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Christian Employers Alliance v. Azar

United States District Court, D. North Dakota

May 15, 2019

Christian Employers Alliance; Trinity Bible College & Graduate School; and Treasure Island Coins, Inc., Plaintiffs,
v.
Alex M. Azar, Secretary of the United States Department of Health and Human Services; United States Department of Health and Human Services; Alexander Acosta, Secretary of the United States Department of Labor; United States Department of Labor; Steven Mnuchin, Secretary of the United States Department of the Treasury; United States Department of the Treasury, Defendants.

          ORDER GRANTING PLAINTIFFS' MOTION FOR PERMANENT INJUNCTIVE RELIEF

          DANIEL L. HOVLAND, CHIEF JUDGE.

         Before the Court are the Plaintiffs' motion for permanent injunction and renewed motion for permanent injunction. See Doc. Nos. 32 and 40. The Defendants do not raise a substantive defense to the motions save for some specific objections to language of the requested relief. The motions have been fully briefed. See Doc. Nos. 31, 33, 34, 43, 49, and 52. For the reasons set forth below, the motions are granted.

         I. BACKGROUND

         This case involves a challenge to the Affordable Care Act's (“ACA”) contraceptive mandate (“Mandate”), a series of regulations promulgated pursuant to 42 U.S.C. § 300gg-13(a)(4) which requires health plans to cover “preventive care and screenings” for women. Preventive care is defined as including “all FDA approved contraceptive methods.” See Health Res. Servs. Admin., Women's Preventive Services Guideline, http://www.hrsa.gov/womensguidelines/index.html (last visited May 1, 2019). Some FDA approved contraceptives prevent a fertilized egg from implanting in the mother's uterus rather than preventing conception. The Plaintiffs refer to such contraceptives as abortifacients or abortion-causing drugs. The Plaintiffs view the use of such abortifacients as contrary to their religious beliefs. The Mandate forces the members of the Christian Employers Alliance (“Alliance”) to choose between violating their religious beliefs regarding the sanctity of human life by forcing them to facilitate coverage in their group health plans for abortion-causing drugs and devices and related counseling and paying substantial fines. See 26 U.S.C. §§ 4980D, 4980H. The Alliance has no objection to providing coverage for non-abortion causing contraceptive drugs and devices. The Defendants, the agencies that have created and enforce the Mandate, admit the Mandate violates the Religious Freedom Restoration Act (“RFRA”), 42 U.S.C. § 2000bb-1(b).

         The Plaintiffs commenced this federal declaratory judgment action on August 29, 2016. See Doc. No. 1. On September 1, 2016, the Court granted the Plaintiffs' motion for temporary restraining order (“TRO”) enjoining enforcement of the Mandate and its penalties against the Plaintiffs noting the Court remained bound by the Eighth Circuit Court of Appeal's holding in Sharpe Holdings, Inc. v. U.S. Dep't of Health & Human Servs., 801 F.3d 927 (8th Cir. 2015) vacated on other grounds by Dept. of H&HS, et al. v. CNS Int'l Ministries, et al., No. 15-775, 2016 WL 2842448 (May 16, 2016) that the Mandate violates the RFRA. See Doc. No. 11. The Court later extended the TRO to permit briefing by the parties on the Plaintiffs' motion for a preliminary injunction. See Doc. No. 15. On September 20, 2017, the Court stayed further action in the case and deferred ruling on the pending motions until either a final decision by the Eighth Circuit in Sharpe Holdings was issued or “legislative, regulatory, or other executive changes affecting some or all of the issues raised in this case.” See Doc. No. 26.

         On October 13, 2017, the Defendants issued an Interim Final Rule (“IFR”) acknowledging that the Mandate, including the 2013 “accommodation, ” violates the RFRA. See Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 82 Fed. Reg. 47, 792, 47, 806 (Oct. 13, 2017). Shortly thereafter, the Defendants voluntarily dismissed their Eighth Circuit appeal, which sought to overturn the district court's preliminary injunction in Sharpe Holdings, Inc. v. U.S. Dep't of Health & Human Servs., No. 2:12-cv-92, 2013 WL 6858588 (E.D. Mo. Dec. 30, 2013), aff'd, 801 F.3d 927 (8th Cir. 2015), cert. granted, judgment vacated on other grounds by Dept. of H&HS, et al. v. CNS Int'l Ministries, et al., No. 15-775, 2016 WL 2842448 (May 16, 2016). Defendants finalized the IFR on November 15, 2018, with the new regulations (“Final Rule”) taking effect on January 14, 2019. See Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 Fed. Reg. 57, 536 (Nov. 15, 2018).

         On November 2, 2017, the case was reassigned to the undersigned. See Doc. No. 27. Despite the case being stayed, the Plaintiffs filed motions for permanent injunction on March 13, 2018, and March 8, 2019. See Doc. Nos. 32 and 40. On April 1, 2019, the Court, on its own motion, issued an order lifting the stay because the appeal in Sharpe Holdings had been dismissed and regulatory changes occasioned by the Final Rule had obviated the need for the stay.

         The Defendants have now concluded that requiring employers with sincerely held religious objections to comply with the Mandate would violate the RFRA. Having admitted that the Mandate violates the RFRA, the Defendants do not oppose permanent injunctive and declaratory relief for the Alliance in general, although they do oppose certain aspects of the relief requested by the Plaintiffs. Specifically, the Defendants object to any order restraining the IRS from collecting payments required by 26 U.S.C. § 4980H for failure to comply with the Mandate and to any injunction extending to future members of the Alliance.

         II. LEGAL DISCUSSION

         A. PENALTIES

         The Mandate is enforced through numerous mechanisms, including two penalties in the Internal Revenue Code. Religious employers that respond to the Mandate by offering a health plan that excludes abortifacient coverage are subject to an excise tax of $100 per covered beneficiary per day, or $36, 500 per covered beneficiary per year. 26 U.S.C. § 4980D(b)(1). Religious employers that are unwilling to either violate their conscience or subject themselves to the Section 4980D penalty are stuck with a third choice: dropping their health plans altogether. This option subjects them to an “assessable payment” penalty under 26 U.S.C. § 4980H of $2, 000 per full-time employee per year.

         The RFRA makes it illegal to substantially burden a person's religious exercise unless doing so is the least restrictive means of furthering a compelling governmental interest. See 42 U.S.C. § 2000bb-1. In Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682, 719 (2014), the United States Supreme Court found that the Mandate imposes a substantial burden because it forces religious employers to sponsor health plans that violate their religious beliefs, and punishes them if they refuse to do so. The Supreme Court specifically noted that the penalty provisions of Section 4980D and Section 4980H promise “severe” economic consequences for religious employers that do not comply:

If the companies continue to offer group health plans that do not cover the contraceptives at issue, they will be taxed $100 per day for each affected individual. . . . It is true that the plaintiffs could avoid these assessments by dropping insurance coverage altogether . . . [but] this course would also entail substantial economic consequences. The companies could face penalties of $2, 000 per employee each year.

Id. at 720. The Supreme Court rejected the argument that “dropping insurance coverage eliminates the substantial burden” because neither RFRA nor the ACA “put[s] family-run businesses to the choice of violating their sincerely held religious beliefs or making all of their employees lose their existing healthcare plans.” Id. at 723. “Because the contraceptive mandate forces [employers] to pay an enormous sum of money . . . if they insist on providing insurance coverage in accordance with their religious beliefs, ” ...


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