U.S. Supreme Court’s Ruling Upholds Religious and Moral Exemptions from ACA’s Contraception Coverage Mandate, but Remands Matter for Further Proceedings

The U.S. Supreme Court’s ruling in Little Sisters of the Poor v. Pennsylvania, et al. (19-431) is a victory for employers with religious or moral objections to the Affordable Care Act’s contraception coverage mandate. On its face, this decision extends protections the Court afforded employers in Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014). Specifically, this decision upholds exemptions granted to organizations (including publicly traded corporations) with sincerely held religious-based objections and non-profits and privately held for-profits with sincerely held moral objections from the contraception coverage mandate. Because the Court has remanded the matter for further proceedings, the decision’s impact is muted, however.

As employers know, the ACA requires them to provide women with preventive care and screenings without any cost sharing requirements. Implementing federal agency regulations mandate coverage for all Food and Drug Administration-approved contraception, which includes contraceptives, sterilizations, and emergency birth control. While this was an employer requirement, the mandate allowed for an “accommodation” to religious employers, such as churches and religious orders.

In the Court’s 2014 decision in Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682, the Court held that the ACA’s contraception mandate violated the Religious Freedom Restoration Act of 1993 (RFRA), 42 U.S.C. § 2000bb, et seq. The Court reached that conclusion for two key reasons. First, it determined that the RFRA’s prohibitions of governmental burdens on a person’s religious exercise extends to some closely held for-profit corporate entities. Second, it determined that the mandate forced the corporations to comply with the mandate despite their owners’ religious objections to contraception or face stiff monetary penalties. The Court also concluded that the mandate was not the least restrictive means of furthering a compelling governmental interest in guaranteeing cost-free access to contraception.

Then, in the Court’s 2016 decision in Zubik, et al. v. Burwell, et al., 578 U.S. __, 136 S. Ct. 1557, the Court considered whether the mandate’s self-certification requirement substantially burdened the religious exercise of religious non-profits and religious organizations. Because the parties conceded that self-certification was unnecessary, the Court remanded the matter to the lower courts so that the parties could develop an approach that accommodates the organizations’ religious exercise while ensuring female employees receive contraceptive coverage.

Following Zubik, the Health Resources and Service Administration (HRSA) modified its regulations to eliminate the self-certification requirement and to expand the contraception-mandate exemption to include other organizations “with sincerely held religious[-based objections]” and non-profits and privately held for-profits with “sincerely held moral” objections to providing contraceptive coverage. In final agency rulemaking, HRSA explained its reasons for the exemption provision’s expansion. That rulemaking did not follow the Administrative Procedure Act’s typical notice and comment rulemaking process, however. Instead, HRSA published interim final rules, received public comment, and issued final rules with explanations and responses to public comments.

The Court’s recent decision in Little Sisters of the Poor addressed challenges to the expanded exemptions’ procedural and substantive validity under the Administrative Procedure Act and the ACA. The Court upheld the exemptions’ validity on two grounds. First, the Court rejected the argument that HRSA lacked authority to promulgate the revised rules because the ACA expressly authorizes HRSA to identify the universe of covered preventive care and screenings, which implies authorization to exempt certain employers from that universe of coverage. Second, the Court concluded that the HRSA’s rulemaking complied with the Administrative Procedure Act’s notice and public comment requirements. Thus, the Court reversed the judgment of the lower appellate court (Third Circuit Court of Appeals) and remanded the case for further proceedings.

Decision’s Impact

Because the Supreme Court has remanded the matter to the lower court, the decision’s impact on employers and their employees’ access to free contraception is muted. This decision might signal the conservative majority’s inclination to uphold extended contraception-coverage exemptions to organizations (including public-traded corporations) with sincerely held religious-based objections and to non-profits and privately held for-profits with sincerely held moral objections. On remand, however, the lower court will likely address whether the HRSA’s extended exemptions are overbroad and otherwise arbitrary and capricious.