O'Brien v. U.S. Dep't of Health & Human Servs.

• Decision Date: 28 September 2012
• Docket Number: Case No. 4:12–CV–476 (CEJ).
• Citation: 894 F.Supp.2d 1149
• Parties: Frank R. O'BRIEN, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

894 F.Supp.2d 1149

Frank R. O'BRIEN, et al., Plaintiffs,

v.UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.

Case No. 4:12–CV–476 (CEJ).

United States District Court,

E.D. Missouri,

Eastern Division.

Sept. 28, 2012.

Francis J. Manion, Geoffrey R. Surtees, American Center for Law and Justice, New Hope, KY, Patrick T. Gillen, Fidelis Center for Law and Policy, Naples, FL, Edward L. White, III, American Center for Law and Justice, Ann Arbor, MI, fro Plaintiff.

Michelle R. Bennett, U.S. Department of Justice, Washington, DC, for Defendant.

Anthony E. Rothert, Grant R. Doty, American Civil Liberties Union of Eastern Missouri, St. Louis, MO, Brigitte Amiri, American Civil Liberties Union, New York, NY, for American Civil Liberties Union.

MEMORANDUM AND ORDER

CAROL E. JACKSON, District Judge.

This matter is before the Court on defendants' motion to dismiss plaintiffs' amended complaint pursuant to Rules 12(b)(6) and 12(b)(1) of the Federal Rules of Civil Procedure. Plaintiffs oppose the motion, and the issues are fully briefed.¹

Plaintiffs bring this action for declaratory and injunctive relief, claiming that regulations promulgated under the Patient Protection and Affordable Care Act (ACA) Pub. L. No. 111–148, 124 Stat. 119 (2010), violate plaintiffs' statutory and constitutional rights. Specifically, plaintiffs allege violations of the First Amendment, the Religious Freedom Restoration Act (RFRA), and the Administrative Procedure Act (APA).² Defendants move to dismiss the entire amended complaint for failure to state a claim upon which relief can be granted and to dismiss the Administrative Procedure Act claim for lack of subject matter jurisdiction.

I. Background

The plaintiffs in this case are Frank O'Brien and O'Brien Industrial Holdings, LLC (OIH), the limited liability company in which he holds the sole voting interest and of which he is the chairman and managing member. OIH is a secular, for-profit company in St. Louis, Missouri, that is engaged in the business of mining, processing, and distributing refractory and ceramic materials and products. Frank O'Brien is Catholic and tries to manage and operate OIH in a manner consistent with his religion.³

Defendants are the U.S. Department of Health and Human Services (HHS), Kathleen Sebelius in her official capacity as Secretary of HHS, the U.S. Department of Treasury, Timothy F. Geithner in his official capacity as Secretary of the Treasury, the U.S. Department of Labor (DOL), and Hilda L. Solis in her official capacity as Secretary of the DOL. Collectively, defendants are the departments and officials responsible for adopting, administering, and enforcing the regulations to which plaintiffs object.

The ACA contains a preventive services coverage provision which provides:

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 ... (4) 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 The Health Resources and Services Administration (HRSA), an agency within HHS, commissioned the Institute of Medicine (IOM) to conduct a study on preventive services necessary to women's health. The IOM, in a report entitled “Clinical Preventive Services for Women: Closing the Gaps,” issuedrecommendations that HRSA adopted on August 1, 2011. The HRSA guidelines include “[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity.” Women's Preventive Services: Required Health Plan Coverage Guidelines,health resources and services administration,http:// www. hrsa. gov/ womens guidelines/ (last visited Sep. 18, 2012). Among the FDA-approved contraceptive methods are diaphragms, oral contraceptive pills, emergency contraceptives, and intrauterine devices. Birth Control Guide,fda office of women's health,www. fda. gov/ downloads/ For Consumers/ By Audience/ For Women/ Free Publications/ UCM 282014. pdf (last updated Aug. 2012).

HHS, the Department of Labor, and the Department of Treasury published rules finalizing the HRSA guidelines on February 15, 2012. 77 Fed.Reg. 8725, 8726.⁵ Employers must provide group health plans with coverage conforming with the guidelines for plan years beginning on August 1, 2012. 75 Fed.Reg. 41726, 41729.

Several exemptions and safe-harbor provisions excuse certain employers from providing group health plans that cover women's preventive services as defined by HHS regulations. First, religious employers are exempt from providing plans covering contraceptive services. Religious employers are defined as employers meeting all of the following criteria:

(1) The inculcation of religious values is the purpose of the organization; (2) The organization primarily employs persons who share the religious tenets of the organization; (3) The organization serves primarily persons who share the religious tenets of the organization; (4) The organization is a nonprofit organization as described in [provisions of the Internal Revenue Code referring to churches, associations of churches, and exclusively religious activities of religious orders].

45 C.F.R. § 147.130(a)(1)(iv)(B); 76 Fed.Reg. 46621–01, 46623 (Aug. 3, 2011). Second, “grandfathered” health plans (plans in which individuals were enrolled on March 23, 2010, the date the ACA was enacted) are not subject to the preventive services provision of the ACA. 75 Fed.Reg. 34538–01 (June 17, 2010). Third, a temporary enforcement safe-harbor provision applies to certain non-profit organizations not qualifying for any other exemption. The safe-harbor provision ensures that no department will take enforcement action against non-profit employers and their group health plans that “on or after February 10, 2012 do not provide some or all of the contraceptive coverage otherwise required, consistent with any applicable State law, because of the religious beliefs of the organization.” 77 Fed.Reg. 16501, 16502 (March 21, 2012); 77 Fed.Reg. 8725 (Feb. 15, 2012). The safe-harbor “is in effect until the first plan year that begins on or after August 1, 2013.” 77 Fed.Reg. 16501, 16503 (March 21, 2012).⁶ Finally, employers with fewer than 50 employees need not provide employees with any health insurance plan. 26 U.S.C. § 4980(H)(c)(2)(A) (defining a large employer subject to fines for failing to provide a plan to employees as “an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.”)

Plaintiffs do not qualify for any of these exemptions.⁷ As a secular, for-profit employer, OIH does not satisfy the definition of “religious employer,” and is ineligible for the protection of the temporary enforcement safe-harbor. The grandfathered plans provision also does not assist OIH, because the current group health insurance policy OIH provides to its employees covers contraceptives. “When OIH switched from a self–insured plan to a fully-insured plan several years ago, coverage of contraceptive services was inadvertently included contrary to the company's longstanding practice and intentions, as well as the actual coverage request and without OIH's knowledge.” Am. Compl. ¶ 28 [Doc. # 19]. Finally, OIH employs 87 individuals; therefore, if plaintiffs do not provide employees with any group health insurance plan, plaintiffs will be subject to fines. Likewise, fines may be imposed if plaintiffs provide a group plan, but the plan excludes coverage for contraceptives and other women's preventive care.⁸

The OIH health plan is due for renewal on January 1, 2013. Plaintiffs state they face a choice between “complying with [the ACA's] requirements in violation of their religious beliefs, or paying ruinous fines that would have a crippling impact on their ability to survive economically.” Am. Compl. ¶ 36 [Doc. # 19]. The regulations creating this choice, plaintiffs argue, violate their rights under RFRA and the First Amendment to the United States Constitution and run afoul of the APA. Before the Court is defendants' motion to dismiss plaintiffs' claims pursuant to the Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1). Plaintiffs have also moved for a preliminary injunction, to prevent defendants from enforcing the challenged regulations against plaintiffs as they select a new employee health plan before January 1, 2013. [Doc. # 38].

II. Legal Standard

The purpose of a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure is to test the legal sufficiency of the complaint. The factual allegations of a complaint are assumed true and construed in favor of the plaintiff, “even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n. 1, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002); Neitzke v. Williams, 490 U.S. 319, 327, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) does not countenance ... dismissals based on a judge's disbelief of a complaint's factual allegations”); Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) (a well-pleaded complaint may proceed even if it appears “that a recovery is very remote and unlikely”). The issue is not whether the plaintiff will ultimately prevail, but whether the plaintiff is entitled to present evidence in support of his claim. Id. A viable complaint must include “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp., 127 S.Ct. at 1974;See also id. at 1969 (“no set of facts” language in Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2...