Michigan Labor & Employment Law Blog

Supreme Court Upholds Right of Employers to Opt Out of ACA Contraceptive Mandate on Religious or Moral Grounds

The U.S. Supreme Court, in a July 8, 2020 decision, upheld the validity of religious and moral exemptions for employers from requirements that contraceptive coverage be included under employer provided health insurance pursuant to the Patient Protection and Affordable Care Act of 2010 (“Affordable Care Act”).

Case Background

Under the Affordable Care Act, many employers are required to offer health plans that include, for women, “such additional preventive care and screening...as provided in the comprehensive guidelines.” The guidelines are issued by the Health Resources and Services Administration (“HRSA”).

In 2011, HRSA regulations began requiring health plans to cover “contraceptive methods and sterilization procedures.” In 2017 and 2018, the Trump administration exempted a wide range of employers from the mandate, allowing them to opt out on religious and “moral” grounds.

The state of Pennsylvania, later joined by New Jersey, challenged the Trump administration’s actions, arguing that the broadened HRSA regulations were not authorized under the Affordable Care Act and the Religious Freedom Restoration Act (the “RFRA”), and also violated the federal Administrative Procedure Act (“APA”). The District Court issued a preliminary nationwide injunction against the implementation of the final rules, and the U.S. Court of Appeals for the Third Circuit affirmed the injunction on appeal.

The Supreme Court Decision

In the consolidated cases of Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania and Trump v. Pennsylvania, the Court reversed the Third Circuit in a 7 to 2 ruling. The Court held that the government has the authority under the Affordable Care Act to promulgate the exemptions, given that the statute gives the HRSA “broad discretion to define preventive care and screenings and to create the religious and moral exemptions.”

The Court next considered the states’ argument that the HRSA could not even consider RFRA as it formulated the religious exemption from the contraceptive mandate. The Court explained that, “It is clear from the face of the statute that the contraceptive mandate is capable of violating RFRA.” Therefore, it was proper for the government to take it into account. The Court’s prior decisions involving the contraceptive mandate, including the Hobby Lobby case, “all but instructed the [government] to consider RFRA going forward.”

The Court then turned to the question of whether the 2018 final rules establishing the exemptions were procedurally invalid. The final rules creating the exception were preceded by a document called “Interim Final Rules with Request for Comments.” The states argued that the interim document should have been titled “General Notice of Proposed Rulemaking,” and since it wasn’t, the notice was insufficient under the APA and the final rules were procedurally invalid. The Court rejected the states’ argument, favoring substance over form. The Court explained, “Formal labels aside, the rules contained all of the elements of a notice of proposed rulemaking as required by the APA.”

Finally, the Court considered the states’ argument that the 2018 final rules are procedurally invalid because, according to the states’ brief, “nothing in the record signal[s]” that the government “maintained an open mind throughout the [post-promulgation] process.” The Court rejected this argument, holding that there is no “open-mindedness test” required by the APA.

Ministerial Exception Upheld as Defense to Teachers’ Age and Disability Discrimination Claims Against Religious School

In Our Lady of Guadalupe School v. Morrissey-Berru, the U.S. Supreme Court ruled 7-2 that the First Amendment “ministerial exception” doctrine prohibits courts from considering an age or disability employment discrimination claim brought by two elementary school teachers against their prior Catholic school employers.

Case Background

Two teachers, at two separate Catholic schools, brought lawsuits against their former employers, one on the basis of age discrimination and the other on the basis of disability discrimination. The schools argued that the teachers’ employment was not continued due to performance. The U.S. District Court granted the schools summary judgment pursuant to the ministerial exception. The U.S. Court of Appeals for the Ninth Circuit reversed.

The Supreme Court Decision

The Supreme Court reversed the Ninth Circuit, ruling that the “ministerial exception” applies.  The underlying principle of the ministerial exception is that governments may not interfere with the internal workings of religious organizations.

According to the Court, "The religious education and formation of students is the very reason for the existence of most private religious schools, and therefore the selection and supervision of the teachers upon whom the schools rely to do this work lie at the core of their mission. Judicial review of the way in which religious schools discharge those responsibilities would undermine the independence of religious institutions in a way that the First Amendment does not tolerate.”

If you have questions about  how these cases impact an employer’s rights regarding religious or moral grounds, contact a member of Foster Swift’s employment law team:

• Mike Blum (Southfield)…248.785.4722…mblum@fosterswift.com
• Karl Butterer (Grand Rapids)…616.726.2212…kbutterer@fosterswift.com
• Cliff Hammond (Lansing)… 517.371.8135…chammond@fosterswift.com

Categories: Employment, U.S. Supreme Court