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Regulation and Compliance > Federal Regulation

Federal court lets N.Y. benefits case move forward

By Allison Bell

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Federal courts should put off looking at employer challenges to the birth control benefits mandate, because the U.S. Department of Health and Human Services (HHS) and other departments will be releasing new regulations designed to address religious employers’ objections by Aug. 1, 2013, according to lawyers for the government.

U.S. District Judge Brian Cogan said a government promise that new regulations are coming is no reason to dismiss a suit challenging the mandate.

The First Amendment to the U.S. Constitution does not require citizens to accept assurances from the government that it will correct its mistakes, Cogan wrote in a memorandum released earlier this week.

“There is no, ‘Trust us, changes are coming’ clause in the Constitution,” Cogan wrote.

Cogan, a judge in the Eastern District of the U.S. District Court for New York, has issued a ruling that will let the Roman Catholic Archdiocese of New York and two other plaintiffs move forward with a federal suit, Roman Catholic Archdiocese of New York et al. vs. Sebelius et al. (1:12-cv-2542) against HHS, HHS Secretary Kathleen Sebelius and other federal departments and officials.

The employer plaintiffs remaining in the case — which include Catholic Health Care System and Catholic Health Services of Long Island as well as the New York archdiocese — allege that the federal birth control benefits mandate regulations violate their right to religious liberty, by requiring them to prepare for the possibility that they might have to pay for contraceptive coverage despite their belief that interfering with the creation of human life is immoral.

Cogan, who was appointed by President George W. Bush, said he believes the courts should look at the case now, even before final regulations take effect.

“The coverage mandate has caused and will continue to cause plaintiffs harm so long as it remains in place,” Cogan wrote.

A representative for the U.S. Department of Justice, the department representing HHS and other departments in the case, said the Justice Department does not comment on pending litigation.

Representatives for the New York archdiocese and other plaintiffs were not immediately available to comment on the case.

PPACA
The Patient Protection and Affordable Care Act of 2010 (PPACA) requires individual health insurers and group health plans to cover a basic set of preventive services created by the U.S. Health and Human Services (HHS) secretary without imposing deductibles, co-payment requirements, or other cost-sharing requirements on the patients.

HHS Secretary Kathleen Sebelius has ruled that the preventive services packages should include services and products aimed at women — including Pap smears and breastfeeding supplies as well as contraceptive services — starting with plan years beginning on or after Aug. 1, 2012.

A safe harbor issued in February, which is set to expire Aug. 1, 2013, frees houses of worship, religious denominations and other clearly religious employers from having to offer birth control benefits.

The safe harbor does not provide a broad exemption for colleges, hospitals and other types of nonprofit employers that are formally or informally affiliated with religious organizations.

The February safe harbor does create a temporary exemption for other nonprofit employers that are not eligible for the religious employer exemption but have been refusing to offer contraceptive benefits for religious reasons.

Religious organizations, hundreds of members of Congress and at least 7 states have opposed the birth control coverage requirement and what they believe to be the narrow scope of the safe harbor.

Supporters of the HHS approach say that HHS is taking the advice of a panel of experts, that analysts have found that access to contraceptive services lowers overall health care costs, and that the federal government has applied other labor laws, such as minimum wage laws, to religious employers without creating conscientious objection exemptions.

In March, HHS and other departments published an “advance notice of proposed rulemaking” (ANPRM). In the notice, the departments said they intend to revised the coverage mandate regulations to address religious organizations’ objections to the current mandate.

Cogan’s memorandum

The government has promised not to take action against employers protected by the safe harbor at least until Aug. 1, 2013, Cogan acknowledged.

Nevertheless, for now, the coverage mandate is the law, not the regulations promised by the ANPRM, and there is no guarantee that the plaintiffs will find the new regulations to be acceptable, Cogan wrote.

The New York archdiocese and the other plaintiff employers are preparing for the possibility that each affected employer might have to pay an annual fine of $2,000 per full-time employee, and an additional tax of $100 per employee per day, Cogan said.

The maximum annual penalty payment estimates are $200 million for the archdiocese, $40 million for Catholic Health Care System and $400 million for Catholic Health Services of Long Island, Cogan said.

Even though the coverage mandate is not set to take effect until Aug. 1, 2013, the plaintiff employers already are having to spend money to prepare for the mandate effective date and set aside cash they can use to pay the fines, Cogan said.

“Defendants’ arguments to the contrary ring hollow because defendants themselves acknowledged that employers will have to engage in advance preparation for the implementation of [PPACA's] provisions,” Cogan said. “In fact, defendants highlighted the preparations that employers will need to make as a reason for issuing the interim final rules long before their effective dates.”

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