7th Circuit Rejects Preliminary Injunction In ACA Opt-Out Challenge

CHICAGO — (Mealey’s) Notre Dame is not entitled to a preliminary injunction while it challenges the opt-out provision of the Patient Protection and Affordable Care Act (ACA)’s contraceptive mandate, a divided Seventh Circuit U.S. Court of Appeals held May 19 (University of Notre Dame v. Kathleen Sebelius, et al., No. 13-3853, 7th Cir.).

 (Opinion available.  Document #93-150527-013Z.) 

While Notre Dame is differently situated than the plaintiffs in Burwell v. Hobby Lobby Stores, Inc. (134 S. Ct. 2751 [2014]) [lexis.com subscribers may access Supreme Court briefs and an enhanced opinion for this case], the ACA still puts it “in a position that contravenes its belief system,” Judge Joel Martin Flaum wrote in dissent. 

Notre Dame, a Catholic university, sued the federal government in the U.S. District Court for the Northern District of Indiana, saying a mandate contained in the ACA requiring employers to provide employees with health insurance that covers contraceptive care violates its religious beliefs.  The ACA originally exempted only churches and not religious institutions incorporated as nonprofits. 

Appeal

The action was dismissed after the government agreed that Notre Dame wouldn’t have to comply with the regulations during the first year, after which new regulations would be issued. 

In July 2013, the government issued its revised regulations enlarging the exemption and allowing nonprofits such as Notre Dame to avoid paying for contraceptive coverage to which they objected by finding a third-party administrator (TPA) or by notifying their health insurer.  Under the opt out, the TPA or Notre Dame’s insurer would be liable for providing the contraceptive coverage. 

In December 2013, Notre Dame filed suit again.  U.S. Judge Philip P. Simon of the Northern District of Indiana denied Notre Dame a preliminary injunction.  Notre Dame appealed, and the Seventh Circuit denied an emergency motion for an injunction. 

Notre Dame signed the opt-out form, EBSA Form 700, and filed a second appeal.  In February 2014, the Seventh Circuit declined to reverse Judge Simon. 

Notre Dame filed a petition for certiorari that the U.S. Supreme Court granted in March 2015.  The Supreme Court vacated judgment and remanded.

 ‘Scanty Record’

A panel of the Seventh Circuit said the “scanty record contains no evidence to support” Notre Dame’s theory that its contractual relationships with insurers make it a conduit between insurance providers and Notre Dame students and employees. 

“Although Notre Dame is the final arbiter of its religious beliefs, it is for the courts to determine whether the law actually forces Notre Dame to act in a way that would violate those beliefs,” the panel said.

 Notre Dame’s case is complicated by the fact that there is nothing in the record regarding its contracts with its insurers or any facts regarding financial fallout from certain conduct or even when the contracts expire or on what grounds a party can terminate the contract, the panel said. 

It is “irregular” for a court to enjoin nonparties such as Notre Dame’s insurers from providing contraceptive coverage, a service the insurers may well want to provide given the government’s “generous reimbursement” of 110 percent of the cost, the panel said. 

Hobby Lobby

Notre Dame’s opt out, rather than triggering coverage, simply reminds its insurer and TPA that the law obligates them to provide contraceptive coverage in the absence of Notre Dame, the panel said.  This situation differs little from a single-payer system, the panel said, except that here, the government employs insurers to provide the coverage rather than providing the coverage directly. 

Hobby Lobby does not require a different outcome, the panel said.  While the Supreme Court left open the possibility that the opt out substantially burdened religious practice, and Notre Dame itself has listed possible solutions, the record is too thin to reach any type of conclusion regarding burdens or solutions, the panel said.  

“Does Notre Dame expect the government to establish a federal contraception agency to which Notre Dame women should send the bills for the contraceptives they buy? Alternatively, must every woman who wants re-imbursement of contraceptive costs pick a health insurance company, maybe on the basis of a Google search, to contract with,” the panel asked. 

The Supreme Court was careful in Hobby Lobby to note that the outcome would not require additional work on the part of women, the panel said.  Notre Dame’s solution seems likely to do just that, the panel said. 

Judge Richard Posner wrote for the court. 

Concurrence

In concurrence, Judge David Hamilton said that while the merits remain unresolved, “equitable considerations weigh against a grant of preliminary injunction.”  Judge Hamilton said that while Hobby Lobby did not directly resolve the issue here, its reasoning would not seem to extend to the instant case. 

“This is an issue not of moral philosophy but of federal law.  Federal courts are not required to treat Notre Dame’s erroneous legal interpretation as beyond their reach—even if that interpretation is also a sincere and religious belief.  Notre Dame is not entitled to nullify the law’s benefits for others based on this mistake of law, which is the foundation of its claim of a substantial burden,” Judge Hamilton wrote. 

Dissent

In dissent, Judge Flaum wrote that Notre Dame is correct that the opt out turns a self-insurer such as itself into a conduit for the provision of contraceptive services. 

The Hobby Lobby decision was based largely on the fact that the government had alternative means of providing the services in question, Judge Flaum wrote.  Here, Notre Dame has provided such alternatives, Judge Flaum wrote.  Notre Dame faces the same type of substantial burden from, and has provided similar alternatives to, the opt out that the court rejected in Hobby Lobby, Judge Flaum wrote.  

Matthew A. Kairis and Melissa D. Palmisciano of Jones Day in Columbus, Ohio; Carol A. Hogan and Brian J. Murry of Jones Day in Chicago; Leon F. DeJulius Jr. and Alison M. Kilmartin of Jones Day in Pittsburgh; and Marianne Corr of the University of Notre Dame in Notre Dame, Ind., represent Notre Dame.  Assistant Attorney General Stuart F. Delery, Deputy Assistant Attorney General Beth S. Brinkmann and attorneys Mark B. Stern, Alisa B. Klein and Adam C. Jed, all of the U.S. Department of Justice in Washington, D.C., represent the federal government. 

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