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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

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

  1. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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

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