797 F.3d 1173 (D.C. Cir. 2015), 14-5183, Cutler v. United States Department of Health and Human Services

Docket Nº:14-5183
Citation:797 F.3d 1173
Opinion Judge:Millett, Circuit Judge
Party Name:JEFFREY CUTLER, APPELLANT v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, ET AL., APPELLEES
Attorney:Robert J. Muise argued the cause for appellant. With him on the briefs was David E. Yerushalmi. Katherine Twomey Allen, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Benjamin C. Mizer, Acting Assistant Attorney General, Ronald C. Machen Jr., U.S....
Judge Panel:Before: HENDERSON, ROGERS and MILLETT, Circuit Judges.
Case Date:August 14, 2015
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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Page 1173

797 F.3d 1173 (D.C. Cir. 2015)

JEFFREY CUTLER, APPELLANT

v.

UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, ET AL., APPELLEES

No. 14-5183

United States Court of Appeals, District of Columbia Circuit

August 14, 2015

         Argued May 12, 2015

Page 1174

          Appeal from the United States District Court for the District of Columbia. (No. 1:13-cv-02066).

         Robert J. Muise argued the cause for appellant. With him on the briefs was David E. Yerushalmi.

         Katherine Twomey Allen, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Benjamin C. Mizer, Acting Assistant Attorney General, Ronald C. Machen Jr., U.S. Attorney at the time the brief was filed, and Mark B. Stern and Alisa B. Klein, Attorneys.

         Before: HENDERSON, ROGERS and MILLETT, Circuit Judges.

          OPINION

Page 1175

          Millett, Circuit Judge

          Jeffrey Cutler's insurance company cancelled his health insurance plan because it did not comply with the requirements of the Patient Protection and Affordable Care Act (" Affordable Care Act" or " Act" ), Pub. L. No. 111-148, 124 Stat. 119 (2010). He objects to the requirement that he buy compliant insurance for personal, but not religious, reasons. So he filed suit challenging the religious exemption in the Affordable Care Act as an unconstitutional establishment of religion. He also argues that the Administration's decision to temporarily suspend enforcement of some of the Act's requirements for a transitional period deprived him of the equal protection of the laws. While we disagree with the district court's holding that he lacked standing to press his Establishment Clause challenge, long-settled precedent dooms his claim on the merits. Cutler lacks standing to assert his equal protection claim because nothing in the transitional policy requires him to buy insurance; his inability to maintain his old plan was the independent choice of his insurer.

         I

         Statutory and Regulatory Framework

          Congress enacted the Affordable Care Act in 2010 in an effort to " increase the number of Americans covered by health insurance and decrease the cost of health care." National Federation of Independent Business v. Sebelius, 132 S.Ct. 2566, 2580, 183 L.Ed.2d 450 (2012). Key to the Act's " interlocking reforms," King v. Burwell, 576 U.S., 135 S.Ct. 2480, 2485, 192 L.Ed.2d 483 (2015), is a general requirement that individuals must maintain health insurance coverage or pay a tax penalty to the Internal Revenue Service. 26 U.S.C. § 5000A. Without that obligation to obtain insurance, Congress found, " many individuals would wait to purchase health insurance until they needed care," 42 U.S.C. § 18091(2)(I), creating an " adverse selection * * * death spiral" that would destabilize insurance markets, King,

Page 1176

135 S.Ct. 2480 at 2493.1

          Consistent with the statutory goals of near-universal coverage and protecting the efficient functioning of the health insurance market, 42 U.S.C. § 18091(2)(D) and (I), Congress allowed only carefully limited exceptions to the general obligation to maintain health insurance. See Seven-Sky v. Holder, 661 F.3d 1, 6, 398 U.S.App.D.C. 134 (D.C. Cir. 2011). Of relevance here, the Affordable Care Act generally exempts those with sincere religious objections to purchasing health insurance. See 26 U.S.C. § 5000A(d)(2). Specifically, the Act provides for a " religious conscience exemption" that applies to an individual who is both " (i) a member of a recognized religious sect or division thereof which is described in [26 U.S.C.] section 1402(g)(1)," and " (ii) an adherent of established tenets or teachings of such sect or division as described in such section." 26 U.S.C. § 5000A(d)(2)(A)(i)--(ii).

         Section 1402(g)(1) of Title 26, in turn, houses the religious exemption from Social Security and Medicare taxes, which Congress enacted as part of the Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat. 286. That provision allows an individual who, because of religious faith, is " conscientiously opposed to acceptance of the benefits of any private or public [health] insurance," to opt out of the Social Security and Medicare programs. 26 U.S.C. § 1402(g)(1).2

          To qualify for the exemption, an individual must prove " membership in, and adherence to the tenets or teachings of, the sect or division thereof" and must waive " all benefits and other payments" under the Social Security and Medicare programs. 26 U.S.C. § 1402(g)(1)(A)--(B). In addition, the Commissioner of Social Security must find that (i) the " sect or division thereof has the [relevant] established tenets or teachings[,]" (ii) " it is the practice * * * for members of such sect or division thereof to make provision for their dependent members," and (iii) " such sect or division thereof has been in existence at all times since December 31, 1950." Id. § 1402(g)(1)(C)--(E).3

Page 1177

          The Affordable Care Act religious exemption thus comes as a package deal with the Medicare and Social Security religious exemption. The qualifications for each include not only sincere religious belief, but also membership in a group with an established track record of providing care for its members in need and thus ensuring that the cost of their care is not transferred to the public.

          Aside from the coverage requirement for individuals, the Affordable Care Act imposes a number of requirements on insurance providers and employers who offer health insurance to their workers, such as the guaranteed availability of coverage and a prohibition on refusing coverage due to an applicant's pre-existing medical condition. See 42 U.S.C. § 300gg-1. The Centers for Medicare and Medicaid Services (" the Centers" ), which is part of the Department of Health and Human Services, oversees the implementation of many of the legislatively mandated changes.

         Several of the Affordable Care Act's new requirements were scheduled to take effect on January 1, 2014, including provisions governing insurance premiums and discrimination on the basis of preexisting conditions. See 42 U.S.C. § 300gg (relating to fair health insurance premiums); id. § 300gg-1 (relating to guaranteed availability of coverage and ban on pre-existing condition requirements); id. § 300gg (note) (effective date). But the Centers determined that many " affected individuals and small businesses * * * [were] finding that [Affordable Care Act-compliant] coverage would be more expensive than their current coverage, and thus they may be dissuaded from immediately transitioning to such coverage." Letter from Gary Cohen, Director, Center for Consumer Information and Insurance Oversight, Centers for Medicare and Medicaid Services, to State Insurance Commissioners, Nov. 14, 2013, at 1.4 Accordingly, the Centers announced a " transitional policy" under which " health insurance issuers may choose to continue coverage that would otherwise be terminated or cancelled" as non-compliant with the Affordable Care Act, and the renewed plans " will not be considered to be out of compliance" with the statute. Id. The announcement also " encouraged" state insurance regulators to " adopt the same transitional policy[.]" Id. at 3. That transition period was ultimately extended until October 1, 2016. See Centers for Medicare and Medicaid Services, Insurance Standards Bulletin Series - Extension of Transitional Policy through Oct. 1, 2016 (March 5, 2014).5

          Page 1178

         Factual and Procedural History

         Jeffrey Cutler is a resident of Pennsylvania. Complaint ¶ 1, J.A. 11. He is " financially stable, has an annual income that requires him to file federal tax returns, and could afford health insurance if he wanted to obtain such coverage." Id. ¶ 5, J.A. 12. He is non-observant in his religion, and does not qualify for the Affordable Care Act's religious exemption. Id. He is " not covered, nor wishes to be mandated to be covered, under any health insurance plan" meeting the Affordable Care Act's requirements. Id. ¶ 15, J.A. 15. He alleges that he " had health insurance which was cancelled due to the changes specified by regulations that altered the law as approved." Id. ¶ 24, J.A. 17. He " does not want to be forced to purchase health insurance." Id.

         Cutler, proceeding pro se, filed suit in the United States District Court for the District of Columbia to challenge the Affordable Care Act as unconstitutional, both facially and as applied to him. Complaint ¶ 20, J.A. 16. Specifically, his complaint alleged that the religious exemption in the Act violates the First Amendment's guarantee of religious freedom. Id. ¶ 1, J.A. 11.

         Cutler later filed a motion for partial summary judgment, in which he raised for the first time a separate claim that the transitional policy, as implemented, violates his " rights under the Equal Protection Clause in the Fourteenth Amendment[.]" Plaintiff's Motion for Partial Summary Judgment at 2, J.A. 23. Specifically, he objected that " state insurance commissioners are now empowered to override the law--'if you like your plan you can keep it, but only in NY, CT, CA, etc.'" Id.

         The district court granted the government's motion to dismiss, reasoning that Cutler lacked standing to bring either claim. See Cutler v. Department of Health and Human Services, 52 F.Supp.3d 27, 33 (D.D.C. 2014). As for equal protection, the court noted that Cutler " makes no claim as to how he is injured * * * by the alleged fact that the Act will be enforced differently in different states." Id. at 35 n.4.6

         With respect to the Establishment Clause challenge, the district court found no standing because...

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