On August 13, 2025, the District Court of the Eastern District of Pennsylvania vacated federal rules that provided exemptions for contraceptive coverage requirements imposed by the ACA. The court determined that those rules violated the federal Administrative Procedure Act (APA).
Background
The ACA requires health insurance plans to cover women’s preventive services, including contraceptive services. However, due to rulemaking and several court cases, exemptions were allowed for religious organizations and other employers with religious objections to contraception if those organizations self-certified to their insurers or to the federal government that they objected to that requirement.
Several religious and nonreligious employers filed lawsuits challenging the requirement, as well as the exemptions. Essentially, they argued that the requirement to certify their objections to the requirement was too burdensome. In response, the first Trump administration issued final interim rules allowing both religious and nonreligious employers to opt out of the requirement for both religious and moral reasons without certifying their objections.
Pennsylvania and New Jersey filed a lawsuit challenging these rules, stating that they violated the APA because the federal government did not follow the process laid out in the statute for promulgating rules and that the federal government acted in an “arbitrary and capricious” manner when it developed the rules. The case went up to the Supreme Court, which did not agree that the process for promulgating the rules violated the APA. However, the Supreme Court did not weigh in on whether the government acted in an “arbitrary and capricious” manner in violation of the APA, and the case continued in the district court.
The Court’s Analysis
The district court concluded that the government failed to establish a rational connection between the problem of providing exemptions for religious organizations and the rules. The court found that the rules expanded the exemption to include any employer who has a religious or moral objection. In addition, the rules do not require those employers to certify the basis for their objection. The court determined that these changes did not just address the issue of exemptions for religious organizations but also provided the exemption for others who are unlikely to have a religious objection. The court also found that the federal government did not consider other alternatives and did not adequately justify its rules. Accordingly, the district court ruled that the government acted in an “arbitrary and capricious” manner in violation of the APA and vacated the rules.
Employer Takeaway
The district court’s action is the latest in a series of lawsuits and federal rulemaking efforts to define the scope of the ACA’s contraceptive coverage mandate. This highlights the uncertainty surrounding this issue. Since the district court’s decision may be appealed, the decision does not end the matter. Employers should monitor developments and consult with an attorney if they wish to exempt themselves from this mandate.