JOY FLOWERS CONTI, District Judge.
Presently before the court is the Motion to Dismiss Plaintiffs' Amended Complaint (ECF No. 39) and brief in support (ECF No. 40) filed by defendants Kathleen Sebelius,
The present case is one of dozens of similar lawsuits currently pending in district courts and courts of appeals throughout the country. In each case, individuals and entities, both for-profit and nonprofit, are challenging the provision of the new federal health care law requiring health insurance plans to provide coverage for certain services, which defendants assert are appropriate for women's preventive care. Plaintiffs in this case, as discussed more fully below, are a private, nonprofit college, two for-profit entities, and individual owners of those entities. Plaintiffs object on religious grounds to being required to include coverage in their health plans for contraceptives such as ella and Plan B, sterilization procedures, and patient education and counseling for women of reproductive capacity (the "objected to services").
Geneva is a nonprofit institution of higher learning established in Beaver Falls, Pennsylvania in 1848 by the Reformed Presbyterian Church of North America ("RPCNA"). (ECF No. 32 ¶¶ 11, 25.) Geneva's mission is "to glorify God by educating and ministering to a diverse community of students in order to develop servant-leaders who will transform society for the kingdom of Christ." (Id. ¶ 25.) This mission is central to Geneva's institutional identity and activities. (Id. ¶¶ 27-29.) Geneva offers a traditional liberal arts and sciences curriculum as well as student programs and services that are rooted in the Christian faith. (Id. ¶ 26.) Pursuant to its mission and goals, Geneva has historically promoted a diverse student population and has opposed institutions (such as slavery) that it finds inimical to its beliefs. (Id. ¶¶ 34-35.)
Geneva is governed by a board of corporators and a board of trustees. (Id. ¶¶ 30-31.) Members of the board of corporators must be members of the RPCNA and members of the board of trustees must be members of either the RPCNA or some other Reformed or Evangelical Christian congregation. (Id. ¶ 30-31.) Geneva's faculty, staff and administration are drawn from among those who profess faith in Christ and who otherwise agree with the college's Christian convictions. (Id. at ¶ 32.) Geneva does not require its students to profess a particular faith, but it does give enrollment priority to evangelical Christians and requires all students to live by standards of Christian morality. (Id. at ¶ 33.)
Geneva provides health insurance to its employees and makes health insurance available to its students. (Id. ¶ 51.) Geneva's student health plan does not enjoy "grandfathered status"
Geneva also fears that its employee health insurance plan could lose grandfathered status when its insurer attempts to enforce the provision excluding "`[a]ny drugs used to abort a pregnancy.'" (Id. ¶ 58.) This concern arose when Geneva learned that its employee health plan allegedly provided ulipristal ("ella"), levonorgestral ("Plan B"), and intrauterine devices ("IUDs") in the past without its knowledge. (Id.) Geneva instructed its insurer to stop providing these items on the grounds that they "can abort the pregnancy of an embryo after fertilization." (Id.) The insurer allegedly indicated that it would remove the coverage at some point during the 2012 calendar and plan year. (Id.) Geneva alleges that the rules promulgated by defendants (as explained in detail below) make it difficult to determine whether any changes to its employee health plan with respect to ella, Plan B, and IUDs will cause it to lose its grandfathered status. (Id. ¶¶ 59-63.) Geneva alleges, therefore, that the elimination of ella, Plan B, and IUDs from its health plan coverage will result in a loss of grandfathered status. (Id. ¶¶ 64-68.)
Hepler and his family (which includes Kolesar) (collectively the "Heplers"), are practicing Catholics who strive to follow Catholic beliefs and teachings in all areas of their lives, including the operation of their businesses. (Id. ¶¶ 75-77.) The Heplers have pursued this goal by building a chapel on their business premises, displaying religious imagery in their business, making charitable donations to Catholic causes, and providing health insurance to their families and Catholic employees consistent with their beliefs. (Id. ¶¶ 82-85.) The Heplers participate extensively in both Catholic and pro-life activities. (Id. ¶¶ 86-88.) Hepler and his thirteen children allege that they are committed to the Catholic church's teachings on human life and sexuality, including the church's position against abortifacients, contraceptives, and sterilization. (Id. ¶ 88.)
SHLC is owned and directed by Hepler, Kolesar, and six of Kolesar's adult siblings. (Id. ¶ 89.) Hepler owns a 58% share of SHLC and Kolesar and her six adult siblings each own a 6% share. (Id.) SHLC has twenty-two full-time employees, nineteen of whom (including Hepler and Kolesar's husband) are covered by the company's health insurance plan. (Id. ¶ 90.) Hepler also owns and operates a sawmill as the sole proprietorship WLH, which has six full-time employees, five of whom are covered under SHLC's health insurance plan. (Id. ¶ 91.)
Like Geneva, the Heplers allege that their sincerely held religious beliefs prohibit them from intentionally participating in, paying for, facilitating, or otherwise supporting the use of abortifacient drugs, contraception, sterilization, and related education and counseling through the health insurance coverage that SHLC provides their families and employees. (Id. ¶¶ 77-82.) The SHLC health insurance plan is currently in its July 2012 plan year, and will begin its next plan year on July 1, 2013. (Id. ¶ 98.) Plaintiffs allege that SHLC's health insurance plan does not have grandfathered status. (Id. ¶ 97.) Pursuant to the Heplers' stated beliefs, SHLC's health insurance plan currently does not cover abortifacients, contraceptives and sterilization, and has not done so for several years. (Id. ¶¶ 94-99.) Hepler, Kolesar, SHLC and WLH allege that defendants' requirement that SHLC's nongrandfathered health plan provide coverage for the objected to services will force them to purchase a health plan that offers coverage for those services beginning in July 2013. (Id. ¶ 100.)
On March 23, 2010, the Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010) ("ACA") became law and an overhaul of the nation's healthcare system began. Section 1001 of the ACA includes specific measures related to preventive care for women, and provides in part:
42 U.S.C. § 300gg-13 (the "preventive care provision"). Because the ACA did not specifically identify which preventive care services would have to be provided without cost sharing, further rulemaking was necessary.
On July 19, 2010, defendants (the Departments of Health and Human Services, Labor, and Treasury) issued interim final regulations implementing the preventive care provision. Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the ACA, (the "first interim final regulations"), 75 FED.REG. 41,726 (Jul. 19, 2010). The first interim final regulations require all group health plans and health insurance issuers offering nongrandfathered
On August 1, 2011, HRSA adopted guidelines pursuant to the IOM recommendations
The sections of the Internal Revenue Code cited in subsection (4) define nonprofit organizations as "churches, their integrated auxiliaries, and conventions or associations of churches," and "the exclusively religious activities of any religious order" that are exempt from taxation pursuant to 26 U.S.C. § 501(a).
After allowing the public and interested groups to comment on the second interim final regulations, defendants adopted the definition of religious employer contained in those regulations without change on February 15, 2012. Group Health Plans and Health Issuers Relating to Coverage of Preventive Services Under the ACA, 77 FED.REG. 8,725, 8,727-28 (Feb. 15, 2012). The adopted final regulations (the "final regulations") contain a temporary enforcement safe harbor provision for nongrandfathered plans that do not qualify for the religious employer exemption. Id. HHS issued supplemental guidance ("HHS Guidance") with respect to the safe harbor provision.
HHS Guidance, at 3. A similar safe harbor provision also applies to student health insurance coverage provided by nonprofit institutions of higher education that satisfy similar criteria. 77 FED REG. at 16,504.
Following the adoption of the final regulations and the HHS Guidance in February
The HHS updated its guidance bulletin (the "Updated HHS Guidance") on August 15, 2012 by clarifying three points: "(1) that the safe harbor is also available to non-profit organizations with religious objections to some but not all contraceptive coverage ...; (2) that group health plans that took some action to try to exclude or limit contraceptive coverage that was not successful as of February 10, 2012, are not for that reason precluded from eligibility for the safe harbor ...; and (3) that the safe harbor may be invoked without prejudice by non-profit organizations that are uncertain whether they qualify for the religious employer exemption."
On February 6, 2013, defendants issued proposed rules (the "proposed rules") broadening the universe of organizations eligible for an exemption from the contraceptive requirement. Coverage of Certain Preventive Services Under the Affordable Care Act, 78 FED REG. 8,456, 8,462 (Feb. 6, 2013). In the proposed rules, defendants proposed an accommodation for religious organizations that object to providing contraceptive coverage, including religious institutions of higher education. The proposed rules exclude from the contraceptive requirement those organizations that meet certain criteria: (1) "The organization opposes providing coverage for some or all of the contraceptive services required to be covered under [the final regulations] on account of religious objections;" (2) "The organization is organized and operates as a nonprofit entity;" (3) "The organization holds itself out as a religious organization;" and (4) "The organization self-certifies that it satisfies the first three criteria." 78 FED REG. at 8,462. In an effort to also accommodate those plan beneficiaries who may not share the beliefs of the organizations claiming the accommodation, the proposed rules also set forth proposed ways "to provide women with contraceptive coverage without cost sharing and to protect eligible organizations from having to contract, arrange, pay, or refer for contraceptive coverage to which they object on religious grounds." Id. at 8,462-64.
Plaintiffs allege that the statutory scheme outlined above violates their religious
Based upon the uncertainty, plaintiffs allege several hardships that will be incurred as a result of the mandate. Geneva alleges that it would have to change its religious affiliation, admissions, employment, and service programs to fall within the scope of the mandate's religious employer exemption. (Id. ¶ 140.) Geneva also alleges that the mandate would burden its employee and student recruitment and retention efforts by making health insurance coverage uncertain. (Id. ¶¶ 146-47.) Plaintiffs allege that the mandate fails to protect their statutory and constitutional rights to not provide or facilitate the provision of the objected to services. (Id. ¶ 141-43.) Plaintiffs assert that the mandate impermissibly coerces them to provide coverage for the objected to services in violation of their sincerely held religious beliefs, lest they be subject to substantial fines. (Id. ¶¶ 144-45, 148-52.)
Plaintiffs allege that the mandate does not apply equally to all members of religious groups because it provides for numerous exemptions, and therefore the ACA is not a law of general applicability. (Id. ¶¶ 153-57.) According to plaintiffs, the offer of compromise
Geneva disputes whether its employee health plan will maintain its grandfathered status when its insurer removes abortifacients from its coverage during this plan year. (Id. ¶ 165.) Geneva alleges that even if its employee health plan retains grandfathered status, maintaining that status
Geneva disputes that it can comply with the HHS Guidance regarding the temporary safe harbor, because it cannot self-certify that it "did not offer non-abortifacient contraception and sterilization after February 10, 2012." (Id. ¶ 174.) Even if Geneva could avoid any burden based upon the safe harbor, it alleges that it will still be harmed for several reasons: (1) the HHS Guidance is vague, so Geneva may still not qualify; (2) the safe harbor provision can be revoked at any time; (3) at the end of the extension, the mandate will still apply; and (4) even if the safe harbor applied, its effect would still leave Geneva in violation of the mandate, despite defendants' promise not to enforce it. (Id. ¶ 175.) Because the February 2013 proposed rules were issued after the parties filed their briefs, neither defendants nor Geneva addressed their impact. The Heplers, SHLC, and WLH allege that the safe harbor does not apply to them because SHLC and WLH, the employers, are for-profit entities. (Id. ¶ 176.)
Based upon the above allegations, plaintiffs seek declaratory and injunctive relief with respect to twelve claims for relief. Counts I through VI are claims asserted by Geneva: count I alleges a violation of the Religious Freedom Restoration Act of 1993, 42 U.S.C. § 2000bb ("RFRA"); count II alleges a violation of the Free Exercise Clause of the First Amendment; count III alleges a violation of the Establishment Clause of the First Amendment; count IV alleges a violation of the Free Speech Clause of the First Amendment; count V alleges a violation of the Due Process Clause of the Fifth Amendment; and count VI alleges a violation of the Administrative Procedure Act ("APA"), 5 U.S.C. § 551, et seq. Counts VII through XII allege the same violations as Counts I through VI, with respect to Hepler, Kolesar, SHLC, and WLH.
Claims must be dismissed if the plaintiff lacks standing to assert them or if the claims are not ripe. The standing doctrine requires plaintiffs to show a valid "case or controversy" exists as required by Article III and imposes a constitutional limit on who may bring suit. The Pitt News v. Fisher, 215 F.3d 354, 359 (3d Cir.2000). To establish standing, plaintiffs must plead that they have: (1) suffered an injury-in-fact; (2) that is fairly traceable to defendant's challenged actions; and (3) that is likely redressable by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The United States Supreme Court in Lujan defined the injury-in-fact requirement as "an invasion of a legally protected interest which is (a) concrete and particularized ... and (b) `actual or imminent, not `conjectural' or `hypothetical.''" Id. at 560, 112 S.Ct. 2130. An alleged injury must be "`certainly impending' to constitute injury in fact." Whitmore v. Arkansas, 495 U.S. 149, 158, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990) (citing Babbitt v. Farm Workers, 442 U.S. 289, 298, 99 S.Ct. 2301, 60 L.Ed.2d 895 (1979)). The "underlying purpose of the imminence requirement is to ensure that the court in
In Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), the United States Supreme Court set forth the two fundamental considerations in determining ripeness: (1) "the fitness of the issues for judicial decision;" and (2) "the hardship to the parties of withholding court consideration." 387 U.S. at 149, 87 S.Ct. 1507. In the context of a pre-enforcement declaratory judgment action, the Court of Appeals for the Third Circuit refined the Abbott Laboratories test, requiring courts to consider: (1) the adversity of the parties' interests; (2) the conclusiveness of the judgment with respect to the legal relationship between the parties; and (3) the practical help or utility of the judgment. Step-Saver Data Sys., Inc. v. Wyse Tech., 912 F.2d 643, 647 (3d Cir.1990).
A motion to dismiss tests the legal sufficiency of the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir.1993). In deciding a motion to dismiss, the court is not opining on whether the plaintiff will be likely to prevail on the merits; rather, when considering a motion to dismiss, the court accepts as true all well-pled factual allegations in the complaint and views them in a light most favorable to the plaintiff. U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir.2002). While a complaint does not need detailed factual allegations to survive a Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)") motion to dismiss, a complaint must provide more than labels and conclusions. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A "formulaic recitation of the elements of a cause of action will not do." Id. (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)). "Factual allegations must be enough to raise a right to relief above the speculative level" and "sufficient to state a claim for relief that is plausible on its face." Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955).
(Id. at 1949) (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955) (internal citations omitted).
Two working principles underlie Twombly. Id. First, with respect to mere conclusory statements, a court need not accept as true all the allegations contained in a complaint. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955.) Second, to survive a motion to dismiss, a claim must state a plausible claim for relief. Id. at 1950. "Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. (citing 490 F.3d 143, 157-58 (2d Cir.2007)). "But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not `show[n] — that
Id.
If further amendment of the complaint "would fail to state a claim upon which relief could be granted," then amendment would be futile and the plaintiff's claim must be dismissed with prejudice. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir.1997) (citing Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir.1996)).
Defendants challenge this court's jurisdiction to hear Geneva's claims pursuant to the justiciability doctrine of standing;
Defendants rely principally on McConnell v. Federal Election Commission, 540 U.S. 93, 226, 124 S.Ct. 619, 157 L.Ed.2d 491 (2003), overruled on other grounds by Citizens United v. Federal Election Commission, 558 U.S. 310, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010), to support their claim that enforcement of the mandate is "too remote temporally" to constitute an imminent injury. McConnell, however, involved a situation in which the challenged policy would, if at all, only be enforced five years in the future. Id. Even under the safe harbor provision,
Plaintiffs point to several court decisions in support of their imminent injury argument. Most persuasive is Florida ex rel. Attorney General v. United States Department of Health and Human Services, 648 F.3d 1235, 1243 (11th Cir.2011), overruled on other grounds by Nat'l Fed'n of Indep. Bus. v. Sebelius, ___ U.S. ___, 132 S.Ct. 2566, 183 L.Ed.2d 450 (2012), in which the defendants (the same departments and individuals as in the present case) conceded that a delay of more than two years constituted imminent harm for standing purposes. In Belmont Abbey College v. Sebelius, 878 F.Supp.2d 25, 35 (2012), the United States District Court for the District of Columbia found that "the safe harbor merely delays enforcement by one year; it does not (in and of itself) reduce the certainty of the impending injury." Id. Pursuant to the reasoning set forth in Belmont Abbey, and the concession by defendants in this case, Geneva alleged an injury that is not too remote to preclude standing.
Although Geneva established that an injury may be imminent, the standing doctrine also requires that that injury be concrete and certainly impending. Defendants point to the ANPRM to support their claim that "there is
At least two courts, including one court of appeals that reviewed the lower court decisions in Belmont Abbey, 878 F.Supp.2d at 36-37 (finding that religiously-affiliated college lacked standing), and Wheaton College v. Sebelius, 887 F.Supp.2d 102, 107-12 (D.D.C.2012) (finding that religiously-affiliated college lacked standing despite allegations that the college could face ERISA lawsuits over contraceptive coverage), rejected the same arguments raised by defendants and found that religiously-affiliated institutions had standing in similar circumstances. See Wheaton College v. Sebelius, 703 F.3d 551, 552-53 (D.C.Cir.2012) (holding the appeals in Wheaton College and Belmont Abbey in abeyance and finding that both institutions "clearly had standing" at the time the suits were filed); Roman Catholic Archdiocese of N.Y. v. Sebelius, 907 F.Supp.2d 310, 331-33 (E.D.N.Y.2012) (finding that a nonprofit religious organization had adequately pled a certainly impending injury based upon specific allegations of preparation costs and how funds were reallocated because of the contraceptive requirement); but see Univ. of Notre Dame v. Sebelius, No. 12-253, 2012 WL 6756332, at *4 (N.D.Ind. Dec. 31, 2012) (finding that religiously-affiliated
Standing is determined based upon "the facts of the case as they existed at the time the lawsuit was filed." Clark v. McDonald's Corp., 213 F.R.D. 198, 227 (D.N.J.2003) (citing Lujan, 504 U.S. at 570 n. 4, 112 S.Ct. 2130). Standing is distinguishable from mootness and ripeness, both of which can strip a court of jurisdiction after a case has already been filed. The subsequent events and assurances upon which defendants heavily rely, therefore, do not remove Geneva's standing as measured at the time this case was filed in February 2012.
Viewing Geneva's claim of standing as of the date the suit was originally filed, it becomes clear that it acted in response to an injury that was imminent and almost certain to occur. In the amended complaint, Geneva acknowledges that its health care plans will likely lose their grandfathered status beginning in the present plan year, and will thus be subject to the ACA's requirements. (ECF No. 32 ¶¶ 57-68, 73.) As an employer of more than fifty full-time employees, Geneva must provide health insurance that includes coverage for the objected to requirements. (Id. ¶ 101.) If Geneva fails to provide such coverage, it will be subject to financial penalties of at least $500,000 per year. (Id. ¶ 112-15.) Geneva alleges that the religious employer exemption is inapplicable to it as an organization that does not primarily serve those of its own faith or inculcate religious values. (Id. 127-29.) Geneva acknowledges that it was not eligible for the temporary enforcement safe harbor as of the time the suit was filed, since the original HHS Guidance did not exempt organizations like Geneva that had provided contraceptive coverage. (Id. ¶ 174.)
In addition to claims of future harm, Geneva alleges several current injuries that it believes are sufficient to establish standing, and relies on Lac Du Flambeau Band of Lake Superior Chippewa Indians v. Norton, 422 F.3d 490 (7th Cir.2005), to support its argument that "the present impact of a future though uncertain harm may establish injury in fact for standing purposes." Id. at 498. Geneva alleges that it requires substantial lead time to prepare for future health care plan years (ECF No. 32 ¶¶ 56-57, 171); that it is suffering monetary harm in planning for the contraceptive requirement (Id. ¶ 180); and that its employee and student recruitment efforts have been burdened as a result of uncertainty surrounding its health care plans (Id. ¶¶ 146-47). In support of its argument, Geneva notes that defendants have acknowledged the importance of planning with respect to future health insurance plan years. 75 FED REG. at 41,730 (noting that "requirements in these interim final regulations require significant lead time in order to implement"). Courts have held that suffering monetary harm is sufficient to constitute injury-in-fact for standing purposes, and that "injury-in-fact is not Mount Everest." Danvers Motor Co., Inc. v. Ford Motor Co., 432 F.3d 286, 293-94 (3d Cir.2005). The Supreme Court has also acknowledged that burdens on recruitment efforts are sufficient to give rise to standing. Pierce v. Soc'y of the Sisters of the Holy Names of Jesus and Mary, 268 U.S. 510, 536, 45 S.Ct. 571, 69
Geneva must also establish that its claims are presently ripe for judicial review. Ripeness "prevent[s] the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies," and "protect[s] the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." Nat'l Park Hospitality Ass'n v. Dep't of the Interior, 538 U.S. 803, 807-08, 123 S.Ct. 2026, 155 L.Ed.2d 1017 (2003) (citing Abbott Laboratories v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967)). Underpinning the ripeness doctrine are considerations of "whether the facts of the case are `sufficiently developed to provide the court with enough information on which to decide the matter conclusively,' and whether a party is `genuinely aggrieved so as to avoid expenditure of judicial resources on matters which have caused harm to no one.'" Khodara Envtl., Inc. v. Blakey, 376 F.3d 187, 196 (3d Cir.2004) (citing Peachlum v. City of York, Pa., 333 F.3d 429, 433-34 (3d Cir.2003)). Unlike standing which is determined as of the time the case commenced, ripeness may consider events which have occurred after the filing of the complaint. See Buckley v. Valeo, 424 U.S. 1, 114-17, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976)
Geneva acknowledges that Step-Saver provides the appropriate test for ripeness in this case, but it urges the court to apply a "relaxed standard" to their claims because they present a facial challenge involving First Amendment rights. (ECF No. 51 at 14) (citing Peachlum, 333 F.3d at 435). The proposed standard aims to quell concerns that "a person will merely comply with an illegitimate statute rather than be subjected to prosecution." Peachlum, 333 F.3d at 435. Geneva's argument was raised in Persico v. Sebelius, No. 12-123, 919 F.Supp.2d 622, 634-37, 2013 WL 228200, at *10-11 (W.D.Pa. Jan. 22, 2013), and the court found Peachlum to be inapplicable to challenges to the mandate for three reasons.
First, the plaintiffs in Persico (a Catholic Bishop and the Roman Catholic Diocese of Erie, Pennsylvania) did not assert a
To satisfy the first prong of the Step-Saver framework, "the party seeking review need not have suffered a `completed harm' to establish adversity of interest ... it is necessary that there be a substantial threat of real harm and that the threat `
Geneva maintains that its position is sufficiently adverse because it is challenging the law as it currently stands. (ECF No. 51 at 15-16.) It argues that the only remaining question is whether defendants will follow through on their promises to change the regulations. While Geneva is correct that the regulations embodying the mandate are final, and that "weighs in favor of justiciability," Nebraska v. United
Defendants insist that the mandate as it currently stands will never be enforced against institutions similar to Geneva. The temporary enforcement safe harbor already precludes enforcement of the mandate until at least August 1, 2013 for Geneva's student health plan and January 1, 2014 for its employee plan. The February 2013 proposed rules go further and if they become final would exempt Geneva from having to include the coverage for the objected to services in its health plans. 78 FED REG. at 8,462. Geneva appears to come within the requirements for exemption in the proposed rules. First, Geneva vigorously opposes provision of coverage for the objected to services on religious grounds, (ECF No. 32 ¶ 43); second, Geneva operates as a nonprofit entity, (Id. ¶ 11); and finally, Geneva holds itself out as a religious organization, as evidenced by its mission, which is "to glorify God by educating and ministering to a diverse community of students in order to develop servant-leaders who will transform society for the kingdom of Christ." (Id. ¶ 25.) The proposed rules appear to exempt institutions like Geneva from the mandate — provided Geneva complies with the fourth requirement for exemption, self-certifying that it meets the first three requirements.
When an agency expressly assures that it will not enforce regulations against a party, there is no adversity of interest. Salvation Army v. Dep't of Cmty. Affairs of State of N.J., 919 F.2d 183, 192-93 (3d Cir.1990). Here, the proposed rules appear to exempt Geneva from complying with the mandate and, if they become final, will eliminate any remaining adversity of interest. Ohio Forestry Ass'n, Inc. v. Sierra Club, 523 U.S. 726, 735, 118 S.Ct. 1665, 140 L.Ed.2d 921 (1998) (finding a claim unripe when "the possibility that further consideration will actually occur before [the regulation] is implemented is not theoretical, but real").
This conclusion comports with the findings of the majority of courts which addressed this issue in the context of religiously-affiliated colleges and universities. See Persico, 919 F.Supp.2d at 638-39, 2013 WL 228200, at *13 (collecting cases). One court which found that a religious organization's claims were ripe, Roman Catholic Archdiocese of N.Y., 907 F.Supp.2d at 335-36, did not have before it the February 2013 proposed rules that if adopted should ensure that "defendants will never enforce the regulations in their current form against [Geneva]." (ECF No. 60 at 5.) Based upon the most recent developments, this court, like the Court of Appeals for the District of Columbia Circuit in Wheaton College, will "take the government at its word" that it will, in good faith, finalize the proposed rules before the expiration of the safe harbor period — meaning prior to August 2013.
The conclusiveness inquiry requires the court to determine whether there is a "`real and substantial controversy admitting
Geneva argues that the appropriate inquiry with respect to conclusiveness is whether its claims are "predominantly legal." (ECF No. 51 at 16-17) (citing Presbytery of N.J., 40 F.3d at 1463-64.) It notes that the factual record in this case, like most First Amendment cases, is largely undisputed. Geneva points out that government agencies cannot avoid review by simply holding out the possibility of regulatory change. (ECF No. 51 at 18) (citing CSI Aviation Services, Inc. v. United States Dept. of Transp., 637 F.3d 408, 410 (D.C.Cir.2011) (rejecting a "trust us — we'll fix it later" approach to rulemaking)). There, however, is an active rulemaking process underway at this time that will likely moot Geneva's claims.
Defendants are taking concrete steps to ensure that the law will be changed to reflect the concerns expressed by Geneva and other nonprofit entities that are similarly situated. Those procedures are expected to be concluded before the expiration of the safe harbor period. Geneva's contention that the mandate's requirements are "final rules" was made without the benefit of the proposed rules and ignores the nature of the second interim final regulations. See Colo. Christian Univ. v. Sebelius, No. 11-3350, 2013 WL 93188 at *7, n. 9 (D.Colo. Jan. 7, 2013). In Colorado Christian University the court pointed out that "Defendants only finalized the religious employer exemption as an amendment to the interim final rule," not the mandate as a whole. Id. (citing 77 FED REG. at 8,730). The requirements being challenged are not finalized; and the safe harbor, ANPRM, and recent proposed rules are affirmative steps taken to amend the rules as they currently stand. The mandate's requirements remain in flux, and judicial review at this time could be an "exercise in futility" and a waste of judicial resources. Armstrong, 961 F.2d at 412.
The third prong of the Step-Saver framework requires the court to consider whether a declaratory judgment would be useful to the parties. A useful judgment is one that clarifies the legal relationships between the parties and allows the plaintiff to "make responsible decisions about the future." Step-Saver, 912 F.2d at 649. Because the rules in place are in the process of being amended to exempt Geneva from having to comply with the mandate's requirements, judicial intervention at this time will not assist the parties in any meaningful way.
Geneva alleges that a decision in this case would allow it to make informed decisions about planning for future health care plan years, and to better understand the impact the mandate's requirements will have on employment and student recruitment. Unfortunately, any decision made by this court will likely be irrelevant in light of the ongoing rulemaking process. "The mere fact that a declaratory judgment would be useful to assist Plaintiffs in making their upcoming operational decisions is insufficient to overcome the fact that no actual controversy ... exists between the parties." Zubik, 911 F.Supp.2d at 327. Because defendants represent that the final regulations will address the concerns
Based upon consideration of the factors set forth in Step-Saver, the court concludes that Geneva's claims are not ripe for review at this time, and defendants' motion to dismiss with respect to Geneva's claims shall be GRANTED without prejudice.
Geneva argues in the alternative that defendants' promises of future change make this a mootness, rather than a ripeness question. Because the recent proposed rules are not yet final, the court cannot conclude at this time that the issues raised are moot. If defendants do not live up to their promises, this action may become ripe again; thus, to the extent that the court will dismiss Geneva's claims, it will do so without prejudice. See note 13, supra.
It is undisputed that the Hepler and Kolesar have standing to pursue their claims. The court must consider whether SHLC and WLH (the "Hepler Entities" and together with Hepler and Kolesar, the "Hepler plaintiffs") have standing and whether the Hepler plaintiffs stated cognizable claims under the RFRA. Pursuant to the RFRA, the government may not "substantially burden a person's exercise of religion, `even if the burden results from a rule of general applicability.'" Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 424, 126 S.Ct. 1211, 163 L.Ed.2d 1017 (2006) (quoting 42 U.S.C. § 2000bb-1(a)). The government may, however, substantially burden the exercise of religion if the burden: "(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest." 42 U.S.C. § 2000bb-1(b). The simple language of the RFRA belies the challenge of applying it to the Hepler plaintiffs in the present case. The Hepler plaintiffs bear the initial burden under the RFRA of establishing "that application of the offensive law or policy would substantially burden a sincere, religious exercise." Conestoga Wood Specialities Corp. v. Sebelius, No. 12-6744, 2013 WL 140110 at *9 (E.D.Pa. Jan. 11, 2013) (citing Norwood v. Strada, 249 Fed.Appx. 269, 271 (3d Cir. 2007)).
It goes without saying that the individual members of the Hepler family are "persons" as defined by the RFRA. The more difficult issue arises with respect to whether the Hepler Entities are "persons" that can exercise religion in the context of the RFRA. Neither the Supreme Court nor the Court of Appeals for the Third Circuit has had an opportunity to decide whether a secular, for-profit corporation or entity can exercise religion. Other district courts which addressed this question in the context of challenges to the ACA have considered the question as it applies to both the RFRA and the First Amendment Free Exercise Clause. Tyndale House Publishers, Inc. v. Sebelius, 904 F.Supp.2d 106, 114 n. 9 (D.D.C.2012) (acknowledging that courts employ Free Exercise Clause jurisprudence in interpreting RFRA claims).
Defendants argue that a secular, for-profit corporate entity cannot exercise religion because once such an entity enters the regulated commercial market, its owners' beliefs do not trump the regulatory
According to the Hepler plaintiffs, a closely-held, family-owned corporation and its religious owners are virtually indistinguishable, and therefore the corporation can effectively exercise the owners' religion. The Hepler plaintiffs rely on the recent Supreme Court decision in Citizens United (extending the First Amendment right to freedom of speech to corporate entities) for the proposition that secular corporations can exercise religion because the First Amendment rights of individuals and corporations are coextensive.
The RFRA itself does not define "person" as used in the statute. In supplemental briefing, the Hepler plaintiffs suggest that the court apply the definition of "person" as set forth in 1 U.S.C. § 1, which provides that "[i]n determining the meaning of any Act of Congress,
Two decisions from the Court of Appeals of the Ninth Circuit guide this court's holding that a for-profit, secular corporation has standing to assert the religious exercise claims of its owners in certain circumstances: Equal Employment Opportunity Commission v. Townley Engineering & Manufacturing Co., 859 F.2d 610 (9th Cir.1988), and Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir.2009). The Hepler plaintiffs rely heavily on Townley and Stormans in arguing that a closely-held corporation may assert its owners' free exercise and RFRA rights where the corporate entity "`is merely the instrument through and by which [the owners] express their religious beliefs.'" Stormans, 586 F.3d at 1120 (quoting Townley, 859 F.2d at 619-20). A district court addressing a challenge similar to the present case also found Townley and Stormans persuasive in finding that a secular, for-profit corporation may assert its owners' free exercise rights. Tyndale House, 904 F.Supp.2d at 114-17.
Townley involved a closely-held corporation that manufactured and sold mining equipment. Townley, 859 F.2d at 611. The company was 94% owned by Jake and
The Court of Appeals for the Ninth Circuit recently relied on Townley in a case with facts quite similar to the present circumstances. In Stormans, the owner of a pharmacy challenged a Washington state regulation that required pharmacies to provide Plan B to customers despite religious and moral objections. Stormans, 586 F.3d at 1116-17. The pharmacy in Stormans was a fourth-generation family-owned company in which the shareholders and directors were all members of the same family. Id. at 1120. The owners alleged, and the court agreed, that the pharmacy was "an extension of the beliefs of the members of the Stormans family, and that the beliefs of the Stormans family [were] the beliefs of [the pharmacy]." Id. The court held that "Stormans, Inc. does not present any free exercise rights of its own different from or greater than its owners' rights. We hold that, as in Townley, Stormans has standing to assert the free exercise rights of its owners." Id.
SHLC pled ample facts necessary for this court to conclude that it has standing to assert its owners' rights in the First Amendment and RFRA context. As was the case in Stormans, SHLC is a closely-held corporation,
The Hepler plaintiffs allege that "[t]he Heplers believe that it would be immoral and sinful for them to intentionally participate in, pay for, facilitate, or otherwise support abortifacient drugs, contraception, sterilization, and related education and counseling, through the inclusion of such items in health insurance coverage they offer at their businesses." (Id. ¶ 80.) The complaint further alleges the extent to which the Heplers strive to incorporate their religious beliefs into every aspect of their business, including: (1) "providing health insurance coverage to their family members and other Catholic employees in a form that is consistent with those employees' religious beliefs" (Id. ¶ 82); (2) "display[ing] religious imagery at the offices
Like the corporate owners in Townley, Hepler and Kolesar argue that they are unable to separate their Catholic beliefs into different spheres of their lives, and thus their exercise of religion and their business activities are one and the same. (ECF No. 51 at 24.) The present facts are much stronger than those in Stormans, in which the plaintiffs offered no evidence of how their faith was incorporated into the running of the pharmacy business. Taken together, the above-cited examples of the interrelatedness between SHLC, WLH and the Heplers' beliefs lead the court to conclude that SHLC established standing to assert the First Amendment and RFRA claims of its owners.
Defendants argue that a secular, for-profit corporation accepts limitations on its activities when it enters the commercial market, and that a corporation cannot "impose its owners' religious beliefs on its employees." (ECF No. 40 at 24) (citing United States v. Lee, 455 U.S. 252, 261, 102 S.Ct. 1051, 71 L.Ed.2d 127 (1982)). Defendants conclude, therefore, that SHLC's status as a secular, for-profit corporation and WLH's status as a secular, for-profit employer prevent them from claiming the religious employer exemptions that are available to other entities. (Id.) As noted, however, WLH is not a separate legal entity and its claims may be directly asserted by Hepler.
Defendants are correct that SHLC does not operate as a "religious organization" as defined by the Court of Appeals for the Third Circuit. See LeBoon v. Lancaster Jewish Cmty. Ctr. Ass'n, 503 F.3d 217, 226 (3d Cir.2007) (outlining several factors courts consider in determining whether an entity qualifies as a religious organization). Nevertheless, courts should not focus on the particular category of entity seeking First Amendment protection, but should instead look at "whether [a challenged statute] abridges [rights] that the First Amendment was meant to protect." First Nat'l Bank of Boston v. Bellotti, 435 U.S. 765, 776, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978) (addressing free speech rights). The court finds further support for this argument in Citizens United. Although that decision addressed corporate rights in the context of speech, the Court in Citizens United acknowledged that categorizing entities for the purpose of prohibiting some forms of First Amendment expression while allowing others is prohibited. Citizens United, 130 S.Ct. at 898, 905-06 (rejecting the argument that media corporations are entitled to greater First Amendment protections than other corporations). The Court also explicitly acknowledged that "First Amendment protection extends to corporations." Id. at 899. This court will not draw such distinctions in the present case, particularly where crucial First Amendment rights are at stake and where there is no contextual distinction in the language of the First Amendment between freedom of speech and freedom to exercise religion. At this stage, the court finds that SHLC pleaded sufficient facts for the court to find that it has standing to assert its owners' RFRA and First Amendment claims.
Having found that Hepler, Kolesar and SHLC have standing to assert their claims under the RFRA, the court must now determine whether the mandate's requirements impose a substantial burden on the their exercise of religion. Under the RFRA, exercise of religion is defined as "any exercise of religion, whether or not compelled by, or central to, a
A challenged law substantially burdens the free exercise of religion if it compels plaintiffs "to perform acts undeniably at odds with fundamental tenets of their religious beliefs." Wisconsin v. Yoder, 406 U.S. 205, 218, 92 S.Ct. 1526, 32 L.Ed.2d 15 (1972). A substantial burden also exists where a law "put[s] substantial pressure on an adherent to modify his behavior and violate his beliefs." Thomas v. Review Bd. of Ind. Emp't Sec. Div., 450 U.S. 707, 717-18, 101 S.Ct. 1425, 67 L.Ed.2d 624 (1981). Even "onerous" financial costs can rise to the level of a substantial burden. Jimmy Swaggart Ministries v. Bd. of Equalization of Cal., 493 U.S. 378, 392, 110 S.Ct. 688, 107 L.Ed.2d 796 (1990) (declining to find a substantial burden, but recognizing that one could exist under certain circumstances).
Courts addressing similar challenges to the mandate's requirements have "simply assume[d] that a law substantially burdens a person's exercise of religion when that person so claims." Legatus v. Sebelius, 901 F.Supp.2d 980, 991 (E.D.Mich.2012).
Defendants do not question the sincerity of the individual Hepler plaintiffs' religious beliefs, but they do dispute whether the mandate's requirements impose a substantial burden on the exercise of those beliefs. Defendants argue that the mandate's requirements do not burden the Hepler plaintiffs' exercise of religion because the regulations only apply to group health plans and health insurance issuers, not to individuals. Without a direct requirement that the individual Hepler plaintiffs provide insurance coverage for the objected to services, defendants maintain that any burden is too attenuated to be cognizable under the RFRA. The Hepler plaintiffs respond that even indirect compulsion is sufficient under the RFRA if it requires them to abandon their religious beliefs and provide the objectionable coverage in fear of being subject to financial penalties. The Hepler plaintiffs reject defendants' argument that a burden on SHLC is not a burden on the individual owners and employees, as in this case the individual Hepler plaintiffs are essentially providing themselves and their own families with the objectionable coverage.
The Hepler plaintiffs are faced with having to choose between violating their deeply held religious beliefs and being forced to cause SHLC to terminate their health insurance coverage, which they also allege would burden their religious exercise. (ECF No. 32 ¶¶ 116-24.) This kind of Hobson's choice is similar to that faced by the plaintiff in Sherbert, who was "force[d]... to choose between following the precepts of her religion and forfeiting benefits, on the one hand, and abandoning one of the precepts of her religion in order to work, on the other hand." Sherbert, 374 U.S. at 404, 83 S.Ct. 1790. Here, the Hepler plaintiffs are unable to enjoy the benefits of providing the Heplers and their families health insurance that is free of the coverage for the objected to services. Like in Yoder, the Hepler plaintiffs allege that they would be subject to a financial penalty if they were forced to drop the SHLC health insurance plan and compensate the Hepler Entities' employees for the purchase of their own equivalent plans. (ECF No. 32 ¶ 123.) In the context of a small, closely-held corporation and a sole proprietorship, these choices and the attendant consequences can have a significant impact on the health of those businesses and their owners.
Thomas is also instructive with respect to defendants' argument that the burden on the Hepler plaintiffs is too attenuated to be substantial. In addressing whether a pacifist's objection to war was too remote from his former occupation assembling tanks, the Supreme Court noted that "Thomas drew a line, and it is not for [the Court] to say that the line he drew was an unreasonable one." Thomas, 450 U.S. at 715, 101 S.Ct. 1425. The Court instructed that "[c]ourts should not undertake to dissect religious beliefs" when analyzing substantial burden questions. Id. In the present case, SHLC purchases insurance for its employees and provides that coverage to WLH's employees. Thus, the coverage is provided to the Heplers and their families, who object to providing coverage which violates their exercise of religion. At this early stage in proceedings, it is not for this court to prevent the Hepler plaintiffs
It is also important to note that the Hepler plaintiffs' position with respect to the mandate's requirements is more subtle than many courts have recognized. (ECF No. 62 at 3) Compare Tyndale House, 904 F.Supp.2d at 123 ("[t]he plaintiffs' specific objection is not simply to the use of the contraceptives at issue, but to `providing coverage for abortifacients and related education and counseling in [plaintiffs'] health insurance plan"); Grote Indus., LLC v. Sebelius, 914 F.Supp.2d 943, 951 (S.D.Ind.2012) ("[w]e acknowledge that Plaintiffs object not just to the
The Heplers explicitly object to the requirement that they through the Hepler Entities provide the objectionable coverage to themselves and their families. (ECF No. 32 ¶ 80.) Regardless of who purchases the insurance in question in this case — whether it be SHLC (acting on behalf of the Heplers), or the Heplers themselves — that insurance will necessarily include coverage for the objected to services, thus imposing a substantial pressure on the Heplers to "modify [their] behavior and to violate their beliefs" by either giving up their health insurance generally or providing the objectionable coverage. Thomas, 450 U.S. at 718, 101 S.Ct. 1425. This is a quintessential substantial burden. The allegations in the amended complaint are sufficient for the court to conclude that the Hepler plaintiffs have shown a plausible claim under the RFRA.
Since the Hepler plaintiffs set forth a plausible claim that the mandate's requirements impose a substantial burden on their exercise of religion, the burden shifts to defendants to show that the mandate's requirements serve "interests of the highest order." Yoder, 406 U.S. at 215, 92 S.Ct. 1526. Defendants argue that the mandate's requirements serve two complementary compelling interests — namely the need to promote public health and the need to promote gender equality. Few would argue that promoting the public health is not a compelling government interest. See Mead v. Holder, 766 F.Supp.2d 16, 43 (D.D.C.2011) (acknowledging that, in the context of the ACA, "the Government clearly has a compelling interest in safeguarding the public health by regulating the health care and insurance markets"). The Hepler plaintiffs do not appear to seriously dispute that public health and gender equality can, in certain circumstances, be compelling government interests.
The Hepler plaintiffs instead argue that defendants' proffered interests are too vague and general to satisfy a strict scrutiny analysis. In construing RFRA claims, courts must look "beyond broadly formulated interests justifying the general applicability of government mandates
In O Centro, the Supreme Court found that the government failed to make a showing that a ban on the use of a hallucinogenic substance served a compelling interest as applied to a Native American tribe that used the substance as part of its religious services. Id. at 439, 126 S.Ct. 1211. The Court relied heavily on similar religious exemptions granted with respect to the use of peyote by "hundreds of thousands" of members of the Native American Church, and found that such broad exemptions weighed heavily against finding a compelling interest. Id. at 433-34, 126 S.Ct. 1211. In light of the myriad exemptions to the mandate's requirements already granted — including the most recent developments that will — if implemented — further increase the number of exempt entities — and conceding that the requirement does not include small employers similarly situated to SHLC, the requirement is "woefully underinclusive" and therefore does not serve a compelling government interest. Republican Party of Minn. v. White, 536 U.S. 765, 780, 122 S.Ct. 2528, 153 L.Ed.2d 694 (2002).
The Hepler plaintiffs and several other courts addressing similar challenges to the mandate's requirements pointed out that over 190 million individuals have already been exempted from the mandate's requirements as a result of the grandfathering provisions in the ACA. E.g. Newland v. Sebelius, 881 F.Supp.2d 1287, 1298 (D.Colo.2012) ("[t]he government has exempted over 190 million health plan participants... from the preventive care coverage mandate"); Tyndale House, 904 F.Supp.2d at 128 ("Indeed, the 191 million employees excluded from the contraceptive coverage mandate include those covered by grandfathered plans
In addition to the grandfathering exemption, the ACA recognizes an exemption for members of a "religious sect or division" that objects to accepting public or private insurance funds. 26 U.S.C. § 5000A(d)(2)(A). Defendants exempted more traditional religious employers from the requirement, under pressure from other religious groups. 76 FED REG. at 46,626. SHLC itself even qualifies to be excused from providing any kind of health insurance insofar as it is defined as a small employer under the ACA. See 42 U.S.C. § 18024(b)(2). As a small employer, SHLC is exempt from the requirement that it provide health insurance to its employees at all. 26 U.S.C. § 4980H(c)(2)(A) (requiring that employers with fifty or more full-time employees provide health coverage). Finally, in response to intense public pressure, defendants proposed rules that will further exclude nonprofit religious institutions like Geneva from the mandate's requirements. 78 FED. REG. at 8,462. In light of the myriad exemptions,
Having already decided that SHLC has standing to assert the Heplers' First Amendment claims, the court will now individually address those claims.
The Free Exercise Clause of the First Amendment provides "Congress shall make no law ... prohibiting the free exercise [of religion]." U.S. CONST. amend. I. The "RFRA and the Free Exercise Clause create different standards for the protection of religion and ... RFRA's substantive protections extend far beyond what the Free Exercise Clause requires." Hankins v. Lyght, 441 F.3d 96, 112 (2d Cir.2006) (Sotomayor, J., dissenting). Although the Hepler plaintiffs set forth sufficient facts to establish a claim for relief under the RFRA, they must still satisfy the pleading standard with respect to the Free Exercise Clause. The Free Exercise Clause of the First Amendment "does not relieve an individual of the obligation to comply with a `valid and neutral law of general applicability on the ground that the law proscribes (or prescribes) conduct that his religion prescribes (or proscribes).'" Emp't Div., Dep't of Human Res. of Ore. v. Smith, 494 U.S. 872, 879, 110 S.Ct. 1595, 108 L.Ed.2d 876 (1990) (quoting Lee, 455 U.S. at 263 n. 3, 102 S.Ct. 1051). The requirements of "[n]eutrality and general applicability are interrelated." Lukumi, 508 U.S. at 531, 113 S.Ct. 2217. A law is not neutral if its object "is to infringe upon or restrict practices because of their religious motivation." Id. at 533, 113 S.Ct. 2217. Laws are not generally applicable if they selectively "impose burdens only on conduct motivated by religious belief." Id. at 543, 113 S.Ct. 2217. If a law is found to be neutral and generally applicable, then it must only withstand rational basis review; otherwise, it must withstand strict scrutiny. Fraternal Order of Police Newark Lodge No. 12 v. City of Newark, 170 F.3d 359, 362 (3d Cir.1999)
Defendants argue that the Hepler plaintiffs' free exercise claims must fail because the mandate's requirements are neutral and generally applicable. With respect to neutrality, defendants note that the requirements do not, on their face, refer to any religious practice — and that the only mention of religion in the regulations relates to the religious exemption — which they argue reflects an effort to accommodate religion, not target it. (ECF No. 40 at 33-34.) Defendants maintain that the requirement is generally applicable because it does not pursue its purpose "only against conduct motivated by religious belief." (Id. at 33) (citing Lukumi, 508 U.S. at 545, 113 S.Ct. 2217.)
The Hepler plaintiffs respond that the requirement is underinclusive in light of the myriad exemptions provided which exempt "191 million" people from the requirement. The Hepler plaintiffs note that the government has "discretion" to
The Hepler plaintiffs rely on two decisions of the Court of Appeals for the Third Circuit to support their argument. First, in Blackhawk v. Pennsylvania, 381 F.3d 202 (3d Cir.2004), a Native American who owned black bears sought a religious exemption from the permit fee required by the state. The permit statute allowed exemptions for zoos, nationally recognized circuses, and in cases "`where hardship or extraordinary circumstance warrants,' so long as the waiver is `consistent with sound game or wildlife management activities.'" Id. at 205 (citing 34 PA. CONS.STAT. § 2901(d)). In addressing the plaintiff's free exercise claim, the court of appeals acknowledged that a law "fails the general applicability requirement if it burdens a category of religiously motivated conduct but exempts or does not reach a substantial category of conduct that is not religiously motivated and that undermines the purposes of the law to at least the same degree as the covered conduct that is religiously motivated." Id. at 209 (citing Lukumi, 508 U.S. at 543-46, 113 S.Ct. 2217.) The Blackhawk court found that the "individualized, discretionary" permit requirements in that case contained "secular exemptions that preclude[d] the fee scheme from satisfying the requirement of general applicability." Id. at 213. The scheme in Blackhawk did not include a categorical exemption for religiously-motivated conduct.
In Fraternal Order of Police, the court of appeals determined that a police department policy prohibiting the wearing of beards was unconstitutional where exemptions were granted for officers with special medical needs or undercover assignments, but not for officers whose religion required that they wear a beard. Fraternal Order of Police, 170 F.3d at 367. The court of appeals rejected the notion that only policies involving "individualized exceptions" could be subject to free exercise attack and noted that "[i]f anything, this concern is only further implicated when the government does not merely create a mechanism for individualized exemptions, but instead, actually creates a
There is little doubt that the mandate's requirements are facially neutral in the sense that they are directed toward benefiting the public health, and are not explicitly targeted at any particular religious conduct. The court's analysis, however, must extend beyond the face of the regulations in question. The Court of Appeals for the Third Circuit has acknowledged that
Tenafly Eruv Ass'n, Inc. v. Borough of Tenafly, 309 F.3d 144, 165-66 (3d Cir. 2002). The process of implementing the objected to requirements has been replete with examples of the government impermissibly exercising its discretion by exempting vast numbers of entities while refusing to extend the religious employer exemption to include entities like SHLC.
The primary example of the "categorical exemption" rejected in Fraternal Order of Police in the present case is the grandfathering provision in the ACA, which exempts as many as 191 million entities from the mandate's requirements. The grandfathering exemption impacts secular employers to "at least the same degree" — and likely far more — than religious objections from entities like SHLC. Blackhawk, 381 F.3d at 209. The fact that the government saw fit to exempt so many entities and individuals from the mandate's requirements renders their claim of general applicability dubious, at best. Elsewhere in their briefing, defendants respond that the number of grandfathered plans will continue to decrease as time goes on. Even if this comes to fruition (which is not a certainty), the secular exemption for employers with fewer than fifty full-time employees that choose not to provide any insurance coverage remains. 26 U.S.C. § 4980H(c)(2)(A). Taken together, these categorical exemptions for secular entities and individuals raise a concern that the mandate's requirements are not generally applicable.
In addition to the secular exemptions, the government continues to engage in an impermissible "religious gerrymander" by extending exemptions to an increasing number of religiously-affiliated entities. Although the court of appeals in Blackhawk and Fraternal Order of Police was not faced with the situation where, as here, some religious conduct is exempted, the fact that defendants continue to carve out exemptions, see generally 78 FED REG. 8,456, while subjecting SHLC and other similarly-situated close corporate entities to the mandate's requirements, raises a suggestion of "discriminatory intent" against close corporate entities seeking to advance the religious beliefs of their owners. Fraternal Order of Police, 170 F.3d at 362. On the present record, this court finds that the Hepler plaintiffs raised plausible claims that the sheer number of exemptions — both secular and religious — to the mandate's requirements burdened their free exercise rights to an extent sufficient to trigger strict scrutiny. The court already analyzed the mandate's requirements under the compelling government interest test in the RFRA context and found that they do not survive strict scrutiny; therefore, for the same reasons, the First Amendment claim is sufficient, and the motion to dismiss this claim must be denied.
The Establishment Clause of the First Amendment provides that "Congress shall make no law respecting an establishment of religion." U.S. CONST. amend. I. The "clearest command of the Establishment Clause is that one religious denomination cannot be officially preferred over another." Larson v. Valente, 456 U.S. 228, 244, 102 S.Ct. 1673, 72 L.Ed.2d 33 (1982). For a challenged statute to be valid under the Establishment Clause it (1) "must have a secular legislative purpose;" (2) "its principal or primary effect must be one that neither advances nor inhibits religion;" and (3) it "must not foster `an excessive entanglement with religion.'" Lemon v. Kurtzman, 403 U.S. 602, 612-13, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971) (quoting Walz v. Tax Comm'n of City of N.Y., 397 U.S. 664,
The religious employer exemption to the mandate's requirements does not run afoul of the Establishment Clause because it does not make distinctions based upon religious affiliation. Instead, as defendants point out, the "criteria for the exemption focus on the purpose and composition of the organization, not on its sectarian affiliation. The exemption is available on an equal basis to organizations affiliated with any and all religions." (ECF No. 40 at 35-36.) This kind of regulation has been found acceptable in the Establishment Clause context.
In Walz, the Supreme Court concluded that a religious exemption to property tax requirements did not violate the Establishment Clause because the exemption "has not singled out one particular church or religious group or even churches as such; rather, it has granted exemption to all houses of religious worship within a broad class of property owned by non-profit, quasi-public corporations." Id. at 672-73, 90 S.Ct. 1409. Likewise, in Droz v. Commissioner of Internal Revenue Service, 48 F.3d 1120, 1124 (9th Cir.1995), the Court of Appeals for the Ninth Circuit found that a religious exemption from the requirement that individuals pay Social Security taxes, 26 U.S.C. § 1402(g), withstood an Establishment Clause challenge. The court of appeals concluded that the statute did not facially discriminate among religions, despite the fact that "some individuals receive exemptions, and other individuals with identical beliefs do not." Id. Challenges to a state law similar to the mandate have likewise survived Establishment Clause analysis.
The religious employer exemption to the mandate's requirements does not single out one particular religious denomination or religion. The religious employer exemption at issue in the present case is more akin to the situation in Droz, where
The crucial distinction between the present case and Larson is that the Minnesota legislators who drafted the income reporting law at issue in that case explicitly sought to exclude a Roman Catholic Archdiocese from the scope of the act, and accordingly drafted the law. Larson, 456 U.S. at 254, 102 S.Ct. 1673. Other legislators sought to include those "religious organizations which are soliciting on the street and soliciting by direct mail, but who are not substantial religious institutions in ... our state." Id. (quoting the transcript from legislative discussions). The Hepler plaintiffs adduce no factual allegations about such an insidious purpose with respect to the religious exemption in the present case. Without such allegations, the religious employer exemption has neither the purpose nor effect of discriminating among religious denominations, and is therefore not the type of "`religious gerrymandering'" sought to be avoided in Larson. Id. at 255, 102 S.Ct. 1673 (quoting Gillette v. United States, 401 U.S. 437, 452, 91 S.Ct. 828, 28 L.Ed.2d 168 (1971)).
With respect to excessive entanglement, the Hepler plaintiffs maintain that the religious employer exemption requires the government to explore impermissibly a religious organization's purpose when determining eligibility for the exemption. In the present case, neither the Hepler Entities nor the Heplers would be subject to governmental exploration insofar as neither SHLC nor WLH is a nonprofit entity, as required by 45 C.F.R. § 147.130(a)(1)(iv)(B)(4) (requiring that an employer be a nonprofit organization as set forth in the Internal Revenue Code at 26 U.S.C. § 6033(a)(1)). Because the Heplers and the Hepler Entities are individuals and for-profit entities, respectively, no further government investigation would be required to determine their ineligibility for the religious employer exemption. On that basis alone, the Hepler plaintiffs cannot assert that the religious exemption fosters an excessive entanglement with religion.
To the extent that the Hepler plaintiffs present a facial challenge to the religious employer exemption, there is still not the necessary "excessive" entanglement to violate the Establishment Clause. The Supreme Court has stated that "[n]ot all entanglements" violate the Constitution and courts "have always tolerated some level of involvement between the two." Agostini v. Felton, 521 U.S. 203, 233, 117 S.Ct. 1997, 138 L.Ed.2d 391 (1997). "Entanglement must be `excessive' before it runs afoul of the Establishment Clause." Id. (quoting Bowen v. Kendrick, 487 U.S. 589 at 615-17, 108 S.Ct. 2562, 101 L.Ed.2d 520 (1988)).
In Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327, 107 S.Ct. 2862, 97 L.Ed.2d 273 (1987), the Supreme Court held that religious employer exemptions do not necessarily violate the Establishment Clause. At issue in Amos was the religious employer exemption to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-1(a). The Court held that "[i]t cannot be seriously contended that [the religious employer exemption] impermissibly entangles church and state; the statute effectuates a more complete separation of the two and ... easily passes
The religious employer exemption in the present case will likely involve a review of an organization's membership composition and possibly its mission statement. Courts frequently undertake a similar review when determining the applicability of the religious employer exemption under Title VII. Cf. LeBoon, 503 F.3d at 226 (requiring courts to examine, inter alia, an entity's nonprofit status; whether the entity has a religious purpose; whether it includes religious instruction in its curriculum; and whether its membership includes individuals of the same faith). The risk of entanglement in the present case is not excessive, because the government is not providing anything to the covered organizations. Contra Bowen, 487 U.S. 589 at 616-17, 108 S.Ct. 2562 (finding no Establishment Clause violation where government grant program provided funding for adolescent pregnancy and sexuality services at some religiously-affiliated organizations, even though the program required government oversight involving review of program materials and periodic site visits). Instead, the oversight in the present situation requires entities seeking the religious employer exemption to satisfy requirements that are very similar to those seeking exemptions from Title VII. See LeBoon, 503 F.3d at 226. Entities seeking an exemption under the proposed rules must self-certify
The Hepler plaintiffs argue that the mandate's requirements compel them to subsidize speech, in the form of education and counseling, "in favor of items to which they object." (ECF No. 51 at 37.) The Hepler plaintiffs do not, however, appear to contend that providing or using the objected to services is a form of expressive conduct, as has been argued in other challenges to the mandate's requirements. See O'Brien, 2012 WL 4481208, at *11 (noting that "plaintiffs argue that the regulations require plaintiffs to subsidize other
The First Amendment prohibits the government from compelling individuals to express views with which they disagree. United States v. United Foods, Inc., 533 U.S. 405, 410, 121 S.Ct. 2334, 150 L.Ed.2d 438 (2001). Likewise, the government may not compel individuals to subsidize speech to which they object. Abood v. Detroit Bd. of Ed., 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977). Assuming, as the Hepler plaintiffs allege, that their faith requires them to provide health insurance and that they remain subject to the mandate's requirements in choosing to provide health care to their employees, the present case does not rise to the level of compelled speech. The Hepler plaintiffs rely on Abood and United Foods for the proposition that "compelled speech jurisprudence is triggered when the government forces a speaker to fund objectionable speech." (ECF No. 51 at 37.) In Abood, the Supreme Court addressed a challenge to a provision of a public school collective bargaining agreement requiring nonunion teachers to pay service charges equal to the amount of dues paid by union members. 431 U.S. at 212, 97 S.Ct. 1782. The union used the service charge to fund "ideological activities unrelated to collective bargaining." Id. at 236, 97 S.Ct. 1782. The Supreme Court held that the union could not compel the nonunion individuals to "contribute to the support of an ideological cause [they] may oppose as a condition of holding a job as a public school teacher." Id. at 234-35, 97 S.Ct. 1782. The Supreme Court next addressed compelled speech in the context of commercial speech in United Foods. 533 U.S. at 408, 121 S.Ct. 2334. The challenge in that case was to a federal statute that required handlers of fresh mushrooms to pay an assessment to a trade association, which was used generally to fund advertising for the mushroom industry. Id. The Court found that the assessment violated the First Amendment insofar as it compelled the producers to subsidize speech with which they disagreed, even though the payments were not necessary to remain a part of a larger group or organization. Id. at 413-15, 121 S.Ct. 2334.
To the extent that the Hepler plaintiffs in the present case are being called upon to fund speech — in the form of education and counseling — the content of that speech is not defined by the mandate's requirements. Unlike in Abood and United Foods, the Hepler plaintiffs did not make factual allegations to show that they are being forced to "pay special subsidies for speech on the side that [the government] favors." United Foods, 533 U.S. at 411, 121 S.Ct. 2334. The funded speech in Abood and United Foods was directed at supporting a particular viewpoint. In Abood, teachers were forced to fund union political speech espousing ideological views that the plaintiffs did not support. Abood, 431 U.S. at 236, 97 S.Ct. 1782. In United Foods, the plaintiffs funded general advertising with which they did not agree. United Foods, 533 U.S. at 413, 121 S.Ct. 2334. Despite the Hepler plaintiffs' contention that the mandate requires them to fund speech "in favor of items to which they object," (ECF No. 51 at 37), the Hepler plaintiffs made no factual allegations indicating that the "unscripted conversation between a doctor and a patient" will advocate either for or against the provision of contraceptives. O'Brien, 894 F.Supp.2d at 1166-67.
In the present case, the Hepler plaintiffs remain free to express their views about
The Due Process Clause of the Fifth Amendment provides: "No person shall ... be deprived of life, liberty, or property, without due process of law." U.S. CONST. amend. V. The Hepler plaintiffs claim that the mandate's requirements are unconstitutionally vague under the Due Process Clause of the Fifth Amendment because they "create[] a standardless, blank check for Defendants to discriminatorily select whatever they want to call `religious' and offer or withhold whatever accommodation they choose." (ECF No. 51 at 37.) A law is unconstitutionally vague when it "fails to provide a person of ordinary intelligence fair notice of what is prohibited, or is so standardless that it authorizes or encourages seriously discriminatory enforcement." United States v. Williams, 553 U.S. 285, 304, 128 S.Ct. 1830, 170 L.Ed.2d 650 (2008). Courts have held that "`perfect clarity and precise guidance have never been required even of regulations that restrict expressive activity.'" Holder v. Humanitarian Law Project, ___ U.S. ___, 130 S.Ct. 2705, 2719, 177 L.Ed.2d 355 (2010) (quoting Williams, 553 U.S. at 304, 128 S.Ct. 1830). Due process analysis is further relaxed in cases where, as here, a challenged statute imposes civil rather than criminal penalties. Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498-99, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982).
Despite the Hepler plaintiffs' contentions, the amended complaint makes clear that they have a sophisticated understanding of how the mandate will impact SHLC's health plan. E.g. (ECF No. 32 ¶¶ 97, 100, 116, 130, 143, 176.) This understanding belies the Hepler plaintiffs' allegation that the mandate is vague as applied to their situation. Parker v. Levy, 417 U.S. 733, 756, 94 S.Ct. 2547, 41 L.Ed.2d 439 (1974) ("One to whose conduct a statute clearly applies may not successfully challenge it for vagueness"); U.S. Civil Serv. Comm'n v. Nat'l Ass'n of Letter Carriers AFL-CIO, 413 U.S. 548, 579, 93 S.Ct. 2880, 37 L.Ed.2d 796 (1973) ("Surely, there seemed to be little question in the minds of the plaintiffs who brought this lawsuit as to the meaning of the law, or as to whether or not the conduct in which they desire to engage was or was not prohibited by the Act."). Based upon the Hepler plaintiffs' understanding of the mandate's requirements and how they will impact SHLC's health plan, it can hardly be contended that those requirements do not provide "fair notice" of prohibited conduct. Williams, 553 U.S. at 304, 128 S.Ct. 1830. While the Hepler plaintiffs may disagree with what is required under the mandate, there does not seem to be a sufficient basis for the due process claim.
The Hepler plaintiffs attack the standards by which the mandate's requirements are applied, calling them a "blank check" for defendants to decide who is religious or not. The Hepler plaintiffs' argument appears to be that Congress exceeded its authority to delegate legislative power with respect to defining who is religious. The Hepler plaintiffs, however, cite no court decisions to support their argument that Congress exceeded its authority by delegating to HRSA the authority to
The Hepler plaintiffs' final claims allege several violations of the APA. First, the Hepler plaintiffs allege that defendants took administrative action in violation of the notice and comment requirements; second, they allege that defendants' actions were arbitrary and capricious under the APA; and third, they maintain that the mandate's requirements violate existing law. (ECF No. 32 ¶¶ 288-299.) Section 706 of the APA provides:
5 U.S.C. § 706(2)(A), (D). The rulemaking provisions of the APA require that agencies provide notice of a proposed rule, invite and consider public comments, and adopt a final rule that includes a statement of basis and purpose. 5 U.S.C. § 553(b), (c).
Defendants maintain that the issuance of the challenged regulations was procedurally proper, and support their argument by maintaining that defendants sought comments on the second interim final regulations, 76 FED REG. 46,621, based upon express statutory authority. Defendants point out that they "carefully consider[ed] thousands of comments" before they adopted the final regulations with the safe harbor provision and that they allowed for further amendment to accommodate religious objections. (ECF No. 40 at 41) (citing 77 FED REG. at 8,726-27). In the alternative, defendants assert that even if they did not properly administer the notice and comment requirements, they showed good cause sufficient to overcome those requirements.
The Hepler plaintiffs counter by arguing that defendants never actually considered the objections, thus violating the requirements of 5 U.S.C. §§ 553(b) and (c). The
Courts have held that statutory authorization can permit an agency to circumvent the normal APA notice and comment requirements.
In National Women, however, the court looked at the statutory language in the context of the agency's argument that it bypassed the notice and comment requirements for good cause. Nat'l Women, 416 F.Supp.2d at 105-08 (finding good cause after considering the agency's four proffered reasons for its action: (1) the statutory language of 42 U.S.C. § 1758 permitting the agency to promulgate interim final rules; (2) Congressionally-imposed deadlines on the agency to implement a complex regulation; (3) the agency's compelling need to provide guidance to states that would otherwise have had to comply with the statute without that guidance; and (4) the challenged rule was an interim rule). Addressing the defendant's good cause argument at the summary judgment stage, the court in National Women acknowledged that "`good cause inquiry is inevitably fact-or context-dependent.'" Id. at 104-05 (quoting Mid-Tex Elec. Coop., Inc. v. Fed. Energy Regulatory Comm'n, 822 F.2d 1123, 1132 (D.C.Cir. 1987)).
Defendants argue that they established good cause in the present situation because statements in the Federal Register indicate that the public interest benefits by having final regulations in place for the start of the 2012-2013 school year, since many college health plans begin in August. 76 FED REG. at 46,624. Defendants argue that the rules issued in August 2011 were merely interim final rules, and explicitly allow for further comment. Id. Although
The APA allows courts to set aside agency action that is found to be arbitrary or capricious. Fed. Commc'ns Comm'n v. Fox Television Stations, Inc., 556 U.S. 502, 513, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). An agency action is arbitrary and capricious "if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Ass'n of U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 44, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). A court's review of agency action is "narrow;" it may "`not substitute its judgment for that of the agency,'" and it "should `uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned.'" Id. at 513-14, 129 S.Ct. 1800 (quoting Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974)). The same deferential review applies even in cases where an agency has reversed course. Id. at 514, 129 S.Ct. 1800. When promulgating regulations, an agency must "examine the relevant data and articulate a satisfactory explanation for its action." Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. 2856. The Court of Appeals for the Third Circuit has noted that "[f]ailure of the agency to address an important aspect of the issue under consideration may be fatal to its conclusion." Shane Meat Co., Inc. v. United States Dep't of Defense, 800 F.2d 334, 336 (3d Cir.1986). The burden of proving that an agency action is arbitrary or capricious falls upon the party challenging the action. McKinley v. United States, 828 F.Supp. 888, 892 (D.N.M.1993) (citing Park Cnty. Res. Council v. United States Dept. of Agric., 817 F.2d 609 (10th Cir.1987)).
The Hepler plaintiffs argue that defendants failed to consider comments expressing potential First Amendment and RFRA problems with the religious employer exemption and failed to explain the reason for doing so. In the amended complaint, the Hepler plaintiffs allege that defendants' "issuance of the Mandate was arbitrary and capricious within the meaning of 5 U.S.C. § 706(2)(A) because the Mandate fails to consider the full extent of its implications and it does not take into consideration the evidence against it." (ECF No. 32 ¶ 294.) The Hepler plaintiffs, however, provide no factual allegations to support their conclusions, and they carry the burden on this claim. McKinley, 828 F.Supp. at 892. On this basis alone, the Hepler plaintiffs failed to state a claim sufficient to survive defendants' motion to dismiss.
Even if the Hepler plaintiffs' arbitrary and capricious challenge to the regulations at issue was allowed to proceed, statements in the Federal Register providing defendants' rationale for the religious exemption
It is noteworthy that defendants broadened the scope of employers that may seek an exemption from the mandate's requirements. Defendants maintain that the expanded religious employer definition in the proposed rules "is intended to allow health coverage established or maintained or arranged by nonprofit religious organizations, including nonprofit religious institutional health care providers, educational institutions, and charities, with religious objections to contraceptive coverage to qualify for an accommodation." 78 FED REG. at 8,462. Ongoing proposed changes to the regulations reflect that defendants considered public comment and are attempting to accommodate certain comments within the context of achieving the stated overall goal of the requirements. While defendants changed course and expanded the number of exempt employers, that conduct does not reduce the deference afforded those changes. Fox Television Stations, 556 U.S. at 514, 129 S.Ct. 1800. The February 2013 proposed rules illustrate the defendants' consideration of objections. Under those circumstances, defendants' path "may reasonably be discerned" Id. at 513-14, 129 S.Ct. 1800.
In connection with the second interim final regulations defendants point to the following statements contained in the Federal Register to show they considered conscience protections under the First Amendment and the RFRA:
77 FED REG. at 8,729. Defendants, however, acknowledged with respect to the proposed rules that the concerns of for-profit entities will not be considered:
78 FED REG. at 8,462. Defendants' rationale for not permitting a for-profit entity to be an eligible organization does not, of course, comport with the court's conclusions set forth in this opinion. This court cannot, however, substitute its judgment for that of the rulemaking agency when reviewing a claim under the arbitrary and capricious standard. Fox Television Stations, 556 U.S. at 513, 129 S.Ct. 1800. While the court may disagree with the conclusion that for-profit entities can never raise conscience issues under the RFRA and the First Amendment, that disagreement is not a sufficient basis upon which to set aside the rules under the APA. To the extent, therefore, that the Hepler plaintiffs failed to carry their burden of pleading sufficient facts to survive defendants' motion to dismiss with respect to their arbitrary and capricious claim, that claim must be dismissed.
The Hepler plaintiffs allege that the mandate's requirements violate several provisions of existing law, specifically: (1) the ACA's ban on providing abortion services, which is set forth in § 1303(b)(1)(A) of the ACA (42 U.S.C. §§ 18023(b)(1)(A)(i) and (ii)); (2) the Weldon Amendment to the Consolidated Appropriations Act of 2012, P.L. 112-74, §§ 506, 507, 125 Stat. 786, 1111 (Dec. 23, 2011)
Defendants respond that the Hepler plaintiffs lack prudential standing under the APA to challenge § 1303(b)(1) of the ACA, because they do not fall within the "zone of interests" to be protected by the statute. (ECF No. 40 at 42) (citing Ass'n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970)). Section 1303(b)(1) of the ACA provides:
42 U.S.C. § 18023(b)(1)(A).
Defendants point out that § 1303(b)(1) applies to health insurance issuers
Although the Hepler plaintiffs currently lack standing to challenge § 1303(b)(1), they could potentially fall within the zone of interests intended to be protected by that statute at some point in the future. As an employer with fewer than 100 employees, SHLC is a "small employer" potentially eligible to purchase health insurance through an exchange beginning in January 2014. 42 U.S.C. § 18024(b)(2). In the event that SHLC chooses to purchase its health insurance through an exchange, and if that qualified plan provides coverage for the objected to services, SHLC could potentially have the requisite standing at that time. At this stage, however, the Hepler plaintiffs did not indicate that they intend to take any of the above actions. Because the Hepler plaintiffs lack standing at this time to argue that the mandate is contrary to law as violating § 1303(b)(1) of the ACA, the claim will be dismissed without prejudice.
The Hepler plaintiffs' argument with respect to the Weldon Amendment fails to state a claim for which relief can be granted. The Weldon Amendment provides:
Weldon Amendment, § 507(d)(1). The Hepler plaintiffs' Weldon Amendment claim must fail because they do not point to a definition of abortion that would be applicable to that statute.
The Hepler plaintiffs allege that the objected to services constitute abortion, as that term is defined by their religious beliefs. (ECF No. 32 ¶¶ 105-08, 242, 254.) Statutory terms, however, are to be construed as a matter of law. Gov't Employees Ins. Co. v. Benton, 859 F.2d 1147, 1149 (3d Cir.1988) (statutory construction is a question of law when defining terms). Plaintiffs do not provide any legal definition of "abortion," but rest on their allegation that some of the contraceptive products cause abortions. Defendants, on the other hand, point to regulations in the context of Title X, 42 U.S.C. § 300a-6, which do not include emergency contraception in the definition of abortion (Title X grantees are not permitted to use abortion as a family planning tool, but may use emergency contraception). See Health and Human Services, Office of Population Affairs Memorandum, available at http://www.hhs.gov/opa/title-x-family-planning/initiatives-and-resources/documents-and-tools/opa-97-02.html (noting that "Title X grantees should consider the availability of emergency contraception the same as any other method which has been established as safe and effective") (last visited Feb. 28, 2013). The Hepler plaintiffs did not identify any legal basis for finding that a statutory definition of abortion must include emergency contraceptives. Therefore, the court concludes that the claim based upon the Weldon Amendment is not sufficient to survive a motion to dismiss.
The Church Amendment, which is included in Title 42, Subchapter VIII, relates to "Population Research and Voluntary Family Planning Programs" administered by HHS. It provides:
42 U.S.C. § 300a-7(d). The Church Amendment is part of a larger statutory scheme that gives authority to the HHS Secretary to "make grants and to enter into contracts with public or nonprofit private entities to assist in the establishment and operation of voluntary family planning projects which shall offer a broad range of acceptable and effective family planning methods and services." 42 U.S.C. § 300(a).
The Hepler Plaintiffs present no legal authority supporting their claim that they are "required to perform or assist in the performance" of a "health service program" covered by the statute. 42 U.S.C. § 300a-7(d). As an initial matter, only the individual Heplers are potentially covered by the Church Amendment, since it explicitly applies to individuals. The amended complaint, on the other hand, alleges that SHLC purchases its employee health insurance coverage "from a company in the health insurance market," not from HHS or an HHS-administered health service program. (ECF No. 32 ¶ 96.) The Hepler plaintiffs do not indicate how their purchase of health insurance is related to grant funding for "voluntary family planning projects." 42 U.S.C. § 300a-7(d). Without a showing of this connection between their actions and the projects and services subject to the Church Amendment,
For the above-stated reasons, the court concludes that defendants' motion to dismiss will be granted in part and denied in part. With respect to Geneva, the court finds that its claims are not ripe at this time, and therefore dismisses counts I through VI without prejudice. With respect to WLH, the court finds that Hepler has standing to assert WLH's claims and that WLH, which is not a separate entity, must be dismissed as a named plaintiff. With respect to Hepler, Kolesar and SHLC, the court finds that defendants' motion to dismiss is denied with respect to the RFRA claim (count VII); the Free Exercise Clause claim (count VIII); and the notice and comment claim under the APA (count XII (in part)). Defendants' motion to dismiss is granted without prejudice with respect to the Establishment Clause claim (count IX); the Free Speech Clause claim (count X); and the arbitrary and capricious and contrary to law claims under the APA (count XII (in part)); and is granted with prejudice (because further amendment would be futile) with respect to the Fifth Amendment Due Process Clause claim (count XI). An appropriate order follows.
AND NOW, this 6th day of March, 2013, for the reasons set forth above, it is HEREBY ORDERED that defendants' motion to dismiss (ECF No. 39) is GRANTED IN PART as follows:
In all other respects the motion to dismiss is DENIED.
Pending before the court is the Motion for Reconsideration (ECF No. 81) filed by plaintiff Geneva College ("Geneva"). Attached to Geneva's motion is the Declaration of Kenneth A. Smith (ECF No. 81-1), Geneva's president. Defendants Timothy Geithner, Kathleen Sebelius, Hilda Solis, the United States Department of Health and Human Services ("HHS"), the United States Department of Labor, and the United States Department of the Treasury (collectively, "defendants") filed a response in opposition. (ECF No. 85.) The present motion seeks reconsideration of the portion of this court's Memorandum Opinion and Order dated March 6, 2013, (ECF No. 74), which dismissed Geneva's claims without prejudice for lack of ripeness.
The present case involves Geneva's challenge to the requirement that it include coverage for certain preventive services as part of the health insurance plans that it offers to its employees and students. Geneva objects to the requirement in the Patient Protection and Affordable Care Act of 2010, Pub.L. No. 111-148, 124 Stat. 119 (March 23, 2010) ("ACA") mandating that it provide health insurance coverage
As the court discussed in its prior opinion, defendants have promulgated certain final and proposed regulations as part of implementing the mandate. (ECF No. 74 at 6-11.) Most pertinent to the present motion are the proposed rules issued February 6, 2013, which purport to offer an accommodation to religious entities like Geneva that do not fit the definition of a "religious employer"
In the court's previous opinion, it determined that Geneva's claims were not ripe pursuant to the three-prong test set forth by the Court of Appeals for the Third Circuit in Step-Saver Data Systems, Inc. v. Wyse Technology, 912 F.2d 643, 647 (3d Cir.1990). Geneva's claims were found to be unripe based upon: (1) the uncertainty created by the ongoing administrative rules process; (2) defendants' assurances in this and other cases that the final rules implementing the mandate would never be enforced against entities like Geneva; and (3) defendants' proposed rules, which the court interpreted as potentially alleviating the alleged burdens imposed by the mandate on entities like Geneva. The court acknowledged that if its understanding of how Geneva would view the impact of the proposed rules was incorrect, Geneva could file a motion for reconsideration. (ECF No. 74 at 27 n. 15.)
Geneva took the court up on its offer and now argues that its claims are ripe
Defendants respond that "Geneva cannot create jurisdiction over its challenge to the current regulations, which will never be enforced against it, by asserting that it will object to any new rules defendants promulgate." (ECF No. 85 at 6.)
A motion to reconsider "must rely on at least one of three grounds: 1) intervening change in controlling law, 2) availability of new evidence not previously available, or 3) need to correct a clear error of law or prevent manifest injustice." Waye v. First Citizen's Nat'l Bank, 846 F.Supp. 310, 313-14 (M.D.Pa.1994), aff'd, 31 F.3d 1175 (3d Cir.1994). By reason of the interest in finality, at least at the district court level, motions for reconsideration should be granted sparingly; the parties are not free to relitigate issues the court has already decided. Rottmund v. Continental Assurance Co., 813 F.Supp. 1104, 1107 (E.D.Pa.1992). Stated another way, a motion for reconsideration is not properly grounded in a request for a district court to rethink a decision it, rightly or wrongly, has already made. Williams v. Pittsburgh, 32 F.Supp.2d 236, 238 (W.D.Pa.1998). "Motions for reconsideration may not be used `as a means to argue new facts or issues that inexcusably were not presented to the court in the matter previously decided.'" Knipe v. SmithKline Beecham, 583 F.Supp.2d 553, 586 (E.D.Pa.2008) (citing Brambles USA, Inc. v. Blocker, 735 F.Supp. 1239, 1240 (D.Del. 1990)). Such motions may not be "`used to revisit or raise new issues with the benefit of `the hindsight provided by the court's analysis.''" Id. (citing Marshak v. Treadwell, No. 95-3794, 2008 WL 413312 at *7 (D.N.J. Feb. 13, 2008)). With regard to the third ground, litigants are cautioned to "`evaluate whether what may seem to be a clear error of law is in fact simply a point of disagreement between the Court and the litigant.'" Waye, 846 F.Supp. at 314 n. 3 (citing Atkins v. Marathon LeTourneau Co., 130 F.R.D. 625, 626 (S.D.Miss.1990)).
Geneva's motion is primarily directed at the short timeframe within which it must
Geneva identifies no specific grounds for reconsideration upon which it bases the present motion (i.e. newly available evidence, etc.). Courts have found that "[t]o support a motion for reconsideration on the basis of newly available evidence, the movant must `show not only that this evidence was newly discovered or unknown to it until after the hearing, but also that it could not with reasonable diligence have discovered and produced such evidence [during the pendency of the motion].'" Cabrita Point Dev., Inc. v. Evans, Nos. 2006-103, 2006-109, 2009 WL 3245202 at *2 (D.Vi. Sept. 30, 2009) (second alteration in original) (quoting Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir.1996)). To the extent that the passage of time since the filing of the initial complaint now impacts the timing of the negotiations for Geneva's 2013-14 student health insurance plan and in light of the potential impact of the proposed rules on decisions surrounding its student health plan, that information presents newly available evidence appropriate for reconsideration.
The crux of Geneva's concerns appear to be that the proposed rules do not moot the issues it raised in the complaint, and it must finalize its student health insurance plan before August 1, 3013. Defendants did not indicate that the final rules will be implemented in time for Geneva to meet that deadline. To the extent that those new facts impact the court's previous conclusions, the court will reconsider whether Geneva's claims are now ripe for judicial review.
The ripeness doctrine "prevent[s] the courts, through avoidance of premature adjudication, from entangling themselves over disagreements over administrative policies," and "protect[s] the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." Nat'l Park Hospitality Ass'n v. Dep't of the Interior, 538 U.S. 803, 807-08, 123 S.Ct. 2026, 155 L.Ed.2d 1017 (2003) (citing Abbott Labs. v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967)). Underpinning the ripeness doctrine are considerations of "whether the facts of the case are `sufficiently developed to provide the court with enough information on which to decide the matter conclusively,' and whether a party is `genuinely aggrieved so as to avoid the expenditure of judicial resources on matters which have caused harm to no one.'" Khodara Envtl., Inc. v. Blakey, 376 F.3d 187, 196 (3d Cir.2004) (citing Peachlum v. City of York, Pa., 333 F.3d 429, 433-34 (3d Cir.2003)).
In Abbott Labs, the United States Supreme Court set forth the two fundamental considerations in determining ripeness: (1) "the fitness of the issues for judicial decision;" and (2) "the hardship to the parties of withholding court consideration."
To satisfy the first prong of the Step-Saver framework, "the party seeking review need not have suffered a `completed harm' to establish adversity of interest ... it is necessary that there be a substantial threat of real harm and that the threat `must remain `real and immediate' throughout the course of the litigation.'" Presbytery of N.J. of Orthodox Presbyterian Church v. Florio, 40 F.3d 1454, 1463 (3d Cir.1994) (internal citations omitted) (emphasis added). "[A] potential harm that is `contingent' on a future event occurring will likely not satisfy this prong of the ripeness test." Pittsburgh Mack Sales & Serv. v. Int'l Union of Operating Eng'rs, Local Union No. 66, 580 F.3d 185, 190 (3d Cir.2009) (citing Step Saver, 912 F.2d at 647-48). If a subsequent event removes the potential harm, then the controversy becomes speculative and the claim is no longer ripe. Presbytery of N.J., 40 F.3d at 1463.
The additional facts set forth by Geneva indicate that its interests are now sufficiently adverse to defendants' interests for two reasons. First, Geneva maintains its objection to the proposed rules on the basis that, in the proposed rules' current form, defendants took a "smoke and mirrors" approach to accommodating those with religious objections to the mandate. The "contingency" the court previously relied upon — i.e. that the proposed rules would ultimately render Geneva's claims unripe, therefore, does not appear to be the case. Specifically, Geneva objects to the requirement that it directly
(ECF No. 32 ¶ 162) (addressing the "compromise" offered by President Barack Obama at a press conference in February 2012 which set forth an accommodation similar to that in the proposed rules).
Second, Geneva is suffering real and immediate harm now that it is in the process of contracting for its student health insurance plan. The court previously held that Geneva's concerns with respect to the
As articulated by Geneva's president, the college is now being forced to choose — in a very short timeframe — between making available student health insurance that remains objectionable despite the proposed rules, and foregoing student health insurance altogether in response to the final rules that will be imposed beginning on August 1, 2013. (ECF No. 81-1.) The negotiating process surrounding this decision has already begun, and is ongoing. (Id.) Where an administrative action (such as the proposed rules) "causes a change in the day-to-day behavior of the complaining party," the claims are ripe. 5 JACOB A. STEIN, GLENN A. MITCHELL & BASIL J. MEZINES, ADMINISTRATIVE LAW, § 48.04 (2012) (hereinafter ADMINISTRATIVE LAW) (citing Duke Power Co. v. Carolina Envtl. Study Grp., Inc., 438 U.S. 59, 81, 98 S.Ct. 2620, 57 L.Ed.2d 595 (1978)). Here, Geneva's ability to negotiate is fundamentally impacted by the final rules and the proposed rules, none of which alleviate its religious objections to the mandate. Geneva cannot, therefore, simply carry on as though nothing will happen. Geneva must make a determination now based upon defendants' mandate as it stands, which remains at odds with Geneva's belief system in spite of the proposed rules. Geneva raises objections to both the compromise from February 2012 and the proposed rules from February 2013. Given the existing final regulations and the similarity in the proposals, the threat of harm faced by Geneva is presently "real and immediate." See Presbytery of N.J., 40 F.3d at 1463. The adversity of interest prong is satisfied.
With respect to the conclusiveness of judgment prong, it is significant that the proposed rules took a substantial step toward finalizing the regulations that will apply to Geneva — regulations that Geneva maintains are objectionable despite the proposed accommodation. The Court of Appeals for the Third Circuit has held that the conclusiveness inquiry requires the court to determine whether there is a "`real and substantial controversy admitting of specific relief through a decree of conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical set of facts.'" Step-Saver, 912 F.2d at 649 (citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 81 L.Ed. 617 (1937)). Courts acknowledge, however, that "[t]he requirement of concreteness has some play in the joints." Presbytery of N.J., 40 F.3d at 1463. From Geneva's perspective, the facts at the present time are sufficiently developed to be ripe for decision. Defendants contend, however, that the regulations implementing the mandate are not final rules, and therefore the court cannot make a conclusive judgment at this time.
The conclusiveness factor of the Step-Saver test overlaps, for present purposes, with the finality requirement articulated by the Supreme Court in the Abbott Labs decision.
ADMINISTRATIVE LAW, § 48.03[1] (emphasis added). The Supreme Court has acknowledged:
Bell v. New Jersey & Pennsylvania, 461 U.S. 773, 779-80, 103 S.Ct. 2187, 76 L.Ed.2d 312 (1983) (internal citations omitted).
Likewise, in Lauderbaugh v. Hopewell Township, 319 F.3d 568, 574-75 (3d Cir. 2003), the Court of Appeals for the Third Circuit addressed the finality requirement and found that a municipal official's decision that prohibited installation of a mobile home was a final decision ripe for judicial review, despite the possibility that the decision could change on appeal to the zoning hearing board. Lauderbaugh, 319 F.3d at 574-75 (noting that "[the defendant] cannot treat its [administrative] decision as final enough to force a significant hardship upon [the plaintiff] ... but not final enough to be ripe for adjudication").
Defendants maintain that the proposed rules "are just that — proposals" and thus have no binding legal effect. (ECF No. 85 at 3.) Defendants cite several court decisions in support of the proposition that "this Court lacks jurisdiction over any challenge plaintiff could mount to the [proposed rules]." (Id.) This formalistic approach belies, however, the Supreme Court's "pragmatic" and "flexible" approach to determining whether an administrative rule is final for justiciability purposes. Abbott Labs., 387 U.S. at 149, 87 S.Ct. 1507. Courts acknowledge that the possibility of further agency proceedings is not necessarily dispositive of the finality issue. Bell, 461 U.S. at 779, 103 S.Ct. 2187. Courts have also found that the label given to a particular agency decision is not conclusive. Fidelity Television, Inc. v. F.C.C., 502 F.2d 443, 448 (D.C.Cir.1974). As the court in Fidelity Television noted:
Id. (footnotes omitted)
Applying the flexible and pragmatic approach suggested in Abbott Labs, the court notes that the proposed rules have been formally published in the Federal Register and are the most up-to-date statement of defendants' position. Beginning in February 2012, a full year prior to the issuance of the proposed rules, President Barack Obama offered a "compromise" for religious institutions that did not qualify for the religious employer exemption from the mandate — a proposal that is quite similar to the proposed rules. Given the lack of change in the rules as they have developed, the court concludes that the rules are sufficiently final to be the basis for judicial decision.
At this time all plaintiffs like Geneva have to rely on until a final rule is published are the existing final rules and the proposed rules. Geneva will soon be subject to the existing final rules, which contain no exemptions relevant to entities like it. The existing final rules are challenged in the present lawsuit, but the question remains whether the proposed rules will moot any remaining issue. Geneva claims they do not and that its claims are ripe for a determination. In light of the timeframe set forth in the proposed rules which indicate that a final rule on the accommodations may not be adopted until August 1, 2013,
From a practical standpoint, a court determination with respect to Geneva's claims serves a useful purpose at this juncture given the limited time Geneva has to make changes to its student health plan. As defendants previously acknowledged, the "requirements in the [regulations related to the mandate] require significant lead time in order to implement." Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act, 75 FED.REG. 41,726, 41,730 (Jul. 19, 2010). Given Geneva's precarious position of having to choose between maintaining objectionable student health insurance coverage and foregoing student health insurance coverage altogether, any resolution that avoids such a choice will confer a benefit.
The court's previous opinion rejected Geneva's argument that a favorable judgment would assist with its planning process for future health insurance plan years. (ECF No. 74 at 29.) The court now reconsiders that conclusion in light of the additional facts brought to the court's attention. Geneva is no longer planning for some indefinite event in the future, it is
Defendants point to the majority of court decisions finding that claims by entities like Geneva are not ripe. (ECF No. 85 at 7-8.) Many of those courts, however, rendered their decisions before the proposed rules were promulgated and nearly all the decisions involved factually inapposite situations. Specifically, they involved institutions with health insurance plan years that do not begin until
As illustrated in the decisions cited by defendants, Geneva is one of very few challengers to the mandate that must contract for its student health insurance plan in the near future and will potentially implement that plan prior to any further rulemaking by defendants. A conclusive ruling at this time will help Geneva make its choice with respect to whether to maintain a student health plan and will therefore be of practical help or utility.
Taking all the Step-Saver factors into account, Geneva established that its claims are ripe for adjudication. Although further rulemaking is likely to take place, the court concludes the final rules and the proposed rules for accommodations are sufficiently final to satisfy the adversity of interest, conclusivity, and practical help and utility elements of the Step-Saver test. Any finding to the contrary would risk subjecting Geneva to the substantial hardship of preventing it from negotiating for its student health insurance plan.
Based upon the court's conclusion that Geneva's claims are ripe and that all plaintiffs assert essentially the same legal challenges to the mandate, the court finds that, for the same reasons set forth in its previous opinion, (ECF No. 74), defendants' motion to dismiss will be granted in part to the same extent it was with respect to the claims of Wayne L. Hepler, Carrie E. Kolesar, and the Seneca Hardwood Lumber Company, Inc. Defendants' motion to dismiss is granted without prejudice with respect to Geneva's Establishment Clause claim (count III); its Free Speech Clause claim (count IV); and its arbitrary and capricious and contrary to law claims under the Administrative Procedure Act (count VI (in part)); and is granted with prejudice (because further amendment would be futile) with respect to its Fifth Amendment Due Process Clause claim (count V).
Defendants' motion to dismiss is denied in part for the same reasons set forth in the previous opinion with respect to Geneva's Religious Freedom Restoration Act claim (count I), its Free Exercise Clause claim (count II); and its notice and comment claim under the Administrative Procedure Act (count VI (in part)). An appropriate order follows.
For the reasons stated above, it is HEREBY ORDERED that Geneva College's motion for reconsideration (ECF No. 81) with respect to whether its claims are ripe is GRANTED.
It is FURTHER ORDERED that Geneva's claims are ripe for adjudication, and, for the reasons set forth in the court's previous opinion, defendants' motion to dismiss (ECF No. 39) is GRANTED IN PART, as follows:
It is FURTHER ORDERED that in all other respects defendants' motion to dismiss counts I, II, and VI is DENIED.
78 FED REG. at 8,462.
Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the ACA, 76 FED.REG. 46,621, 46,626 (Aug. 3, 2011). Geneva alleges that it is not subject to the religious employer exemption. (ECF No. 32 ¶ 129.) The religious employer exemption is a final rule that will be binding on Geneva beginning August 1, 2013.
