to a preliminary injunction, and it is not, the majority said. No Substantial Burden Notre Dame has not shown yet that it faces a sub- stantial burden in complying with the mandate, the court said. The form is two pages long and the only passage of consequence is 95 words, the court said. The only colorable burden is that by filling out the form and sending it to Aetna and Meritain it ‘‘triggers’’ the cover- age of the contraception costs of the university’s female employees and students, making Notre Dame an accomplice in the provision of contraception in viola- tion of Catholic doctrine, the majority said. However, it is federal law and not Notre Dame’s signing and mailing of a form that requires health care insurers and third-party administrators of self-insured health plans to cover contraceptive services, the majority said. By refusing to fill out the form, Notre Dame would subject itself to penalties, but Aetna and Meritain would still be required by federal law to provide the services, the majority added. ‘‘If the government is entitled to require that female contraceptives be provided to women free of charge, we have trouble understanding how signing the form that declares Notre Dame’s authorized refusal to pay for contraceptives for its students or staff, which under federal law are obligated to pick up the tab, could be thought to ‘trigger’ the provision of female contraceptives,’’ the majority said. ‘‘The process of claiming one’s exemption from the duty to provide contraceptive coverage is the opposite of cumbersome. It amounts to signing one’s name and mailing the signed form to two addresses.’’ No Violations Notre Dame also argued that the mandate violates the establishment clause because it favors certain types of religious organizations over others because the religious employer doesn’t have to sign or mail a certification to claim its exemption. The establishment clause, how- ever, does not require the government to equalize the burdens that laws of general applicability impose on religious institutions, and an unequal effect does not condemn the law, the majority said. Further, the mandate does not violate the free-speech clause, the majority said. The majority also denied the motion to dismiss the appeal, saying it was apparent that the appeal would be refiled after discovery relating to the intervenors or resumed if a limited remand was ordered in lieu of dismissal, meaning that dismissal or remand would be a source of delay harmful to both parties. Judge Richard A. Posner wrote the opinion for the majority in which Judge David F. Hamilton concurred. Dissent Judge Joel M. Flaum said he would have granted the motion to dismiss the appeal, saying dismissal would not prejudice the government or the intervenors. It also would not inhibit the court’s review of the ultimate issues at a later stage, the judge said. As to the merits, Judge Flaum said Notre Dame has made a credible claim under the RFRA and he would grant the university a preliminary injunction for- bidding the government from penalizing Notre Dame for refusing to comply with the self-certification requirement. Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 18
  • 19. Matthew A. Kairis and Melissa D. Palmisciano of Jones Day in Columbus, Ohio; Carol A. Hogan and Brian J. Murry of Jones Day in Chicago; Leon F. DeJulius Jr. and Alison M. Kilmartin of Jones Day in Pittsburgh; and Marianne Corr of the University of Notre Dame in Notre Dame, Ind., represent Notre Dame. Assistant Attorney General Stuart F. Delery, Deputy Assistant Attorney General Beth S. Brinkmann and attorneys Mark B. Stern, Alisa B. Klein and Adam C. Jed, all of the U.S. Department of Justice in Washington, D.C., represent the federal government. I Judge: Cash-Only Physicians’ Alleged Injury Too Remote From ACA Mandate MILWAUKEE — The alleged reduction in clients physicians who accept only cash might face from the delayed implementation of the Patient Protection and Affordable Care Act (ACA)’s employer mandate is too attenuated to provide standing to sue the Internal Rev- enue Service, a Wisconsin federal judge held March 18 (Association of American Physicians Surgeons Inc., and Robert T. McQueeney v. John Koskinen, commis- sioner of the Internal Revenue Service, in his official capacity, No. 13-1214, E.D. Wis.; 2014 U.S. Dist. LEXIS 34980). (Opinion available. Document #93-140326-027Z.) ‘‘[E]ach link of this lengthy causal chain is speculative and fails to support plaintiffs’ standing argument,’’ U.S. Judge William C. Greisbach of the Eastern District of Washington said. The Association of American Physicians Surgeons Inc. (AAPS) and Robert T. McQueeney, M.D., filed suit in the U.S. District Court for the Eastern District of Wisconsin against Internal Revenue Service Com- missioner John Koskinen. Many of the physicians who belong to AAPS operate cash practices and do not take health insurance. McQueeney, an AAPS member, operates a part-time psychiatry practice in Wisconsin. Tax Argument The plaintiffs claimed that implementing the ACA’s individual mandate in 2014 while delaying the em- ployer mandate violated the separation of powers and the 10th Amendment to the U.S. Constitution and sought declaratory and injunctive relief. The IRS moved to dismiss for lack of subject matter jurisdiction. Judge Greisbach rejected the plaintiffs’ contention that the Supreme Court did not find that the ACA’s penalty provisions are a tax for all purposes. ‘‘Plaintiffs’ argument misses the main point of third- party standing cases. The critical issue is not whether the employer mandate is characterized as a tax, a pen- alty, or simply a mandate, but rather, whether the gov- ernment action prescribed by the ACA directly affects (and injures) plaintiffs,’’ Judge Greisbach said. Here, the plaintiffs claim that the IRS’s failure to enforce the employer mandate will cause employers not to offer ACA-compliant plans for 2014, causing employees to pay out-of-pocket for plans plaintiffs do not accept, that this will leave employees with less income and thus cause those employees to purchase fewer cash services from cash-only business like those operated by McQueeney and other AAPS members, Judge Greisbach said. Many Factors An employer’s decision not to offer insurance depends on many factors, including costs, industry standards and employee preference, Judge Greisbach said. Any argument that a substantial number of employers will choose not to offer insurance is speculative at best, Judge Greisbach said. Any employee who does not obtain insurance through work will also have the option of obtaining coverage through the exchanges, Judge Greisbach said. Judge Greisbach noted that because the IRS cannot enforce the penalty for failing to comply with the individual mandate with criminal prosecutions and because of the meager penalties assessed for failing to comply, many individuals may not obtain insurance through the exchanges. Should this occur, McQueeney and AAPS members may actually see an increase in business as a result of the individual mandate, Judge Greisbach said. Evidence Of Injury Nor can the plaintiffs show that any injury is im- minent or traceable to the IRS, Judge Greisbach said. MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 19
  • 20. Any change in tax laws is likely to create incentives or disincentives and have an impact on the income of some industry, trade or profession, Judge Greisbach said. If courts found that such an impact imparted standing, then every tax code change would warrant litigation, Judge Greisbach said. Finally, Judge Greisbach said the plaintiffs’ complaint does not identify any AAPS member whose health insurance premiums increased. Although AAPS be- latedly offered Lawrence Huntoon to satisfy this role, the causal connection between any difference in man- date enforcement and Huntoon’s alleged injury is too remote to support standing, Judge Greisbach said. Jonathan Gordon Cooper of the U.S. Department of Justice in Washington, D.C., represents Koskinen. Andrew L. Shlafly of Andrew L. Schlafly, attorney at law, in Far Hills, N.J., represents the plaintiffs. I District Of Columbia Appeals Panel Affirms Dismissal Of ACA Suit WASHINGTON, D.C. — Plaintiffs cannot squeeze the individual insurance mandate in the Patient Protec- tion and Affordable Care Act (ACA) into an ‘‘arbitrary as-applied’’ exemption to Congress’ taxing power, a panel of the District of Columbia Circuit U.S. Court of Appeals affirmed March 7 (Association of American Physicians Surgeons Inc., et al. v. Kathleen G. Sebe- lius, et al., No. 13-5003, D.C. Cir.). (Opinion in Section A. Document #31-140319- 001Z.) The panel rejected the plaintiffs’ Fifth Amendment challenges to the individual insurance mandate in 26 U.S. Code Section 5000A. The plaintiffs attempt to squeeze their claim into a narrow exception to Congress’ taxing power in Brush- aber v. Union Pac. Railroad Co. (240 U.S. 1, 24-25 [1916]), in which the court rejected the power where it was so arbitrary as to constitute a confiscation of prop- erty rather than a tax, the panel said. The panel rejected the argument that Kelo v. City of New London, Conn. (545 U.S. 469 [2005]) stood for the proposition that a sovereign may not take the property of one private party solely for the purpose of transferring it to a second private party, even when it compensates the first party. ‘‘But it is impossible to read that sentence in Kelo (even if we were to treat it as a holding, which it isn’t) as suggesting that any redistributive purpose sweeps an otherwise valid tax into the narrow group of measures condemned by Brushaber,’’ the panel said. Standing The American Association of Physicians and Sur- geons Inc. (AAPS) and Alliance For Natural Health USA sued Kathleen G. Sebelius, secretary of Health and Human Services (HHS), and Michael J. Astrue, commissioner of the Social Security Administration, in the U.S. District Court for the District of Columbia pursuant to the Medicare Act, the Social Security Act and the Administrative Procedure Act (APA), seeking to enjoin the defendants from compelling AAPS mem- bers to participate in Medicare Part A as a condition of receiving Social Security benefits and to purchase health insurance approved by HHS. The plaintiffs also challenged the ACA’s individual insurance mandate. The District Court dismissed the case, saying that the plaintiffs lacked standing or failed to state claims for which relief could be granted. The plaintiffs appealed to the D.C. Circuit. ‘As-Applied’ In its ruling, the panel said the plaintiffs give no reason why viewing the mandate ‘‘as-applied’’ rather than facially would yield a different result. Nor did National Federation of Independent Business v. Sebelius (132 S. Ct. 2566 [2012]) (NFIB) do anything to change the outcome of the plaintiffs’ challenges to the ACA’s origination, the panel said. The District Court asked for supplemental briefing regarding NFIB but limited it to whether NFIB required dismissal of any portion of the instant case, the panel said. The briefing was not, as portrayed by the plaintiffs, a request to examine the impact of NFIB, the panel said. The panel then rejected statutory challenges to Social Security Administration provisions automatically enti- tling eligible individuals for enrollment in Medicare Part A. Precedent clearly forecloses on the plaintiffs’ Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 20
  • 21. challenge, the panel said. As written, Medicare Part A ‘‘precludes any option not to be entitled to its benefits,’’ the panel said. The panel also rejected the plain- tiffs’ claim that such a change required a notice-and- comment period, saying the lack of any possible remedy from such a process makes it unnecessary. Fiduciary Duties Nor did Astrue or Sebelius violate their fiduciary and equitable duties by failing to provide a honest ac- counting of Social Security and Medicare, the panel said. On this issue, the plaintiffs provide no legal argu- ment and cite no statute or other basis for this argument and ‘‘do not even sketch a penumbra possibly emanat- ing from any part of the laws or Constitution of the United States,’’ the panel said. Judge Stephen F. Williams wrote for the court, joined by Judges Judith W. Rogers and David B. Sentelle. Lawrence J. Joseph represents the plaintiffs. Acting Assistant Attorney General Stuart F. Delery, U.S. Attorney Ronald C. Machen Jr. and trial attorneys Mark B. Stern and Dana Kaersvang, all of the U.S. Justice Department, represent the defendants. All are in Washington. I Government Asks Appeals Court To Affirm Judgment In Birth Control Suit WASHINGTON, D.C. — The federal government on Feb. 12 filed a brief with the District of Columbia Circuit U.S. Court of Appeals urging the court to affirm a decision granting summary judgment in its favor in a suit challenging an Internal Revenue Service regulation imposed under the Patient Protection and Affordable Care Act (ACA) that extends eligibility for premium assistance subsidies to people who purchase health insurance through exchanges established by the ACA (Jacqueline Halbig, et al. v. Kathleen Sebelius, et al., No. 14-5018, D.C. Cir.). (Appellee brief available. Document #31-140305- 002B.) Insurance Exchanges The ACA includes provisions for the creation of state health insurance exchanges, which are mechanisms ‘‘for organizing the health insurance marketplace to help consumers and small businesses shop for coverage in a way that permits easy comparison of available plan options based on price, benefits and services, and qual- ity.’’ The ACA requires each state to establish an exchange by Jan. 1, 2014, but also provides that if a state opts out of the exchange, the federal government will establish and operate an exchange within the state. The ACA encourages states to establish exchanges with a variety of incentives, chiefly the premiums- assistance subsidy for state residents purchasing in- dividual health insurance through state-established exchanges. However, no premium assistance subsidy will be provided unless the citizen pays for the insurance through a state-established exchange. Thirty-four states declined to establish exchanges, making the federal government responsible for estab- lishing exchanges in those states. Under the ACA, the consequence of the states’ decisions not to create their own exchanges is that people who buy insurance through the federal exchanges in those states are not eligible for premium assistance subsidies. If people in those 34 states were ineligible for subsidies, many would be unable to afford the comprehensive coverage the ACA’s individual mandate requires them to purchase, and they would therefore be entitled to an exemption for the mandate’s penalty. If employees in the states were ineligible for subsidies, their em- ployers also would be exempt from the ACA’s em- ployer mandate to sponsor certain health coverage for their employees. Subsidies Expanded To address this issue, the IRS promulgated regulations expanding the availability of subsidies. The IRS rule states that subsidies shall be available to anyone ‘‘enrolled in one or more qualified health plans through an Exchange’’ and defines ‘‘exchange’’ to mean ‘‘a State Exchange, a regional Exchange, subsidiary Exchange, and Federally-facilitated Exchange.’’ The rule means that premium assistance subsidies are available in all states, including those states that declined to establish their own exchange. Virginia resident Jacqueline Halbig, West Virginia resident David Klemencic, Tennessee resident Carrie Lowery and Texas resident Sarah Rump contend that MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 21
  • 22. because the subsidy expansion rule makes them eligible for a premium assistance subsidy, they will be disqua- lified from the exemption to the individual mandate and be subject to its penalties for failure to obtain in- surance. Small businesses Innovare Health Advocates, GC Restaurants, Olde England’s Lion Rose, Olde England’s Lion Rose at Castle Hills, Olde England’s Lion Rose Forum, Olde England’s Lion Rose at Sonterra, Olde England’s Lion Rose at Westlake and Community National Bank all have headquarters in states that chose not to establish their own insurance exchange. The businesses contend that absent the IRS rule, they would not be subject to assessable payments under the employer mandate contained in the ACA. Innovare says that if it were not subject to the pay- ments, it was preparing to expand its health insurance plan to cover all full-time employees in a manner that would likely not comply with the ACA. The Olde England companies say they do not offer health in- surance to many full-time employees and do not want to offer it to them but that choice will expose them to the assessable payments under the employer mandate. Community National Bank says its directors object to certain provisions of the ACA, such as its definition of contraceptive and abortifacient drugs as ‘‘preventative services,’’ and would rather drop the health insurance it offers to full-time employees than comply with the provision. However, the bank says such an action would expose it to assessable payments under the employer mandate. The individuals and small businesses sued Kathleen Sebelius, secretary of Health and Human Services (HHS); Jacob Lew, secretary of the Treasury; Steven Miller, acting commissioner of the IRS; the depart- ments and the IRS in the U.S. District Court for the District of Columbia, seeking a declaration that the IRS regulations are unlawful. They have asserted a claim for rulemaking in violation of the Administrative Procedure Act (APA) and are seeking a judgment declaring that the IRS rule violates the APA and a pre- liminary and permanent injunction. The parties cross-moved for summary judgment. The District Court granted the federal government’s motion. Statutory Language The plaintiffs appealed, arguing that ‘‘[n]o legitimate method of statutory construction would interpret the phrase ‘Exchange established by the State under section 1311’ in the ACA’s subsidy provision to mean ‘Ex- change established by the State under section 1311 or, if the state fails to establish one, by HHS under sec- tion 1321.’ ’’ The act expressly contemplates state-established ex- changes and HHS-established exchanges, and where an act specifically refers to one type or the other, courts must give effect to that language, the plaintiffs say. Congress’ Intent In its brief, the government says the plaintiffs pre- mise their argument on one phrase in Section 36B of the act, read in isolation from the rest of the section and divorced from the statutory provisions it cross- references, the structure of the statute and the purpose of the ACA. The U.S. ‘‘Supreme Court, however, has repeatedly emphasized that ‘statutory construction is a holistic endeavor’’’ and that a ‘‘statutory phrase cannot be ‘con- sidered in isolation, and without reference to the struc- ture and purpose’ of the statute,’’ the government says. ‘‘Moreover, in the context of federal taxing statutes, the Supreme Court has held that ‘revenue laws are to be construed in the light of their general purpose to establish a nationwide scheme of taxation uniform in its application,’ ’’ the government says. ‘‘State law may control only when the federal taxing act, by express language or necessary implication, makes its own opera- tion dependent upon state law.’’ Should the court reach the merits notwithstanding these threshold issues, the government said, the judg- ment of the District Court should be affirmed. The District Court correctly held that ‘‘while there is more than one plausible reading of the challenged phrase in Section 36B when viewed in isolation, the cross- referenced sections, the surrounding provisions, and the ACA’s structure and purpose all evince Congress’s intent to make premium tax credits available on both state-run and federally-facilitated exchanges.’’ Michael A. Carvin, Jacob M. Roth and Jonathan Berry of Jones Day in Washington represent the plaintiffs. Acting Assistant Attorney General Stuart F. Delery, Deputy Assistant Attorney General Ian Heath Gershen- gorn, U.S. Attorney Ronald C. Machen Jr., Deputy Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 22
  • 23. Branch Director Sheila Lieber and Senior Trial Counsel Joel McElvain, all of the U.S. Department of Justice in Washington, represent the government. (Additional document available. Reply brief. Docu- ment #31-140305-022B.) I 4th Circuit Briefed On ACA Exchange Credit Challenge RICHMOND, Va. — The U.S. Department of Health and Human Services on March 18 responded to arguments that the Patient Protection and Affordable Care Act (ACA) allowed for premium support only for those enrolled through exchanges created by the states, saying such reading does not comport with the lan- guage of the statute (David King, et al. v. Kathleen Sebelius, et al., No. 14-1158, 4th Cir.). (Opening brief available. Document #93-140326- 034B. Response available. Document #93-140326- 035B.) Virginia residents David King, Douglas Hurst, Brenda Levy and Rose Luck sued Kathleen Sebelius, secretary of the U.S. Department of Health and Human Service (DHHS); the DHHS; Jacob Lew, secretary of the U.S. Department of Treasury; the Department of Treasury; Daniel Werfrel, acting commissioner of the IRS; and the IRS in the U.S. District Court for the Eastern District of Virginia, saying the IRS rule squarely contravenes the express intent of the PPACA, ignoring the clear limitations that Congress imposed on the availability of the federal subsidies. Further, the IRS promulgated the regulation without any reasoned effort to reconcile it with the contrary provisions of the statute, the plaintiffs say. The plaintiffs seek a declaratory judgment ruling that the IRSrule is illegal under the Administrative Procedure Act (APA) and injunctive relief barring its enforcement. Exchanges The plaintiffs allege that the ACA includes provisions for the creation of state health insurance exchanges, which are mechanisms ‘‘for organizing the health in- surance marketplace to help consumers and small businesses shop for coverage in a way that permits easy comparison of available plan options based on price, benefits and services, and quality.’’ The ACA required each state to establish an exchange by Jan. 1, 2014, but also provided that if a state opts out of the exchange, the federal government would establish and operate an exchange within the state. The ACA encourages states to establish exchanges with a variety of incentives, chiefly the premium-assistance subsidy for state residents purchasing individual health insurance through state-established exchanges. Thirty- four states declined to establish exchanges, making the federal government responsible for establishing ex- changes in those states. To address this issue, the IRS promulgated regulations expanding the availability of subsidies. The IRS rule states that subsidies shall be available to anyone ‘‘enrolled in one or more qualified health plans through an Exchange’’ and defines ‘‘exchange’’ to mean ‘‘a State Exchange, a regional Exchange, subsidiary Exchange, and Federally-facilitated Exchange.’’ The rule means that premium-assistance subsidies are available in all states, including those states that declined to establish their own exchanges. Mandates The plaintiffs allege that Virginia opted not to establish its own insurance exchange. The individuals are not eligible for employer- or government-sponsored health coverage that satisfies the individual mandate. Absent the IRS ruling, the individuals would be entitled to a certificate of exemption from the individual mandate penalty for 2014 because the cheapest bronze plan approved for sale to them on the federal exchange in Virginia would cost more than 8 percent of their in- dividual household incomes. But because the IRS rule makes them eligible for a subsidy that would reduce their out-of-pocket cost to below that figure, they will be disqualified from that otherwise-applicable exemption and subject to the individual mandate penalty. As a result, they say, they will be forced to pay a penalty or purchase more insurance than they want. The individuals say they are injured by the IRS rule because it has the effect of subjecting them to monetary sanctions or requiring them to alter their behavior to avoid those sanctions. Either way, the indi- viduals say, their financial strength and fiscal planning are immediately and directly affected by the exposure and/or liabilities. MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 23
  • 24. The plaintiffs moved for summary judgment, and the government moved to dismiss. Judge James R. Spencer held that the plaintiffs have standing because their economic injury is real and trace- able to the IRS rule and that the court has the power to redress their injuries by invalidating the rule. Judge Spencer also held that the plaintiffs have prudential standing because they are directly regulated by 26 U.S. Code Section 36B and, thus, the IRS rule inter- preting it because they are ‘‘applicable taxpayers’’ under the section. Section 36B establishes the tax credits. In rejecting the plaintiffs’ claims, Judge Spencer said courts have a duty to construe statutes as a whole. Under this standard, the plaintiffs’ reading of Section 36B grows weak when other sections of the ACA are taken into account, Judge Spencer said. Under the plaintiffs’ interpretation, Section 36B(f) would be superfluous with respect to federally facilitated ex- changes under Section 1321 because such exchanges would not be authorized to deliver tax credits, Judge Spencer said. ‘Plain Text’ The plaintiffs appealed. In their opening brief, the plaintiffs argue that ‘‘it is fundamentally incompatible with the plain text to treat an HHS-established exchange as ‘established by the state,’ particularly because it is a state’s failure to establish an exchange that triggers HHS’s authority in the first place.’’ It would be odd that Congress could successfully use the term ‘‘state-established’’ when it wanted in other circum- stances but not in Section 36B, the plaintiffs argue. The plaintiffs argue that ‘‘no legitimate method of statutory construction would interpret the phrase ‘exchange estab- lished by the state under section 1311’ in the ACA’s subsidy provision to mean ‘exchange established by the state or by HHS under section 1311 or section 1321.’ ’’ Because Congress is constitutionally forbidden from forcing states to establish exchanges, it must use a ‘‘carrot and stick’’ approach by offering ‘‘deals,’’ the plaintiffs argue. The credit available through state exchanges was one such ‘‘deal’’ HHS offered, the plaintiffs argue. Thus, the language of the ACA directly answers whether individuals enrolling through federal exchanges are eli- gible for credits for individuals enrolling through state exchanges: They are not, the plaintiffs argue. Taxpayer Definition In its March 18 response, HHS argues that the pre- mium credits are available to federal-exchange enrollees. Congress defined the federal exchange as a state exchange where the state failed to establish an exchange, HHS argues. Section 36B allows for the credit for any ‘‘appli- cable taxpayer’’ and defines that term through income brackets relative to the poverty line without regard for where the insurance was purchased, HHS argues. The phrasing on which plaintiffs rely is tucked into a portion of the statute regarding how to calculate the credit and cannot be interpreted as an attempt by Congress to limit the credit to state exchanges, HHS argues. While the plaintiffs mention superfluity, they ignore that their own reading of the statute would render por- tions superfluous, HHS argues. Jonathan Berry, Michael A. Carvin, Walter D. Kelley Jr. and Jacob M. Roth of Jones Day in Washington, D.C., represent the plaintiffs. Joel McElvain of the U.S. Department of Justice in Washington and Eliza- beth Catherine Wu of the U.S. Attorney’s Office in Richmond represent the government. I Oklahoma, HHS Seek Summary Judgment On ACA Premium Credits Issue ODMULGEE, Okla. — Both parties in a suit challen- ging whether individuals are entitled to premium sup- port when seeking insurance coverage through Patient Protection and Affordable Care Act (ACA) exchanges recently moved for summary judgment in an Okla- homa federal court (State of Oklahoma, ex rel. Scott Pruitt v. Kathleen Sebelius, et al., No. 11-30, E.D. Okla.; 2013 U.S. Dist. LEXIS 113232). E M A I L T H E E D I T O R email editor bryan redding at bryan.redding@lexisnexis.com Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 24
  • 25. (Pruitt’s memo supporting summary judgment available. Document #93-140326-032B. Govern- ment’s response and memo supporting summary judgment available. Document #93-140326-033B.) Oklahoma Attorney General Scott Pruitt sued Kath- leen Sebelius, in her official capacity as secretary of Health and Human Services (HHS), and Timothy Geithner, in his official capacity as secretary of the Treasury, in the U.S. District Court for the Eastern District of Oklahoma, saying the individual mandate provision in the PPACA and Section 37 of Article 2 of the Oklahoma Constitution are conflicting provisions that cannot exist. The case was stayed pending resolu- tion of similar cases in the U.S. Supreme Court. Stay Lifted In National Federation of Independent Business, et al. v. Kathleen Sebelius (No. 11-393), the Supreme Court held that the Anti-Injunction Act (AIA) does not bar challenges to the PPACA, that the individual mandate contained in the act is constitutional and that the federal government can expand Medicaid but cannot withhold existing funding from the states for non- compliance with the expansion. Following the decision in National Federation, the stay in the instant case was lifted, and Pruitt filed an amended complaint. The PPACA calls for the creation and operation of markets, referred to as ‘‘exchanges,’’ in which health insurance coverage will be offered to in- dividuals. Section 1311 of the PPACA provides for the establishment of an exchange by a state, and Section 1321(c) of the act provides for the establishment of an exchange by the federal government. As part of the new complaint, Pruitt raised new claims challenging parts of the PPACA that provide for subsidizing the qualified individual’s health insurance coverage if that person enrolls for coverage through an exchange established by Section 1311. Pruitt asserts claims for violations of the commerce and necessary and proper clauses, ultra vires and vio- lation of the Administrative Procedure Act. He requests a declaration that the final rule is unconstitutional as applied to employees of the State of Oklahoma or, alternatively, that Section 1321(c) of the PPACA is unconstitutional. The federal government moved to dismiss for lack of jurisdiction. Judge Ronald A. White partially granted the motion. Judge White dismissed a claim alleging that the minimum coverage provision exceeds the power of Congress to regulate interstate commerce for lack of standing. Judge White also dismissed a claim chal- lenging the IRS rule as unconstitutional as applied to the employees of the State of Oklahoma. Judge White declined to dismiss a claim contending that the term ‘‘Exchange’’ in the IRS rule must exclude a ‘‘Federally-facilitated Exchange’’ and apply only to an agency or entity established by the state. Judge White declined to dismiss a claim challenging the IRS rule as arbitrary and capricious under the APA for the same reason he declined to dismiss the claim over the term ‘‘Exchange.’’ The judge also left an alternative claim for relief Pruitt asserted in the event that the de- fendants assert that an exchange created by the HHS if a form of ‘‘Exchange established by the state.’’ Although the defendants have given no indication of making such an argument, the merits have not yet been reached, Judge White said. Standing In a Feb. 18 motion for summary judgment, Pruitt argues that Oklahoma has standing to sue because the employer mandate forces it to incur the expense of offering insurance to new classes of employees and comply with resulting regulations. Failure to undertake these requirements results in ‘‘enormous monetary penalties,’’ Pruitt claims. Pruitt argues that the ACA regulations should be declared unlawfully in contradiction of 26 U.S. Code Section 36B’s limits on premium assistance credits for people who purchase insurance through exchanges. Section 36B provides assistance to people who obtain insurance through state exchanges and could trigger employer mandate regulations for the state, Pruitt said. State Exchange Credits But Section 36B clearly refers to exchanges created by states, Pruitt argues. No valid method of statutory construction would allow that statute to be construed as also involving exchanges established by the federal government, Pruitt argues. Defendants attempt to create such ambiguity stems only from the fact that they cannot promulgate ACA regulations absent such ambiguity, Pruitt argues. ‘‘Section 36B directly and unambiguously answers the question of whether the credits are available in states MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 25
  • 26. that elected to not establish an exchange. Defendants thus lacked the authority to redefine those eligibility standards,’’ Pruitt argues. If the court does somehow find that Section 36B’s re- ference to ‘‘state exchanges’’ applies to state and federal exchanges, it must find that such a situation constitutes unconstitutional commandeering, Pruitt argues. Regulatory In a March 19 motion for summary judgment and response, the government argues that mere regulatory compliance does not create standing. Such a finding would stretch the concept of injury beyond recognition, the government argues. Further, Oklahoma already offers sufficient insurance coverage to its employees, the government argues. Pruitt cannot trace any injury the state suffers to the regulations it challenges, the government argues. The ‘‘look back’’ exception protects Oklahoma and other large employers from being held liable for not offering insurance coverage to employees whom they do not believe would be eligible for such coverage at the time of hiring, the government argues. Even in the event that Pruitt is correct, the State of Oklahoma cannot seek a judgment binding the injured party because that party would be the employees, not the State of Oklahoma, the government argues. Misreading Even if Oklahoma was found to have tax liability, the proper means of addressing this under the ACA is through a tax refund suit, not by challenging the sta- tute, the government argues. Finally, the government argues that Oklahoma’s con- tention that only state exchange participants are en- titled to premium credits asks the court to read isolated provisions of the statute, rather than construe the actual statute. Looking at the statute inits entirety reveals that Congress defined those eligible for credits as those within certain income brackets without regard for what type of exchange they used, the government argues. Pruitt and Solicitor General Patrick R. Wyrick, both in Oklahoma City, represent Oklahoma. U.S. Attorney Mark F. Green, Assistant U.S. Attorney Susan S. Bran- don, Director Jennifer Ricketts, Deputy Director Sheila Lieber and attorney Joel McElvain of the U.S. Department of Justice in Washington, D.C., repre- sent the federal government. I Government: Bulletin Clarifies Enrollment In Exchange May Be Retroactive WASHINGTON, D.C. — The federal government on March 7 responded to a letter filed in the District of Columbia Circuit U.S. Court of Appeals by plaintiffs in a case challenging an Internal Revenue Service reg- ulation imposed under the Patient Protection and Affordable Care Act (ACA) that extends eligibility for premium assistance subsidies to people who purchase health insurance through exchanges established by the ACA. The plaintiffs’ letter addresses a bulletin is- sued by the Center for Medicare and Medicaid Services (CMS) discussing the tax credits available for indivi- duals who purchase health care coverage through ex- changes (Jacqueline Halbig, et al. v. Kathleen Sebelius, et al., No. 14-5018, D.C. Cir.). (Government’s letter available. Document #93- 140326-013X. Appellant letter available. Document #93-140326-014X. CMS bulletin available. Docu- ment #93-140326-015X.) The ACA includes provisions for the creation of state health insurance exchanges, which are mechanisms ‘‘for organizing the health insurance marketplace to help consumers and small businesses shop for coverage in a way that permits easy comparison of available plan options based on price, benefits and services, and qual- ity.’’ The ACA required each state to establish an exchange by Jan. 1, 2014, but also provided that if a state opted out of the exchange, the federal govern- ment would establish and operate an exchange within the state. Premium assistance is available to help people pay for individual health insurance purchased through state-established exchanges. Thirty-four states declined to establish exchanges, making the federal government responsible for estab- lishing exchanges in those states. Under the ACA, the consequence of the states’ decisions not to create their own exchanges is that people who buy insurance through the federal exchanges in those states are not eligible for premium assistance subsidies. To address Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 26
  • 27. this issue, the IRS promulgated regulations expanding the availability of subsidies. The IRS rule states that subsidies shall be available to anyone ‘‘enrolled in one or more qualified health plans through an Exchange’’ and defines ‘‘exchange’’ to mean ‘‘a State Exchange, a regional Exchange, subsidiary Exchange, and Federally- facilitated Exchange.’’ The rule means that premium assistance subsidies are available in all states, including those states that declined to establish their own exchanges. Retroactive Payments People still had to enroll through the exchanges and be determined eligible to receive premium assistance, but technical problems existed with the rollout of the exchanges, and many people could not enroll. On Feb. 28, the CMS filed a bulletin on the availability of retroactive advance payment of the premium tax credit (PTC) and advance payments of cost-sharing reductions (CSRs) on a retroactive basis to an issuer once the marketplace has provided a qualified indivi- dual with an appropriate eligibility determination and has determined that the individual is eligible for such assistance and the individual has enrolled in qualified health plan (QHP) through the marketplace. The CMS says it issued the bulletin to provide guidance to marketplaces that, ‘‘due to technical issues in estab- lishing automated eligibility and enrollment function- ality, have had difficulty in providing timely eligibility determinations to applicants and enrolling qualified individuals’’ in QHPs through the marketplace during the initial open enrollment period for the 2014 cover- age year. Under marketplace guidelines, individuals must re- ceive an eligibility determination from the marketplace to enroll in a QHP through the marketplace and to receive CSRs and the PTC made available through the ACA. For the marketplace to perform the eligibility determination, however, an individual must have sub- mitted an application for coverage to the marketplace using a U.S. Department of Health and Human Ser- vices (HHS)-approved single, streamlined application during the open enrollment period. If a person meeting those exceptional circumstances ‘‘has not been enrolled in any health coverage continu- ously since January 1, 2014, including QHP coverage offered outside of the Marketplace or otherwise, before a successful eligibility determination is obtained, when he or she receives a determination of eligibility for coverage through the Marketplace and enrolls in a QHP through the Marketplace, the Marketplace may allow for coverage retroactive to the date, established by the Marketplace, on which coverage would have been effective absent the exceptional circumstance,’’ according to the bulletin. Also, if an individual meeting the exceptional circum- stances ‘‘is enrolled in QHP coverage offered outside of the Marketplace, when he or she receives a determi- nation of eligibility for coverage through the Market- place, the Marketplace may deem the individual to have been enrolled in the QHP through the Market- place retroactive to the date on which the individual first enrolled in the QHP outside the Marketplace,’’ according to the bulletin. Requirement Eliminated Virginia resident Jacqueline Halbig, West Virginia resident David Klemencic, Tennessee resident Carrie Lowery and Texas resident Sarah Rump challenged the health care exchanges in the U.S. District Court for the District of Columbia, seeking a declaration that IRS regulations expanding the availability of subsidies to include anyone ‘‘enrolled in one or more qualified health plans through an Exchange’’ violate the Administrative Procedure Act (APA) and seeking a judgment declaring that the IRS rule violates the APA and a preliminary and permanent injunction. The District Court granted the government’s motion for summary judgment, and the case is on appeal, with oral arguments scheduled for March 25. On Feb. 28, the plaintiffs filed a letter with the court saying that through the bulletin the HHS eliminated the requirement that to be eligible for a subsidy, cover- age must be purchased through an exchange and pro- vides instead that for someone enrolled in ‘‘coverage offered outside of the Marketplace,’’ the Marketplace may ‘‘deem the individual to have been enrolled . . . through the Marketplace.’’ The bulletin illustrates the government’s ‘‘lack of fidelity to the conditions that Congress included in [26 U.S. Code Section] 36B,’’ the plaintiffs say. ‘‘Not only does the Government believe that it may simply MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 27
  • 28. ‘deem’ HHS-established Exchanges to be established ‘by the State’ notwithstanding the lack of any statutory authority for such transmogrification, but that it may also ‘deem’ individuals who buy coverage outside an Exchange to have purchased it on an Exchange. If such administrative revision — simply ‘deeming’ A to be B — were permitted, there is literally nothing in the ACA (or any other statute) that could not be reversed by agency fiat.’’ Technical Problems In its response, the government says the bulletin makes clear that people who are entitled to tax credits to help them pay for health insurance need not lose them sim- ply because technical problems with websites prevented people from enrolling in the exchanges. ‘‘Contrary to plaintiffs’ assertion, the HHS bulletin does not change the requirement of Section 36B that individuals enroll in coverage through an Exchange in order to be eligible for the premium tax credit,’’ the government says. ‘‘The bulletin merely clarifies that, in very limited circumstances, such enrollment may be considered retroactive to when it would have taken effect but for the sole fault of the Exchange. Retroactive enrollment is not unusual in health insurance.’’ Michael A. Carvin, Jacob M. Roth and Jonathan Berry of Jones Day in Washington represent the plaintiffs. Acting Assistant Attorney General Stuart F. Delery, Deputy Assistant Attorney General Ian Heath Ger- shengorn, U.S. Attorney Ronald C. Machen Jr., Dep- uty Branch Director Sheila Lieber and Senior Trial Counsel Joel McElvain, all of the U.S. Department of Justice in Washington, represent the government. I Mo. Federal Judge Grants Injunction, Halts Law Regulating Insurance Exchanges JEFFERSON CITY, Mo. — A Missouri federal judge on Jan. 23 granted a motion for preliminary injunction, enjoining the enforcement of Missouri’s Health Insurance Market Innovation Act (HIMIA) as it applies to entities and individuals certified under federal law to provide services or perform functions pursuant to the Patient Protection and Affordable Care Act (PPACA) (St. Louis Effort for Aids, et al. v. John Huff, director of the Missouri Department of Insurance, Financial Institutions and Professional Registration, No. 13-4246, W.D. Mo.; 2014 U.S. Dist. LEXIS 8187). (Opinion available. Document #31-140205-008Z.) Health Exchanges In 2010, Congress passed the PPACA, which aims to increase the number of Americans covered by health insurance and decrease the cost of health care. Indivi- duals who cannot obtain qualified health plans (QHPs) from their employer are steered to insurance exchanges established under the act, where the government offers subsidies to those who cannot afford the full cost of insurance on their own. As part of providing QHPs, the exchanges provide the opportunity for individuals and employers to compare various health plans. The PPACA provides a mechanism for states to establish the exchanges. If the states choose not to estab- lish an exchange, the secretary of the U.S. Department of Health and Human Service (DHHS) establishes and operates the exchange. The federal exchange if referred to as ‘‘Federally Facilitated Exchange’’ (FFE). The DHHS contracts with not-for-profit entities in the state to operate the FFE. Included in the requirements of an exchange is the creation of a certified application assistance program consisting of some combination of certified application counselors (CACs) or navigators. The PPACA regulates the conducts of the CACs and navigators. The ex- change is responsible for overseeing the counselors and must create a procedure for withdrawing certifi- cation if it finds that a counselor has violated the reg- ulations. Likewise, an exchange must establish a navigator program through which it awards grants to eligible public or private entities or individuals. The ex- change also establishes standards and a course of train- ing for Navigators. As such, entities and individuals designated as ‘‘Federal Counselors,’’ including coun- selor designated organizations, navigators and CACs, are all certified, approved and subject to oversight by the DHHS directly or indirectly. Conduct Regulated The State of Missouri opted not to create an ex- change, so the DHHS created and operates the FFE in the state. Missouri subsequently passed HIMIA, Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 28
  • 29. which regulates the conduct of those performing duties on behalf of the FFE. St. Louis Effort for Aids and Planned Parenthood of the St. Louis Region and Southwest Missouri are counselor- designated organizations under the PPACA. St. Louis Effort and Planned Parenthood also employ individuals who are certified as CACs and navigators. They also train navigators. St. Louis Effort, Planned Parenthood (collectively, CAC plaintiffs), Consumers Council of Missouri, Mis- souri Jobs with Justice, Jeanette Oxford, Dr. Wayne Letizia, Dr. William Fogarty and Chris Worth sued John Huff, director of the Missouri Department of Insurance, Financial Institutions and Professional Registration in the U.S. District Court for the Western District of Missouri, seeking to enjoin certain provi- sions of HIMIA. The plaintiffs argue that the provi- sions are preempted by and violate the supremacy clause of the U.S. Constitution, violate the First Am- endment and violate the due process clause. The plaintiffs claim that the HIMIA frustrates the purpose of the PPACA by imposing additional burdens upon them as duly designated federal counselors and creates a risk that they will be punished because the HIMIA forbids them from performing their required duties under the PPACA. The plaintiffs moved for a preliminary injunction. Huff opposed the injunction and moved to dismiss, arguing that the plaintiffs failed to state a cause of action for which relief can be granted. In considering the motions, Judge Ortrie D. Smith said he would focus on the preemption/supremacy clause issues as they are dispositive of the issues raised. The judge went on to find that the PPACA’s purpose is a congressional measure designed to increase the availability and lower the cost of health care. The spe- cific aspects of the act relate to the government’s opera- tions of the FFE, which are a means to the PPACA’s overall objective, Judge Smith said. As such, state laws that make operation of the FFE more difficult or oner- ous run afoul of the PPACA’s purpose and are subject to preemption, the judge added. Likelihood Of Success He went on to find that the CAC plaintiffs are likely to succeed on the merits, but not the remaining plaintiffs. The HIMIA includes the CAC plaintiffs as ‘‘State Navigators’’ within its reach because they receive compensation in connection with a health benefit exchange, they have been selected to perform the duties of federal navigators, they receive grants from DHHS to perform the duties of federal navigators, they have been certified by the DHHS to perform duties related to the exchange and their function is not limited to disseminating public health information to a general audience, Judge Smith said. Judge Smith went on to find that the CAC plaintiffs were likely to succeed on their claim that the HIMIA is preempted insofar as it applies to entities and in- dividuals certified under federal law to provide services or perform functions pursuant to the PPACA and its regulations, including specifically federally approved/ certified CACs, navigators and counselor designated organizations. Judge Smith also said the CAC plaintiffs demon- strated that they face irreparable harm because they must overcome the HIMIA’s hurdles to operate. The CAC plaintiffs also face irreparable harm because even if they comply with the HIMIA’s licensing require- ments they risk violating the HIMIA just by perform- ing federally mandated functions, Judge Smith said. Huff may fine any state navigator who violates the HIMIA, and he may suspend the license of state navi- gators that violate the HIMIA, thereby precluding them from performing their functions in connection with the FFE, Judge Smith said. As such, the CAC plaintiffs face a genuine risk of harm if they, as an example, provide information that contrasts various health coverage options because doing so may consti- tute ‘‘advice’’ in violation of the HIMIA, Judge Smith said. But if they do not present the information, they have violated their obligation as federal counselors, he added. The judge also held that the public interest is not harmed by granting the injunction. The public interest is actually promoted by granting the injunction because by removing the state-created specter of punishment and regulation that likely violates the Constitution per- mits the FEE to operate as intended by the PPACA, Judge Smith said. No Requirements Judge Smith agreed with Huff that the HIMIA does not apply to the remaining plaintiffs because nothing MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 29
  • 30. in the complaint suggests that the plaintiffs are federal counselors. A reading of all of the HIMIA’s provisions suggests that only those who are state navigators under state law must be licensed and there is no indication that any plaintiffs other than the CAC plaintiffs qualify as state navigators, the judge said. Because these plaintiffs did not demonstrate that the HIMIA imposes restrictions or requirements upon them, they have not demonstrated that they are likely to succeed on the merits, he added in denying the motion for preliminary injunction. Ingrid Babri, Steven A. Skalet and Jay B. Angoff of Mehri Skalet in Washington, D.C., Martha Jane Perkins in Carrboro, N.C., and Jane Perkins of National Health Law Program in Chapel Hill, N.C., represent the plaintiffs. Jeremiah J. Morgan of the Missouri Attor- ney General’s Office in Jefferson City represents Huff. (Additionaldocumentsavailable: Complaint.Document #31-140205-009C. Preliminary injunction brief. Document#31-140205-010B.Oppositionbrief.Docu- ment #31-140205-011B.) I 4th Circuit Briefed On ACA Exchange Credit Challenge RICHMOND, Va. — The U.S. Department of Health and Human Services on March 18 responded to arguments that the Patient Protection and Affordable Care Act (ACA) allowed for premium support only for those enrolled through exchanges created by the states, saying such reading does not comport with the language of the statute (David King, et al. v. Kathleen Sebelius, et al., No. 14-1158, 4th Cir.). (Opening brief available. Document #93-140326- 034B. Response available. Document #93-140326- 035B.) Virginia residents David King, Douglas Hurst, Brenda Levy and Rose Luck sued Kathleen Sebelius, secretary of the U.S. Department of Health and Human Service (DHHS); the DHHS; Jacob Lew, secretary of the U.S. Department of Treasury; the Department of Treasury; Daniel Werfrel, acting commissioner of the IRS; and the IRS in the U.S. District Court for the Eastern Dis- trict of Virginia, saying the IRS rule squarely contra- venes the express intent of the PPACA, ignoring the clear limitations that Congress imposed on the avail- ability of the federal subsidies. Further, the IRS pro- mulgated the regulation without any reasoned effort to reconcile it with the contrary provisions of the statute, the plaintiffs say. The plaintiffs seek a declaratory judgment ruling that the IRSrule is illegal under the Administrative Procedure Act (APA) and injunctive relief barring its enforcement. Exchanges The plaintiffs allege that the ACA includes provisions for the creation of state health insurance exchanges, which are mechanisms ‘‘for organizing the health insur- ance marketplace to help consumers and small busi- nesses shop for coverage in a way that permits easy comparison of available plan options based on price, benefits and services, and quality.’’ The ACA required each state to establish an exchange by Jan. 1, 2014, but also provided that if a state opts out of the exchange, the federal government would establish and operate an exchange within the state. The ACA encourages states to establish exchanges with a variety of incentives, chiefly the premium-assistance subsidy for state residents purchasing individual health insurance through state-established exchanges. Thirty- four states declined to establish exchanges, making the federal government responsible for establishing ex- changes in those states. To address this issue, the IRS promulgated regulations expanding the availability of subsidies. The IRS rule states that subsidies shall be available to anyone ‘‘enrolled in one or more qualified health plans through an Exchange’’ and defines ‘‘exchange’’ to mean ‘‘a State Exchange, a regional Exchange, subsidiary Exchange, and Federally-facilitated Exchange.’’ The rule means that premium-assistance subsidies are available in all states, including those states that declined to establish their own exchanges. Mandates The plaintiffs allege that Virginia opted not to establish its own insurance exchange. The individuals are not eligible for employer- or government-sponsored health coverage that satisfies the individual mandate. Absent Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 30
  • 31. the IRS ruling, the individuals would be entitled to a certificate of exemption from the individual mandate penalty for 2014 because the cheapest bronze plan approved for sale to them on the federal exchange in Virginia would cost more than 8 percent of their individual household incomes. But because the IRS rule makes them eligible for a subsidy that would reduce their out-of-pocket cost to below that figure, they will be disqualified from that otherwise-applicable exemption and subject to the individual mandate pen- alty. As a result, they say, they will be forced to pay a penalty or purchase more insurance than they want. The individuals say they are injured by the IRS rule because it has the effect of subjecting them to monetary sanctions or requiring them to alter their behavior to avoid those sanctions. Either way, the indi- viduals say, their financial strength and fiscal planning are immediately and directly affected by the exposure and/or liabilities. The plaintiffs moved for summary judgment, and the government moved to dismiss. Judge James R. Spencer held that the plaintiffs have standing because their economic injury is real and trace- able to the IRS rule and that the court has the power to redress their injuries by invalidating the rule. Judge Spencer also held that the plaintiffs have prudential standing because they are directly regulated by 26 U.S. Code Section 36B and, thus, the IRS rule in- terpreting it because they are ‘‘applicable taxpayers’’ under the section. Section 36B establishes the tax credits. In rejecting the plaintiffs’ claims, Judge Spencer said courts have a duty to construe statutes as a whole. Under this standard, the plaintiffs’ reading of Section 36B grows weak when other sections of the ACA are taken into account, Judge Spencer said. Under the plaintiffs’ interpretation, Section 36B(f) would be superfluous with respect to federally facilitated ex- changes under Section 1321 because such exchanges would not be authorized to deliver tax credits, Judge Spencer said. ‘Plain Text’ The plaintiffs appealed. In their opening brief, the plaintiffs argue that ‘‘it is fundamentally incompatible with the plain text to treat an HHS-established ex- change as ‘established by the state,’ particularly because it is a state’s failure to establish an exchange that triggers HHS’s authority in the first place.’’ It would be odd that Congress could successfully use the term ‘‘state-established’’ when it wanted in other circumstances but not in Section 36B, the plaintiffs argue. The plaintiffs argue that ‘‘no legitimate method of statutory construction would interpret the phrase ‘exchange established by the state under section 1311’ in the ACA’s subsidy provision to mean ‘exchange established by the state or by HHS under section 1311 or section 1321.’ ’’ Because Congress is constitutionally forbidden from forcing states to establish exchanges, it must use a ‘‘carrot and stick’’ approach by offering ‘‘deals,’’ the plaintiffs argue. The credit available through state exchanges was one such ‘‘deal’’ HHS offered, the plain- tiffs argue. Thus, the language of the ACA directly answers whether individuals enrolling through federal exchanges are eligible for credits for individuals enrol- ling through state exchanges: They are not, the plain- tiffs argue. Taxpayer Definition In its March 18 response, HHS argues that the pre- mium credits are available to federal-exchange enrollees. Congress defined the federal exchange as a state ex- change where the state failed to establish an exchange, HHS argues. Section 36B allows for the credit for any ‘‘applicable taxpayer’’ and defines that term through income brack- ets relative to the poverty line without regard for where the insurance was purchased, HHS argues. The phrasing on which plaintiffs rely is tucked into a portion of the statute regarding how to calculate the credit and cannot be interpreted as an attempt by Con- gress to limit the credit to state exchanges, HHS argues. While the plaintiffs mention superfluity, they ignore that their own reading of the statute would render portions superfluous, HHS argues. Jonathan Berry, Michael A. Carvin, Walter D. Kelley Jr. and Jacob M. Roth of Jones Day in Washington, D.C., represent the plaintiffs. Joel McElvain of the U.S. Department of Justice in Washington and Eliza- beth Catherine Wu of the U.S. Attorney’s Office in Richmond represent the government. I MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 31
  • 32. Judge Enjoins Insurers From Rejecting Funds From HIV Program BATON ROUGE, La. — A Louisiana judge on Feb. 24 granted a preliminary injunction barring a health care insurer from changing its policies involving acceptance of funds from the Ryan White HIV/AIDS Program (John East, et al. v. Blue Cross and Blue Shield of Louisiana, et al., No. 14-115, M.D. La.; 2014 U.S. Dist. LEXIS 23916). (Order available. Document #93-140326-028R.) John East filed suit in the U.S. District Court for the Middle District of Louisiana, seeking to prevent Blue Cross and Blue Shield of Louisiana (BCBS), Vantage Health Plan Inc. and Louisiana Health Co- operative Inc. from changing their policies related to the Ryan White HIV/AIDS Program funds. Discrimination East claimed that Patient Protection and Affordable Care Act (ACA) Section 1557 prohibits insurers from discriminating against individuals based on disability. East sought a class of individuals who have been paying their premiums, sometimes for decades, and who receive assistance from the Ryan White program. East claimed that in the past, the defendants accepted payments from the program but that in January 2014, BCBS indicated it would no longer accept such payments. In his February order granting a temporary restraining order, Judge Brian A. Jackson said he was satisfied East had met the requirements for such relief. East ‘‘scrupulously adhered to [Federal Rules of Civil Procedure] Rule 65 procedural requirements,’’ Judge Jackson said. In his application for relief, East attached an affidavit describing his alleged injury, which he claims is irreparable, Judge Jackson said. Irreparable Harm East alleges that he is living with HIV and that absent the restraining order he seeks he would not be able to afford the monthly $1,306 premium for the insur- ance that covers the two medications he must take every day, Judge Jackson said. ‘‘It goes without saying that Mr. East’s eventual death is an irreparable injury,’’ Judge Jackson said. The U.S. Department of Health and Human Services on March 14 issued a proposed rule that would bar insurers who participate in federal or state programs from rejecting payments from premium or cost support organizations (See related story, this issue). East and BCBS on March 17 stipulated that the insurer will continue accepting payments from the Ryan White program until November and that the parties would confer should HHS issue a final rule. Nicholas M. Berg, Timothy R. Farrell, Jeffrey J. Bush- ofsky and Anthony C. Biagioli of Ropes Gray in Chicago and Bryan Edward Bowdler of Phelps Dunbar in New Orleans represent East. Brandon Kelly Black of Jones Walker in Baton Rouge, La., and Adam P. Feinberg of Miller Chevalier in Washington, D.C., represent BCBS. Layna S. Cook of Baker, Donelson, Bearman, Caldwell Berkowitz in Baton Rouge rep- resents Vantage. Michele Whitesell Crosby of Jones Walker in Baton Rouge represents Louisiana Health Exchange. I ACA Regulations Covering Senators Don’t Provide Injury, Government Argues GREEN BAY, Wis. — A senator cannot allege injury from regulations governing the Patient Protection and Affordable Care Act (ACA)’s application to Congress Our Copyright Policy Subscribers are encouraged to copy sections of this report for use in court submissions. You also are welcome to copy a single article to send to a client or colleague, and to copy and route our table of contents. However, it is a violation of our copyright to copy substantial portions of this report for any other reasons without permission. Illegal copying can seriously undermine subscription-based publications like ours; moreover, the Copyright Act of 1976 provides for damages for illegal copying. If you wish to copy and distribute sections of the report, simply contact MealeyInfo@LexisNexis.com. Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 32
  • 33. and its staff, the U.S. Office of Personnel Management argues in a March 17 motion to dismiss (Senator Ron Johnson, et al. v. U.S. Office of Personnel Manage- ment, et al., No. 14-09, E.D. Wis.). (Memo in support available. Document #93-140326- 030B.) OPM administers the Federal Employees Health Ben- efits Program (FEHBP), the program that provides health insurance for federal employees. When Congress passed the ACA, it resolved that members of Congress and their staffs should be treated the same way that most private citizens are treated by the ACA. As such, the ACA requires that these federal employees obtain health insurance through an ACA exchange. Regulations The ACA sets up two kinds of insurance exchanges in each state — those that will offer coverage to indivi- duals and their families and the Small Business Health Options Program (SHOP) Exchange that will offer group policies to small businesses and their employees. Employees who participate in the individual exchanges cannot buy group insurance policies. Although de- pending upon their income, the employees may be entitled to a premium subsidy under the individual exchanges, they cannot receive a tax-free employer sub- sidy for their premiums. Group insurance policies — such as those offered through SHOP plans — permit employers to subsidize part of the premium costs for their employees on a tax-free basis. The SHOP insur- ance plans, however, are limited to plans offered in the small business market. Before the ACA, members of Congress and federal leg- islative employees participated in the FEHBP. Under FEHBP, the federal government paid approximately 75 percent of Congress’ and the employees’ insurance premiums. The FEHBP contributions are tax free. The OPM adopted a final rule that is intended to permit OPM to provide members of Congress and certain of their employees with group health insurance through participation in the SHOP. The ACA defines small businesses as those with fewer than 100 employ- ees. The federal government has millions of employees, and Congress employs more than 11,000 people. As such, neither the federal government nor Congress could qualify as a small business under the ACA, according to Johnson. OPM is bending the rules so that many members of Congress and their employees who want to continue to obtain group health insurance essentially tax free and at the government’s expense can do so, Johnson says. Unequal Treatment Johnson contends that the OPM rule does not treat members of Congress and their staffs like the members’ constituents as proposed by the ACA but instead puts them in a better position by providing them with a continuing tax-free subsidy from the federal govern- ment to pay a percentage of the premiums for health insurance purchased through an ACA exchange, just as they had received under FEHBP. In a motion seeking dismissal for lack of subject matter jurisdiction, OPM argues that Article III of the U.S. Constitution bars federal courts from deciding abstract legal or political debates. The plaintiffs here do not allege that they are or will be harmed in any material way by the OPM’s coverage decisions, the OPM argues. Standing Arguments Plaintiffs’ claim that OPM’s decisions make them ‘‘complicit’’ in violating the law fails in light of Supreme Court precedent holding that ‘‘personal indignation at a perceived violation of the law is not the kind of injury that can support standing.’’ Nor can any threat to Johnson’s credibility or reputa- tion create standing, OPM argues. ‘‘Moreover, this allegation does not describe an immedi- ate injury that is directly attributable to the OPM reg- ulations. Instead, it describes an abstract injury that might or might not occur depending on how third parties (Senator Johnson’s constituents) perceive and react to OPM’s regulations,’’ OPM argues. Any remedy related to the categorization of employees strikes not at OPM regulations, but at ACA regula- tions themselves, OPM argues. Indeed, any such order would not eliminate the need for congressional mem- bers to identify ‘‘official office’’ employees, OPM argues. Nor are congressional members injured by having to make such designations, since they can assign the task to the administrative wing of the office, OPM argues. MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 33
  • 34. Assistant Attorney General Stuart F. Delery, U.S. Attorney James L. Santelle, Deputy Director Sheila M. Lieber, Assistant Branch Director Susan K. Rudy and Trial Attorney James C. Luh of the U.S. Depart- ment of Justice in Washington, D.C., represent OPM. Richard M. Esenberg of Wisconsin Institute for Law Liberty in Milwaukee represents plaintiffs. I Calif. Senator Sues State, Claiming Improper Cancellation Of Insurance Policies LOS ANGELES — California’s health exchange forced the cancellation of 1 million residents’ health plans and threatens millions more, despite the Patient Protection and Affordable Care Act’s (ACA) exclusion of existing policies from its coverage mandates, a state senator claims in a March 4 complaint (Edward Gaines, Gaines Insurance Agency Inc., et al. v. Peter Lee, in his official capacity as Executive Director of the California Health Benefit Exchange, et al., No. BS147414, Calif. Super., Los Angeles Co.). (Complaint available. Document #93-140326-004C.) California Sen. Edward ‘‘Ted’’ Gaines, R-1st Dist., and his company, Gaines Insurance Agency Inc., claim that the California Health Benefit Exchange, also known as Covered California, has been requiring can- cellation of existing policies that are not in compliance with the coverage requirements of the ACA. However, Gaines claims that ACA Section 1251, 26 Code of Federal Regulations Part 54, ‘‘grandfathers’’ individual and employer plans from the compliance requirements. In November 2013, the U.S. Department of Health Human Services confirmed that individuals may keep their grandfathered plans, Gaines claims. However, later that month Covered California confirmed that it would not honor the grandfathered plans, Gaines claims. Enforcement of the ACA’s coverage provisions for employer plans have been delayed twice and currently aresettobecomeeffectiveinJanuary2016,Gainesclaims. Covered California Gaines claims that Californians losing their coverage will face higher premiums, co-pays and/or deductibles and that Covered California has signed up fewer Cali- fornians than have lost their plans. Even fewer of the enrollees have made premium payments, meaning they do not actually have insurance through the exchange, Gaines claims. Gaines seeks of writ of mandate, as well as declaratory and injunctive relief. Michael D. McClelland of McClelland Advocacy in Rocklin, Calif., represents Gaines. I Couple Sues In Mississippi Federal Court, Says Coverage Wrongfully Canceled HATTIESBURG, Miss. — A Mississippi couple on March 7 filed a lawsuit in federal court, alleging that they are wrongfully being held responsible for more Ifyouhaveanarticleoropiniontoshare, considerauthoringacommentaryarticle. Fordetails,simplycontacttheeditorofthisreport. LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. © 2012, LexisNexis. All rights reserved. OFF02214-0 2012 Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 34
  • 35. than $50,000 in medical claims after the company responsible for making premium payments for their Pre-existing Condition Insurance Plan (PCIP) provided for under the Patient Protection and Affordable Care Act (ACA) failed to make the payments (Thomas and Wanda Carruth v. The Outsource Group, et al., No. 14-33, S.D. Miss.). (Complaint available. Document #93-140326-006C.) PCIP Coverage In February 2013, Thomas Carruth had acute abdom- inal symptoms that caused him to go to the emergency room at Forest General Hospital (FGH). Carruth was admitted to FGH for gallbladder surgery. Carruth did not have health insurance at the time of the surgery and did not qualify for governmental med- ical benefits such as Medicaid or Medicare. Carruth negotiated with FGH officials to pay an agreed reduced cost of the surgery, and Carruth paid for the surgery using a credit card. FGH officials also advised Carruth that he might qua- lify for the PCIP, created under the ACA and referred Carruth to the Jackson County Outsource Group for assistance. Under the ACA, individuals who had recently been denied private health care coverage pos- sibly could qualify for free PCIP coverage. Jackson County Outsource Group is a third-party administra- tion company formed to assist patients with obtaining health care coverage through many different state and national government programs, including PCIP, cre- ated under the ACA. The Outsource Group is a parent company of the Jackson County Outsource Group. United Healthcare Services Inc., a health insurance provider, provides health insurance coverage options to patients, including patients qualifying for PCIP. Carruth was advised that Jackson County Outsource Group would pay the premiums through an available grant and that he would not be responsible for pre- miums. Carruth also was advised that PCIP was a tem- porary plan for coverage to qualified applicants through early 2014, at which time the ACA would require pri- vate insurance to cover all patients with pre-existing conditions. Carruth and his wife obtained coverage under the PCIP, effective March 2013. He never received premium notices, demands for payment under PCIP or noti- fication of cancellation under PCIP. Retroactive Termination Carruth later sought and received precertification from Hattiesburg Clinic for a colonoscopy. Following the procedure, Carruth received an explanation of benefits form from PCIP, identifying the charges submitted by providers, the amount allowed versus that not cov- ered along with any deductible, co-pay and benefits to be paid by the patient. The majority of the benefits were paid through PCIP with smaller co-pays made by Carruth. A few months later, Carruth sought precertification for shoulder surgery at Southern Bone and Joint. Again, following the procedure, Carruth received an explanation of benefits form from PCIP, identifying the charges submitted by providers, the amount allowed versus that not covered along with any deduc- tible, co-pay and benefits to be paid by the patient. The majority of the benefits were paid through PCIP with smaller co-pays made by Carruth. Following the shoulder surgery, Carruth underwent physical therapy, which also was preapproved and paid by PCIP. In January 2014, Carruth’s wife contacted PCIP for permission to extend their PCIP coverage for one month. The Carruths were aware that the PCIP was a temporary gap program and would expire in early 2014, but Carruth’s physical therapy had not been completed, so the Carruths wanted to extend the coverage. After multiple phone conversations, the Carruths learned that Jackson County Outsource had not paid the premiums during the entire period of coverage. PCIP representatives advised the Carruths that they would be retroactively terminating coverage back to March 2013 and would be seeking reimbursement from all of the providers from whom Carruth had received treatment and for which PCIP had paid ben- efits and that the Carruths would be responsible for full submitted charges of all medical providers, includ- ing the surgeries, which totaled in excess of $50,000. Breach The Carruths sued The Outsource Group, Jackson County Outsource Group, United, FGH, Medco Health Solutions of Indiana and Optum RX in the MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 35
  • 36. U.S. District Court for the Southern District of Mis- sissippi for breach of contract, intentional breach of contract, bad faith, negligence, negligent supervision, negligent misrepresentation, fraud, breach of fiduciary duty, estoppel and detrimental reliance and negligent infliction of emotional distress. They also seek relief under the ACA. The Carruths contend that the defendants failed to honor the coverage the Carruths were approved to receive without any lawful justification to deny cover- age under the plan. The breach contributed to the retroactive termination of coverage under the PCIP, which exposed them to unnecessary and unjustified medical expenses, the Carruths say. The Carruths seek injunctive relief, asking the court to stay all parties and proceedings in connection with the matter, including any retroactive collections actions, until the claims can be adjudicated. They also seek damages. L. Clarks Hicks Jr. of Hicks Law Firm in Hattiesburg filed the suit. I Oklahoma City Archdiocese Sues HHS Over Contraceptive Mandate OKLAHOMA CITY — The Patient Protection and Affordable Care Act (ACA) forces religious groups to support contraception, abortion, sterilization and related counseling that they find ‘‘morally abhorrent and that violate their sincerely held religious belief,’’ The Roman Catholic Archdiocese of Oklahoma City, related nonprofit employers and their insurer claim in a March 12 federal class action (The Catholic Bene- fits Association LCA, et al. v. Kathleen Sebelius, et al., No. 14-240, W.D. Okla.). (Complaint available. Document #93-140326-023C. Brief in support of preliminary injunction available. Document #93-140326-024B.) The plaintiffs claim that they face ‘‘ruinous fines’’ for failure to comply with ACA mandates and ask the U.S. Court for the Western District of Oklahoma to enjoin the defendants from forcing the plaintiffs, their members and their contracting providers into compliance. The defendants are the U.S. Department of Health and Human Services (HHS), HHS Secretary Kathleen Sebelius, The U.S. Department of Labor and its secre- tary, Thomas E. Perez, and the U.S. Department of the Treasury and its secretary, Jacob J. Lew. Joining the Oklahoma City Archdiocese are Catholic Charities of the Archdiocese of Oklahoma City Inc., All Saints Catholic School Inc., Archbishop William E. Lori, Roman Catholic Archdiocese of Baltimore and His Successors in Office, The Cathedral Foundation Inc. d/b/a Catholic Review Media, Villa St. Francis Catholic Care Center Inc. and Good Will Publishers Inc. The employer plaintiffs provide health care to employees through group or self-funded plans. Limited Exemption The plaintiffs claim that although the ACA exempts religious institutions from complying with objectionable LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. © 2012, LexisNexis. All rights reserved. OFF02211-0 2012 We’re listening. If you have news to report, simply contact the editor of this report. Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 36
  • 37. standards, that exemption applies only to ‘‘houses of worship.’’ Even then, it applies only to an institution that can show that it opposes providing the services in question, is a nonprofit, holds itself as a religious ins- titution and self-certifies to the previous conditions. The plaintiffs allege violations of the Religious Freedom Restoration Act, 42 U.S. Code Section 2000bb-1, the establishment, free speech and exercise clauses of the U.S. Constitution and the Administrative Procedure Act and allege that the mandate imposes a substantial burden on them, constitutes an intentional discri- mination and interferes with religious matters and governance. In a brief supporting a preliminary injunction, the plaintiffs argue that the government is enforcing its mandate on them even though ‘‘it has chosen not to enforce its mandate on other employers and other health arrangements for both secular and religious rea- sons.’’ This includes 98 million people covered by grandfathered plans and the 34 million employees who work at employers with fewer than 50 employees. J. Angela Ables and Johnny R. Blassingame of Kerr, Irvine, Rhodes Ables in Oklahoma City and L. Mar- tin Nussbaum, Ian S. Speir and Eric Kniffin of Lewis Roca Rothgerber in Colorado Springs, Colo., represent the plaintiffs. I HHS: ACA Plans Must Accept Specialty Support Programs WASHINGTON, D.C. — Patient Protection and Affordable Care Act (ACA) insurers must accept pay- ment from federal and state programs that provide pre- mium and cost-sharing support for specific individuals, the U.S. Department of Health and Human Services announced March 14. (Regulation available. Document #93-140326-025X.) The new rule requires qualified health plans and stand- alone dental plans to accept premiums and cost-sharing payments from the Ryan White HIV/AIDS Program and other, similar programs covering Indian tribes, tri- bal organizations and urban Indian organizations. The rule is to be published in the Federal Register on March 19. I HHS Issues Guidelines For Basic Health Programs, Same-Sex Households WASHINGTON, D.C. — The Department of Health and Human Services on March 12 issued reg- ulations governing the Basic Health Program (BHP) required by Patient Protection and Affordable Care Act Section 1331. (Regulation available. Document #93-140326-038X.) Under the rule, states will have the option to establish BHPs for individuals whose income exceeds 133 percent of the federal poverty level but does not exceed 200 percent of the federal poverty level and who are both ineligible for Medicaid and insurance through one of the exchanges. The rule adopts Internal Revenue Code Ruling 2013-17 for household income, meaning that it in- cludes same-sex partners who have entered into a valid marriage. The rule is effective on Jan. 1, 2015. I HHS Issues Proposed Rule On Product Modifications, Risk Corridors, Civil Penalties WASHINGTON, D.C. — The U.S. Department of Health and Human Services on March 18 issued a proposed rule covering what changes to an existing policy constitute a discontinuation of that policy under the Patient Protection and Affordable Care Act (ACA), altering risk corridor regulations and governing civil penalties for fraud in the exchanges. (Regulations available.Document #93-140326-026X.) The proposed rule sets up guidelines for when modi- fications to an insurance plan offered through an exchange constitute the discontinuation of an existing product and creation of a new product. MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 37
  • 38. The rule also proposes a modification of the allocation of reinsurance contributions if allowable administrative expenses in the risk corridors do not meet estimates. Under the modification, HHS may round those para- meters down to the nearest $50 increment, and it potentially allows HHS to index the required risk cor- ridor contribution used to determine eligibility for an exemption from the shared responsibility payment under Internal Revenue Code Section 5000A. ‘Ongoing Uncertainty’ The proposed rule also says that reinsurance and risk adjustment funds subject to sequestration and that would ordinarily be paid during summer 2015 will be paid ‘‘as soon as practicably possible in fiscal year 2016.’’ Because of ‘‘ongoing uncertainty and changes in the market in 2015,’’ the rule would limit plans to admin- istrative costs of 22 percent and profits of 5 percent. The rule also provides grounds for imposing civil penal- ties on individuals and consumer assistance entities that provide false or fraudulent information on an exchange or improperly use or disclose information through an exchange. The rule is set for publication on March 21. I HHS Sets Parameters For Reinsurance, Coinsurance, Exchange User Fees WASHINGTON, D.C. — The U.S. Department of Health and Human Services (HHS) on March 11 issued finalized rules establishing various insurance parameters for the Patient Protection and Affordable Care Act (ACA) in 2015. (Regulation available. Document #93-140326-037X.) The regulation set the yearly 2015 uniform reinsurance contribution rate at $44 per capita and the uniform pay- ment parameters at $70,000 and provides for a $250,000 reinsurance cap and a 50 percent coinsurance rate. Under the regulation, should reinsurance proceeds exceed payments, HHS will increase the coinsurance rate and roll over any remaining funds into the subse- quent year. The rule finalizes cost-sharing parameters and metho- dology. The rule sets the federally funded exchange user fee at 3.5 percent of the premium. I ACA Insurance Plans To Offer Same-Sex Coverage In 2015, HHS Says WASHINGTON, D.C. — Patient Protection and Affordable Care Act (ACA) insurance plans offering same-sex coverage must also offer opposite-sex coverage starting in 2015, Health and Human Services official Matthew Heinz clarified in a March 14 blog post. ‘‘In other words, insurance companies will not be permitted to discriminate against married same-sex couples when offering coverage,’’ Heinz said. Heinz is the director of Provider Lesbian, Gay, Bisexual and Transgender Outreach in the Office of Intergovern- mental and External Affairs, which is part of the U.S. Department of Health and Human Services. The Centers for Medicare Medicaid Services an- nounced Feb. 25 that 4.2 million people enrolled in private health insurance plans through the federal and various state-based marketplaces. Open enrollment ends March 31. I U.S. House Passes ACA Individual, Employer Mandate Exemption Bills WASHINGTON, D.C. — The U.S. House on March 11 passed a trio of bills seeking to grant addi- tional religious exemptions from the Patient Protection and Affordable Care Act (ACA)’s individual mandate and excluding military personnel and emergency ser- vices volunteers from the law’s individual and employer mandates. (HR 1814 available. Document #93-140326-016L. HR 3474 available. Document #93-140326-017L. HR3979 available. Document #93-140326-018L.) The first of the bills, House Resolution 1814, amends Section 5000A of the Internal Revenue Code of 1986, was introduced in April. Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 38
  • 39. HR1814 exempts individuals from complying with minimum health care coverage requirements if they have a sincere religious objection. The law leaves intact examinations or treatments required by law, third par- ties and vaccinations. The bill passed on a voice vote. Employee, Employer The House also passed House Resolution 3474, which amends IRS rules to exempt employees with health insurance through TRICARE or the Veterans Admin- istration from being taken into account for purposes of the ACA’s employer mandate. TRICARE is a health program for uniformed service members. The House passed HR 3474 by a 406-to-1 margin late Tuesday night. Finally, the House passed House Resolution 3979, which amends the IRS code to ensure that emergency service volunteers are not considered employees under the ACA’s shared responsibility requirements. The House unanimously passed HR 3979. I U.S. House Passes Bill Delaying ACA Mandate Penalties WASHINGTON, D.C. — The U.S. States House of Representatives on March 5 passed, by a 250-to- 160 vote, legislation seeking to delay the penalty for failing to comply with the individual mandate in the president’s health care legislation. (Legislation available. Document #93-140326-002L.) House Resolution 4118, the Suspending the Individual Mandate Penalty Law Equals Fairness Act, garnered 223 votes from Republicans and 27 from Democrats. A single Republican and 159 Democrats voted against HR 4118, which was introduced by Rep. Lynn Jenkins, R-Kan., on Feb. 28. HR4118 would amend the Internal Revenue Code of 1986 to delay by one year implementation of the penalty associated with failing to comply with the individual mandate portion of the Patient Protection and Affordable Care Act (ACA). Mandate Under the ACA, those covered by the mandate face a penalty of $95 per uninsured individual in 2014, which rises to $695 per uninsured individual in 2016. HR4118 keeps the mandate that individuals obtain insurance in place. The Congressional Budget Office recently said that between 2014 and 2019, HR 4118 would reduce the budget deficit by $10 billion. That impact falls to $9.4 billion when the analysis is extended to 2024, according to the CBO. According to the CBO analysis, the legislation would result in 2 million more uninsured individuals in 2015, 1 million more uninsured individuals in 2016 and less than 500,000 more uninsured indivi- duals in the following years. I MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014 39
  • 40. Mealey’s™ Online Access additional documents not found in this report. Perform headline searches on any Mealey title. View and download full-text court documents. Search the Mealey editorial archives as far back as the 1980s. LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. © 2012, LexisNexis. All rights reserved. OFF02215-0 2012 Visit www.mealeysonline.com Vol. 1, #1 March 2014 MEALEY’S Affordable Care Act Report 40
  • 41. Documents UnitedStatesCourtofAppeals FORTHEDISTRICTOFCOLUMBIACIRCUIT ArguedJanuary10,2014DecidedMarch7,2014 No.13-5003 ASSOCIATIONOFAMERICANPHYSICIANSANDSURGEONSAND ALLIANCEFORNATURALHEALTHUSA, APPELLANTS v. KATHLEENSEBELIUS,SECRETARYOFHEALTHHUMAN SERVICES, INHEROFFICIALCAPACITY,ETAL., APPELLEES AppealfromtheUnitedStatesDistrictCourt fortheDistrictofColumbia (No.1:10-cv-00499) LawrenceJ.Josepharguedthecauseandfiledthebriefs forappellants. DanaL.Kaersvang,Attorney,U.S.Departmentof Justice,arguedthecauseforappellees.Withheronthebrief wereStuartF.Delery,AssistantAttorneyGeneral,RonaldC. MachenJr.,U.S.Attorney,andMarkB.Stern,Attorney. AlisaB.Klein,Attorney,U.S.DepartmentofJustice,entered anappearance. USCACase#13-5003Document#1482743Filed:03/07/2014Page1of10 2 Before:ROGERS,CircuitJudge,andWILLIAMSand SENTELLE,SeniorCircuitJudges. OpinionfortheCourtfiledbySeniorCircuitJudge WILLIAMS. WILLIAMS,SeniorCircuitJudge:Plaintiff-appellants AssociationofAmericanPhysiciansSurgeons,Inc.and AllianceforNaturalHealthUSAsuedtheSecretaryofHealth andHumanServicesandtheCommissioneroftheSocial SecurityAdministration1 indistrictcourt,raisingawide varietyofclaims:(1)constitutionalchallengestothePatient ProtectionandAffordableCareAct(“ACA”),(2)statutory (includingAdministrativeProcedureAct)challengesto actionsofHHSandtheCommissionerrelatingtothe implementationofACAandpriorMedicarelegislation,and (3)asomewhatamorphousattackonthefailureofthe defendantstorenderan“accounting”thatwould(theyargue) alerttheAmericanpeopletotheinsolvencytowardswhichthe MedicareandSocialSecurityprogramsareheading.The districtcourtdismissedthechallengesvariouslyforlackof jurisdictionorforfailuretostateaclaimuponwhichrelief canbegranted.AssociationofAmericanPhysicians Surgeons,Inc.v.Sebelius,901F.Supp.2d19(D.D.C.2012) (“AAPSI”);seeFed.R.Civ.P.12(b)(1),(6).Eachofthe challengesultimatelyfails,forthereasonssetforthbelow. 1 TheSecretaryoftheTreasuryisalsonamedasadefendant, butappellantsdirectnoargumentsspecificallytohim. USCACase#13-5003Document#1482743Filed:03/07/2014Page2of10 3 ConstitutionalChallenges Wetaketheconstitutionalclaimsfirst.Ifsuccessful,they wouldradicallyalterthecontextforthestatutoryclaims, whilethereisnochancethatthestatutoryclaims,if successful,wouldavoidtheconstitutionalquestions. Appellantsattack26U.S.C.§5000A,oftenspokenof informallyastheACA’sindividualhealthinsurancemandate, whichwassustainedasavalidexerciseofthetaxingpowerin NationalFederationofIndependentBusinessv.Sebelius,132 S.Ct.2566(2012)(“NFIB”).2 Id.at2593-2600;Id.at2609 (Ginsburg,J.,joinedbyBreyer,Kagan,andSotomayor,JJ., concurring)(agreeingthat“theminimumcoverageprovision isaproperexerciseofCongress’taxingpower”).Theyargue thatthetaxviolatesboththeFifthAmendment’sprohibition ofthetakingofprivatepropertywithoutjustcompensation andtheoriginationclause,U.S.Const.art.I,§7,cl.1,which providesthat“AllBillsforraisingRevenueshalloriginatein theHouseofRepresentatives;buttheSenatemayproposeor concurwithAmendmentsasonotherBills.” Astotakings,thedistrictcourtappliedtheSupreme Court’sopinioninBrushaberv.UnionPac.RailroadCo.,240 2 Appellantsmentionedthecorrespondingprovisionfor employersintheiropeningbriefbutprovidednorationalefor treatingitdifferentlyfromtheindividualmandate.Appellantsalso mentionedanequalprotectionargumentintheiropeningbrief,but onlyinthestandingsection,notinthemeritssection.Laterthey appearedtoadvanceargumentsinvolvingtheequalprotection clauseandtheemployerprovisionsinlettersfiledunderFed.R. App.P.28(j)(e.g.,lettersofJuly15,2013).Underthese circumstanceswehavenooccasiontoaddresstheclaimsinvolving theemployermandateortheequalprotectionclause. USCACase#13-5003Document#1482743Filed:03/07/2014Page3of10 AMERICANASSOCIATIONOFSURGEONSv.SEBELIUS A-1 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 42. 4 U.S.1,24-25(1916),holdingthatanotherwisevalidtax couldrunafoulofthetakingsclauseonlyina“casewhere, althoughtherewasaseemingexerciseofthetaxingpower, theactcomplainedofwassoarbitraryastoconstraintothe conclusionthatitwasnottheexertionoftaxation,buta confiscationofproperty.”SeeAAPSI,901F.Supp.2dat38- 39. Inanapparentefforttosqueeze§5000Aintothatnarrow category,appellantsarguethatthetax(andtheinsurance programofwhichitisapart)asks“healthyprivateindividuals tosupportunhealthyprivateindividuals.”Appellants’Br.32. InsupporttheycitetheCourt’sobservationinKelov.Cityof NewLondon,Conn.,545U.S.469(2005),that“ithaslong beenacceptedthatthesovereignmaynottakethepropertyof Aforthesolepurposeoftransferringittoanotherprivate partyB,eventhoughAispaidjustcompensation.”Id.at477. ButitisimpossibletoreadthatsentenceinKelo(evenifwe weretotreatitasaholding,whichitisn’t)assuggestingthat anyredistributivepurposesweepsanotherwisevalidtaxinto thenarrowgroupofmeasurescondemnedbyBrushaber. Appellantsmakemuchofanassertionthattheirtakings clausechallengeisas-appliedratherthanfacial.Butother thansayingso,theygiveusnoreasonwhythisshouldyielda morefavorableoutcomefortheclaim.Wethusaffirmthe districtcourt. Insupportoftheiroriginationclauseclaim,appellants arguethatthoughthebillultimatelyeventuatingintheACA originatedintheHouse,itwasnot,asitleftthatchamber,a revenuebill;onlyamendmentsaddedintheSenatethatmade itsuchabill.Appellantsraisedthisargumentforthefirst timeonlyafteranorderbythedistrictcourt,aftertheCourt issueditsdecisioninNFIB,invitingsupplementalpleadings, wellafterappellantsfiledtheiroppositiontothegovernment’s motiontodismiss.Thedistrictcourtdismissedtheclaimon USCACase#13-5003Document#1482743Filed:03/07/2014Page4of10 5 theprinciplethatwhenaplaintifffilesanoppositiontoa motiontodismiss,andaddressesonlysomeofthedefendant’s arguments,theonesnotaddressedmaybetakenasconceded. AAPSI,901F.Supp.2dat37-38(citingIwealav. OperationalTechs.Servs.,Inc.,634F.Supp.2d73,80 (D.D.C.2009)).Appellantsdonotcontestthegeneral principle,butarguethatbecausetheyraisedtheorigination clauseclaiminsupplementalbriefingorderedbythedistrict court,therewasnowaiverorforfeiture. Insofarasthegovernmentrecognizesthattheorderfor supplementalbriefingrendersthissituationatypical,itfocuses onthefacttheorderrequiredbothpartiestofiletheir supplementalbriefssimultaneously.It’shardtoseehowthe merefactofsimultaneousfilinghelpsthegovernment.Ifit feltthatappellantshadimproperlyraisednewarguments,it wasfreetoseekleavetoobjectonthatground,tooffer contraryargumentsonthemerits,ortomovetoamendits pleadings,Fed.R.Civ.P.15.Itdidnoneofthese. Regardlessofthesimultaneousfilings,two considerationssupportthedistrictcourt’sdecisiontotreatthe argumentasconceded.First,thebriefinginNFIBandthe lowercourtdecisionsreviewedinNFIB,longbeforethe decisionissued,clearlyraisedthepossibilitythat§5000A wouldbesustainedasatax.See,e.g.,NFIB,132S.Ct.at 2593-2600(opinionofChiefJusticeRoberts)(addressingthe government’staxtheory),2650-55(opinionofJusticesScalia, Kennedy,ThomasandAlito)(same).Thegovernment offeredthattheoryasadefenseinthisverycase,seeMotion toDismiss5,44-47,andappellantsresistedtheclaimwith roughlyfivepagesoftheiroppositiontothatmotion,see OppositiontoMotiontoDismiss41-46.Thusthedecisionin NFIBdidnomorethanrenderthetaxtheorymoresalientthan ithadbeen. USCACase#13-5003Document#1482743Filed:03/07/2014Page5of10 6 Second,thedistrictcourtcalledforsupplementalbriefing onlytoaddress“whether[NFIB]andHallv.Sebelius[667 F.3d1293(D.C.Cir.2012),addressedbelow]requirethe dismissalofanycounts.”Itwasthusmuchmorelimitedthan plaintiffsnowsuggest;itdidnotinvitebriefing“onthe impact”ofNFIB.CompareReplyBr.17-18.Thedistrict courtwasthereforeperfectlyreasonableinapplyingthe standardruleinferringconcessionfromgapsinaplaintiff’s oppositiontoamotiontodismiss. Wenote,thoughwedonotrelyon,thepresenceofan originationclausechallengeto§5000AinSisselv.U.S.Dep’t ofHealthHumanServs.,951F.Supp.2d159(D.D.C. 2013),appealpending,No.13-5202(D.C.Cir.). Statutory(IncludingAPA)Claims Appellants’firststatutoryclaimisanobjectionto provisionsinaSocialSecurityAdministration(“SSA”) handbook,theSocialSecurityProgramOperationsManual System(“POMS”).Theseprovisionsexplainthatindividuals entitledtosocialsecuritybenefitsareautomaticallyentitledto MedicarePartAbenefits.POMSHI00801.002,POMSHI 00801.034,andPOMSGN00206.020.Appellantsarguethat thehandbookprovisionsexceedtheSSA’sstatutoryauthority andthattheiradoptionshouldhavebeenprecededbynotice- and-commentrulemaking.Thedistrictcourtdismissedthe claimonavarietyofstandingtheories.AAPSI,901F.Supp. 2dat29-34.Weaffirmonasomewhatsimplerbasis. First,appellants’substantiveattackonthePOMS provisionsisclearlyforeclosedbyourdecisioninHallv. Sebelius,667F.3d1293(D.C.Cir.2012),holdingthatthe statutorytextestablishingMedicarePartAprecludesany optionnottobeentitledtoitsbenefits(thougheligible personsarefreenottoexercisetheirentitlement).Id.at1295- USCACase#13-5003Document#1482743Filed:03/07/2014Page6of10 A-2 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 43. 7 97.AlthoughSteelCo.v.CitizensforaBetterEnvironment, 523U.S.83,94-95(1998),normallybarsacourtfrom addressingasubstantivemeritsclaimbeforeaddressingall jurisdictionalvulnerabilities(thegovernmentpressesseveral, suchasthechannelingprovisionof42U.S.C.§405(h)),there isanexceptionwithinSteelCo.forameritsdecisionresting entirelyonpriororsimultaneousrulingsonanidenticalmerits question,id.at98-101. Second,appellants’claimtonotice-and-comment proceduresundertheAPAfailsbecauseourdecisioninHall eliminatesanypossibilitythatsuchprocedurescouldremedy appellants’allegedinjury.Itistruethatapartyassertinga proceduralinjuryenjoysasomewhatrelaxedtestasto whethercompliancewiththeproceduralrequirementwould leadto“redress”oftheparty’ssubstantiveinjury(i.e.,leadto alessinjuriousoutcome),seeLujanv.DefendersofWildlife, 504U.S.555,572n.7(1992),butherethereisnoway whatsoeverthatnotice-and-commentprocedurescouldhelp appellants,see,e.g.,Simonv.EasternKy.WelfareRights Org.,426U.S.26,38,41-43(1976).Halldidnotholdthat thePOMSpermissiblyinterpretedthestatutetopreclude withdrawalbyeligiblepersonsfromtheentitlementto MedicarePartA.Ratheritheldthatthestatuteitselfbarred anysuchefforttoescapeentitlement.Hall,667F.3dat1296 (“underthelaw,plaintiffsremainlegallyentitledtothe benefitsregardlessofwhethertheyacceptthem”);id. (“plaintiffs’positionisinconsistentwiththestatutorytext”). Accordingly,alltheprocedureintheworldcouldnotlawfully leadtheSSAtoaconclusionthatwouldredressappellants’ substantiveinjury. Appellants’secondstatutoryclaimattacksaninterim finalrule,ChangesinMedicareandMedicaidPrograms,75 Fed.Reg.24,437(May5,2010)(“IFR”),andtwo2009 changestoaMedicareclaimsprocessingmanual,Change USCACase#13-5003Document#1482743Filed:03/07/2014Page7of10 8 Requests6417and6421,onbothproceduralandsubstantive grounds.(“ChangeRequest”isthetermforanupdateto HHS’sonlinemanual,seeComplaint,¶76).Thedistrict courtrejectedtheclaimsinpartonastandingtheoryandin partonthemerits.AAPSI,901F.Supp.2dat39-46.The governmentarguesthattheclaimsaremoot,andweagree. Thedistrictcourt’sdiscussionthoroughlydescribesthe IFRandtheChangeRequests.Itisenoughforourpurposes toobservethattheygoverntheprocessbywhichphysicians may“optout”ofparticipationinMedicarePartB,and,having optedout,maynonethelessreferpatientsforservicescovered byPartB. Asiscommonwithinterimfinalrules,theIFRherewas supersededbyarulepromulgatedafternoticeandcomment, ChangesinMedicareandMedicaidPrograms,77Fed.Reg. 25,284(Apr.27,2012),issuedwhilethiscasewaspendingin thedistrictcourt.Thegovernmentarguesthattheprocedures accompanyingadoptionofthe2012ruleclearlymoot appellants’proceduralclaim.Moreover,theSecretarymade substantivechangestotheinterimruleasaresultofthe comments.See,e.g.,id.at25,291-92.Appellantsdonot disputethesepoints. Intheiropeningbrief,appellantsmakethestartling argumentthattheirclaimisnotmootbecause,“oncethe2012 ruleisinvalidated,theAdministrationwillneedtoretreatto theprocedurallydefectiveactionschallengedhere.” Appellants’Br.49.Appellantscitenocaseorreasoningto supporttheideathataclaimcanbesavedfrommootnessby thecourt’sblithelyhypothesizingthatawholeothersetof rules,notatissueinthepresentcase,orsofarasappearseven challengedinanyproceeding,maybeinvalid.Appellants alsoarguethatwhenweholdACAunconstitutionalasa violationoftheoriginationclause,theIFR,etc.,will inevitablyfall.Wemayassumearguendothatthesecondstep USCACase#13-5003Document#1482743Filed:03/07/2014Page8of10 9 inthisargumentissound,butthatisofnohelptoappellants: theirpremise—thatwewouldvindicatetheirorigination clauseclaim—hasprovenincorrect.Appellantsfurtherargue thatthe“substantivedefects”carryoverfromtheIFRtothe 2012rule,andthatthiscommonalitydefeatsmootness.Butit isclearlypreferableasageneralmattertoreviewasetof claimsinthecontextofanextantratherthanadefunctrule, andappellantsdonotevenarguethatthepassagestowhich theyobjectaresoisolatedastodefeatthatgeneralprinciple. Claimforan“Accounting” Finally,appellantsclaimthattheSocialSecurity CommissionerandtheSecretaryhaveviolatedtheir“fiduciary andequitableduties,”Compl.¶¶111,117,byfailingto providean“honestaccounting”ofthefinancialsituation facingSocialSecurityandMedicare.Id.at¶¶106-117.The districtcourtheldthatplaintiffsdidnotidentifyaninjury sufficientforstandinganddismissedonthatground,AAPSI, 901F.Supp.2dat46,apositionendorsedbythegovernment onappeal.Theplaintiffsstressthat,contrarytothe conclusionofthedistrictcourt,theyhaveassertedsuchan injury,pointingtotheparticularinterestinthesolvencyofthe MedicareProgramheldbythephysicianmembersof appellantorganizations. Weneednotaddresswhetherappellants’allegedinjury shouldbeclassifiedasmerelyanabstractinterest“inproper application”ofthelaws,asthedistrictcourtfound,AAPSI, 901F.Supp.2dat46,citingLujan,504U.S.at573-74,oras aharmthat,thoughverywidelyshared,issufficiently concretetosatisfyArticleIII’sinjuryrequirement,FECv. Akins,524U.S.11,23-25(1998).Appellantsprovidenolegal argumentfortheirclaimsagainsttheCommissionerand Secretary.Theydonotciteastatute,theConstitution,orany USCACase#13-5003Document#1482743Filed:03/07/2014Page9of10 A-3 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 44. 10 caselawforthefoundationoftheallegedfiduciaryduties; theydonotevensketchapenumbrapossiblyemanatingfrom anypartofthelawsorConstitutionoftheUnitedStates. Although“[i]tisfirmlyestablishedinourcasesthatthe absenceofavalid(asopposedtoarguable)causeofaction doesnotimplicatesubject-matterjurisdiction,”SteelCo.,523 U.S.at89,itisequallyclearthatwhereaclaimis“wholly insubstantialandfrivolous,”itmaybedismissedforwantof jurisdiction.Bellv.Hood,327U.S.678,682-83(1946).As thefilingsinthedistrictcourtandbeforethiscourtdonot discloseevenanarguabletheory,wefindawantof jurisdictionovertheclaimtoan“accounting.” *** Forthereasonsstatedabove,thejudgmentofthedistrict courtis Affirmed. USCACase#13-5003Document#1482743Filed:03/07/2014Page10of10 A-4 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 45. 1 Official-SubjecttoFinalReview 1INTHESUPREMECOURTOFTHEUNITEDSTATES 2-----------------x 3KATHLEENSEBELIUS,: 4SECRETARYOFHEALTHAND:No.13-354 5HUMANSERVICES,ETAL.: 6Petitioners: 7v.: 8HOBBYLOBBYSTORES,INC.,: 9ETAL.;: 10: 11and: 12: 13CONESTOGAWOOD: 14SPECIALTIESCORPORATION,: 15ETAL.,: 16Petitioners:No.13-356 17v.: 18KATHLEENSEBELIUS,: 19SECRETARYOFHEALTHAND: 20HUMANSERVICES,ETAL.: 21-----------------x 22Washington,D.C. 23Tuesday,March25,2014 24 25Theabove-entitledmattercameonfororal AldersonReportingCompany 2 Official-SubjecttoFinalReview 1argumentbeforetheSupremeCourtoftheUnitedStates 2at10:11a.m. 3APPEARANCES: 4PAULD.CLEMENT,ESQ.,Washington,D.C.;onbehalf 5ofthePrivateParties. 6DONALDB.VERRILLI,JR.,ESQ.,SolicitorGeneral, 7DepartmentofJustice,Washington,D.C.;onbehalfof 8theFederalGovernment. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AldersonReportingCompany 3 Official-SubjecttoFinalReview 1CONTENTS 2ORALARGUMENTOFPAGE 3PAULD.CLEMENT,ESQ. 44OnbehalfofthePrivateParties 5ORALARGUMENTOF 6DONALDB.VERRILLI,JR.,ESQ. 7OnbehalfoftheFederalGovernment41 8REBUTTALARGUMENTOF 9PAULD.CLEMENT,ESQ. 10OnbehalfofthePrivateParties83 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AldersonReportingCompany HOBBYLOBBY/CONESTOGAWOODv.SEBELIUS B-1 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 46. 4 Official-SubjecttoFinalReview 1PROCEEDINGS 2(10:11a.m.) 3CHIEFJUSTICEROBERTS:We'llhearargument 4thismorninginconsolidatedcasesNumber13-354, 5Sebelius,SecretaryofHealthandHumanServicesv. 6HobbyLobbyStores;and13-356,ConestogaWood 7SpecialtiesCorporationv.Sebelius. 8Mr.Clement. 9ORALARGUMENTOFPAULD.CLEMENT 10ONBEHALFOFTHEPRIVATEPARTIES 11MR.CLEMENT:Mr.ChiefJustice,andmayit 12pleasetheCourt: 13WhenaFederalGovernmentagencycompelled 14employerstoprovidesomethingasreligiouslysensitive 15ascontraception,itknewthatfreeexerciseinRFRA 16claimswouldsoonfollow. 17Inparticular,theagencyitselfprovided 18exemptionsandaccommodationsforthereligiousexercise 19ofasubset-- 20JUSTICESOTOMAYOR:Isyourclaimlimitedto 21sensitivematerialslikecontraceptivesordoesit 22includeitemslikebloodtransfusion,vaccines?For 23somereligions,productsmadeofpork?Isanyclaim 24underyourtheorythathasareligiousbasis,couldan 25employerprecludetheuseofthoseitemsaswell? AldersonReportingCompany 5 Official-SubjecttoFinalReview 1MR.CLEMENT:Well,JusticeSotomayor,the 2firststepintheanalysiswouldbetoaskwhetheror 3notthere'sasubstantialburdenonreligiousexercise. 4Idothinkthiscaseis,inasense,easierthanmostof 5theexamplesthatyou'vebroughtupbecausehere'sone 6whereit'ssoreligiouslysensitive,sofraughtwith 7religiouscontroversy,thattheagencyitselfprovidesa 8certainnumberofexemptionsandaccommodations.So 9that'soneway,Ithink,thatyou'daddressthefirst 10stepofthequestionhere. 11JUSTICEKAGAN:Well,Imean,justtakeone 12ofthethingsthatJusticeSotomayoraskedabout,which 13isvaccinations,becausetherearemanypeoplewhohave 14religiousobjectionstovaccinations.Sosupposean 15employerdoesand--andrefusestofundorwantsnotto 16fundvaccinationsforheremployees,what--what 17happensthen? 18MR.CLEMENT:Well,ifweassumewegetpast 19thesubstantialburdenstepoftheanalysis,thenthe 20nextstepoftheanalysisisthecompellinginterestand 21leastrestrictivealternativesanalysis.Andeverycase 22wouldhavetobeanalyzedonitsown.Idothinkinthe 23contextofvaccinations,thegovernmentmayhavea 24strongercompellinginterestthanitdoesinthis 25contextbecausetherearenotionsofherdimmunityand AldersonReportingCompany 6 Official-SubjecttoFinalReview 1thelikethatgivethegovernmentaparticularly 2compellinginterestintryingtomaximizethenumber-- 3JUSTICEKAGAN:Bloodtransfusions? 4MR.CLEMENT:Bloodtransfusions.Again, 5eachoneofthesecases,Ithinkwouldhavetobe 6evaluatedonitsownandapplythecompelling 7interest-leastrestrictivealternativetestandthe 8substantialburdenspartofthetest. 9JUSTICEKAGAN:Soreally,everymedical 10treatment.AndJusticeSotomayorisquiterightthat 11therearequiteanumberofmedicaltreatmentsthat 12differencereligiousgroupsobjectto.Soonereligious 13groupcouldoptoutofthisandanotherreligiousgroup 14couldoptoutofthatandeverythingwouldbepiecemeal 15andnothingwouldbeuniform. 16MR.CLEMENT:Well--well,JusticeKagan, 17nothingcouldbeclearerthanwhenCongresspassedRFRA 18CongressmadeajudgmentthatRFRAwasgoingtoapplyto 19allmannerofFederalstatutes.AndIthinkwhatthe 20Congress-- 21JUSTICEGINSBURG:Mr.Clement,maybeit 22seemedclearthen,butsinceRFRA,justasbeforeRFRA, 23CongresshascontinuedtowriteintoFederallegislation 24specificreligiousexemptionsforsome,butnot 25everybody,forindividuals,sometimesreligious AldersonReportingCompany B-2 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 47. 7 Official-SubjecttoFinalReview 1institutions.SoifitwasallthatclearthatRFRA 2tookcareofitall,whydidCongresscontinueafter 3RFRAtopasstheselawsfocusingtheexemptiononan 4individual,religiousinstitution?Those,asItake 5yourargument,allofthoselaws--andtherearemore 6thanhalfadozen--wereunnecessary.OnceRFRAwason 7thebooks,Congressdidn'thavetodothatanymore. 8MR.CLEMENT:Well,JusticeGinsburg,I'm 9notsurethattheywereallunnecessary.Andofcourse, 10inavarietyofcontexts,Congressmayproceedonabelt 11andsuspendersmatters.SoIthinkthere'sreallytwo 12differentquestions.OneiswhenCongresspassedRFRA, 13wasRFRAjustdonewithcreatingotherexemptions.And 14Ithinktheanswertothatisno.ButIthinkthe 15questionthatJusticeKagan'squestionbroughtupis, 16wasCongressevidentanddidCongressspecifically 17considerwhetherRFRAwouldapplyacrosstheboardto 18alltheprovisionsof18U.S.C.,orratherallthe 19provisionsoftheUnitedStatesCode.AndCongress 20couldnothavebeenclearerthatitwaspassinga 21statutethatitwantedtoapplytoallpreexisting 22statutesandtoallsubsequentstatutesunlessCongress 23specificallyprovidedotherwise. 24JUSTICEKENNEDY:Youwerebeginningby 25givingusaframeworkforyourargument.DoIthinkof AldersonReportingCompany 8 Official-SubjecttoFinalReview 1thisasastatutorycase?Ofcourse,theFirst 2Amendmentisonthestageatsomepointhere,butItake 3ityoucanprevailjustonthequestionofstatutory 4interpretation,andifthatisso,arethereany 5statutoryrulesthatworkinyourfavor,thatistosay, 6avoidingaconstitutionalquestionorhowdowethink 7aboutthiscase,primarilyasastatutorycase? 8MR.CLEMENT:Obviously,oneofmyclients 9hasbeforeyourightnowafreeexerciseclaimandmy 10otherclienthasafreeexerciseclaimthat'slivein 11thelowercourts.Sothoseissuesarepreserved.But 12I,think,asyourquestionpointsout,thisCourt 13really,firstandforemost,candecidethisonthebasis 14oftheFederalstatute,andtheAshwanderprinciplesof 15constitutionalavoidanceseemliketheywouldbesortof 16fullyapplicabletotheCourt'sconsiderationofthat 17question.Andthen,ofcourse,thenormalprinciplesof 18statutoryconstructionwouldcertainlypointyoutothe 19answertothefirstobjectionthegovernmentraises, 20whichisdopersonsincludefor-profitcorporations 21because-- 22JUSTICEKAGAN:Mr.Clement,isn'tthisa 23specialkindofstatute?Becausethisisastatutethat 24specificallyrefersbacktoabodyofconstitutional 25law.Itbasicallysayswewanttogetrightbacktothe AldersonReportingCompany 9 Official-SubjecttoFinalReview 1placethatwewerewithrespecttoreligiousclaims 2beforeEmploymentDivisionv.Smith.Andsowehave-- 3it'snot--youknow,it'sastatutethatdirectsusto 4abodyofconstitutionallaw. 5Thatbodyofconstitutionallawis,Ithink, 6verydifferentfromtheoneyouportrayinyourbrief. 7Itsuggeststhataccommodationsshouldbemade 8sometimes,butrarely,andsubjecttoa--toa 9balancinganalysis,nottoacompellinginterest 10standardinthewaywewoulduseitfor,say,race 11discrimination.So,youknow,what's--what'sthe 12responsetothat? 13MR.CLEMENT:Well,first,JusticeKagan, 14letmetakealittlebitofanissuewithyourpremise 15andletmetrytoresponsivetoyourquestionanyways 16afterIdothat.HowI'dliketotakeissuewithyour 17premiseisthatwhenCongressfirstpassedthestatute 18RFRA,ittalkedaboutfreeexerciseasdefinedinthe 19Court'scases.Andthenatthetimethatitpassed 20RLUIPA,whichisalaterstatute,itactuallyconfronted 21somelowercourtcasesthathadlimitedRFRAandtried 22toimposeacentralityrequirement.AndCongressdidn't 23wantthat.Itdidn'twanttotakeallthebaggageof 24thepre-Smithfreeexercisecases.Soitactually 25amendedthestatutetobroadenitsoitnowprotectsany AldersonReportingCompany B-3 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 48. 10 Official-SubjecttoFinalReview 1exerciseofreligion.SoIwouldtakeissuewithyour 2premisethatRFRAsimplypicksupeverythingthatever 3happenedpre-Smith. 4JUSTICESCALIA:Well,there--there's 5anotherrespectinwhichthis,evenasoriginally 6enacted,doesnottrackthe--thepreemployment 7Divisionv.Smithlaw.Thatistosay,the--the 8compellingStateinteresttestinthepriorcaseswas 9neveraccompaniedbyaleastrestrictivealternative 10requirement.Thatwasaninventionofthis--ofthis 11law. 12MR.CLEMENT:Ithinkthat'sfair,Justice 13Scalia.Oneofthethingsthatyourunintoifyoutry 14tosortofgetatthisstatutethewaythatJustice 15Kaganissuggestingisthatnoteverybodyexactlyagreed 16astowhatthepre-Smithcaselawwas.Youdescribed 17thepre-Smithcaselawinyouropinioninacertainway. 18JusticeO'Connordescribedthepre-Smithcaselawin 19anotherway.Soit'salittlebitdifficulttotryto 20say,asJusticeKagan'squestionwouldsuggest,that 21ratherthanjustapplythestatuteaswritten,weshould 22reallysortofjustgobackandapplypre-Smithlawsif 23thiswere-- 24JUSTICEKAGAN:Well,itisapplyingthe 25statuteaswritten.Thestatuteaswritten--thisis AldersonReportingCompany 11 Official-SubjecttoFinalReview 1notaquestionoflegislativehistory--thestatuteas 2writtenpointsbacktopre-Smithlaw.Itsays:That's 3whatwemean. 4MR.CLEMENT:Well,you'reright,Justice 5Kagan,inthepurposepartofthestatuteitsays:What 6wemeantodohereisbasicallyrestorethepre-Smith 7law.Butitalsoaccompaniesthatpurposestatutewith 8operativelanguage.Andtheoperativelanguage,whichI 9thinkthisCourtshouldapply,asJusticeScalia 10suggests,appliesbroadlytoanyexerciseofreligionby 11anypersonandthensuggeststhattherelevanttestis 12substantialburdenwiththeburdenonmyclientasto 13thesubstantialburdenpartofthetest.Andthen 14it's-- 15JUSTICEGINSBURG:Mr.Clement,this--this 16wasalawthatwaspassedoverwhelmingly,bothhousesof 17Congress.Peoplefromallsidesofthepolitical 18spectrumvotedforit.Itseemsstrangethatthere 19wouldhavebeenthattremendousuniformityifitmeans 20whatyousaiditmeans,totake--tocoverprofit 21corporations,especiallyinlightof--therewasan 22efforttoadoptaconscienceamendment,aspecific 23conscienceamendmentin2012,andtheSenaterejected 24that.That--thatamendmentwouldhaveenabledsecular 25employersandinsuranceproviderstodenycoverageon AldersonReportingCompany Official-SubjecttoFinalReview 12 1thebasisofreligiousbeliefsormoralconvictions.It 2wasspecificallygearedtosecularemployersand 3insuranceproviders.Andthat--thatwasrejected. 4MR.CLEMENT:Well,JusticeGinsburg,I 5wouldsuggesttothecontrary.Thereasonthatthere 6wassuchunanimitybehindRFRAinthefirstplaceis 7thateffortstolimitittojustcertainsubclasses, 8subsetsofreligiousfreedomclaims,wererejectedand 9sortofeverybodyinCongressgottogetherandsaid,all 10right,youhavesomeclaimsyouactuallywanttobe 11vindicated,youhavesomeclaimsyouwanttobe 12vindicated,we'llvindicateallofthem.Andifwe're 13goingtolookatanylegislativehistoryasshedding 14lightonthis,thenIwouldsuggestyoulookat 15ProfessorLaycock'sbrief,whichgoesintogreatdetail 16aboutthelegislativedebatesinvolvedin--thatledup 17ultimatelytothepassageofRLUIPA.AndwhenCongress 18wastryingtopassabroaderstatute,theRLPA,the 19ReligiousLibertyProtectionAct,theissueofthe 20statute'sapplicationandRFRA'sapplicationto 21for-profitcorporationswassquarelyputatissuebythe 22NadlerAmendment.Andthatamendmentwasrejectedand 23theHousereportthatdemonstratestherejectionofthat 24amendmentcouldnotbeclearerthattheyunderstoodthat 25for-profitcorporationswouldbecovered. AldersonReportingCompany B-4 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 49. 13 Official-SubjecttoFinalReview 1Now,infairness,whattheyunderstoodis 2thatwewereprobablytalkingaboutintherealworlda 3relativelysmallsetofcorporationslikean 4incorporatedkoshermarketorkosherdeliofthekind 5thatthisCourthadbeforeitintheCrownKoshercase. 6AndsoIthinkit's--youknow,wecantalkaboutthe 7extentandhowyou'dapplytheseprinciplestoExxon, 8butIthinkthat'sjustsomethingthat'snotgoingto 9happenintherealworld.Itisnoaccidentthatthe 10claimsthatyouhavebeforeyouinthesecasesare 11broughtbysmallclosely-heldcorporationsthathave 12firmlyheldreligiousbeliefs. 13JUSTICEKAGAN:But,again,Mr.Clementas 14JusticeGinsburgsaid,thiswasaveryuncontroversial 15law.Yourunderstandingofthislaw,your 16interpretationofit,wouldessentiallysubjectthe 17entireU.S.Codetothehighesttestinconstitutional 18law,toacompellingintereststandard.Soanother 19employercomesinandthatemployersays,Ihavea 20religiousobjectiontosexdiscriminationlaws;andthen 21anotheremployercomesin,Ihaveareligiousobjection 22tominimumwagelaws;andthenanother,familyleave; 23andthenanother,childlaborlaws.Andallofthatis 24subjecttotheexactsametestwhichyousayisthis 25unbelievablyhightest,thecompellingintereststandard AldersonReportingCompany 14 Official-SubjecttoFinalReview 1withtheleastrestrictivealternative. 2MR.CLEMENT:Well,Idon'tsaythat.I 3thinkCongresssaidthat.ButtobeasresponsiveasI 4cantoyourquestion,theparadeofhorriblesthatthe 5governmentoffersyououghttosoundfamiliar,because 6ifyoulookatthatparadeofhorribles--Social 7Security,minimumwage,discriminationlaws,compelled 8vaccination--everyitemonthatlistwasincludedin 9JusticeScalia'sopinionfortheCourtinSmith.And 10JusticeO'Connorrespondedtothatinherseparate 11opinionandshesaid,look,you'vegottotrustthe 12courts;justbecausefreeexerciseclaimsarebeing 13broughtdoesn'tmeanthatthecourtscan'tseparatethe 14sheepfromthegoats.Now,whatever-- 15JUSTICEKAGAN:Well,shehadan 16understandingofhowtheCourtworkedpre-Smiththatwas 17akindofSherbertv.Verner-Yoderunderstanding,which 18waswedidabalancing,welookedatthegovernment's 19interests,wetookthoseveryseriously,especiallyto 20theextentthattherewasharmtoidentifiablethird 21partiesandthatitfellonanidentifiablethirdparty. 22Thatwasbasically--youcouldnotgetanaccommodation 23forthatkindofharm. 24MR.CLEMENT:Well,whatshesaidand 25whateverthemeritsofitasamatterofconstitutional AldersonReportingCompany Official-SubjecttoFinalReview 15 1debateisn'trelevant.What--whatIthinkisrelevant 2isthatCongressclearlypreferredonesideofthat 3debateandthoughtcourtscouldhandlethis. 4Sothenthequestionbecomes:Howdocourts 5actuallyapplythistest?AndIdon'tthinkapplying 6thetesttorecognizethiscase,whereIthinkthe 7governmenthasanincrediblyweakcaseoncompelling 8interestandleastrestrictivealternatives,whichthey 9almostdon'twanttotalkaboutatall,isgoingto 10endangeranyotherstatutes.AndifIcouldtalkabout 11specific-- 12JUSTICEALITO:Well,couldIaskyouthis, 13Mr.Clement.In--inalltheyearssinceRFRAhasbeen 14onthebooks,hasanyoftheseclaimsinvolvingminimum 15wage,forexample,beenbroughtandhavetheysucceeded? 16MR.CLEMENT:JusticeAlito,veryfewof 17theseclaimshavebeenbrought.Veryfewofthemhave 18succeeded,andthat'snotwithstandingthefactthatall 19ofthesestatuteswe'retalkingaboutapplytoemployers 20generally.Andit--andnoneofthoseclaimshavebeen 21broughtortheyhaven'tsucceedednotwithstandingthe 22factthatthegovernmentconcedesthatsole 23proprietorshipsandpartnershipsandnonprofit 24corporationsareallprotectedbyRFRA. 25Now,millionsofAmericansareemployedby AldersonReportingCompany B-5 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 50. 16 Official-SubjecttoFinalReview 1proprietorships,partnerships,andnonprofits.Soif 2thesestatutesreallywereonacollisioncourse,I 3thinkwewouldhaveseenthecollisionalready. 4JUSTICEKAGAN:Well,withrespect, 5Mr.Clement,Ithinkthatthat'sprobablybecausethe 6CourthashadadifferentunderstandingofwhatRFRA 7doesandthekindofanalysisthatitrequirescourtsto 8performthanyou'rearguingforinthiscase.Thatif 9yourargumentwereadoptedandtherewasastrict 10scrutinystandardofthekindthatusuallyappliesanda 11leastrestrictivealternativerequirement,thenyou 12wouldseereligiousobjectorscomeoutofthewoodwork 13withrespecttoalloftheselaws.Andbecauseyousay 14thatthere--andIthinkthisisabsolutelyrightwhen 15yousayit--thatyou--youcannottestthecentrality 16ofabelieftoareligion,youcannottestthesincerity 17ofreligion.Ithinkacourtwouldbe,youknow-- 18theirhandswouldbeboundwhenfacedwithallthese 19challengesifyourstandardapplies. 20MR.CLEMENT:Well,JusticeKagan,acouple 21ofthoughts.Firstofall,Imean,it'snotlikethis 22CourthasneverhadaRFRAcasethatitappliedthe 23standardonthemerits.AndintheOCentrocase,this 24Courtappliedsomethingthatverymuchfelttothe 25governmentatthetimeasbeingstrictscrutiny.Butif AldersonReportingCompany 17 Official-SubjecttoFinalReview 1thisCourt-- 2JUSTICEGINSBURG:Well,Itwasareligious 3organization. 4MR.CLEMENT:Itcertainlywasareligious 5organizationandit'saseparatequestionas-- 6JUSTICEGINSBURG:Thisis--thisiswhat's 7different.Imean,allalongtheearliercasesdealt 8withindividualsandtheydealtwithreligious 9institutions. 10MR.CLEMENT:Well,ifImay,Justice 11Ginsburg,there'stwoseparatequestions.There'sa 12questionabouthowtoapplythetestifit'sapplicable 13inaparticularcase,andIthinkOCentroisthe 14startingplaceforguidanceonthat. 15Yourquestionalsobringsuptheseparate 16questionaboutthecoverageofthestatute.Andasto 17that,Ithinktheplacetostartisthestatuteitself, 18whichbroadlyprovidescoveragestopersons.Thatis 19notanincidentalterm.It'satermthatpicksup 20additionalcontextthroughtheDictionaryActand 21specificallyappliestoallcorporations,tojoint 22partnerships,tosocieties. 23JUSTICESOTOMAYOR:Howdoesacorporation 24exercisereligion?Imean,Iknowhowitspeaksandwe 25have,accordingtoourjurisprudence,200yearsof AldersonReportingCompany 18 Official-SubjecttoFinalReview 1corporationsspeakinginitsowninterests.Butwhere 2arethecasesthatshowthatacorporationexercises 3religion? 4MR.CLEMENT:Well,JusticeSotomayor, 5those--thosecases--Imean,I'dstartwithcases 6likeLukumiorOCentro,whichallinvolved 7corporations,andnobodythoughtitwasparticularly 8problematictherethattheplaintiffsbeforethecourt 9wereartificialentities.AndIsupposeyoucould 10take-- 11JUSTICESOTOMAYOR:Well,buttheywere 12reallyarguingaboutthingsthataffectedtheir 13membership,notthemasacorporateentity. 14MR.CLEMENT:Well,I'mnotsurethatyou 15cansoeasilydividethetwo,andwecantalkabouthow 16itiswithcorporationsgenerally.Youunderstandhow 17thecorporationhascertainbeliefsorcertainintent,a 18scienterrequirement.Thecourtseverydaydealwith 19issuesoftryingtofigureoutwhatkindofintentor 20motivationacorporateentityhas. 21JUSTICESOTOMAYOR:Sothedissentinthis 22case,intheTenthCircuitcase,saidhowdowe 23determinewhenacorporationhasthatbelief?Whosays 24it?Themajorityofshareholders?Thecorporate 25officers?The--isit51percent?Whathappenstothe AldersonReportingCompany B-6 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 51. 19 Official-SubjecttoFinalReview 1minority?Andhowmuchofthebusinesshastobe 2dedicatedtoreligion?5percent?10percent?90 3percent?Justassumenotabusinesslikeyours--you 4pickedgreatplaintiffs,butlet'sassume-- 5(Laughter.) 6JUSTICESOTOMAYOR:Let'sassumejusta 7businessthatsells5percentofreligiousbooks, 8doesn'tplayChristmasmusic,doesn'tgiveoff--works 9onSunday,youknow,doesnothingelsereligiously. 10MR.CLEMENT:Right.And,Justice 11Sotomayor,Ithinkthewaytoapproachthosecaseswould 12bethesamebasicwayyouapproachotherquestionsof 13corporateintentorcorporatemotivation.Youlookto 14thegovernancedoctrines,ifanyofthisisputat 15issue.AndIthinkthat'sreallyacriticalquestion, 16whichisultimately,Ithinkthislineofquestioning 17goestoaquestionofsincerity,andifsomelarge 18corporationassertssomeclaimthat'sgoingtosavethem 19lotsofmoney,Iwouldthinkthatthegovernmentin 20thosekindofcasesisreallygoingtoresistthe 21sinceritypieceoftheanalysis.Inthiskindof 22case-- 23JUSTICESOTOMAYOR:That'sthemost 24dangerouspiece.That'stheonewe'veresistedinall 25ourexercisejurisprudence,tomeasurethedepthof AldersonReportingCompany 20 Official-SubjecttoFinalReview 1someone'sreligiousbeliefs. 2MR.CLEMENT:Tobeclear,thisCourt's 3caseshavealwaysdistinguishedbetweenthesincerity 4inquiry,whichtheCourthasallowed,andthecentrality 5inquiry,whichitsuggestedisinappropriate.But 6sincerityhasalwaysbeenapartofthisCourt'scases. 7JUSTICESOTOMAYOR:Ithoughtmore 8importantlywaswhetheraburdenwassubstantialornot. 9Thatwe'veneveraccededtothepersonclaiminga 10religiousexemption,abeliefinhowsubstantialthe 11burdenmightbe. 12MR.CLEMENT:Right.ThisCourthasnot 13questionedthat.TheThomascase,Ithink,putsas 14commongroundtheideathatyoudon'treally 15second-guesstheperson's--theperson'sbelief,but 16youcancontestsincerity.Itis--thereiscaselaw 17inthis.Youknow,youhavepeoplewhoarearrestedin 18possessionoflargequantitiesofmarijuanaandthey 19assertthattheybelongtothechurchofmarijuana,and 20thosecasesdogetlitigatedandtheygetrejected.And 21there'salotofdifferentwaysto-- 22JUSTICESOTOMAYOR:Isthere--istherea 23differentwayoflookingatit,theleeway?InU.S.v. 24Lee,wesaid,Whenfollowersofaparticularsectenter 25intoacommercialactivityasamatterofchoice,the AldersonReportingCompany 21 Official-SubjecttoFinalReview 1limitstheyacceptontheirownconductasamatterof 2conscienceandfaitharenottobesuperimposedonthe 3statutoryschemeswhicharebindingonothersinthat 4activity. 5Soisn'tthatreallytheanswer,thatwe've 6neverconsideredafor-profitcorporationasexercising 7religion? 8MR.CLEMENT:Well,letme--letmetakeon 9Leefirst.AndImean,that'sobviouslythetwolines 10ofLeethatarethegovernment'sfavoritetwolinesin 11Lee.ButLeestartswithasubstantialburdeninquiry, 12whichiswheremostofthesesincerityquestionsgo. 13AndLeedefinitelysaysthatthereisasincere 14religiousbeliefandasubstantialburdenonreligious 15exercise. 16Sothetwosentencesthatyou'requoting 17comeinthecompellinginterestanalysisofthecase. 18AndIthinkLeedoesstandforthepropositionthatin 19thetaxcontext,it'sgoingtobeveryhardforsomebody 20tobringaclaimthatsatisfieseventhedemanding 21compellinginterest,leastrestrictivealternativetest. 22JUSTICESOTOMAYOR:Well,that'san 23interestingquestion,becausethebriefsonbothsides 24herearewrittenasifthepenaltyfornothavinga 25healthinsurancepolicythatcoverscontraceptivesisat AldersonReportingCompany B-7 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 52. 22 Official-SubjecttoFinalReview 1issue.Butisn'tthereanotherchoicenobodytalks 2about,whichispayingthetax,whichisalotlessthan 3apenaltyandalotlessthan--thanthecostofhealth 4insuranceatall?Theseemployerscouldchoosenotto 5givehealthinsuranceandpaynotthathighapenalty-- 6notthathighatax. 7MR.CLEMENT:Well,justtoputthisin 8concreteterms,forHobbyLobby,forexample,thechoice 9isbetweenpayinga500--a$475millionperyear 10penaltyandpayinga$26millionperyearcoverage. 11JUSTICEKAGAN:No,Idon'tthinkthat 12that'sthesamething,Mr.Clement.There'sonepenalty 13thatisiftheemployercontinuestoprovidehealth 14insurancewithoutthispartofthecoverage,butHobby 15Lobbycouldchoosenottoprovidehealthinsuranceat 16all.AndinthatcaseHobbyLobbywouldpay$2,000per 17employee,whichislessthanHobbyLobbyprobablypays 18toprovideinsurancetoitsemployees. 19Sothereisachoicehere.It'snotevena 20penaltyby--inthelanguageofthestatute.It'sa 21paymentoratax.There'sachoice.Andsothe 22questionis,whyisthereasubstantialburdenatall? 23MR.CLEMENT:Well,justtobeclear,we 24weretalkingaboutthesamething.Sotheoption,the 25choice,isbetweenpayinga$475millionayearpenalty AldersonReportingCompany 23 Official-SubjecttoFinalReview 1anda$26millionayearpenalty.That'swhatHobby 2Lobbyfaces.So$2,000perperson-- 3JUSTICEKAGAN:No,betweenpaying$2,000 4peremployeeperyearifHobbyLobbydoesnotprovide-- 5MR.CLEMENT:That's$26million. 6JUSTICEKAGAN:Youknow,HobbyLobbyis 7payingsomethingrightnowforthe--forthecoverage. 8It'slessthanwhatHobbyLobbyispayingforthe 9coverage.ThereareemployersallovertheUnited 10Statesthataredoingthisvoluntarilybecausethey 11thinkthatit'sless. 12CHIEFJUSTICEROBERTS:Ithought--I 13thoughtthatpartofthereligiouscommitmentofthe 14ownerswastoprovidehealthcareforitsemployees. 15MR.CLEMENT:Thatistrue,Mr.Chief 16Justice.Itisalsotruethatthis-- 17JUSTICESOTOMAYOR:Well,iftheywanttodo 18that,theycanjustpayagreatersalaryandletthe 19employeesgoinontheexchange. 20MR.CLEMENT:Exactly,whichis,bytheway, 21whycomparingthe$2,000penaltytothecostofthe 22healthcareisafalse--it'safalsecomparison. 23JUSTICESOTOMAYOR:It'snotcalleda 24penalty.It'scalledatax.Andit'scalibrated--and 25it'scalibrated-- AldersonReportingCompany 24 Official-SubjecttoFinalReview 1CHIEFJUSTICEROBERTS:She'srightabout 2that. 3(Laughter.) 4MR.CLEMENT:Andithasbeentreatedfor 5somepurposesasapenalty.AndIthinkforthis 6purposes,itcertainlyfeelspunitive. 7AndifIcouldfinishthethoughtaboutwhyit's 8afalsecomparison,the2,000penaltytothecostofthe 9healthinsurance,isthatit'sgoingtoverymuchhurt 10HobbyLobbyifallofthesuddenitdoesn'tprovide 11healthcaretoitsemployees.Andinorderto 12compensateforthat,itwouldhavetoincreasethe 13wages.AndIthinkitwouldbeworseoffasaresultof 14this.ButifIcouldalso-- 15JUSTICEKAGAN:Well,let'ssaythatthat's 16right.Let'ssaythattheyhavetoincreasethewagesa 17littlebit.Imean,stillwearetalkingaboutpretty 18equivalentnumbers.Maybeit'salittlebitless;maybe 19it'salittlebitmore.Butthisisnotthekindof 20thingthat'sgoingtodriveapersonoutofbusiness. 21It'snotprohibitive. 22It'slikethethingthatwetalkedaboutin 23Braunfeldwherewesaid,youknow,maybeifthestore 24can'tstayopen7daysaweek,itmakesalittlebit 25lessmoney.Butsobeit,iswhatwesaid. AldersonReportingCompany B-8 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 53. Official-SubjecttoFinalReview 25 1MR.CLEMENT:No,Iactuallythinkwhatit's 2like,YourHonor,withallduerespect,it'slikethe 3fivedollarpenaltyenforcingtheprohibitioninYoder. 4AndwhatthisCourtsays,it'sonethingifyoudon't 5haveadirectgovernmentprohibitiononareligious 6exerciseoramandatethatsomebodydosomethingthat 7violatestheirreligion.Inthosecases,whichislike 8SherbertandislikeBraunfeld,thenyouhavetolookat 9thesubstantialpressure,anditbecomesalittlebit 10moreofaloosey-gooseyanalysis.Butwhenyouhavea 11governmentlawthatspecificallysaysyoumustdo 12somethingthatviolatesyourreligion--andit's 13enforcedwithapenalty,andwithallduerespectI 14think$2,000peremployeeisapenalty. 15JUSTICEKAGAN:ButMr.Clement,it'snot 16sayingyoumustdosomethingthatviolatesyour 17religion.It'sgivingyouachoice.Youcandothis 18thingorifthisthingviolatesyourreligionyoucando 19anotherthing.Andthatotherthingisapproximately 20thesamepriceasthethingthatyoudon'twanttodo. 21MR.CLEMENT:Idon'tthinkitwouldbethe 22samepriceattheendoftheday.I'dalsoliketo 23pointouthowthis-- 24JUSTICESCALIA:Well,ofcourseitwouldn't 25bethesamepriceattheendoftheday.Iftheydeny AldersonReportingCompany 26 Official-SubjecttoFinalReview 1healthinsurance,they'regoingtohavetoraisewages 2iftheyaregoingtogetemployees. 3MR.CLEMENT:Absolutely. 4JUSTICESCALIA:It'sabsurdtosaythat, 5youknow,itcomesoutofnowhere. 6MR.CLEMENT:Absolutely,YourHonor.And 7bytheway,this$2,000penaltyisverymucha 8double-edgedswordforthegovernment,becauseyou're 9tryingto-- 10JUSTICEKENNEDY:Butwhy--whyisthata 11problem?Let'sassumethatthecostofproviding 12insuranceisroughlyequivalenttothe$2,000penalty. 13How--howistheemployerhurt?Hecanjustraisethe 14wages. 15JUSTICESOTOMAYOR:MayIjustputa 16footnoteonthis.Ithoughttheaveragepriceof 17providinginsuranceforasinglepersonis$4,000,and 18it's$12,000forafamily--forafamily.Sothe2,000 19tax--that'swhatit'scalled--istohelpthe 20governmentprovidesubsidiestopeopleontheexchange 21thatdon'thaveemployerinsurance.Soit'satax 22becauseit's--itistodoexactlywhatyourclient 23wants,togetthegovernmenttosupplythe 24contraceptives,nottheinsurancecompanies. 25MR.CLEMENT:Here'stheproblemwiththis AldersonReportingCompany 27 Official-SubjecttoFinalReview 1wayoflookingatit,whichistosaywhateveritcosts 2peremployeetogetthis,thishealthcare,that's 3somethingthatrightnowHobbyLobbyispayingwhatever 4it'spayingthem,plusit's--it's--youknow,imputed 5intothatistheideathatthey'regettingtheirwage 6andthey'regettinghealthcareinsurance. 7Iftheytakeawaythehealthcareinsurance, 8theyaregoingtohavetoincreasethewagestomakeup 9forthat.Andthey'regoingtohavetopaythe$2,000 10penaltyontopofit,plusthey'regoingtohaveto 11violatetheir--theirowninterestwhichis,we 12actually--webelieveit'simportanttoprovideour 13employeeswithqualifiedhealthcare. 14JUSTICEKENNEDY:Okay,thelastis 15important.Butjustassumehypotheticallythatit'sa 16wash,thattheemployerwouldbeinaboutthesame 17positionifhepaidthepenaltyandtheemployer-- 18pardonme,anemployeewentoutandgottheinsurance 19andthattheemployee'swageswereraisedslightlyand 20thenit's--andthatit'sawashsofarastheemployer 21areconcerned,otherthantheemployer'sreligious 22objection,butjustonthefinancialstandpoint.Canwe 23assumethatasahypothetical.Thenwhatwouldyour 24casebe? 25MR.CLEMENT:Ithinkmycasewouldbethat AldersonReportingCompany B-9 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 54. 28 Official-SubjecttoFinalReview 1inthatcasethegovernmentmightbeabletosortof 2supportitselfonthecompellinginterest.Ithink 3therewouldstillbeasubstantialburdenontheir 4exercise.Butagain,thisallturnsonissuesthatthe 5governmenthasn'tputinissue.Thiscasehasn'tbeen 6litigatedonthisparticulartheory,soIthink--I'd 7lovetohavetheopportunitytoshowhowbynot 8providinghealthinsuranceitwouldhaveahugeburden 9onmyclientandtheirabilitytoattractworkers,and 10thatinfactwouldcostthemmuchmoreoutofpocket. 11Butthat'snotbeenthenatureofthegovernment's 12theory. 13JUSTICEKAGAN:CanIask-- 14JUSTICEGINSBURG:Therewasapointmade 15earlier,andIthinkyoudidn'tmeantosaythis,that 16provisionofhealthcareisnotpartoftheirreligious 17belief.Coveringtheiremployeesforhealthcare,that 18isnotareligioustenet,right? 19MR.CLEMENT:No,itactuallyis.Again,it 20hasn'tbeentheprincipaltheoryonwhichthiscasehas 21beenlitigated.Butsee,ifyougobacktothe 22complaintsandyougobacktoourbriefs,youknow,it's 23partofthereligiousbeliefsthatboththeHahnsand 24theGreenshave.Theythinkit'sactuallyimportant-- 25JUSTICEKAGAN:But,Mr.Clement,you'renot AldersonReportingCompany 29 Official-SubjecttoFinalReview 1saying,areyou,thattheirreligiousbeliefsmandate 2themtoprovidehealthcare?Ithoughtthatyouwere 3nevermakingthatclaim. 4MR.CLEMENT:Ididn'thavetomakethat 5claiminthecourseofthislitigation.WhatI'm 6pointingout,though,isforpurposesofthesubstantial 7burdenanalysis,itisperfectlyappropriatetotake 8intoaccountthatthe2,000--the$26millioninfines 9theywouldpaywouldnotbetheonlythingthatthey 10wouldloseoutiftheyareonthathornofthedilemma. 11Theywouldalsoloseoutalltheadditionalwagesthey 12wouldhavetopay,andtheywouldbeinthispositionof 13notofferinghealthcare,whichissomethingthey 14believeisimportantfortheirreligionaswell. 15JUSTICEKAGAN:Youknow,I'msuretheyseem 16likeverygoodemployers.AndI'msuretheywanttobe 17goodemployers.Butagain,that'sadifferentthing 18thansayingthattheirreligiousbeliefsmandatethemto 19providehealthinsurance,becausehereCongresshassaid 20thatthehealthinsurancethatthey'reprovidingisnot 21adequate,it'snotthefullpackage. 22MR.CLEMENT:Well,withrespect,what 23Congresshassaidisthatthiskindofplanisnot 24appropriateforanon-grandfatheredplan.Butifwe're 25goingtotalkaboutthegovernment'scompelling AldersonReportingCompany 30 Official-SubjecttoFinalReview 1interestshere,whichIthinkhasgottobepartofthe 2analysis,thenIthinkthegrandfatheredprovisionsof 3thisstatutereallyaredevastatingforthegovernment's 4argumentthatithasacompellinginterest. 5Whenthegovernmentpursuescompelling 6interest,itdemandsimmediatecompliance.Itdoesn't 7say,Getaroundtoitwheneverit'sconvenient.I 8can'timagineCongresspassingTitleVIIandsaying, 9Stopdiscriminatingonthebasisofrace,unlessof 10courseyouhaveapreexistingpolicythatdiscriminates 11onthebasisofrace,andthenyoucankeepitaslong 12asyou'dlike. 13Itisfundamentallyinconsistentwitha 14compellinginterest-- 15JUSTICEKAGAN:Well,butIthinkeven-- 16MR.CLEMENT:--analysistohavethiskind 17ofgrandfathering. 18JUSTICEKAGAN:--thatexample,youknow, 19initiallyTitleVIIdidnotapplytoanyemployerswith 20fewerthan25employees.Andthengradually,Congress 21broughtthenumberdownbecauseCongressrealizedthat 22thereweregoingtobetransitionissuesandthatsome 23timewasneededtomakesurethatthecompelling 24interest,youknow,shouldbeapplieduniformlyacross 25allemployers. AldersonReportingCompany B-10 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 55. 31 Official-SubjecttoFinalReview 1MR.CLEMENT:Here's,respectfully,whyI 2don'tthinkthatthatworks,whichisIthinkthe 3questionwheneverthereareexemptionsinthestatuteis 4toaskyourself,dotheexemptionsunderminethe 5compellinginterestthatthegovernmentasserts. 6There'snothinginconsistentwithan 7interestinprohibitingemploymentdiscriminationtosay 8we'regoingtofocusonthepeoplewhoactuallyemploy 9themostpeopleandthereforecanengageinthemost 10discrimination. 11It'squiteadifferentmatter,andIdon't 12thinkanybodywouldthinkthatCongresswouldpassa 13TitleVIIthatsaid,Hey,aslongasyouhavea 14preexistingdiscriminatorypolicy,you'reallowedto 15keepit.Thatdoesn'tseemlikeitwouldbe 16consistent. 17JUSTICESOTOMAYOR:Counsel,your 18attorney--oneoftheattorneysbelowonbehalfofyour 19clientsadmittedthatthegrandfatheredpoliciesweren't 20goingtobearoundverylongbecauseanychangetoan 21existingpolicy--andhesaidthesechangeshappenona 22yearlybasis.Andwealreadyknowfromthegovernment's 23statisticsthatit'supto40percentnowhave 24grandfatheredout.Yourownclientchangeditspolicy, 25andthat'swhyit'snotgrandfathered. AldersonReportingCompany 32 Official-SubjecttoFinalReview 1Andhechangedittodropcontraceptivesit 2wascovering. 3MR.CLEMENT:Well-- 4JUSTICESOTOMAYOR:Andsomypointis, 5sincewhendoesatransitionedgrandfatheredexemption 6andonethateverybodyknowswillhavetochange, 7becausepremiumsbydefinitionwillchangeorco-pays 8willchange,somethingisgoingtochange--it'savery 9shorttransitionperiod.Sincewhendoesthatprove 10thattheneedisnotcompelling? 11MR.CLEMENT:Withallduerespect,it'snot 12necessarilyaveryshorttransitionperiod.Andyour-- 13yourreferencestoco-paysandpremiumsispreciselyon 14point,becausethegovernment,throughitsregulations, 15hasallowedgrandfatheredplanstomakechangestothe 16co-paysaslongasthey'reindexedtomedicalinflation. 17Now,ifyouhaveatransitionperiodthat's 18justthereforananosecond,youdon'tbotherindexing 19ittomedicalinflation.Sothisisagrandfather 20provisionthat'sgoingtobearoundformultipleyears. 21Andbythegovernment'sownnumbers,tensofmillionsof 22employeesarenotgettingthismandatedcoverageasa 23resultofthegrandfatherprovision.Andevenifwecan 24projectforwardtenyearstowhenmaybetherewouldonly 25beahandfulofgrandfatheredplans,evenatthatpoint, AldersonReportingCompany 33 Official-SubjecttoFinalReview 1youwouldstillhavethesameproblemthatthe 2governmentwouldhave,whichisithastomakean 3argumentforacompellinginterest. 4JUSTICEKENNEDY:Justbeforeyourtime 5startstogotoofast,howwouldyousuggestthatwe 6thinkaboutthepositionandtherightsofthe--ofthe 7employees?Andyoucanhavehypotheticalsaboutthe 8employermakesthem--wantstomakethemwearburkas 9andsoforth.That'snotinthiscase. 10Butin--inaway,theemployeesareina 11positionwherethegovernment,throughitshealthcare 12plans,is--is,underyourview,is--isallowingthe 13employertoputtheemployeeinadisadvantageous 14position.Theemployeemaynotagreewiththese 15religious--religiousbeliefsoftheemployer.Does 16thereligiousbeliefsjusttrump?Isthatthewayit 17works? 18MR.CLEMENT:Well,no,it'snotjustthe 19wayitworks,JusticeKennedy.AndIactuallyhavefour 20thingsI'dliketosayaboutthat,ifit'spossible. 21Oneis,Ithinkthefirstthingabout 22third-partyburdensisyouhavetoaskwherearethey 23comingfrom.Andifthethird-partyburdensarecoming 24fromanemployer--Imean,anemployerrightnowcan 25putsomeburdenontheirrightsbecausetheyhaveto AldersonReportingCompany B-11 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 56. 34 Official-SubjecttoFinalReview 1listentoreligiousmusicorwhatever.That'snotas 2seriousasaburdenthat'scomingdirectlyfromthe 3government.Sothat'soneprincipletothinkabout. 4Anotherprinciple,andthisismoreofa 5detail,butIthinkit'simportant,isthattothe 6extentyoutakeintoaccountthird-partyburdens,you 7takethoseintoaccountinthecompellinginterestpart 8oftheanalysis.Thegovernmenthasanargumentthat 9somehowthird-partyinterestsgointothesubstantial 10burdenpartoftheanalysis,wherewebeartheburden. 11Andwedon'tthinkthat'srightatall. 12Thethird-party-- 13JUSTICEGINSBURG:But,Mr.Clement,you 14madetheanalogytoRLUIPA.Andtheonethingthathas 15notbeenmentioneduptillnowistheEstablishment 16Clause.TheCourtwasveryclearwhenitcameto 17RLUIPA,whichyousaidissimilartoRFRA,thatthe 18accommodationmustbemeasuredsoitdoesn'toverride 19othersignificantinterests.Andthatwastrueof 20SherbertandthatwastrueofYoder.The--andthe 21Cuttercase,andthisCourtmadeitveryclear,thatthe 22accommodationhastobebalancedandyouhavetotake 23intoaccountothersignificantinterests. 24MR.CLEMENT:Right.Butthatactually 25bringsmetomythirdpoint,whichisthoseother AldersonReportingCompany Official-SubjecttoFinalReview 35 1significantintereststhatcarrythemostweighthaveto 2beindependentoftheverystatutethat'satissuein 3thecaseandthatthepartyseeksanexemptionfrom. 4SoifyouthinkabouttheCaldorcase,there 5theCourtwasconcernedwiththethird-partyburdenson, 6say,anemployeewhohadaseniorityrighttotakethe 7weekendsoff.Soheorshehadanindependentrightto 8taketheweekendoff,andthegovernmentpolicywas 9cominginanddisplacingthis. 10JUSTICESOTOMAYOR:I'mnotsurethat-- 11thatsquareswithLee.The--thestatutecreatedthe 12righttoSocialSecurity,andtheretheCourtsaidyou 13can'tdepriveemployeesofastatutoryrightbecauseof 14yourreligiousbeliefs.SoLeeiscontrarytothepoint 15you'remaking. 16MR.CLEMENT:There,too,Ihaveto 17respectfullydisagree,becauseifyourememberthefacts 18ofLee,Leeisbroughtnotjustbytheemployer,butby 19theemployee.Sotheparticularemployeestheredon't 20haveabeefwithwhathe'sdoingatall.AndIthink 21whenthey'retalkingaboutthird-partyburdensthere, 22whattheCourtisreallytalkingaboutisthe--the 23burdensofeverybodyelsewhocontributesintoasystem 24whereuniformity,tousetheCourt'swords,was 25indispensable. AldersonReportingCompany 36 Official-SubjecttoFinalReview 1AndsoifIcould,though,Ithink,justto 2illustratewhyit'ssortofdoublecountingtocountthe 3mandatedissuehereasbeingwhatgivestheburdento 4thethirdpartyorthebenefitonthethirdparty. 5Imaginetwohypotheticals.OneisCongresspassesa 6statuteandsaysIhavetodestroyallofmybooks, 7includingmyBibles.Anotherstatute,Congresscomesin 8andsaysIhavetogiveallofmybooks,includingall 9ofmyBibles,toyou. 10Now,inthesecondcase,Isupposeyoucould 11saythataRFRAclaimsomehowgetsridofyourstatutory 12entitlementtomyBibles,butIdon'tthink,sinceit's 13theverybenefitthatwe'retalkingaboutthat'sat 14issuethere,Idon'tthink--Ithinkthatreallyis 15doublecountingandIdon'tthinkthosetwohypothetical 16statutesshouldbeanalyzedanydifferently. 17Theotherthing,though,aboutburdens,and 18Ithinkitshouldgo--thisisthefourthpoint--that 19shouldgointothecompellinginteresttest-- 20JUSTICEKAGAN:Imean,Mr.Clement,isn't 21thatjustawayofsayingthatyouthinkthatthisisn't 22agoodstatute,becauseitasksonepersontosubsidize 23anotherperson.ButCongresshasmadeajudgmentand 24Congresshasgivenastatutoryentitlementandthat 25entitlementistowomenandincludescontraceptive AldersonReportingCompany B-12 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 57. 37 Official-SubjecttoFinalReview 1coverage.Andwhentheemployersays,no,Idon'twant 2togivethat,thatwomanisquitedirectly,quite 3tangiblyharmed. 4MR.CLEMENT:Well,JusticeKagan,Ithink 5youcouldsaythesamethingaboutmyBible 6hypothetical. 7ButIdohaveonelastthingtosayabout 8burdens.AndIdothinkwhenyouthinkaboutimpactson 9thirdparties,notalloftheseburdensarecreated 10equal.Andthat,too,Ithinkisborneoutinthis 11Court'scases.Andthemostrelevantfactoris,is 12theresomealternativewayforthegovernmentto 13amelioratetheburden. 14AndIthinkabouttwotypesof,kindof 15accommodations,ifyouwill.YougetsortofTitleVII 16withaverynarrowaccommodation.Andthenyouhave 17conscienceclausesthatallowmedicalproviders, 18includingfor-profitmedicalproviders,nottoprovide 19abortions. 20Now,eachofthosehasaburdenonthird 21parties,butIwouldrespectfullysuggestthey're 22different.Inthecaseoftheemployeewho'sbeen 23subjecttoracialdiscrimination,eveniftheycanget 24anotherjob,thatracialdiscriminationisaunique 25injurytothemthatyoucan'tremedyunlessyoutellthe AldersonReportingCompany 38 Official-SubjecttoFinalReview 1employer,don'tdiscriminateonthebasisofrace. 2Now,inthecontextoftheconscience 3clause,ifawomancan'tgetanabortionfromher 4preferredprovider,that'ssurelyasignificantburden 5onher.Butwedon'tviewthatastrumpingthe 6conscienceclause,becauseshecangettheabortion 7throughanothermechanism. 8Here,asyourquestionrightfully 9highlights,allwe'rereallytalkingaboutiswho's 10goingtopayforasubsidythatthegovernmentprefers. 11Thisisnotaboutaccesstothecontraception.It's 12aboutwho'sgoingtopayforthegovernment'spreferred 13subsidy.AndIthinkinthatcontext,thereareample 14alternativewaystoaddressanyburdensonthird 15parties.Andthatgoesrighttotheleast-- 16JUSTICEGINSBURG:Itwouldmakeno 17differenceifitwere--thereare20FDA-approved 18contraceptives,allofthemcoveredbytheHealthcare 19Act. 20MR.CLEMENT:Ithink-- 21JUSTICEGINSBURG:You--youpickedout,in 22onecasewhat,three,andtheothercasefour?Suppose 23theemployersayscontraceptivesalltogetherare 24againstmyreligion,soI'mnotgoingtogiveany 25contraceptivecoverage. AldersonReportingCompany 39 Official-SubjecttoFinalReview 1MR.CLEMENT:Well,obviously, 2JusticeGinsburg,Ididn'tpicktheseout.Imean,my 3clientsandtheirreligiousbeliefsidentifiedtheseas 4problematic.Therearecertainly-- 5JUSTICEGINSBURG:Butyourargument,it 6seemstome,wouldapplyjustaswelliftheemployer 7saidnocontraceptives. 8MR.CLEMENT:Ithinkthat'safairpoint, 9JusticeGinsburg,andthegovernment'sown 10accommodations,wheretheyofferthemtoreligious 11groupsandreligiousemployerslikenonprofithospitals, 12alsoappliestowhateverthereligiousbeliefsofthat 13providerare.Soiftheyextendtoall20,thenthe 14exemption'sappliedtoall20.Iftheyonlyextendto 15four,thentheexemptionappliestoallfour. 16JUSTICEALITO:Aretherewaysof 17accommodatingtheinterestsofthewomenwhomaywant 18theseparticulardrugsordeviceswithoutimposinga 19substantialburdenontheemployerwhohasthereligious 20objectiontoit? 21MR.CLEMENT:Thereareampleless 22restrictivealternatives,YourHonor. 23JUSTICEALITO:Whatarethey? 24MR.CLEMENT:AndIthinktheyallflowfrom 25thisfactthatthisisultimatelyaboutwho'sgoingto AldersonReportingCompany B-13 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 58. 40 Official-SubjecttoFinalReview 1payforasubstitute-- 2JUSTICESOTOMAYOR:Thosearealternatives 3thatyou'reaskingthegovernmenttoincurortheperson 4toincur.Thereisn'tanalternativethatdoesn'tputa 5costonsomeoneelse. 6MR.CLEMENT:Well,it's--it's--it's 7funnyaboutthisparticularmandatebecausethe 8government'spositionisthisisactuallyacost-free 9mandate;thatwhateveryoupayoutincontraceptions, 10you'regoingtomakeupinnothavingtopayforother 11coverages.Andsoonealternative,onelessrestrictive 12alternativeiswhat'sdoneintheaccommodationfor 13nonprofitemployerslikehospitals,wherebasicallythey 14telltheinsurancecarrierortheplanadministerthat 15youpickupthecostforthisandthenessentiallyit'll 16becostneutralfromyou. 17ButIdon'tthinkthere'sanythingsortof 18sacrosanct,ifyouwill,abouthavingthegovernmentpay 19foritspreferredsubsidyasalessrestrictive 20alternative.Andthat'sessentiallywhatthegovernment 21doesforthoseemployeeswhohaveemployers--under50 22employers.Ifthoseemployees--iftheemployer 23doesn'tprovidehealthcare,thoseemployeesgoontothe 24exchangeswithasubsidyfromthegovernment.Now,they 25candothesamethingforobjectingreligiousemployers. AldersonReportingCompany 41 Official-SubjecttoFinalReview 1Theyjusthavechosennotto. 2IfImayreservemytime. 3CHIEFJUSTICEROBERTS:Thankyou, 4Mr.Clement. 5GeneralVerrilli. 6ORALARGUMENTOFDONALDB.VERRILLI,JR. 7ONBEHALFOFTHEFEDERALGOVERNMENT 8GENERALVERRILLI:Mr.ChiefJustice,and 9mayitpleasetheCourt: 10Thetouchstoneforresolvingthiscaseis 11theprincipleJusticeJacksonarticulatedinPrincev. 12Massachusetts.Ashesaid,Limitationswhichof 13necessityboundreligiousfreedombegintooperate 14wheneveractivitiesbegintoaffectorcollidewiththe 15libertiesofothersorofthepublic.Adherencetothat 16principleiswhatmakespossibletheharmonious 17functioningofasocietylikeours,inwhichpeopleof 18everyfaithliveandworksidebyside. 19CHIEFJUSTICEROBERTS:That'sastatement 20thatisinconsistentwithRFRA,isn'tit?Thewhole 21pointofRFRAisthatCongresswantedtoprovide 22exceptionsforthereligiousviewsofparticular-- 23includingproprietors,individuals. 24GENERALVERRILLI:No,Mr.ChiefJustice,I 25don'tthinksoatall.Infact,the--althoughI AldersonReportingCompany 42 Official-SubjecttoFinalReview 1was--ofcourse,IwasreferringtoJusticeJackson's 2wordsfortheirwisdombecauseitwasn'ttheopinionof 3theCourt.Butsee,Jackson-- 4CHIEFJUSTICEROBERTS:Yeah.Butthe 5wisdomyoucitedistheideathatyoudon'thave 6imposed,onthebasisofreligiousbeliefs,exemptions 7or--orlimitations.Anditseemstomethatwasthe 8wholepointofRFRA,totellthecourtsthatthatis 9exactlywhatyoushoulddounlesstheexception 10satisfiesthestrictscrutinytest. 11GENERALVERRILLI:Well,butIthink-- 12well,unlessitsatisfiesthe--thepre-Smithstandards 13under--undertheEstablishmentClause.ButIdothink 14thattheexactsamepoint-- 15JUSTICESCALIA:It'smorethanpre-Smith. 16GENERALVERRILLI:Itakeyourpoint-- 17JUSTICESCALIA:Plus-- 18GENERALVERRILLI:--Itakeyourpoint 19aboutlessrestrictivemeans,YourHonor. 20JUSTICESCALIA:Okay. 21GENERALVERRILLI:Butthe--theexactsame 22pointthatJusticeJacksonmadeinPrince,Isubmit,is 23thepointthatthisCourtmadeunanimouslyinCutter. 24It'snot--it'sthatwhenyouareanalyzingwhatis 25requiredunderRFRA,thecourtmusttakeaccountofthe AldersonReportingCompany B-14 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 59. Official-SubjecttoFinalReview 43 1wayinwhichtherequestedaccommodationwillaffectthe 2rightsandinterestsofthirdparties. 3JUSTICEALITO:Well,isityourargument 4thatprovidingtheaccommodationthat'srequestedhere 5wouldviolatetheEstablishmentClause? 6GENERALVERRILLI:It'snotourargument 7thatitwouldviolatetheEstablishmentClause.Butit 8isourargumentthatyou--inanyRFRAcase,including 9thisone,youhavetoconsidertheimpactonthird 10parties,becauseotherwise,youwillbeskatingonthin 11constitutionalice. 12AndsoJusticeKennedy,youaskedabout 13principlesthat--thatsurroundstatutoryconstruction. 14Avoidanceisoneofthem.AndthatwaswhytheCourt 15unanimouslyinCuttersaidthatineveryRFRAcasewhen 16you'reconsideringanaccommodation,youhavetoweigh 17theeffectonthirdparties.Andthat-- 18JUSTICESCALIA:Where--whereisthatin 19RFRA?Imean,what--whatfactorofRFRAdoyoufold 20thatinunder?Is--isthatpartofthecompelling 21Stateinterestrequirementor--orsubstantialburden 22requirement?Where--whereisitinRFRA? 23GENERALVERRILLI:I'dlike--Ithinkthe 24answeristhatitcouldinformeveryoperativeprovision 25inRFRA.Wehavesaidthatitshouldinformthecourt's AldersonReportingCompany 44 Official-SubjecttoFinalReview 1interpretationofwhocountsasaperson. 2JUSTICESCALIA:If--iftheywantedyouto 3balance--balancetheinterestofthereligious 4objectoragainsttheinterestofotherindividuals, 5they--theymadenoreferencetothatinRFRAatall. 6GENERALVERRILLI:Well,I-- 7JUSTICESCALIA:Theysaidunlessthe 8governmenthasacompellingStateinterest. 9GENERALVERRILLI:Andthecompelling--and 10certainlycompellinginterestanalysiscertainlydoes 11requireconsiderationoftheinterestsofthirdparties. 12Ofcourse,whatthecourt--whattheCongresssaidin 13RFRA,inexplaininghowthecompellinginteresttestwas 14towork,wasthatitwastostrikeasensiblebalance 15betweenclaimsforreligiouslibertyandgovernmental 16interests. 17And--and,ofcourse,Leeisoneofthe 18pre-Smithcasesthatprovidesthegoverninglaw.AndI 19wouldsubmititisreallytheonlycasefromthisCourt 20inwhichtherequestforanexemptionundertheFree 21ExerciseClausehadtheeffectofextinguishinga 22statutorily-guaranteedbenefit.BecauseinLee,hadthe 23employergottentheexemptionfromprovidingSocial 24Security,theconsequencewouldhavebeenthatthe 25employeeswouldhavebeendisqualifiedfromreceiving AldersonReportingCompany 45 Official-SubjecttoFinalReview 1SocialSecuritybenefits. 2JUSTICESCALIA:Butthatwasn'tthebasis 3for--fordenyingtheclaim.Thebasiswasthatthe 4governmenthastorunauniformsystemthatappliesto 5everybody. 6GENERALVERRILLI:Idisagree. 7JUSTICESCALIA:Andyoucan'targuethat 8herebecausethegovernmenthasmadealotof 9exemptions. 10GENERALVERRILLI:I--firstofall,I 11disagreewithrespecttoLee,thatoneofthepoints 12thattheCourtmadeinLeewasthatgrantingthe 13exemptionfromSocialSecuritytaxestoanemployer 14operatestoimposetheemployer'sreligiousfaithonthe 15employees.Itwasoneofthegroundsofdecision. 16Now--butturningto--Iwouldliketo 17addresstheseexemptions.I'mhappytotalkaboutthem. 18I'mhappytotalkaboutourcompellinginterestat 19length.The--now,the--my-- 20JUSTICEALITO:Well,ifyoucouldstart 21withthequestionofwhetherthe--thecompaniesin 22thiscasehavearighttobringRFRAclaimsbecause 23they'refor-profitcorporations.Youarguethatthey 24can't. 25GENERALVERRILLI:That'scorrect. AldersonReportingCompany B-15 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 60. 46 Official-SubjecttoFinalReview 1JUSTICEALITO:Now,whyisthat?Isit-- 2isityourpositionthatthere'ssomethingaboutthe 3corporateformpersethatisinconsistentwiththefree 4exerciseclaim? 5GENERALVERRILLI:No,because,obviously, 6churchescanbringclaims. 7JUSTICEALITO:Allright.Butisityour 8argumentthatthere'ssomethingaboutengagingina 9for-profitactivitythatisinconsistentwithafree 10exerciseclaim? 11GENERALVERRILLI:Yes.AndifIcouldwalk 12throughthe--letme,ifyoudon'tmind,justwalk 13throughtheanalysison-- 14JUSTICEALITO:Well,werethemerchantsin 15theBraunfeldcaseengagedinfor-profitactivity? 16GENERALVERRILLI:Yes. 17JUSTICEALITO:Sothereisn'tanything 18inherentin-- 19GENERALVERRILLI:ButIthink-- 20JUSTICEALITO:--inparticipatingina 21for-profitactivitythat'sinconsistentwithcorporate 22form,isthere?I'msorry,withafreeexerciseclaim. 23GENERALVERRILLI:Yes.ButIthinkthe 24relevantquestioniswhatdidCongressthinkitwas 25doingwhenitenactedRFRAin1993?Whatkindsof AldersonReportingCompany 47 Official-SubjecttoFinalReview 1claimsdiditthinkitwas-- 2JUSTICEALITO:Well,whatisitabout-- 3GENERALVERRILLI:--justifying? 4JUSTICEALITO:--afor-profitcorporation 5thatisinconsistentwithafreeexerciseclaim?Doyou 6agreewiththepropositionthatwasendorsedbyoneof 7thelowercourtsinthiscase,thatfor-profit 8corporationsmustdonothingbutmaximizeprofits,they 9cannothaveotheraims-- 10GENERALVERRILLI:No,not-- 11JUSTICEALITO:--includingreligiousaims? 12GENERALVERRILLI:No.Buthere'showwe 13lookatit.Atitscore-- 14JUSTICESOTOMAYOR:I'msorry,General.You 15answeredyestoBraunfeld.ItwasJewishmerchants,but 16itwasthemerchantsthemselves-- 17GENERALVERRILLI: 18JUSTICESOTOMAYOR: 19GENERALVERRILLI: 20JUSTICESOTOMAYOR: Individuals. --theindividuals-- Yes. --notthecorporation 21thatwasgoingtobejailed.Itwasa-- 22GENERALVERRILLI:Yes,that'sright. 23JUSTICESOTOMAYOR:--criminalprosecution. 24GENERALVERRILLI:IunderstoodJustice 25Alitotobeaskingmenotaboutthecorporateform,but AldersonReportingCompany 48 Official-SubjecttoFinalReview 1aboutthe--theactivity.Andwhenyouhavean 2individual,youhaveanindividual.It'saperson. 3JUSTICESOTOMAYOR:Sowhetheritwasa 4merchantthatwasacorporationornotwasirrelevant. 5Itwasthattheindividualwas-- 6GENERALVERRILLI:That's-- 7JUSTICESOTOMAYOR:--goingtobejailed. 8GENERALVERRILLI:That'scorrect. 9JUSTICESCALIA:Itwasanindividualmaking 10aprofit,right? 11GENERALVERRILLI:Certainly. 12JUSTICESCALIA:Hewasrunningabusiness 13foraprofit,andthatwasthepointof--ofJustice 14Alito'squestion,right,whichIthinkyouunderstood. 15GENERALVERRILLI:AndIdidtrytoanswer 16it,yes.ButI--butletmesay,Ithinktherelevant 17questionhereiswhatdidCongressthinkitwasdoingin 181993?AndIthinktheanswertothathastobein-- 19youknow,weunderstandtheDictionaryActprovidesa 20broaddefinitionofperson,buttheDictionaryAct 21doesn'tdefineexercisereligion.Andtheoperative 22statutorylanguageisexercise--person'sexerciseof 23religion.Andsoyoucan'tlooktotheDictionaryAct 24todefinethat.ButCongresstoldyouwheretolook. 25Ittoldyoutolooktothepre-Smithcaselaw-- AldersonReportingCompany B-16 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 61. 49 Official-SubjecttoFinalReview 1JUSTICEALITO:Andwhydidittell-- 2GENERALVERRILLI:--todefinethat. 3JUSTICEALITO:Whydiditsaythat?It 4changedthedefinitionatthetimewhenRLUIPAwas 5adopted,diditnot,toeliminatethereferencetothe 6FirstAmendment;isn'tthatright? 7GENERALVERRILLI:Yes.Butit--butthe 8differencetherewastosayitdidn'twantcourtstoget 9involvedintheentanglingenterpriseofdecidingwhat 10wasacentralbeliefversuswhatwas-- 11JUSTICEALITO:Well,itsaysfreeexercise. 12Anddidn'titalsoadoptaprovisioninRLUIPAsaying 13that--thattheexerciseofreligionwastobe 14interpretedinthebroadestpossibleway? 15GENERALVERRILLI:Well,Ithinkit--it 16saidsomethingmoreprecisethanthat,whichwasthatit 17wastobeinterpretednottobeconfinedonlytocentral 18religioustenets. 19JUSTICEALITO:No.Didn'titsay--didn't 20itsaythetermreligiousexerciseincludesany 21exercise-- 22GENERALVERRILLI:Yes,includesany 23exerciseofreligion,butitdoesn'tdefinewhatthat 24is.Itjustsaysyoudon'tdrawalinebetween 25centralityandsomethingthatmay-- AldersonReportingCompany 50 Official-SubjecttoFinalReview 1JUSTICEALITO:No.Butthereisanother 2provisionthatsaysthat,Thischaptershallbe 3construedinfavorofabroadprotectionofreligious 4exercisetothemaximumextentpermittedbythetermsof 5thischapterandtheConstitution. 6GENERALVERRILLI:Right.Andit--but 7withrespecttowhatexercisereligionmeans,itsaid 8don'tdrawlinesbetweencentralityandnon-centrality. 9Itdidn'tgobeyondthatandtellyouwhatitmeans. 10AndwhatRFRAtellsyoutolooktoispre-Smithcase 11law.Andintheentirehistoryofthiscountry,there 12isnotasinglecaseinwhichafor-profitcorporation 13wasgrantedanexemptionon-- 14JUSTICESCALIA:Notasinglecaseinwhich 15itwasdeniedexemption,either.Allyou'resaying 16is-- 17GENERALVERRILLI:Well,Lee-- 18JUSTICESCALIA:--thattherearenocases. 19GENERALVERRILLI:Well,Leewascertainlya 20caseinwhichafor-profitenterprisewasdeniedan 21exemption.Braunfeldwassuchacase.Gallagherwas 22suchacase. 23JUSTICESCALIA:Notonthegroundthatit 24wasafor-profitenterprise.Thereisnotasinglecase 25whichsaysthatafor-profitenterprisecannotmakea-- AldersonReportingCompany 51 Official-SubjecttoFinalReview 1afreedomofreligionclaim,isthere? 2GENERALVERRILLI:Right.Thereisnota 3singlecase-- 4JUSTICESCALIA:Right. 5GENERALVERRILLI:--holdingthat.Except 6thatinLee,itwascriticaltotheCourt'sanalysis 7thatthe--thatthe--thatMr.Leeandhisbusiness 8hadchosentoenterthecommercialsphere. 9JUSTICEKAGAN:Isn'tthatamerits 10question,General?Imean,Itotallyunderstandthat 11argumentasa--asanargumentaboutthemerits.I'm 12notsureIunderstanditasathresholdclaimthat 13this--thattheclaimisnotrecognizableatall. 14GENERALVERRILLI:Right.Well,letme--I 15dowanttomovetothecompellinginterestanalysis,but 16ifIcouldmakeonepointinresponsetoYourHonor's 17question,thattheCourt'sgottodecidewhatperson-- 18aperson'sexerciseofreligionmeans.Andthat--it 19seemstomethatitwouldbesuchavastexpansionof 20whatCongressmust--couldhavethoughtitwasdoingin 211993,whenitenactedRFRA,tosaythatfor-profit 22corporationscanmakeclaimsforreligiousexemptionsto 23anylawsofgeneralapplicationthattheywantto 24challenge. 25Ido--youknow,Mr.Clementsays,well, AldersonReportingCompany B-17 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 62. Official-SubjecttoFinalReview 52 1youdon'thavetoworryaboutanythingotherthansmall, 2tightly-knitcorporationsliketheoneatissuehere.I 3takethepointoftheappealofasituationlikethis 4one.Butthewayinwhichhesuggeststhatyouwillbe 5abletodistinguishthiscasefromacaseinwhicha 6largecorporationcomesinorapubliccompanycomesin, 7isthatyouwillhavemoregroundstoquestionthe 8sincerityoftheclaim.Butthatraisesexactlythe 9kindsofentanglementconcernsthatthisCourthas 10alwayssaidyoushouldtrytoavoid. 11CHIEFJUSTICEROBERTS:Well,that'shis 12argumentfordistinguishingit.Butthereareothers, 13includingthefactthatitismoreyouavoidallofthe 14problemswithwhattodoifit'sa--youknow,there's 15a51percentownershipoftheshareholders,ifyou 16simplysaythatit'sinthistypeofChapterS 17Corporationthatiscloselyheld.Whetheritappliesin 18theothersituationsis--isaquestionthatwe'llhave 19toawaitanothercasewhenalargepublicly-traded 20corporationcomesinandsays,wehavereligious 21principles,thesortofsituation,Idon'tthink,is 22goingtohappen. 23GENERALVERRILLI:Butevenwithrespectto 24thesecompanies,YourHonor,whatareyougoingtodoif 25there'sadisputebetween--let'ssaytherearethree AldersonReportingCompany 53 Official-SubjecttoFinalReview 1shareholders--adisputebetweentwointhemajority 2andoneintheminority?You'regoingtohavetoget 3yourselfinvolved--thecourtswillhavetoget 4themselvesinvolvedinallkindsof-- 5JUSTICESCALIA:Whoevercontrolsthe 6corporation.Whoevercontrolsthecorporation 7determineswhattheparty-- 8GENERALVERRILLI:Andthen--andthe 9minorityshareholderwillsay,well,thisis--under 10statelaw,thisisanactofoppressionandthis 11is-- 12CHIEFJUSTICEROBERTS:Well,that'sa 13questionofStatecorporatelaw.It'snotaquestionof 14whocanbringanactionunderRFRA. 15CouldIjustraise--eightcourtsof 16appeals,everycourtofappealtohavelookedatthe 17situationhaveheldthatcorporationscanbringracial 18discriminationclaimsascorporations. 19Now,doesthegovernmenthaveapositionon 20whethercorporationshavearace? 21GENERALVERRILLI:Yes.Wethinkthoseare 22correctandthatthissituationisdifferent. 23CHIEFJUSTICEROBERTS:Sothat--sothata 24corporationdoeshavearaceforpurposesof 25discriminationlaws. AldersonReportingCompany 54 Official-SubjecttoFinalReview 1GENERALVERRILLI:No,notthatthe 2corporationhasarace,butthatcorporationscanbring 3thoseclaims.Butyou'renotinterpreting--inthat 4situation,allyou'reinterpretingisthewordperson 5inastatute,notexerciseofreligion,whichiswhat 6makesitdifferenthere. 7CHIEFJUSTICEROBERTS:Sothose--those 8casesinvolveconstructionofthetermperson? 9GENERALVERRILLI:Yes,butonlyperson. 10CHIEFJUSTICEROBERTS:Sotheperson--the 11corporationcanbringasapersonaclaimofracial 12discrimination. 13GENERALVERRILLI:That'scorrect,butnot 14exerciseofreligion.That'sthedifference.Butlet 15me,ifIcould,wethinkthatpartoftheproblemhere 16andthereasonwemaketheargumentwedoatthe 17thresholdaboutwhyyououghtnotrecognizeclaimsunder 18RFRAforfor-profitcorporationsisthattheyaregoing 19topredictivelygiverisetothekindsofissuesyou 20haveinthiscaseinwhichtheexemptionisgoingto 21imposeaburdenonthirdpartiesorextinguishrightsof 22thirdparties,employeesorothers,andthatthat-- 23thatreallycan'tbewhatCongresswasthinkingabout. 24Butevenifyou-- 25JUSTICEALITO:Ifyousaytheycan'teven AldersonReportingCompany B-18 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 63. 55 Official-SubjecttoFinalReview 1gettheir--theycan'tevengettheir--theirdayin 2court,you'resayingsomethingpretty,prettystrong. 3GENERALVERRILLI:AndIunderstand,butif 4YourHonordisagreeswithme--iftheCourtdoesn't 5agreewiththispositionatthethreshold,thesame 6considerationswithrespecttotheharmsofthird 7partiesdefinitelyplayintothecompelling-interest 8analysis. 9Infact,underRFRA,thestandard,the 10precisestandardofthestatutesaysthegovernmentmust 11meetisthatitmustshowthattheapplicationofthe 12lawtotheparticularpartieshere,ConestogaandHobby 13Lobby,isinfurtheranceofthegovernment'scompelling 14interest.That'sthetest.Sothequestionhereis 15whetherhavingHobbyLobbyandConestogaprovidethis 16coverageisinfurtheranceofthegovernment'sinterests 17inensuringthatthiskindofpreventiveservice 18coverageisavailableand,inparticular,the 19contraceptivecoveragethat'sincludedwithinit. 20JUSTICEKENNEDY:Isityourpositionthat 21partofthecompellinginteresthereisthatyouhaveto 22protecttheintegrity--theoperationalintegrityof 23thewholeAct? 24GENERALVERRILLI:Itispartofour 25argument,absolutely.And--butit--butthereisin AldersonReportingCompany 56 Official-SubjecttoFinalReview 1additiontothat,muchmore-- 2JUSTICEKENNEDY:Doesthatmeanthe 3constitutionalityofthewholeActhastobeexamined 4beforeweacceptyourview? 5GENERALVERRILLI:Well,Ithinkithasbeen 6examined,YourHonor,ismyrecollection. 7(Laughter.) 8GENERALVERRILLI:But--butwithrespect 9to--butwithrespecttothe--thereisa 10particularizedinteresthereinthatwhatwearetalking 11aboutisaquestionofwhether14,000employeesand 12theirfamiliesgetaccesstothiscontraceptive 13coverage. 14JUSTICEKENNEDY:You--youhaveexempteda 15wholeclassofcorporationsandyou'vedonesounder 16yourviewnotbecauseofRFRA. 17GENERALVERRILLI:Soletme--letmegoto 18that-- 19JUSTICEKENNEDY:Now,what--whatkindof 20constitutionalstructuredowehaveiftheCongresscan 21giveanagencythepowertograntornotgranta 22religiousexemptionbasedonwhattheagencydetermined? 23Irecognizedelegationofpowersrulesaresomewhatmore 24abundantinsofarastheirenforcementinthisCourt. 25ButwhenwehaveaFirstAmendmentissueof--ofthis AldersonReportingCompany 57 Official-SubjecttoFinalReview 1consequence,shouldn'tweindicatethatit'sforthe 2Congress,nottheagencytodeterminethatthis 3corporationgetstheexemptiononthatone,andnoteven 4forRFRApurposes,forotherpurposes. 5GENERALVERRILLI:And,YourHonor,Ido 6thinkthatitwasappropriatefortheagency,in 7exercisingitsdelegatedauthorityhere,totakeinto 8accountthespecialsolicitudethatunderour 9constitutionalorderchurchesreceive.Andit's 10importanttounderstand,andIwanttowalkthrough 11the--thisquestionofexemptionsverycarefully 12becauseIthinkthere'salotofconfusionherethat 13needstobeclearedup,thatallthatthe--allthat 14thegovernmenthasdoneissaythatchurches,becauseof 15thatspecialsolicitude,whichtheCourtrecognizedin 16Hosanna-Tabor,churchesgetanexemption. 17Thenonprofitreligiousorganizationsdon't 18getanexemption.There'sanaccommodationthere 19provided,butthataccommodationresultsinthe 20employeesreceivingaccesstothis--tothe 21contraceptivecoverage,sothatdoesn'tdiminishthe 22government'scompellinginterest. 23TheTenthCircuitandmyfriendsonthe 24othersidehavereliedonthisideathatemployerswith 25fewerthan50employeesaresomehowexempt. AldersonReportingCompany B-19 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 64. 58 Official-SubjecttoFinalReview 1JUSTICEKENNEDY:Butyougavethis 2exemption,accordingtoyourbrief,withoutreferenceto 3thepoliciesofRFRA.What--whatwerethepolicies 4thatyouwereimplementing? 5GENERALVERRILLI:Well,withrespectto-- 6asIsaid,withrespecttothechurches,itwasthe 7specialsolicitudethatchurchesreceiveunderour 8ConstitutionundertheFirstAmendment. 9Butwithrespect--nowwithrespecttothe 10employers50andunder,it'sjustnotrighttosaythat 11there'sanykindofanexemption.Iftheyofferhealth 12insurance,they'resubjecttoexactlythesame 13per-employee,per-daypenaltyaslargercorporations, 14exactlythesameriskofLaborDepartmentenforcement, 15exactlythesameriskofanERISAsuitbytheplan 16beneficiaries.Thereisnopossiblewaytolookatthe 17statutoryschemeandconcludethereisanexemption 18there. 19CHIEFJUSTICEROBERTS: 20grandfatheredplans? 21GENERALVERRILLI:Yes. 22thegrandfatheredplans. 23CHIEFJUSTICEROBERTS: Whataboutthe Letmetalkabout Well,justbefore 24you--soonethingI'dlikeyoutoaddress,thedispute 25arosewithMr.Clementabouthowlongtheyweregoingto AldersonReportingCompany Official-SubjecttoFinalReview 59 1beineffect.Canyoumakearepresentationtousabout 2howlongthegrandfatheringisgoingtobeineffect? 3GENERALVERRILLI:I--Ican'tgiveyoua 4precisefigureasto--there'sacleardownward 5trajectory.There'ssignificantmovementdownwardevery 6yearinthenumbers.There'severyreasontothink 7that'sgoingtocontinue.Ican'tgiveyouaprecise 8timewhenthatisgoingtobe-- 9CHIEFJUSTICEROBERTS:Canyougivemean 10approximatetime,ifnotapreciseone? 11GENERALVERRILLI:I--Ican'tgiveyoua 12representationofexactlyhowlowthatnumberisgoing 13togoandexactlyhowlongit'sgoingtotake.ButI 14thinkwhatyou'retalkingaboutisaperiodinwhich 15thatnumberisgoingtogotoavery,verylowlevel 16overaseveralyearperiod. 17CHIEFJUSTICEROBERTS:Well,ifyoucan't 18tellus,andIdon'tfaultyoufornotbeingableto 19tellus,whenthegrandfatheringisgoingtoend, 20shouldn'tweassumeinouranalysisthatitiscurrent 21and,asfaraswecantell,notgoingtoend? 22GENERALVERRILLI:No.Idon'tthat's 23right,YourHonor.AndIthink--let's--let'slook 24atthis,ifwecould,intoto.Thatwithrespectto 25grandfathering,it'stobeexpectedthatemployersand AldersonReportingCompany 60 Official-SubjecttoFinalReview 1insurancecompaniesaregoingtomakedecisionsthat 2triggerthelossofthatso-calledgrandfatheredstatus 3underthe--underthegoverningregulation. 4JUSTICEALITO:Isn'tittruewithrespect 5tothegrandfatheredplansthattheregulationsrequired 6immediatecompliancewithcertainrequirements,butnot 7withpreventivecarerequirements;isn'tthatright? 8LetmereadyouwhatHHSsaidintheregulation:With 9certainparticularlysignificantprotections, 10particularlysignificantprotections,Congressrequired 11grandfatheredhealthplanstocomplywithasubsetof 12theAffordableCareAct'shealthreformprovisions.On 13theotherhand,grandfatheredhealthplansarenot 14requiredtocomplywithcertainotherrequirementsof 15theAffordableCareAct;forexample,therequirement 16thatpreventivehealthservicesbecoveredwithoutany 17costsharing. 18Soisn'tHHSsayingthere,quite 19specifically,these,inourview,arenotwithinthis 20subsetofparticularlysignificantrequirementsasto 21whichtheremustbeimmediatecompliance? 22GENERALVERRILLI:Well,the--thequestion 23wouldbewhetherthere'sacompellinginterestin 24compliancewiththeserequirements.AndI--I'dlike 25tomaketwopointsinresponsetoYourHonor'squestion. AldersonReportingCompany B-20 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 65. 61 Official-SubjecttoFinalReview 1Firstwithrespecttothisissueofdelay,whichI 2think,Mr.ChiefJustice,yourquestionraised,andmy 3friendontheothersidehasputalotofweighton,I'd 4refertheCourttotheADA.Idon'tthinkanybodywould 5doubtthattheAmericanswithDisabilitiesActadvances 6interestofthehighestorder.ButwhenCongress 7enactedthat,itputatwo-yeardelayonthe 8applicabilityofthediscriminationprovision. 9CHIEFJUSTICEROBERTS:Well,isn'tthat 10becauseyou'retalkingaboutbuildingrampsandthings 11likethat? 12GENERALVERRILLI:No.No,YourHonor. 13There'sanevenlongerdelaywithrespecttothosekinds 14ofprovisions,butit'sjustabasicprohibitionof 15discriminationtwo-yeardelay,andnoonewoulddoubt 16there'sacompellinginteresthere.Andwith--and 17take--takeTitleVII.Myfriendsontheotherside 18havesaid,well,thisisdifferentbecausethere'sso 19manymorepeoplewhoaregoingtonothavethiscoverage 20underthegrandfatheredplan.ButwithrespecttoTitle 21VII,ofcourse,it'sstillthecasethat--that 22employerswith15orfewerpeoplearenotsubjectto 23thatlaw,andthat's80percentoftheemployersinthe 24country.Andifyourunthemath,that's--it'sat 25least80percent--that's--it'sgoingtobesomewhere AldersonReportingCompany 62 Official-SubjecttoFinalReview 1between10and22millionpeoplewhoarenotwithinthe 2coverage.Noonewouldsaythatbecausethecoverageis 3incompleteinthatrespect,thatTitleVII--enforcing 4TitleVIIdoesn'tadvance-- 5CHIEFJUSTICEROBERTS:Thosewere 6decisions--thoseweredecisionsthatCongressmade, 7right? 8GENERALVERRILLI:Yes. 9CHIEFJUSTICEROBERTS:Well,the 10grandfatheringisnotadecisionthatCongressmade,is 11it? 12GENERALVERRILLI:Well,thewayinwhich 13it'simplementedisadecisionthattheagencyhasmade, 14that'strue.Butevenwithrespecttothepreventive 15services,Idon'tthinkanyonewouldsaythatthere's 16notacompellinginterestinadvancingcolorectalcancer 17screeningandimmunizationsandthethingsthatthe 18preventiveservicesprovisionsprovideinadditionto 19contraceptivecoverage.Ijustthinkthisisa 20compellinginterestunderanyunderstandingoftheterm. 21JUSTICEBREYER:Ijustwant--beforeyou 22gettothispoint,andmyquestionreflectsnopointof 23viewatallonmybehalf.Ijust--butItook 24Mr.Clement,oneofhispoints,whichIthoughtwasan 25importantone.Hesaystherearesomepeopleherewho AldersonReportingCompany 63 Official-SubjecttoFinalReview 1stronglyobjecttohelpingwithabortionswhichinclude 2abortifacientcontraceptives.Everybodysays,yes,they 3doobjecttothatandthat'ssincere.Sohe'snot 4sayingthis,butImight. 5Butthereisacompellinginterestin 6women'shealthandinthehealthofthefamily,and 7they'renothavingareligiousobjectiontotakingit. 8Andsothegovernmenthassaidprovideit. 9Thenhesays,butthereisaless 10restrictiveway,andthelessrestrictivewayisthe 11governmentpaysforit.Saysitwouldn'tcostmuch. 12You'dhavetohaveanotherpieceofpaperthatwouldgo 13totheinsurancecompanythatwouldsay,insofarasyour 14employerhasasincereobjectionagainstpayingthis, 15thegovernmentwillpayforit. 16Now,whatIwanttohear,andthisisnot 17comingfromanypointofview,Iwanttohearyour 18preciseanswertothatkindofargument. 19GENERALVERRILLI:Yes.Theydidargue--I 20willpointout,forthefirsttimeatthepodiumthis 21morning--thatalessrestrictivemeanswouldbeto 22extendtheaccommodationthatcurrentlyexists-- 23JUSTICEBREYER:I'mnotinterestedin 24whethertheymadetheargumentsoonerorlater.WhatI 25wanttohearfromyouisIwanttohear--andit's AldersonReportingCompany B-21 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 66. 64 Official-SubjecttoFinalReview 1not--you'vethoughtaboutthis.Iwanttohearyour 2answertothatkindofargument. 3GENERALVERRILLI:Well-- 4JUSTICEBREYER:Iwanttobesureyouhave 5achancetogiveit. 6GENERALVERRILLI:Theanswer--Ithink 7therearetwoanswerstoit.Assumingit'sbeforethe 8Court--andI'mgoingtoansweryourhonestquestion 9directly,butIdowanttomakeaprefatorypointhere, 10whichisthatunderthelaw,underAshcroftv.ACLU,for 11example,theburdenonthegovernmentistoshowthat 12proposedlessrestrictivealternativesarenotequally 13effective.Iftheydon'tproposeit,wedon'thavea 14burdentorefuteit. 15Havingsaidthat,wecanrefuteit.Now, 16therearetwo--andtherearetwoways.Thefirstis, 17theyclaimthattheydon'tthinkthattheaccommodation 18isalessrestrictivemeans,Itakeit,because--or 19theyhaven'traiseditbeforetoday,becausethey 20believethatRFRAwouldrequireexemptionstothattoo, 21suchthatifyouwere--ifyouweretoprovidethe 22accommodationinwhichtheinsurancecompanycomesin 23andprovidesthecontraceptioniftheemployersignsthe 24form,theywouldsaythatthat--signingtheformalso 25makesthemcomplicitinthecentralactivity,andthat AldersonReportingCompany 65 Official-SubjecttoFinalReview 1thereforeRFRAprovidesanexemptionthere,too. 2Andofcoursethetestiswhetherthe 3proposedalternativeadvancesthegovernment's 4interestsaseffectively.Andifitisgoingtobe 5subjecttoexactlythesameRFRAobjectionsbyexactly 6thesameclassofpeopleaskingforit,it'snotgoing 7toservethegovernment'sinterestaseffectively 8becausetheRFRAexemptionwillresultinnocoverage 9there. 10Thesecondpointbeingthat-- 11JUSTICESCALIA:Sodon'tmakethemsigna 12pieceofpaper. 13GENERALVERRILLI:Well,whethertheysign 14thepieceofpaperornot,iftheymaketheRFRAclaim 15there,whichtheyhavewithrespecttothat 16accommodation,itwillresultinitbeinglesseffective 17intermsofaccomplishingthecompellinginterest.In 18addition-- 19JUSTICEALITO:Well,wecanaskMr.Clement 20whathispositionisonthis.Butyousaytheyhave 21alreadyassertedthatitwouldbeinconsistentwithRFRA 22astheyunderstandittoprovideforafor-profit 23corporation,liketheonesinvolvedhere,thesortof 24accommodationthatHHShasextendedtoso-called 25religiousnonprofits,perhapswiththemodificationthat AldersonReportingCompany 66 Official-SubjecttoFinalReview 1wasincludedinourstayorderintheLittleSisters 2case.Havetheytakenapositiononthat? 3GENERALVERRILLI:You'llhavetoaskthem. 4Idon'tthinktheyhave.Buttheyhavestudiously 5avoidedarguingthisasalessrestrictivealternative, 6andItakeitit'sbecausetheirtheory,atleast,would 7leadonetotheconclusionyouwouldhavetoprovidea 8RFRAobjection.Butnowthe--yes,thankyou, 9Mr.ChiefJustice. 10Thesecondpointisthatyou'retalking 11aboutaveryopen-endedincreaseinthecosttothe 12government.Now,wedon'tknowhowmuchthatcostwould 13be.Thereasonisbecause,sincethiswasn'tlitigated 14inthelowercourts,there'snotarecordonit.SoI 15can'ttellyouwhatthat--whatthatincreasedcostis 16goingtobe,butitcouldbequiteconsiderable. 17JUSTICESCALIA:You'retalkingabout,what, 18threeorfourbirthcontrols,notallofthem,just 19thosethatareabortifacient.That'snotterribly 20expensivestuff,isit? 21GENERALVERRILLI:Well,tothecontrary. 22Andtwopointstomakeaboutthat.First,ofcourse 23the--oneofthemethodsofcontraceptiontheyobject 24tohereistheIUD.Andthatisbyfarandawaythe 25methodofcontraceptionthatismosteffective,buthas AldersonReportingCompany B-22 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 67. 67 Official-SubjecttoFinalReview 1thehighestupfrontcostandcreatespreciselythekind 2ofcostbarrierthatthepreventiveservicesprovision 3istryingtobreakdown. 4JUSTICEALITO:Ithoughtthat--Iwas 5takenbyyouranswer.Ithoughtitwasthegovernment's 6positionthatprovidingcoverageforthefullrangeof 7contraceptivesandotherdevicesanddrugsthatare 8coveredhereisactuallyfinanciallyneutralforan 9insurancecompany,thatthatreducesothercoststhat 10theywouldincur. 11GENERALVERRILLI:Itisfortheinsurance 12company,butforthewomanwhoisgoingtonotgetthe 13benefitofthestatuteiftheexemptionisgranted-- 14JUSTICEALITO:No.No.Ifshe--ifshe 15hasthecoveragethroughtheinsurancecompanybutthe 16employerhasnothingtodowitharrangingforthat. 17GENERALVERRILLI:Well,so,inotherwords, 18iftheyhaven'traisedaRFRAobjectiontothe 19alternative,butthat--butasIsaid,youknow,the 20logicoftheirpositionisthatyouwouldgetaRFRA 21objection.Itcan'tbe-- 22JUSTICEBREYER:Still,Iwanttoget-- 23pressthisalittlefurther,andIdon'twantyousimply 24tojustagreewithwhatI'mabouttosay. 25GENERALVERRILLI:Don'tworry. AldersonReportingCompany 68 Official-SubjecttoFinalReview 1(Laughter.) 2JUSTICEBREYER:No,Imean--Imean,after 3all,somebody,ataxpayer,mightsay,Idon'twantto 4payforthissmallwar.Anditwouldbeareligious 5ground,anditwouldbevery,verylittlemoney,in 6fact,thatyoutakefromhim.Orthechurchmightsay, 7IwantaSundaymorningreductioninthecostof 8municipalparking.Andbytheway,thatwillnotonly 9notcostthegovernmentanything,they'llmakemoney 10becausenobodyparksthereonSunday,particularlywith 11thishighafee. 12Now,I'mthinkingof--I'mtryingtofigure 13outwherethiscasefitsinthatspectrumbecauseI 14thinktheanswertothefirsttwoquestionsisno.And 15Iknow,soyou'rejustgoingtoagree,andthat'swhatI 16don'twant.Iwanttounderstandyourthinkingonthat. 17GENERALVERRILLI:Onthatpoint,Ithink 18thatquestionplugsintoourviewofwhatthe 19substantialburdentestrequires,thattheirviewof 20substantialburdenisifyouhaveasincerereligious 21beliefandthereisanylawwithameaningfulpenalty 22thatimposesonyoupressuretodosomething 23inconsistentwithyourbelief,thenyoumaypassthe 24substantialburdentest. 25Ithinktheproblemwiththattestasthey AldersonReportingCompany 69 Official-SubjecttoFinalReview 1formulateit,isthatunderthetwohypotheticalsthat 2youjustgave,JusticeBreyer,you'vegotasubstantial 3burdeninthosesituations,becauseifyoudon'tpaythe 4taxyoucangotojail,forexample. 5Andsowethinkthesubstantialburden 6analysishasgottobemorestrenuousthanthat.It's 7gottoincorporateprinciplesofattenuationand 8proximatecause,andthatwhenyouthinkaboutthiscase 9wheretherequirementistopurchaseinsurancewhich 10enablesactionsbyothers,thatyou'rereallycloserto 11thetaxsituationthantoimposingadirectobligation 12toact. 13Sothat'showwewouldthinkaboutthat 14issue.Butnow,withrespectto-- 15JUSTICEALITO:Mr.--GeneralVerrilli, 16isn'tthatreallyaquestionoftheologyormoral 17philosophy,whichhasbeendebatedfor--bymany 18scholarsandadherentstomanyreligions.Adoes 19somethingthatBthinksisimmoral.Howclosea 20connectiondoestherehavetobebetweenwhatBdoes 21thatmayhavesome--thatmayprovidesomeassistance 22toAinorderforBto--toberequiredtorefrainfrom 23doingthat--thataction. 24GENERALVERRILLI:It'struethatit'sa 25difficultquestion.Butitisn't-- AldersonReportingCompany B-23 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 68. 70 Official-SubjecttoFinalReview 1JUSTICEALITO:Itisareligiousquestion 2andit'samoralquestion.Andyouwantustoprovidea 3definitivesecularanswertoit? 4GENERALVERRILLI:No,butIdothinkthe 5problem,JusticeAlito,isthatthisCourthas 6recognized,andcertainlythecourtsofappealshave 7recognized,thatthereisadifference.Youacceptthe 8sincerityofthebelief,buttheCourtstillhastomake 9ajudgmentofitsownaboutwhatconstitutesa 10substantialburden,orotherwise,forexample,thetax 11thingwouldbeasubstantialburden.OrwecitedaD.C. 12CircuitcaseinwhichprisonersobjectedtogivingDNA 13samplesandthecourtsaid:Weacceptthesincerityof 14thatbelief,butit'suptoustodecidewhetherthat's 15aactuallysubstantialburden. 16IntheBowencaseinthisCourt,theCourt 17acceptedthesincerityofthebeliefthattheuseofthe 18child'sSocialSecuritynumberwouldoffendreligious 19beliefandcommitments,butsaidtheystillhadtomake 20ajudgmentaboutwhetherthatwasasubstantialburden. 21Soitdoeshavetobe,withallduerespect, 22partoftheanalysis. 23JUSTICEKENNEDY:Istilldon'tunderstand 24howHHSexerciseditsjudgmenttogranttheexemptionto 25nonreligiouscorporationsifyousayitwasnot AldersonReportingCompany 71 Official-SubjecttoFinalReview 1compelledbyRFRA. 2GENERALVERRILLI:Idon'tthink-- 3JUSTICEKENNEDY:Thenitmusthavebeen 4becausethehealthcarecoveragewasnotthatimportant. 5GENERALVERRILLI:Itdidn'tgrantan 6exemptiontoanynonreligiousorganizations,Justice 7Kennedy.Itgrantedanexemptiontochurches,andthat 8wasit.Withrespecttoreligiousnonprofits,it 9constructedanaccommodation,buttheaccommodation 10deliversthecontraceptivecoveragetotheemployeesof 11thenonprofits.Itjustdoesitthroughanindirect 12means.Butthereisnodiminutionofthe--there'sno 13basisforquestioningthegovernment'sinterestwith 14respecttothataccommodationbecausetheemployeesget 15thecoverage,justastheywould-- 16CHIEFJUSTICEROBERTS:Well,butthatof 17courseisanissuethat'sbeinghotlylitigatedright 18now,right?Whethertheemployeescangetthecoverage 19whenyou'retalkingaboutthereligiousorganizations. 20GENERALVERRILLI:Well,that'sexactlywhy 21Ithinkyoucan'tlooktothatasalessrestrictive-- 22thataccommodation,extendingthataccommodationto 23for-profitcorporations.Asalessrestrictive 24alternative.Preciselybecauseit'sbeinghotly 25litigatedwhetherRFRAwillrequireexemptionstothat, AldersonReportingCompany 72 Official-SubjecttoFinalReview 1aswell. 2CHIEFJUSTICEROBERTS:Butyou're 3relying--you'rerelyingonittomakeyourpointwith 4respecttotheaccommodation,andthenyou're 5criticizingyourfriendforrelyingonthesamethingin 6makinghispoints. 7GENERALVERRILLI:Well,Ithink--Ithink 8whatJusticeKennedy--ItookJusticeKennedytobe 9askingme,Mr.ChiefJustice,waswhetherthe 10government'schoicetoprovidethataccommodation 11reflectedajudgmentonthepartofthegovernmentthat 12thiswassomethinglessthanacompellinginterest,and 13Idon'tthinkthatinferenceispossible,becausethe 14governmentwastryingtousethataccommodationto 15ensurethatthecontraceptivesweredelivered.So,with 16allduerespect,Idon'tthinkthereisaninconsistency 17there. 18AndI--andIdothink,ifIcould,with 19respecttothisissueofwhetherthereareexemptions 20thatdefeatacompellinginterest,thatIsubmitwould 21beaverydangerousprincipleforthisCourttoadoptin 22theformthatmyfriendsontheothersidehaveoffered 23it,becausenotonlywouldyouthenbeinaposition 24whereitwouldbeveryhardtoseehowTitleVII 25enforcementcouldbejustifiedbycompellinginterestin AldersonReportingCompany B-24 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 69. 73 Official-SubjecttoFinalReview 1responsetoaRFRAobjection,ADAenforcement,FMLA 2enforcement,allkindsofthings.AndIdothink-- 3JUSTICEGINSBURG:TitleVIIwaspassed 4before1993,soitwouldn'tapply--RFRAwouldn'tapply 5toTitleVII. 6GENERALVERRILLI:Well,Ithink--withall 7duerespect,JusticeGinsburg,Ithinkyoucouldclaima 8RFRAexemptionfromTitleVII.Andtheproblemhere 9wouldbethat--andIthinkoneofthethingsthat's 10significantaboutthepositionthatmyfriendsonthe 11othersidearetakinghere,isthatwithrespectto 12exemptions,forexample,fromtheTitleVIIrequirement 13againstdiscriminationonthebasisofreligionand 14hiring,Congressmadeaquiteclearjudgmenttoprovide 15averynarrowexemption:Churchesandreligious 16educationalinstitutionsandreligiousassociations,and 17that'sit.Nobodyelsecanclaimanexemptionunder 18TitleVII. 19JUSTICESCALIA:Exceptthattheypassed 20RFRAafterthat.Thatmadealotofsense.Butthe 21questionistheypassedRFRAafterthat. 22GENERALVERRILLI:ButIthinkthefurther 23question,YourHonor,iswhetheryouwouldinterpret 24RFRAinamannerwhereyouwouldessentiallyobliterate 25thatcarefullycrafted--orwhatCongressmeanttodo AldersonReportingCompany 74 Official-SubjecttoFinalReview 1wastoobliteratethatcarefullycraftedexemptionand 2insteadsaythateveryfor-profitcorporationcouldmake 3arequestlikethat. 4CHIEFJUSTICEROBERTS:Well,ifCongress 5feelsasstronglyaboutthisasyousuggest,theycan 6alwayspassanexemption,anexceptiontoRFRA,which 7theyhavedoneonotheroccasions.Andtheyhaven't 8doneithere. 9GENERALVERRILLI:Well,withalldue 10respect,YourHonor,Ithinkyoucouldmakethesame 11argumenteitherwayinthiscase,thatthequestionhere 12iswhatCongressthoughtitwasdoingin1993,andwe 13don'tthink,giventhelonghistoryandthefactthat 14notonlydoyouhavenocaseinwhichafor-profit 15corporationeverhadasuccessful-- 16CHIEFJUSTICEROBERTS:Well,we'vealready 17discussedthatthereisnocaseholdingthattheycan't, 18right? 19GENERALVERRILLI:Inaddition,ifyoulook 20atthehistoryofexemptionsandaccommodationsinour 21legislation,StateandFederallegislationmayextendto 22churchesandreligiousnonprofits,andthat's--and 23individuals.Andthat'swherethelinehasbeendrawn 24inourlegislationhistorically.Therejustisnothing 25inourcurrent-- AldersonReportingCompany 75 Official-SubjecttoFinalReview 1JUSTICEKENNEDY:Underyourview,aprofit 2corporationcouldbeforced--inprinciple,thereare 3somestatutesonthebooksnowwhichwouldpreventit, 4but--couldbeforcedinprincipletopayfor 5abortions. 6GENERALVERRILLI:No.Ithink,asyou 7said,thelawnow--thelawnowistothecontrary. 8JUSTICEKENNEDY:Butyourreasoningwould 9permitthat. 10GENERALVERRILLI:Well,Ithinkthat--you 11know,Idon'tthinkthatthat's--Ithinkitwould 12dependonthelawanditwoulddependontheentity.It 13certainlywouldn'tbetrue,Ithink,forreligious 14nonprofits.Itcertainlywouldn'tbetrueforachurch. 15JUSTICEKENNEDY:I'mtalkingaboutaprofit 16corporation.Yousayprofitcorporationsjustdon't 17haveanystandingtovindicatethereligiousrightsof 18theirshareholdersandowners. 19GENERALVERRILLI:Well,Ithinkthatifit 20wereforafor-profitcorporationandifsuchalawlike 21thatwereenacted,thenyou'reright,underourtheory 22thatthefor-profitcorporationwouldn'thaveanability 23tosue.Butthereisnolawlikethatonthebooks.In 24fact,thelawistheopposite. 25CHIEFJUSTICEROBERTS:I'msorry,Ilost AldersonReportingCompany B-25 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 70. Official-SubjecttoFinalReview 76 1trackofthat.Thereisnolawonthebooksthatdoes 2what? 3GENERALVERRILLI:Thatmakesarequirement 4ofthekindthatJusticeKennedyhypothesized.Thelaw 5istheopposite. 6CHIEFJUSTICEROBERTS:Well,fleshitouta 7littlemore.What--thereisnolawonthebooksthat 8doeswhat? 9GENERALVERRILLI:Thatrequiresfor-profit 10corporationstoprovideabortions. 11JUSTICEKENNEDY:Whatifalawlikethat-- 12CHIEFJUSTICEROBERTS:Isn'tthatwhatwe 13aretalkingaboutintermsoftheirreligiousbeliefs? 14Oneofthereligiousbeliefsisthattheyhavetopay 15forthesefourmethodsofcontraceptionthatthey 16believeprovideabortions.Ithoughtthat'swhatwehad 17beforeus. 18GENERALVERRILLI:Itistheirsincere 19beliefandwedon'tquestionthat.ButIwillsay,and 20IdothinkthisisimportantandIsayitwithall 21respect,thatthatishowthey--thatisthejudgment 22thattheymake.ItisnotthejudgmentthatFederallaw 23orStatelawreflects.FederallawandStatelawwhich 24does--whichdoprecludefundingforabortionsdon't 25considertheseparticularformsofcontraceptiontobe AldersonReportingCompany 77 Official-SubjecttoFinalReview 1abortion. 2Withallduerespect,IwouldsaythatI 3thinkthat,youknow,we'vegotabout2millionwomen 4whorelyontheIUDasamethodofbirthcontrolinthis 5country.Idon'tthinktheythinktheyareengagedin 6abortionindoingthat.Itistheirbelief.It's 7sincere.Werespectit. 8Butitisn'tabeliefthatwethinkis 9reflectedinFederalorStatelaworourtraditionsof 10wherethatlineisdrawn.Andso--andIdothinkthat 11thatiswhatmakesthisadifficultcase.Iagree. 12Andifyoudisagreewithourpositionatthe 13thresholdthatcorporations--thateventhoughyouhave 14asituation,andweacknowledgeyoucanhavesituations, 15inwhichatightlyknitgroupof--asmallgroupof 16tightlyknitindividualsownandoperateacorporation 17wherethereisappealtothat,totheargumentthatthey 18oughttorecognizeaclaimofexercisingreligionin 19thosecircumstances. 20Theproblem,Iwouldsubmit,iswiththe 21implicationsofdoingit,theimplicationsfor 22entanglementandmakingthejudgmentswhenyoumovepast 23thatgroup,theadministrabilityproblems,andthe 24problemsofinvitingthekindsofclaimsthatare 25predictablygoingtoimposeharmsonthirdparties. AldersonReportingCompany 78 Official-SubjecttoFinalReview 1JUSTICEALITO:Whatabouttheimplications 2ofsayingthatnofor-profitcorporationcanraiseany 3sortoffreeexerciseclaimatallandnobodyassociated 4withthefor-profitcorporationcanraiseanysortof 5freeexerciseclaimatall? 6Letmegiveyouthisexample.Accordingto 7themedia,Denmarkrecentlyprohibitedkosherandhalal 8slaughtermethodsbecausetheybelievethattheyare 9inhumane.Now,supposeCongressenactedsomethinglike 10thathere.Whatwouldthe--whatwouldacorporation 11thatisakosherorhalalslaughterhousedo?Theywould 12simply--theywouldhavenorecoursewhatsoever.They 13couldn'tevengetadayincourt.Theycouldn'traisea 14RFRAclaim.Theycouldn'traiseaFirstAmendment 15claim. 16GENERALVERRILLI:Well,I'mnotsurethey 17couldn'traiseaFirstAmendmentclaim,JusticeAlito. 18Ithinkifyouhadatargetedlawlikethat,that 19targetedaspecificreligiouspractice,that--Idon't 20thinkitisourpositionthattheycouldn'tmakeafree 21exerciseclaiminthatcircumstanceandso-- 22JUSTICEALITO:Whyisthat-- 23JUSTICEKENNEDY:Well,butyou'regetting 24awayfromthehypothetical.Say--JusticeAlito's 25hypotheticalwasthattheimpetusforthiswashumane AldersonReportingCompany B-26 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 71. 79 Official-SubjecttoFinalReview 1treatmentofanimals.Therewasnoanimustoreligion 2atall,whichintheChurchofLukumi,therewasan 3animustothereligion.Sowe'retakingthatoutofthe 4hypothetical. 5JUSTICEALITO:Exactly. 6GENERALVERRILLI:Right.Well,Ithinkif 7itweretargetedonlyatthepracticesofthe--the 8kosherandhalalpractices,thenIthinkyouwouldhave 9anissueofwhetherit'satargetedlawornot.But 10evenifitis-- 11JUSTICEALITO:Well,theysaynoanimalmay 12beslaughteredunlessit'sstunnedfirst,unlessthe 13animalisrenderedunconsciousbeforeitisslaughtered. 14GENERALVERRILLI:Well,Ithinkinthat 15circumstance,youwouldhave,Ithink,anabilityfor 16customerstobringsuit.Ithinkyoumightrecognize 17thirdpartystandingonbehalfofthecorporation--on 18thecorporations,onbehalfofcustomers.Soasuit 19likethatcouldbebrought. 20Butevenifyoudisagreewithmeatthe 21threshold,evenifyoudisagreewithuswithrespectto 22thekindsofrisksthatwethinkyouwillbeinvitingif 23youholdthatfor-profitcorporationscanbringthese 24claims,whenyougettothecompellinginterest 25analysis,therightsofthethirdpartyemployeesareat AldersonReportingCompany 80 Official-SubjecttoFinalReview 1centerstagehere.Andthat's--Ithinkthat'sthe 2pointofcriticalimportanceinthinkingaboutthis 3case.AndIthink,frankly,thepointthathasbeen 4justleftonthesidelinesbymyfriendsontheother 5side. 6Theconsequenceofholdingherethatthe 7RFRAexemptionappliesisnotasituationlikeonesin 8whichthisCourtundertheFreeExerciseClauseorunder 9RFRAhaverecognizedexemptionsinthepast.Thosehave 10alwaysbeensituationswhereit'sarelationshipbetween 11theindividualandthegovernmentandgrantingthe 12exemptionmightresultinthegovernmentnotbeingable 13toenforcethelawwithrespecttotheindividual,but 14-- 15JUSTICEBREYER:Imean,thepointthat 16JusticeAlitowasmakingisthat--takefiveJewishor 17Muslimbutchersandwhatyou'resayingtothemisif 18theychoosetoworkunderthecorporateform,whichis 19vieweduniversally,youhavetogiveuponthatformthe 20FreedomofExerciseClausethatyou'dotherwisehave. 21Now,lookedatthatway,Idon'tthinkit 22matterswhethertheycallthemselvesacorporationor 23whethertheycallthemselvesindividuals.Imean,I 24thinkthat'sthequestionyou'rebeingasked,andIneed 25toknowwhatyourresponseistoit. AldersonReportingCompany 81 Official-SubjecttoFinalReview 1GENERALVERRILLI:Well,Ithinkour 2responseiswhattheCourtsaidinPart3oftheLee 3opinion,whichisthatonceyoumakeachoicetogointo 4thecommercialsphere,whichyoucertainlydowhenyou 5incorporateasafor-profitcorporation,youaremaking 6achoicetolivebytherulesthatgovernyouandyour 7competitorsinthecommercialsphere. 8Butevenifyoudisagreewithmeaboutthat, 9whatI'dliketoleavetheCourtwith,iswhatIthink 10isthemostimportantpointhere,isthatifthis 11exemptionweregranted,itwillbethefirsttimeunder 12theFreeExerciseClauseorunderRFRAinwhichthis 13Courtoranycourthasheldthatanemployermaytake-- 14maybegrantedanexemptionthatextinguishes 15statutorily-guaranteedbenefitsoffundamental 16importance. 17Leecametoexactlytheoppositeconclusion 18withrespecttoSocialSecuritybenefits,thatyou-- 19thatitwasimperativethattheemployee'sinterestbe 20protected.Andthatisthefundamentalproblemwiththe 21positionthatmyfriendsontheothersideraisehere, 22thattheyleavethethird-partyemployeesentirelyout 23oftheequation. 24JUSTICESCALIA:That'sokayfor 25not-for-profitcorporationstodothatwithrespectto AldersonReportingCompany B-27 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 72. 82 Official-SubjecttoFinalReview 1alloftheiremployees,andsomeofthemareprettybig 2operations-- 3GENERALVERRILLI:No. 4JUSTICESCALIA:--that'sokaythere? 5GENERALVERRILLI:No,wedon'tthinkthat. 6Wedon't--we'renotdrawingalinebetweennon-profits 7andprofits. 8JUSTICESCALIA:Theycanmake--youallow 9themtomakethisreligiousobjection,don'tyou? 10GENERALVERRILLI:No.No.Religious 11non-profitsgetanaccommodationinwhichtheir 12employeesgetthecontraception.Butwearenotdrawing 13alinebetweenfor-profitandprofit. 14JUSTICESCALIA:Buttheydon'thavetopay 15forit,right? 16GENERALVERRILLI:The-- 17JUSTICESCALIA:Andyoucouldsetthatup 18thisway,thatthesepeopledon'thavetopayforit. 19GENERALVERRILLI:Well,asI'vesaida 20coupleoftimes,theyhaven'taskedforthatuntilthis 21morning.Butthefundamentalpointhereisthatyou 22wouldbeextinguishingstatutorily-guaranteedhealth 23benefitsoffundamentalimportancetotheseemployees, 24andthatissomethingthatthisCourthasneverdone. 25AndIsubmitthatCongresscan'thavethoughtitwas AldersonReportingCompany 83 Official-SubjecttoFinalReview 1authorizingitwhenitenactedRFRAin1993. 2Thankyou. 3CHIEFJUSTICEROBERTS:Thankyou,General. 4Mr.Clement,fourminutes. 5REBUTTALARGUMENTOFPAULD.CLEMENT 6ONBEHALFOFPRIVATEPARTIES 7MR.CLEMENT:Thankyou,Mr.ChiefJustice. 8Justafewpointsinrebuttal.Letmestart 9withtheAbortionConsciousClause.It's--becauseit 10tellsyousomethingaboutwhereCongresshasdrawnthe 11lineandittellsyoutheconsequencesofthe 12government'sposition.Historically,thoseconscious 13provisionshaveappliedtoallmedicalproviders, 14includingfor-profitmedicalproviders.Butwelearned 15todaythatasfarasthegovernment'sconcerned,that's 16justCongress'judgment.IfCongresschangesits 17judgmentandsaysthatafor-profitmedicalproviderhas 18toprovideanabortion,RFRAdoesn'tapply.That,with 19allduerespect,cannotbewhatCongresshadinmind 20whenitpassedRFRA.Theyalsosuggestedifakosher 21markettakesthetroubletoincorporateitself,thenit 22hasnofreeexerciseclaimsatall. 23Now,youcangobackandreadtheCrown 24koshercase.Itookitascommonground,thatallnine 25justicesthoughtthatiftheMassachusettslawtherehad AldersonReportingCompany 84 Official-SubjecttoFinalReview 1forcedCrownkoshertobeopenonSaturday,thatthat 2wouldbeafreeexerciseclaimnotwithstandingthe 3incorporation. 4ThesecondpointIwanttotalkaboutisthe 5leastrestrictivealternatives.Inacolloquywith 6JusticeScalia,theSolicitorGeneralpointsoutthat 7yeah,well,it'salittlebitdifferentfromthe 8pre-Smithlawbecausenowyouhavethelessrestrictive 9alternativesanalysis. 10That'snotasmalldifference.That'sa 11majordifference.Andit'sreallytheeasiestwayto 12ruleagainstthegovernmentinthiscase.Becauseyou 13haveauniquesituationherewheretheirpolicyisabout 14agovernment--asubsidyforagovernment-preferred 15healthcareitem,andthequestioniswhopays?The 16governmentpayingorathird-partyinsurerpayingisa 17perfectlygoodleastrestrictivealternative. 18JUSTICESOTOMAYOR:Sowegobacktothe 19startofmyquestion,thatwouldbeessentiallythesame 20forvaccines,bloodtransfusions,non-porkproducts,the 21governmenthastopayforallofthemedicalneedsthat 22anemployerthinksorclaimsithasareligious 23exemptionto? 24MR.CLEMENT:Notnecessarily, 25JusticeSotomayor.Itwilldependonhowyou-- AldersonReportingCompany B-28 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 73. Official-SubjecttoFinalReview 85 1JUSTICESOTOMAYOR:Becausethosethingsare 2moreimportant? 3MR.CLEMENT:No,notbecausethey're 4more-- 5JUSTICESOTOMAYOR:It'sreallytheamount 6ofmoney-- 7MR.CLEMENT:--important.Buttheeasiest 8waytodistinguishthemisifthegovernment'salready 9providedthisaccommodationforreligiousemployers. 10JUSTICESOTOMAYOR:Well,butthey-- 11MR.CLEMENT:Andwithallduerespect-- 12JUSTICESOTOMAYOR:--theymakeexemptions 13forvaccines,presumably,tosomepeopleonsomebasis, 14butwehaveataxcodethatappliestoeverybody,butwe 15haveamillionexemptions. 16Doesthecreationoftheexemptionrelieve 17mefrompayingtaxeswhenIhaveasincerereligious 18beliefthattaxesareimmoral? 19MR.CLEMENT:IthinkLeesaysthattaxes 20aredifferentandnotallexemptionsarecreatedequal, 21becausesomeexemptionsunderminethecompelling 22interest.Now,thereason-- 23JUSTICEALITO:Isn'tthereaFederal 24programthatpaysforvaccinesforanychildrenwhoare 25notcoveredbyinsuranceforthosevaccines? AldersonReportingCompany 86 Official-SubjecttoFinalReview 1MR.CLEMENT:Thereis,JusticeAlito.Of 2course,there'salsoTitleX,whichprovidesfor 3contraceptioncoverage,whichisanotherleast 4restrictivealternative. 5ButIdowanttogetonthetablethatitis 6nottrue,thatwehavenotsuggestedthatthe 7accommodationprovidedtoreligiousemployers,like 8nonprofithospitals,that'snotsomethingIinventedat 9thepodium. 10Ifyoulookatpage58ofourbrief,thered 11brief,wespecificallysaythatoneoftheleast 12restrictivealternativeswouldbe--themostobvious 13leastrestrictivealternativeisforthegovernmentto 14payfortheirfavoritecontraceptionmethodsthemselves. 15Laterinthatparagraph,theonlyfull 16paragraphonthepage,wesay,Andindeed,the 17governmenthasattemptedsomethinglikethatwith 18respecttocertainobjectiveemployers--objective 19employees--employers,andwecitetheFederal 20Registerprovisionwherethereistheaccommodation 21provision. 22JUSTICESOTOMAYOR:Willyourclientsclaim 23thatfillingouttheform,if--you'resayingthey 24wouldclaimanexemptionlikethechurcheshavealready? 25MR.CLEMENT:Wehaven'tbeenofferedthat AldersonReportingCompany Official-SubjecttoFinalReview 87 1accommodation,sowehaven'thadtodecidewhatkindof 2objection,ifany,wewouldmaketothat.Butit's 3importanttorecognizethatasIunderstandthat 4litigation,theobjectionisnottothefactthatthe 5insuranceortheproviderpaysforthecontraception 6coverage.Thewholedebateisabouthowmuchcomplicity 7therehastobefromtheemployerinordertotrigger 8thatcoverage.AndwhatevertheanswerisforLittle 9SistersofthePoor,presumablyyoucanextendthesame 10thingtomyclientsandtherewouldn'tbeaproblemwith 11that. 12IfIcouldhavejustonesecondmoretosay 13thattheagencypointthatJusticeKennedyhaspointed 14toistremendouslyimportant,becauseCongressspoke,it 15spokeinRFRA.Heretheagencyhasdecidedthatit's 16goingtoaccommodateasubsetofthepersonsprotected 17byRFRA.InachoicebetweenwhatCongresshasprovided 18andwhattheagencyhasdone,theanswerisclear. 19Thankyou,YourHonor. 20CHIEFJUSTICEROBERTS:Thankyou,counsel. 21Counsel,thecaseissubmitted. 22(Whereupon,at11:39a.m.,thecaseinthe 23above-titledmatterwassubmitted.) 24 25 AldersonReportingCompany B-29 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 74. Official-SubjecttoFinalReviewOfficial-SubjecttoFinalReview 88 A57:18,1963:22adequate29:2131:1432:1543:2448:15,18 $12,00026:1864:17,2265:16Adherenceallowing33:1263:1864:2,6,8 $2,00022:1665:2471:9,941:15alternative6:767:568:14 23:2,3,2171:14,22,22adherents69:1810:914:170:387:8,18 25:1426:7,1272:4,10,14administer16:1121:21answered47:15 27:982:1185:940:1437:1238:14answers64:7 $2622:1023:1,586:7,2087:1administrability40:4,11,12,20anybody31:12 29:8accommodati...77:2365:366:561:4 $4,00026:174:185:89:7admitted31:1967:1971:24anyways9:15 $47522:9,2537:1539:10adopt11:2284:1786:4,13appeal52:3 a.m2:24:274:2049:1272:21alternatives53:1677:17 87:22accompaniedadopted16:95:2115:8appeals53:16 ability28:910:949:539:2240:270:6 75:2279:15accompaniesadvance62:464:1284:5,9APPEARAN... able28:152:511:7advances61:586:122:3 59:1880:12accomplishing65:3ameliorateapplicability abortifacient65:17advancing62:1637:1361:8 63:266:19account29:8affect41:1443:1amended9:25applicable8:16 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  • 75. 91 Official-SubjecttoFinalReview 4:655:12,15consistent31:1675:724:826:1143:2551:6,17 confined49:17consolidated4:4contributes28:1040:5,15courts8:11 confronted9:20constitutes70:935:2340:1660:1714:12,1315:3 confusion57:12Constitutioncontrol77:463:1166:11,1215:416:7 Congress6:1750:558:8controls53:5,666:1567:1,218:1842:8 6:18,20,237:2constitutional66:1868:7,947:749:853:3 7:7,10,12,168:6,15,249:4,5controversy5:7cost-free40:853:1566:14 7:16,19,2213:1714:25convenient30:7costs27:167:970:6 9:17,2211:1743:1156:20convictions12:1counsel31:17cover11:20 12:9,1714:357:9core47:1387:20,21coverage11:25 15:229:19,23constitutionali...corporate18:13count36:217:1622:10,14 30:8,20,2156:318:20,2419:13counting36:223:7,932:22 31:1236:5,7constructed19:1346:3,2136:1537:138:25 36:23,2441:2171:947:2553:13country50:1155:16,18,19 44:1246:24construction80:1861:2477:556:1357:21 48:17,2451:208:1843:13corporationcounts44:161:1962:2,2 54:2356:2054:81:144:717:23couple16:2062:1965:8 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  • 76. 94 Official-SubjecttoFinalReview 65:2271:2381:15,2082:2184:659:2160:1grandfather 74:2,1475:2082:23generally15:2061:19,2564:832:19,23 75:2276:9fundamentally18:1665:4,666:16grandfathered 78:2,479:2330:13getting27:5,667:1268:1530:231:19,24 81:582:13funding76:2432:2278:2377:2587:1631:2532:5,15 83:14,17funny40:7Ginsburg6:21good29:16,1732:2558:20,22 forced75:2,4further67:237:811:1512:436:2284:1760:2,5,11,13 84:173:2213:1417:2,6gotten44:2361:20 foremost8:13furtherance17:1128:14govern81:6grandfathering form46:3,2255:13,1634:1338:16,21governance30:1759:2,19 47:2564:24,2439:2,5,973:3,719:1459:2562:10 G72:2280:18,19give6:119:8governing44:18grant56:21,21 G4:186:2322:536:837:260:370:2471:5 Gallagher50:21forms76:2538:2454:19government2:8granted50:13 geared12:2formulate69:156:2159:3,7,93:74:135:2367:1371:7 general2:641:5forth33:959:1164:56:18:1914:581:11,14 41:8,2442:11forward32:2478:680:1915:7,2216:25granting45:12 42:16,18,21four33:1938:22given36:2419:1925:5,1180:11 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possible33:20preventiveproject32:24providing26:1157:1160:22,25 41:1649:1455:1760:7,16propose64:1326:1728:861:262:22 58:1672:1362:14,1867:2proposed64:1229:2043:464:868:18 power56:21price25:20,2265:344:2367:669:16,2570:1 powers56:2325:2526:16propositionprovision28:1670:273:21,23 practice78:19primarily8:721:1847:632:20,2343:2474:1176:19 practices79:7,8Prince41:11proprietors49:1250:280:2484:15,19 pre-Smith9:2442:2241:2361:867:2questioned 10:3,16,17,18principal28:20proprietorships86:20,2120:13 10:2211:2,6principle34:3,415:2316:1provisions7:18questioning 14:1642:12,1541:11,1672:21prosecution7:1930:219:1671:13 AldersonReportingCompany B-33 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 78. Official-SubjecttoFinalReview 100 questions7:12receiving44:25relieve85:16remedy37:25respectfully 17:1119:1257:20religion10:1remember35:1731:135:17 21:1268:14recognizable11:1016:16,17rendered79:1337:21 quite6:10,1151:1317:2418:3report12:23responded14:10 31:1137:2,2recognize15:619:221:725:7representationresponse9:12 60:1866:1654:1756:2325:12,17,1859:1,1251:1660:25 73:1477:1879:1629:1438:24request44:2073:180:25 quoting21:1687:348:21,2349:1374:381:2 recognized49:2350:7requested43:1,4responsive9:15 R57:1570:6,751:1,1854:5require44:1114:3 R4:180:954:1473:1364:2071:25restore11:6 race9:1030:9recollection56:677:1879:1,3required42:25restrictive5:21 30:1138:1record66:14religions4:2360:5,10,146:710:914:1 53:20,2454:2recourse78:1269:1869:2215:816:11 racial37:23,24red86:10religious4:18,24requirement21:2139:22 53:1754:11reduces67:95:3,7,146:129:2210:1040:11,1942:19 raise26:1,13reduction68:76:12,13,24,2516:1118:1863:10,10,21 53:1578:2,4refer61:47:49:112:1,843:21,2260:1564:12,1866:5 78:13,14,17reference44:512:1913:12,2069:973:1271:21,2384:5 81:2149:558:213:2116:1276:384:8,1786:4 raised27:19references32:1317:2,4,819:7requirements86:12,13 61:264:19referring42:120:1,1021:1460:6,7,14,20result24:13 67:18refers8:2421:1423:1360:2432:2365:8,16 raises8:1952:8reflected72:1125:527:21requires16:780:12 ramps61:1077:928:16,18,2368:1976:9results57:19 range67:6reflects62:2229:1,1833:15reserve41:2RFRA4:156:17 rarely9:876:2333:15,1634:1resist19:206:18,22,227:1 read60:883:23reform60:1235:1439:3,10resisted19:247:3,6,12,13,17 real13:2,9refrain69:2239:11,12,19resolving41:109:18,2110:2 realized30:21refuses5:1540:2541:13,22respect9:110:512:615:13,24 really6:97:11refute64:14,1542:644:3,1516:4,1325:216:6,2234:17 8:1310:22Register86:2045:1447:1125:1329:2236:1141:20,21 16:218:12regulation60:349:18,2050:332:1145:1142:8,2543:8 19:15,2020:1460:851:2252:2050:752:2343:15,19,19,22 21:530:3regulations56:2257:1755:656:8,943:2544:5,13 35:2236:1432:1460:563:765:2558:5,6,9,945:2246:25 38:944:19rejected11:2368:4,2070:159:2460:450:1051:21 54:2369:10,1612:3,8,2270:1871:8,1961:1,13,2053:1454:18 84:1185:520:2073:15,1674:2262:3,1465:1555:956:16 reason12:5rejection12:2375:13,1776:1369:1470:2157:458:3 54:1659:6relationship76:1478:1971:8,1472:464:2065:1,5,8 66:1385:2280:1082:9,1084:2272:16,1973:765:14,2166:8 reasoning75:8relatively13:385:9,1786:773:1174:1067:18,2071:1 rebuttal3:8relevant11:11religiously4:1476:2177:2,771:2573:1,4,8 83:5,815:1,137:115:619:979:2180:1373:20,21,24 receive57:946:2448:16rely77:481:18,2583:1974:678:14 58:7relied57:24relying72:3,3,585:1186:1880:7,981:12 AldersonReportingCompany Official-SubjecttoFinalReview 101 83:1,18,20run10:1345:4screening62:1718:2452:15situations52:18 87:15,1761:24scrutiny16:1053:175:1869:377:14 RFRA's12:20running48:1216:2542:10sharing60:1780:10 rid36:11se46:3shedding12:13skating43:10 right6:108:9,25SSebelius1:3,18sheep14:14slaughter78:8 11:412:10S3:14:152:164:5,7Sherbert14:17slaughtered 16:1419:10sacrosanctsecond36:1025:834:2079:12,13 20:1223:740:1865:1066:10short32:9,12slaughterhouse 24:1,1627:3salary23:1884:487:12show18:228:778:11 28:1833:24samples70:13second-guess55:1164:11slightly27:19 34:11,2435:6satisfies21:2020:15side15:241:18small13:3,11 35:7,12,1342:10,12Secretary1:4,1941:1857:2452:168:4 38:1545:22Saturday84:14:561:3,1772:2277:1584:10 46:747:22save19:18sect20:2473:1180:5Smith9:210:7 48:10,1449:6saying25:16secular11:2481:2114:9 50:651:2,4,1429:1,1830:812:270:3sidelines80:4so-called60:2 58:1059:2336:2149:12Security14:7sides11:1765:24 60:762:750:1555:235:1244:2421:23Social14:6 71:17,1874:1860:1863:445:1,1370:18sign65:11,1335:1244:23 75:2179:678:280:1781:18significant45:1,1370:18 82:1586:23see16:1228:2134:19,2335:181:18 rightfully38:8says8:2511:2,542:372:2438:459:560:9societies17:22 rights33:6,2513:1918:23seeks35:360:10,2073:10society41:17 43:254:2121:1325:4,11seen16:3signing64:24sole15:22 75:1779:2536:6,837:1sells19:7signs64:23Solicitor2:6 rise54:1938:2349:11,24Senate11:23similar34:1784:6 risk58:14,1550:2,2551:25seniority35:6simply10:2solicitude57:8 risks79:2252:2055:10sense5:473:2052:1667:2357:1558:7 RLPA12:1862:2563:2,9sensible44:1478:12somebody21:19 RLUIPA9:2063:1183:17sensitive4:14,21sincere21:1325:668:3 12:1734:14,1785:195:663:3,1468:20someone's20:1 49:4,12Scalia10:4,13sentences21:1676:1877:7somewhat56:23 ROBERTS4:311:925:24separate14:1085:17soon4:16 23:1224:126:442:15,1714:1317:5,11sincerity16:16sooner63:24 41:3,1942:442:2043:1817:1519:17,2120:3sorry46:22 52:1153:12,2344:2,745:2,7serious34:220:6,1621:1247:1475:25 54:7,1058:1948:9,1250:14seriously14:1952:870:8,13sort8:1510:14 58:2359:9,1750:18,2351:4serve65:770:1710:2212:9 61:962:5,953:565:11service55:17single26:1728:136:2 71:1672:266:1773:19services1:5,2050:12,14,2437:1540:17 74:4,1675:2581:2482:4,84:560:1651:352:2165:23 76:6,1283:382:14,1784:662:15,1867:2Sisters66:187:978:3,4 87:20Scalia's14:9set13:382:17situation52:3Sotomayor4:20 roughly26:12scheme58:17sex13:2052:2153:17,225:1,126:10 rule84:12schemes21:3shareholder54:469:1117:2318:4,11 rules8:556:23scholars69:1853:977:1480:718:2119:6,11 81:6scienter18:18shareholders84:1319:2320:7,22 AldersonReportingCompany Official-SubjecttoFinalReview 102 21:2223:17,2374:2176:23,23stuff66:2068:7,1056:1059:14 26:1531:1777:9stunned79:12superimposed61:1066:10,17 32:435:10statement41:19subclasses12:721:271:1975:15 40:247:14,18States1:12:1subject9:8supply26:2376:13 47:20,2348:37:1923:1013:16,2437:23support28:2talks22:1 48:784:18,25statistics31:2358:1261:22suppose5:14tangibly37:3 85:1,5,10,12status60:265:518:936:10targeted78:18 86:22statute7:218:14submit42:2238:2278:978:1979:7,9 sound14:58:23,239:3,1744:1972:20Supreme1:12:1tax21:1922:2,6 speaking18:19:20,2510:1477:2082:25sure7:918:1422:2123:24 speaks17:2410:21,25,25submitted87:2129:15,1630:2326:19,2169:4 special8:2357:811:1,5,712:1887:2335:1051:1269:1170:10 57:1558:717:16,1722:20subsequent7:2264:478:1685:14 Specialties1:1430:331:335:2subset4:19surely38:4taxes45:13 4:735:1136:6,760:11,2087:16surround43:1385:17,18,19 specific6:2436:2254:5subsets12:8suspenders7:11taxpayer68:3 11:2215:1155:1067:13subsidies26:20sword26:8tell37:2540:14 78:19statute's12:20subsidize36:22system35:2342:849:150:9 specifically7:16statutes6:19subsidy38:1045:459:18,19,21 7:238:2412:27:22,2215:1038:1340:19,2466:15 17:2125:1115:1916:284:14Ttells50:1083:10 60:1986:1136:1675:3substantial5:3T3:1,183:11 spectrum11:18statutorily-gu...5:196:811:12table86:5ten32:24 68:1344:2281:1511:1320:8,10take5:117:48:2tenet28:18 sphere51:881:482:2221:11,1422:229:14,16,23tenets49:18 81:7statutory8:1,3,525:928:329:610:111:20tens32:21 spoke87:14,158:7,1821:334:939:1918:1021:8Tenth18:22 squarely12:2135:1336:11,2443:2168:19,2027:729:734:657:23 squares35:1143:1348:2268:2469:2,534:7,2235:6,8term17:19,19 stage8:280:158:1770:10,11,15,2042:16,18,2549:2054:8 stand21:18stay24:2466:1substitute40:152:357:762:20 standard9:10step5:2,10,19succeeded15:1559:1361:17,17terms22:850:4 13:18,2516:105:2015:18,2164:1866:665:1776:13 16:19,2355:9Stop30:9successful74:1568:680:16terribly66:19 55:10store24:23sudden24:1081:13test6:7,810:8 standards42:12Stores1:84:6sue75:23taken66:267:511:11,1313:17 standing75:17strange11:18suggest10:20takes83:2113:24,2515:5 79:17strenuous69:612:5,1433:5talk13:615:9,1015:616:15,16 standpointstrict16:9,2537:2174:518:1529:2517:1221:21 27:2242:10suggested20:545:17,1858:2136:1942:10 start17:1718:5strike44:1483:2086:684:444:1355:14 45:2083:8strong55:2suggesting10:15talked9:1865:268:19,24 84:19stronger5:24suggests9:724:2268:25 starting17:14strongly63:111:10,1152:4talking13:2thank41:366:8 starts21:1133:574:5suit58:1579:1615:1922:2483:2,3,787:19 state10:843:21structure56:2079:1824:1735:21,2287:20 44:853:10,13studiously66:4Sunday19:936:1338:9theology69:16 AldersonReportingCompany B-34 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
  • 79. Official-SubjecttoFinalReview 103 theory4:2428:656:557:6,1252:2566:1887:7understand 28:12,2066:659:6,14,23threshold51:12trouble83:2118:1648:19 75:2161:2,462:1554:1755:5true23:15,1651:10,1255:3 thin43:1062:1964:6,1777:1379:2134:19,2060:457:1065:22 thing22:12,2466:468:14,17tightly77:15,1662:1469:2468:1670:23 24:20,2225:468:2569:5,8tightly-knit52:275:13,1486:687:3 25:18,18,19,1969:1370:4till34:15trump33:16understanding 25:2029:9,1771:2,2172:7,7time9:1916:25trumping38:513:1514:16,17 33:2134:1472:13,16,1830:2333:4trust14:1116:662:20 36:1737:5,773:2,6,7,9,2241:249:459:8try9:1510:13understood 40:2558:2474:10,1375:659:1063:2010:1948:1512:2413:1 70:1172:575:10,11,11,1381:1152:1047:2448:14 87:1075:1976:20times82:20trying6:212:18uniform6:15 things5:1277:3,5,5,8,10Title30:8,1918:1926:945:4 10:1318:1278:18,2079:631:1337:1567:368:12uniformity 33:2061:1079:8,14,15,1661:17,2062:372:1411:1935:24 62:1773:2,979:2280:1,362:472:24Tuesday1:23uniformly30:24 85:180:21,2481:173:3,5,8,12,18turning45:16unique37:24 think5:4,9,2281:982:586:2turns28:484:13 6:5,197:11,1485:19today64:19two7:1117:11United1:12:1 7:14,258:6,12thinking54:2383:1518:1521:9,107:1923:9 9:510:1211:968:12,1680:2told48:24,2521:1636:5,15universally 13:6,814:3thinks69:19top27:1037:1453:180:19 15:1,5,616:3,584:22totally51:1060:2564:7,16unnecessary7:6 16:14,1717:13third14:20,21toto59:2464:1666:227:9 17:1719:11,1534:2536:4,4touchstone68:1469:1upfront67:1 19:16,1920:1337:9,2038:1441:10two-year61:7use4:259:10 21:1822:1143:2,9,17track10:676:161:1535:2470:17 23:1124:5,1344:1154:21,22traditions77:9type52:1672:14 25:1,14,2155:677:25trajectory59:5types37:14usually16:10 27:2528:2,679:17,25transfusion4:22 28:15,2430:1third-partytransfusions6:3UV 30:2,1531:2,233:22,2334:66:484:20U.S13:1720:23v1:7,174:5,7 31:12,1233:634:9,1235:5transition30:22U.S.C7:189:210:714:17 33:2134:3,535:2181:2232:9,12,17ultimately12:1720:2341:11 34:1135:4,2084:16transitioned19:1639:2564:10 36:1,12,14,14Thomas20:1332:5unanimity12:6vaccination14:8 36:15,18,21thought15:3treated24:4unanimouslyvaccinations 37:4,8,8,10,1418:720:7treatment6:1042:2343:155:13,14,16,23 38:13,2039:823:12,1324:779:1unbelievablyvaccines4:22 39:2440:1726:1629:2treatments6:1113:2584:2085:13,24 41:2542:11,1351:2062:24tremendousunconscious85:25 43:2346:19,2364:167:4,511:1979:13variety7:10 46:2447:174:1276:16tremendouslyuncontroversialvast51:19 48:14,16,17,1882:2583:2587:1413:14Verner-Yoder 49:1552:21thoughts16:21tried9:21undermine31:414:17 53:2154:15three38:22trigger60:285:21Verrilli2:63:6 AldersonReportingCompany Official-SubjecttoFinalReview 104 41:5,6,8,24violate27:1163:10,1068:867:2520017:25 42:11,16,18,2143:5,774:1180:21worse24:13201211:23 43:6,2344:6,9violates25:7,1282:1884:11wouldn't25:2420141:23 45:6,10,2525:16,1885:863:1173:4,42262:1 46:5,11,16,19voluntarilyways20:2175:13,14,22251:2330:20 46:2347:3,10 47:12,17,19,22 23:10 voted11:18 38:1439:16 64:16 87:10 write6:233 47:2448:6,8 48:11,1549:2 49:7,15,22 50:6,17,19 51:2,5,14 52:2353:8,21 W wage13:2214:7 15:1527:5 wages24:13,16 26:1,1427:8 we'll4:312:12 52:18 we're12:12 15:1929:24 31:836:13 38:979:382:6 written10:21,25 10:2511:2 21:24 X x1:2,2186:2 381:2 4 43:4 4031:23 413:7 54:1,9,1355:3 55:2456:5,8 56:1757:5 58:5,2159:3 59:11,2260:22 61:1262:8,12 63:1964:3,6 65:1366:3,21 67:11,17,25 68:1769:15,24 27:1929:11 walk46:11,12 57:10 want8:259:23 9:2312:10,11 15:923:17 25:2029:16 37:139:17 49:851:15,23 57:1062:21 we've19:2420:9 21:574:16 77:3 weak15:7 wear33:8 week24:24 weekend35:8 weekends35:7 weigh43:16 weight35:161:3 Y yeah42:484:7 year22:9,10,25 23:1,459:6,16 yearly31:22 years15:13 17:2532:20,24 Yoder25:3 34:20 5 519:2,7 5040:2157:25 58:10 50022:9 5118:2552:15 5886:10 6 70:471:2,5,20 72:773:6,22 74:9,1975:6 75:10,1976:3 63:16,17,25,25 64:1,4,967:22 67:2368:3,7 68:16,1670:2 went27:18 weren't31:19 whatsoever 78:12 Z 0 7 724:24 8 76:9,1878:1684:486:5wisdom42:2,518061:23,25 79:6,1481:1 82:3,5,10,16 82:19 versus49:10 view33:1238:5 56:4,1660:19 62:2363:17 68:18,1975:1 viewed80:19 views41:22 VII30:8,19 31:1337:15 61:17,2162:3 62:472:24 wanted7:21 41:2144:2 wants5:15 26:2333:8 war68:4 wash27:16,20 Washington 1:222:4,7 wasn't42:245:2 66:13 way5:99:10 10:14,17,19 19:11,1220:23 23:2026:7 woman37:2 38:367:12 women36:25 39:1777:3 women's63:6 Wood1:134:6 woodwork 16:12 word54:4 words35:24 42:267:17 work8:541:18 44:1480:18 worked14:16 1019:262:1 10:112:24:2 11:3987:22 13-3541:44:4 13-3561:164:6 14,00056:11 1561:22 187:18 199346:25 48:1851:21 73:474:12 83:1 2 833:10 9 9019:2 73:3,5,8,12,1827:133:10,16workers28:9277:3 vindicate12:1233:1936:21works19:831:22,00024:826:18 75:1737:1243:133:17,1929:8 vindicated12:1149:1452:4world13:2,92038:1739:13 12:1258:1662:12worry52:139:14 AldersonReportingCompany B-35 MEALEY’S Affordable Care Act Report Vol. 1, #1 March 2014
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