Courts Block Final Contraceptive Coverage Exemption Regulations

Two federal trial courts have issued injunctions blocking enforcement of final regulations that expand the exemptions from health care reform’s contraceptive coverage mandate. As background, qualifying religious employers are exempt from the mandate, and certain other employers with religious objections to contraceptives may engage in an accommodation process relieving them of their coverage obligation (see our Checkpoint article). Interim final regulations expanding the exemption to include additional individuals and entities based on sincerely held religious beliefs, as well as others objecting to coverage based on sincerely held moral convictions, were blocked from enforcement by nationwide preliminary injunctions (from trial courts in California and Pennsylvania) (see our Checkpoint article). On appeal, the California court’s preliminary injunction was upheld as to the states that filed the lawsuit and vacated as to other states (see our Checkpoint article). In the meantime, the government issued final regulations that generally adopt the interim final regulations, with clarifications (see our Checkpoint article).

The Pennsylvania and California trial courts have now granted preliminary injunctions blocking enforcement of the final regulations. Here are highlights:

• Pennsylvania. The court has issued an injunction that temporarily blocks implementation of the final regulations nationwide. According to the court, the states that filed the lawsuit (Pennsylvania and New Jersey) are likely to prevail on their claim that the final regulations exceed the scope of the agencies’ authority. The court also determined that the final regulations violate the procedural requirements of the Administrative Procedure Act (APA) because of a procedural defect that occurred with the interim final regulations, which “fatally tainted” the final regulations.
• California. The court has granted the request of 13 states (California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Minnesota, New York, North Carolina, Rhode Island, Vermont, Virginia, and Washington) and the District of Columbia, to temporarily block implementation of the final regulations in those jurisdictions. The court determined that the states were likely to succeed (or at a minimum had raised “serious questions going to the merits”) on their claim that the expanded exemptions in the final regulations are inconsistent with the Affordable Care Act, and thus violate the APA. Noting that a Massachusetts court’s refusal to block enforcement of the regulations (see our Checkpoint article) is currently on appeal, the court concluded that it could not meet the high threshold for a nationwide injunction and issued the preliminary injunction only for the states involved in this case.

EBIA Comment: These decisions will almost certainly be appealed. While awaiting a decision on the merits or further action affecting the geographical scope of the injunctions, those potentially eligible for the expanded exemptions under the final regulations will need to closely monitor the latest developments. For more information, see EBIA’s Health Care Reform manual at Section XII.C (“Coverage of Preventive Health Services”) and EBIA’s Group Health Plan Mandates manual at Section XIV.E (“Contraceptive Coverage: Exemptions and Accommodations Based on Religious Beliefs and Moral Convictions”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C.1 (“Preventive Health Services”).

Contributing Editors: EBIA Staff.