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Recent Rulings May Spell Trouble for the Affordable Care Act

President Obama’s signature healthcare legislation will likely force two more significant legal hurdles after decisions this month that attack peripheral but important portions of the Affordable Care Act (ACA).

On Sept. 17, 2015, the United States Court of Appeals for the Eighth Circuit held in two separate opinions that the ACA’s accommodation for nonprofit religious organizations violates the Religious Freedom Restoration Act of 1993 (RFRA), by imposing an undue burden on such organizations. These decisions are at odds with other general appellate rulings on the same subject, greatly increasing the chance that the U.S. Supreme Court will hear the case. On another, separate issue, the U.S. District Court for the District of Columbia held that the House of Representatives has standing to bring a suit challenging the distribution of “billions of dollars in ACA subsidies . . . without a valid appropriation from Congress.”

Congress’ Challenge to the Distribution of Subsidies under the ACA

On Sept. 9, 2015, a judge for the U.S. District Court of the District of Columbia held that the House may have standing to pursue Constitutional claims that it “has been injured in a concrete and particular way that is traceable to [executive branch actions] and remediable in court. . . .” The House claims that the executive branch used government funds to provide ACA subsidies in order to reduce out-of-pocket payments made by citizens utilizing health care purchased under the ACA without valid appropriation. See United States House of Representatives v. Burwell et al. (case number 1:14-cv-01967).

The House claims that the program was subject to an annual appropriations process that was never carried out. The D.C. court held that this claim is sufficient for the House to have standing to sue under the theory that it is Congress’ constitutional right to be the sole branch that recommends approval of all government expenditures.

While the decision was not a ruling on the merits, it could result in severe negative consequences for those citizens that rely on ACA subsidies to pay for their health coverage.

The Eighth Circuit Decisions

Under the RFRA, the government must demonstrate that any law imposing a burden on religious freedom furthers a compelling government interest through the least restrictive means available. The Eighth Circuit’s opinions in Sharpe Holdings Inc. et al. v. U.S. Department of Health and Human Services et al. (case number 14-1507) and Dordt College et al. v. Burwell et al. (case number 14-2726) held that while the provision of no-cost contraceptives may be a compelling government interest, the self-certification and notice requirements are not the least-restrictive means to further it. “In other words, governmental action substantially burdens the exercise of religion when it coerces private individuals into violating their religious beliefs or penalizes them for those beliefs by denying them the “rights, benefits, and privileges enjoyed by other citizens.” Lyng v. Nw. Indian Cemetery Protective Ass’n, 485 U.S. 439, 449 (1988).” See Sharpe Holdings Inc. et al. (case number 14-1507).

Under the accommodation, a religious organization that (1) has religious objections to providing healthcare coverage for some or all contraceptive services, (2) “is organized and operates as a nonprofit entity,” (3) “holds itself out as a religious organization,” and (4) complies with a self-certification process,” may apply for exemption from the requirement of “having to contract, arrange, pay, or refer for” contraceptive coverage. See 29 C.F.R. § 2590.715-2713A(a) and 78 Fed. Reg. at 39,872. Petitioners in both cases argue that their religious freedom is being restricted through the accommodation process that requires an organization to either self-certify by filing an EBSA Form 700 with its insurance issuer or provide notice to HHS, which includes details such as the basis for qualification for the accommodation, its religious objections to the provision of coverage for contraceptives, and which contraceptives it objects to providing, among others. For a more complete list of notice requirements, see 79 Fed. Reg. 51,092, 51,094-95 (Aug. 27, 2014); 80 Fed. Reg. 41,318, 41,323 (July 14, 2015); 29 C.F.R. § 2590.715-2713A(b)(1)(ii)(B).

Petitioners also argued that after completing the self-certification or notification process, alternative means for employees to receive no-cost contraceptives are arranged, which makes those employers complicit in a practice that violates their religious beliefs. The court held that, in accordance with the Supreme Court’s decision in Burwell v. Hobby Lobby, it was not the place of the court to dispute an organization’s “sincerely held religious beliefs, [that] oppose the use, funding, provision, or support of abortion on demand, and [its] belie[f] that certain contraceptives required under the contraceptive mandate—Plan B, ella, and copper IUDs—are functionally equivalent to abortion on demand.” See Dordt College et al. v. Burwell et al. (case number 14-2726).

The potential circuit split created by the Eighth Circuit decisions may allow the high court to grant any of the seven petitions for certiorari involving the opt-out accommodation currently pending before it.

© 2020 BARNES & THORNBURG LLPNational Law Review, Volume V, Number 267

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About this Author

The Barnes & Thornburg Healthcare Department regularly represents physicians, medical groups, managed care organizations, hospitals, nursing homes, and national healthcare-related associations located around the country. Given our healthcare practice, we understand the unique commercial and regulatory environment in which healthcare organizations operate. Our attorneys bring their problem-solving and consensus-building skills to listen carefully to the goals of their clients and recommend practical solutions.

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