California v. Health & Human Servs.

• Citation: 281 F.Supp.3d 806
• Decision Date: 21 December 2017
• Docket Number: Case No.17–cv–05783–HSG
• Parties: State of CALIFORNIA, et al., Plaintiffs, v. HEALTH AND HUMAN SERVICES, et al., Defendants.
• Court: U.S. District Court — Northern District of California

281 F.Supp.3d 806

State of CALIFORNIA, et al., Plaintiffs,

v.HEALTH AND HUMAN SERVICES, et al., Defendants.

Case No.17–cv–05783–HSG

United States District Court, N.D. California.

Signed December 21, 2017

Christina Bull Arndt, Michele Li Wong, Attorney General of CA, Los Angeles, CA, R. Matthew Wise, Karli Ann Eisenberg, Department of Justice Attorney General's Office, Sacramento, CA, Nimrod Pitsker Elias, California State Attorney General's Office, San Francisco, CA, Steven Marshall Sullivan, Office of the Attorney General of Maryland, Kimberly S. Cammarata, Baltimore, MD, Elizabeth Chesler, Sara Haviva Mark, New York State Attorney General's Office, New York, NY, Jessica M. Willey, Delaware Department of Justice, Wilmington, DE, Samuel Towell, Richmond, VA, for Plaintiffs.

Justin Michael Sandberg, U.S. Department of Justice, Washington, DC, Brian Ricardo Chavez–Ochoa, Attorney at Law, Valley Springs, CA, Kevin H. Theriot, Pro Hac Vice, Scottsdale, AZ, for Defendants.

ORDER GRANTING PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION

Re: Dkt. No. 28

HAYWOOD S. GILLIAM, JR., United States District Judge

I. INTRODUCTION

Pending before the Court is a motion for a preliminary injunction that would enjoin two interim final rules ("IFRs") exempting certain entities from the Affordable Care Act's mandate to employers to provide contraceptive coverage. Plaintiffs are the states of California, Delaware, Maryland, and New York, and the Commonwealth of Virginia. Defendants are the U.S. Department of Health & Human Services ("HHS"); Secretary of HHS Eric D. Hargan; the U.S. Department of Labor; Secretary of Labor R. Alexander Acosta; the U.S. Department of the Treasury; and Secretary of the Treasury Steven Mnuchin.

Defendants begin their brief in opposition to the motion for preliminary injunction with the contention that "[t]his case is about religious liberty and freedom of conscience." Dkt. No. 51 at 1. And without question, that is one of the important values at issue in this case. But Defendants' characterization leaves out an equally critical aspect of what this case is about. Since its enactment, the Affordable Care Act ("ACA") has required group health insurance plans to provide women access to preventive care, including contraceptives, without imposing any cost sharing requirement. Less than two years ago, in April 2016, Defendants (or, in the case of the individual defendants, their predecessors) represented to the Supreme Court that the United States Government has a compelling interest in ensuring access to such coverage for women. See Supplemental Br. for Resp'ts at 1, Zubik v. Burwell , ––– U.S. ––––, 136 S.Ct. 1557, 194 L.Ed.2d 696 (2016) (per curiam) ( No. 14-1418), 2016 WL 1445915, at *1 (explaining that rules in existence in April 2016 "further[ed] the compelling interest in ensuring that women covered by every type of health plan receive full and equal health coverage, including contraceptive coverage"). Moreover, Defendants have consistently recognized the need to balance this compelling interest with the important goal of "minimiz[ing] any burden on religious exercise." Id.

But the Defendants have now changed their position, dramatically. In the IFRs that became effective on October 6, 2017, Defendants asserted that there is no such compelling interest after all. They also markedly expanded the scope of the exemption available to religious entities under the ACA's contraceptive coverage mandate, and created an entirely new exemption based on moral objections. In sum, the IFRs represent an abandonment of the Defendants' prior position with regard to the contraceptive coverage requirement, and a reversal of their approach to striking the proper balance between substantial governmental and societal interests.

These highly-consequential IFRs were implemented without any prior notice or opportunity to comment. The Court finds that, at a minimum, Plaintiffs are likely to succeed in showing that this process violated the Administrative Procedure Act, and that this violation will cause them imminent harm if enforcement of the IFRs is not enjoined. Accordingly, for the reasons set forth below, Plaintiffs' motion is GRANTED .

II. BACKGROUND

Before turning to Plaintiffs' challenge to the IFRs at issue in this case, the Court recounts the sequence of events which began with the enactment of the Affordable Care Act in 2010.

A. The Affordable Care Act

In March 2010, Congress enacted the Affordable Care Act. The ACA included a provision known as the Women's Health Amendment, which states:

A group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for ... with respect to women, such additional preventive care and screenings ... as provided for in comprehensive guidelines supported by the Health Resources and Services Administration for purposes of this paragraph.

42 U.S.C. § 300gg–13(a)(4).

B. The 2010 IFR and Subsequent Regulations

On July 19, 2010, under the authority of the Women's Health Amendment, several federal agencies (including HHS, the Department of Labor, and the Department of the Treasury) issued an interim final rule ("the 2010 IFR"). See 75 Fed. Reg. 41,726. It required, in part, that health plans provide "evidence-informed preventive care" to women, without cost sharing and in compliance with "comprehensive guidelines" to be provided by HHS' Health Resources and Services Administration ("HRSA"). Id. at 41,728.

The agencies found they had statutory authority "to promulgate any interim final rules that they determine[d were] appropriate to carry out the" relevant statutory provisions. Id. at 41,729 –30. The agencies also determined they had good cause to forgo the general notice of proposed rulemaking required under the Administrative Procedure Act ("APA"), 5 U.S.C. § 553. Id. at 41,730. Specifically, the agencies determined that issuing such notice would be "impracticable and contrary to the public interest" because it would not allow sufficient time for health plans to be timely designed to incorporate the new requirements under the ACA, which were set to go into effect approximately two months later. Id. The agencies requested that comments be submitted by September 17, 2010, the date the IFR was scheduled to go into effect.

On September 17, 2010, the agencies first promulgated regulations pursuant to the 2010 IFR. See 45 C.F.R. § 147.310(a)(1)(iv) (HHS); 29 C.F.R. § 2590.715–2713 (Department of Labor); 26 C.F.R. § 54.9815–2713 (Department of the Treasury).¹ As relevant here, the regulations were substantively identical to the IFR, stating that HRSA was to provide "binding, comprehensive health plan coverage guidelines."

C. The 2011 HRSA Guidelines

From November 2010 to May 2011, a committee convened by the Institute of Medicine ("IOM") met in response to the charge of HHS' Office of the Assistant Secretary for Planning and Evaluation: to "convene a diverse committee of experts" related to, as relevant here, women's health issues. IOM Report² at 1, 23. In July 2011, the committee issued a report recommending that private health insurance plans be required to cover all contraceptive methods approved by the Food and Drug Administration ("FDA"), without cost sharing. Id. at 102–10.

On August 1, 2011, HRSA issued its preventive care guidelines ("2011 Guidelines"), defining preventive care coverage to include all FDA-approved contraceptive methods.³

D. The 2011 IFR and the Original Religious Exemption

On August 3, 2011, the agencies issued an IFR amending the 2010 IFR. See 76 Fed. Reg. 46,621 ("the 2011 IFR"). Based on the "considerable feedback" they received regarding contraceptive coverage for women, the agencies stated that it was "appropriate that HRSA, in issuing [its 2011] Guidelines, take[ ] into account the effect on the religious beliefs of certain religious employers if coverage of contraceptive services were required ...." Id. at 46,623. As such, the agencies provided HRSA with the "additional discretion to exempt certain religious employers from the [2011] Guidelines where contraceptive services are concerned." Id. They defined a "religious employer" as one that:

(1) [h]as the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a non-profit organization under [the relevant statutory provisions, which] refer to churches, their integrated auxiliaries, and conventions or associations of churches, as well as to the exclusively religious activities of any religious order.

Id.

The 2011 IFR went into effect on August 1, 2011. The agencies again found that they had both statutory authority and good cause to forgo the APA's advance notice and comment requirement. Id. at 46,624. Specifically, they found that "providing for an additional opportunity for public comment [was] unnecessary, as the [2010 IFR] ... provided the public with an opportunity to comment on the implementation of the preventive services requirement in this provision, and the amendments made in [the 2011 IFR were] in fact based on such public comments." Id. The agencies also found that notice and comment would be "impractical and contrary to the public interest," because that process would result in a delay of implementation of the 2011 Guidelines. See id. The agencies further stated that they were issuing the rule as an IFR in order to provide the public with some opportunity to comment. Id. They requested comments by September 30, 2011.

On February 15, 2012, after considering more than 200,000 responses, the agencies issued a final rule adopting the definition of "religious employer" set forth in the 2011 IFR. 77 Fed. Reg. 8,725. The final rule also established a temporary safe harbor, during which the agencies

plan[ned] to develop and propose changes to these final regulations that would meet two

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