The Hobby Lobby Decision and Beyond Hillary Byrnes, Assistant General Counsel United States Conference of Catholic Bishops Diocesan Fiscal Management Conference Chicago, Illinois September 24, 2014

The HHS Contraceptive Mandate Requires coverage of all FDA-approved contraceptives and sterilization for women with reproductive capacity, and related education and counseling. Exemption for houses of worship. Exemption for grandfathered plans. “Accommodation” for religious nonprofits with religious objection to contraceptive coverage. Possible application of “accommodation” to certain for-profit entities based on religious objections.

Cardinal Dolan on Last Year’s Final Rule On September 17, 2013, Cardinal Dolan said that the final rule “still suffers from the same three basic problems”: “Its narrow definition of ‘religious employer’ reduces religious freedom to the freedom of worship by dividing our community between houses of worship and ministries of service,” “Its second-class treatment of those great ministries – the so-called ‘accommodation’ – leaves them without adequate relief,” and “Its failure to offer any relief to for-profit businesses run by so many of our faithful in the pews.”

HHS Mandate: The Fines What is at stake for non-compliance? If an employer decides to drop employee health insurance altogether, the fine is $2,000 per employee per year. If an employer decides to continue providing excellent healthcare that excludes certain objectionable drugs, then the fine is $100 per “affected individual” per day, or $36,500 per “affected individual” per year. This could amount to millions of dollars in fines for nonprofits or family-owned businesses.

Scorecard of Cases Over 100 cases have now been filed in federal courts around the country challenging the HHS mandate. Of the 53 nonprofit cases, early relief has been granted to plaintiffs in 31 of 34 cases. Of the 49 for-profit cases, there are 44 cases with rulings on the merits. Plaintiffs in 40 cases have been granted injunctive relief, while 4 have lost in the lower courts. Source: Becket Fund for Religious Liberty

HHS Mandate Litigation Plaintiffs generally argue that the federal government has violated: several clauses in the First Amendment, including the Free Exercise, Establishment, and Free Speech clauses, the federal Religious Freedom Restoration Act (RFRA), and the Administrative Procedure Act.

Religious Freedom Restoration Act of 1993 Federal law that forbids substantial burden on a person’s religious exercise. One exception: government action that furthers a compelling government interest by means that is least restrictive of religious freedom. Struck down in 1997 as applied to states (City of Boerne v. Flores) but still applies to the federal government.

Burwell v. Hobby Lobby (June 30, 2014) In a 5-4 opinion, the U.S. Supreme Court held that the HHS contraceptive mandate violates RFRA as applied to closely-held for-profit companies with religious objections to contraceptive coverage. Justice Alito wrote for himself, Roberts, Scalia, Thomas, and Kennedy. Justice Kennedy filed a concurring opinion. Justice Ginsburg dissented (joined by Justice Sotomayor). Justices Breyer and Kagan joined some of Justice Ginsburg’s dissent.

The Hobby Lobby Plaintiffs Hobby Lobby – a chain of arts and crafts stores with more than 13,000 employees. Mardel – a chain of religious bookstores with close to 400 employees. Conestoga Wood Specialties – a manufacturer of wood cabinet doors with about 950 employees.

Hobby Lobby Would Lose IF… … closely-held for-profits are not “persons” that can “exercise religion” under RFRA; … there is no “substantial burden”; or … the mandate is the least restrictive means of furthering a compelling government interest.

Is Hobby Lobby a “Person” that can “Exercise Religion”? Yes (Alito, Roberts, Scalia, Thomas, Kennedy): Profit making not inconsistent with religious exercise. Corporate status not inconsistent with religious exercise. Corporations represent the interests of their stakeholders. Opinion limited to closely-held corporations. No (Ginsburg, Sotomayor)

Is the Mandate a “Substantial Burden”? Yes (Alito, Roberts, Scalia, Thomas, Kennedy): Reject government’s attenuation argument. Government cannot decide questions about moral cooperation. Hobby Lobby faces millions of dollars in potential penalties if it follows its conscience. No (Ginsburg, Sotomayor, Breyer, Kagan)

Does the Mandate Serve a “Compelling Government Interest”? Did not answer the question (Alito, Roberts, Scalia, Thomas, Kennedy): Government must prove that its interests are compelling as applied to these plaintiffs. How can the government’s interests be compelling when so many people lack contraceptive coverage? Ultimately, there is no need to answer the question in this case. Yes (Ginsburg, Sotomayor, Breyer, Kagan)

Is the Mandate the “Least Restrictive Means”? No (Alito, Roberts, Scalia, Thomas, Kennedy): Government can pay for birth control. The “accommodation” for religious nonprofits is less restrictive. Burden on employees does not override employer’s rights under RFRA. Employees are not burdened in any event. Yes (Ginsburg, Sotomayor, Breyer, Kagan)

Justice Kennedy’s Concurrence Suggests, but does not decide, that government’s claimed interests may be compelling. Emphasizes that there is an existing, workable, less restrictive alternative (i.e., the “accommodation”). Notes that employees are not harmed; they can get birth control by other means.

Implications for Religious Nonprofits Challenging the “Accommodation” Religious nonprofits are “persons” entitled to RFRA protection (this is undisputed by the government). Court rejects government’s “attenuation” argument. Religious objectors don’t lose under RFRA simply because third parties are deprived of a benefit. Court cites its Little Sisters of the Poor order. Post-Hobby Lobby order in Wheaton College mirrors pre-Hobby Lobby order in Little Sisters.

Wheaton College Order On July 3, 2014, the Supreme Court granted a temporary injunction to evangelical Wheaton College. The Court’s order states that Wheaton “need not use the form prescribed by the Government, EBSA Form 700, and need not send copies to health insurance issuers or third- party administrators.” However, the order also notes: “Nothing in this interim order affects the ability of the applicant’s employees and students to obtain, without cost, the full range of FDA approved contraceptives.”

Other Post-Hobby Lobby Decisions On June 30, EWTN received last-minute injunctive relief from the Eleventh Circuit Court of Appeals. The same day, the Diocese of Cheyenne and related entities received similar relief from the Tenth Circuit. The Archdiocese of St. Louis also received an injunction from a federal district court on the same day. This injunctive relief came just hours after the Supreme Court ruled in Hobby Lobby, as fines were due to go into effect for these entities on July 1.

Status of Diocesan Litigation 21 Catholic dioceses have filed suit as named plaintiffs. (Several others have filed as part of the CBA.) 14+ dioceses have received some kind of injunctive relief, stopping enforcement of the mandate. The Diocese of Nashville and the Michigan Catholic Conference have been denied relief so far. Plans have different start dates, so timing may differ.

Catholic Benefits Association (CBA) CBA is a new membership organization consisting of Catholic nonprofit and for-profit entities. The CBA filed a class action lawsuit in Oklahoma, where the association is incorporated. It has now received injunctive relief for almost 600 employers, including many dioceses and related entities. June 4, 2014 preliminary injunction for original members July 1, 2014 temporary restraining order (TRO) for members that joined after the initial injunction was granted

Additional HHS Regulations On August 22, 2014, HHS issued Interim Final Rules revising the “accommodation” for religious nonprofits. The Interim Final Rules became effective August 27, 2014. On the same day, HHS issued Proposed Rules on how to apply the accommodation to certain closely-held, for- profit entities. The Proposed Rules will become effective sometime after the comment period closes. USCCB will likely file comments very soon on each of the new rules, although the comment periods end in late October 2014 (the 27th and 21st, respectively).

The Revised “Accommodation” On Sept. 8, the Little Sisters of the Poor and Christian Brothers Services filed a brief in the Tenth Circuit stating that the revised “accommodation” still constitutes a “substantial burden” on their religious exercise. “The government has simply given the Little Sisters an alternative way of doing what their faith forbids them to do: converting their conscience-compliant health plan into a plan that violates their conscience.” On Sept. 16, the Archdiocese of Washington and others filed a brief in the D.C. Circuit similarly stating that the new regulations continue to impose a substantial burden on their religious exercise.

Questions? Thank you!