Appellate Court Deals Setback to Opponents of Contraceptive Coverage Mandate

On Aug. 4, 2017, the U.S. Court of Appeals for the Third Circuit – in Real Alternatives v. HHS, No. 16-1275 (3rd Cir. Aug. 4, 2017) – affirmed the district court’s decision for the government. This case involved objections to the requirement to provide contraceptive coverage at no cost-sharing imposed by PPACA based on moral objections of a nonprofit, nonreligious organization and its employees.

As background, PPACA requires health plans to cover contraceptives at no cost sharing. The provision that includes contraceptive coverage is commonly referred to as the “Contraceptive Mandate,” and it includes a limited exemption for houses of worship (and their integrated auxiliaries). To accommodate non-profit religious and for-profit employers, the government allows these employers to seek an opt-out from providing contraceptive coverage, with the government then arranging for their employees to receive the coverage through third parties at no cost to, and with no participation from, the objecting employers.

Specifically, this case involves two issues:

  1. Whether the government must exempt an employer with no religious affiliation from the contraceptive mandate based on moral objections, and
  2. Whether an employee’s religious beliefs are substantially burdened by the law’s requirement that his or her employer’s insurance plan cover contraceptives.

Although other federal district courts have weighed-in on both of these issues, this is the first appellate court decision addressing both.

The court, in this case, answered both questions in the negative. Specifically, two of the three circuit judges on the appellate panel answered both questions in the negative. The third judge agreed with the majority on the first issue involving moral objections but provided a lengthy dissent on the second issue.

On the first issue, the court held that the employer’s equal protection rights were not violated because it is not similarly situated to religious employers with comparable objections to the contraceptive mandate. The court reasoned that the employer in this case is in no way like a religious denomination or one of its nontheistic counterparts — not in structure, not in aim, not in purpose, and not in function. The court did note that they did not doubt that the employer’s stance on contraceptives is grounded in sincerely-held moral values. But such sincerity is not enough to justify an exemption for this type of private organization.

On the second issue, the court also held that the employees’ exercise of religion is not substantially burdened since nothing in the plan compels them to use the services. The court found that there is no substantial burden if the governmental action does not force the individuals to violate their religious beliefs or deny them the rights, benefits, and privileges enjoyed by other citizens — even if the challenged governmental action would interfere significantly with their ability to pursue spiritual fulfillment according to their own religious beliefs. The dissenting judge found that the contraceptive mandate substantially burdens employees’ religious beliefs.

Although this will likely not be the last court decision we see on the contraceptive mandate, nonreligious employers may be affected by the final decision in this appellate case. Keep in mind that an executive order was also recently issued in May of 2017 (see: Presidential Executive Order Promoting Free Speech and Religious Liberty) that directs the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health and Human Services to consider issuing amended regulations consistent with applicable law to address conscience-based objections to the preventive-care mandate. While we will continue to monitor these cases and governmental action, employers should consult with legal counsel before changing their benefit plan design in regard to contraceptives.

Real Alternatives v. HHS »