Third Circuit Upholds Nationwide Injunction Blocking Expansion of Contraceptive Coverage Exemptions

The Third Circuit Court of Appeals has upheld the nationwide preliminary injunction currently barring enforcement of the final contraceptive coverage exemption regulations. As background, qualifying religious employers are exempt from the contraceptive coverage 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). Final regulations expanding the exemption to include additional individuals and entities based on sincerely held religious beliefs or sincerely held moral convictions were blocked from enforcement by preliminary injunctions from trial courts in California and Pennsylvania (see our Checkpoint article).

The Third Circuit has now affirmed the Pennsylvania trial court’s nationwide preliminary injunction. Concluding that the agencies did not have good cause for ignoring the Administrative Procedures Act (APA) notice and comment requirements, the appellate court held that the trial court correctly determined that the challengers have a reasonable probability of showing that the regulations violate the APA. The court also found “serious substantive problems” with the regulations. Explaining that neither the Affordable Care Act (ACA) nor the Religious Freedom Restoration Act (RFRA) authorizes or requires the regulations, the court held that the regulations exceeded the agencies’ statutory authority, making them arbitrary, capricious, and an abuse of discretion. Furthermore, the court affirmed the trial court’s conclusion that a nationwide injunction is warranted because of the regulations’ effects on interstate activities, such as their impact on individuals who reside in one state and work or attend college in another.

EBIA Comment: This case seems destined for the U.S. Supreme Court, although perhaps there will be another regulatory response from the agencies. Despite the nationwide injunction, substantive challenges to the contraceptive coverage mandate based on violations of the ACA and RFRA continue in the courts (see our Checkpoint article). 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.