Grote Indus., LLC v. Sebelius

• Decision Date: 27 December 2012
• Docket Number: No. 4:12–cv–00134–SEB–DML.,4:12–cv–00134–SEB–DML.
• Citation: 914 F.Supp.2d 943
• Parties: GROTE INDUSTRIES, LLC an Indiana limited liability company, Grote Industries, Inc. an Indiana corporation, William D. Grote, III, William Dominic Grote, IV, Walter F. Grote, Jr., Michael R. Grote, W. Frederick Grote, III, John R. Grote, Plaintiffs, v. Kathleen SEBELIUS in her official capacity as Secretary of the United States Department of Health and Human Services, Hilda L. Solis in her official capacity as Secretary of the United States Department of Labor, Timothy Geithner in his official capacity as Secretary of the United States Department of the Treasury, United States Department of Health and Human Services, United States Department of Labor, United States Department of the Treasury, Defendants.
• Court: U.S. District Court — Southern District of Indiana

914 F.Supp.2d 943

GROTE INDUSTRIES, LLC an Indiana limited liability company, Grote Industries, Inc. an Indiana corporation, William D. Grote, III, William Dominic Grote, IV, Walter F. Grote, Jr., Michael R. Grote, W. Frederick Grote, III, John R. Grote, Plaintiffs,

v.Kathleen SEBELIUS in her official capacity as Secretary of the United States Department of Health and Human Services, Hilda L. Solis in her official capacity as Secretary of the United States Department of Labor, Timothy Geithner in his official capacity as Secretary of the United States Department of the Treasury, United States Department of Health and Human Services, United States Department of Labor, United States Department of the Treasury, Defendants.

No. 4:12–cv–00134–SEB–DML.

United States District Court,

S.D. Indiana,

New Albany Division.

Dec. 27, 2012.

Bryan H. Beauman, Sturgill, Turner, Barker & Moloney, PLLC, Lexington, KY, Matthew S. Bowman, Alliance Defending Freedom, Washington, DC, Michael A. Wilkins, Broyles Kight & Ricafort, P.C., Michael J. Cork, Bamberger, Foreman, Oswald and Hahn, LLP, Indianapolis, IN, for Plaintiffs.

Jacek Pruski, U.S. Department of Justice, Washington, DC, Shelese M. Woods, United States Attorney's Office, Indianapolis, IN, for Defendants.

ORDER DENYING PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION

SARAH EVANS BARKER, District Judge.

This cause is before the Court on Plaintiffs' Motion for Preliminary Injunction [Docket No. 7], filed on October 30, 2012. Plaintiffs, Grote Industries, LLC; Grote Industries, Inc.; William D. Grote III; William Dominic Grote, IV; Walter F. Grote, Jr.; Michael R. Grote; W. Frederick Grote, III; and John R. Grote bring this claim against Kathleen Sebelius in her official capacity as Secretary of the United States Department of Health and Human Services (“HHS”); Hilda S. Solis in her official capacity as Secretary of the United States Department of the Treasury; the United States Department of Health and Human Services; United States Department of Labor; and the United States Department of the Treasury, challenging preventive care coverage regulations (“the mandate”) issued under the Patient Protection and Affordable Care Act, Pub.L. No. 111–148, 124 Stat. 119 (2010), as amended by the Health Care and Reconciliation Act, Pub.L. No. 111–152, 124 Stat. 1029 (2010) (“Affordable Care Act” or “ACA”), which Plaintiffs allege require them “to pay for and otherwise facilitate the insurance coverage and use of abortifacient drugs, contraception, sterilization, and related education and counseling.” Compl. ¶ 7. Plaintiffs contend that the mandate violates their statutory rights under the Religious Freedom Restoration Act, 42 U.S.C. § 2000bb et seq. (“RFRA”) and the Administrative Procedure Act, 5 U.S.C. § 701 et seq. (“APA”) as well as their constitutional rights under the First and Fifth Amendments to the United States Constitution. Plaintiffs seek both declaratory and injunctive relief.

Presently before the Court is the Plaintiffs' Motion for Preliminary Injunction seeking an order prohibiting Defendants from enforcing the mandate against them and others similarly situated when it goes into effect on January 1, 2012. After review of the parties' submissions, we DENY Plaintiffs' request for injunctive relief.

Factual Background

The Affordable Care Act, signed into law on March 23, 2010, effected a variety of significant changes to the healthcare system, including in the area of preventive care services. Section 1001 of the Act, which includes the preventative services coverage provision relevant to the case at bar, requires all group health plans and health insurance issuers that offer non-grandfathered group or individual health coverage to provide coverage for certain preventive services without cost-sharing, including, “[for] women, such additional preventive care and screenings ... as provided for in comprehensive guidelines supported by the Health Resources and Services Administration.” 42 U.S.C. § 300gg–13(a)(4).

The Health Resources and Services Administration (“HRSA”) commissioned the Institute of Medicine (“IOM”) to develop recommendations for implementing such preventive care for women. Upon review, the IOM issued a report recommending that the HRSA guidelines include, inter alia, “the full range of Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity.” INSTITUTE OF MEDICINE, CLINICAL PREVENTIVE SERVICES FOR WOMEN: CLOSING THE GAPS 19–20, 109 (2011) (“IOM Report”), available at http:// iom. edu/ Reports/ 2011/ Clinical– Preventive– Services– for– Women– Closing– the– Gaps/ Report– Brief. aspx (last visited December 20, 2012). Contraceptive methods approved by the Food and Drug Administration (“FDA”) include diaphragms, oral contraceptive pills, emergency contraceptives, such as Plan B and Ella, and intrauterine devices. FDA, Birth Control Guide, available at www. fda. gov/ downloads/ For Consumers/ By Audience/ For Women/ Free Publications/ UCM 282014. pdf (last visited December 20, 2012).

On August 1, 2011, HRSA adopted IOM's recommendations, subject to an exemption relating to certain religious employers authorized by an amendment to the interim final regulations issued the same day. See76 Fed.Reg. 46621; 45 C.F.R. § 147.130. On February 15, 2012, HHS, the Department of Labor, and the Department of Treasury published rules finalizing the HRSA guidelines. There are certain exemptions to the preventive services provision of the Affordable Care Act. Grandfathered health plans, to wit, plans that were in existence on March 23, 2010 and have not undergone any of a defined set of changes, are not subject to the mandate. See26 C.F.R. § 54.9815–1251T; 29 C.F.R. § 2590.715–1251; 45 C.F.R. § 147.140. Certain religious employers are exempt from providing plans that cover contraceptive services. To qualify as a “religious employer” under the exemption, an employer must satisfy 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 section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code of 1986, as amended.

45 C.F.R. § 147.130(a)(1)(iv)(B).¹ There is also a temporary enforcement safe-harbor provision applicable to non-grandfathered group health plans sponsored by certain non-profit organizations with religious objections to contraceptive coverage (and any associated group health insurance coverage). 77 Fed.Reg. 8725, 8726–27 (Feb. 15, 2012). Finally, employers with fewer than fifty employees are not required to provide any health insurance plan. 26 U.S.C. § 4980H(c)(2)(A).

The individual plaintiffs (collectively, “the Grote Family”) are members of a family that owns and operates Grote Industries, LLC and Grote Industries, Inc. (“Grote Industries”), a privately held, for-profit business that manufactures vehicle safety systems, headquartered in Madison, Indiana. Grote Industries currently employs approximately 464 full-time employees in the United States. The members of the Grote Family are believing and practicing Catholic Christians. Although Grote Industries is a for-profit, secular corporation, the Grote Family seeks to run Grote Industries in a manner that reflects their religious beliefs and believes that their operation of Grote Industries “must be guided by ethical social principles and Catholic religious and moral teachings.” Compl. ¶ 36. The Grote Family follows the moral teachings of the Catholic Church and “believes that God requires respect for the sanctity of human life and for the procreative and unitive character of the sexual act in marriage.” Id. ¶ 4. The Grote Family “adhere[s] to the centuries-old biblical view of Christians around the world, that every human being is made in the image and likeness of God from the moment of conception/fertilization, and that to help destroy such an innocent being, including in the provision of coverage in health insurance, would be an offense against God.” Id. ¶ 5. Accordingly, the Grote Family believes that “it would be immoral and sinful for them to intentionally participate in, pay for, facilitate, or otherwise support abortifacient drugs,² contraception, sterilization, and related education and counseling” as required by the preventive care provision of the Affordable Care Act. Id. ¶ 39.

Consistent with their religious beliefs, the Grote Family provides health insurancebenefits to their employees that omit coverage of abortifacient drugs, contraception, and sterilization. Id. ¶¶ 6, 47. The health insurance plan provided by Grote Industries is self-insured, and the plan year renews each year on January 1. It is not grandfathered under the Act. As a secular, for-profit corporation, Grote Industries does not fall within the Act's definition of a “religious employer” and is ineligible for the protection of the safe-harbor provision. Thus, the mandate takes effect as to the corporation's employee health plan on January 1, 2013.

Plaintiffs contend that Grote Industries is unable to simply avoid the mandate by refusing to provide health care insurance to its employees because it would incur a penalty of approximately $2,000 per employee per year by doing so. Nor can it continue to offer its current self-insured plan that omits abortifacients, contraceptives, and sterilization because that course of action would subject Grote Industries to penalties of approximately $100 per employee, per day. If they fail to comply with the mandate, Grote Industries could also be subject to a range of enforcement mechanisms, including civil actions by the Secretary of Labor or by plan participants and...