Benefits and Compensation

Michigan Firm Wins Reprieve From Contraceptive Mandate

In other legal action over health reform’s inclusion of reproductive services as mandated benefits, one company blocked the government from forcing it to include contraception coverage in its health plan coverage. The injunction in Legatus v. Sebelius, 2012 WL 5359630 (E.D. Mich., Oct. 31, 2012) was at the request of Weingartz Supply, a for-profit outdoor power equipment company with 170 employees, and the ruling from the U.S. District Court for the Eastern District of Michigan.

Weingartz is a member of Legatus, a non-profit organization whose mission is to strengthen Catholicism. Both organizations had designed their health plans to exclude contraception coverage.

District Judge Robert Cleland ordered a preliminary injunction in favor of Weingartz even though, he said, the government might eventually win the lawsuit. He expressed doubts that the company had suffered an actual harm yet.

Cleland denied associational standing for Legatus, saying the final rule was being amended to accommodate companies like Weingartz and other Legatus members, making the expected injuries not inevitable.

Note: Another district court found that non-profit organizations protected under the safe harbor did not have standing because safe harbor is being amended, making their injuries hypothetical. Wheaton Coll. v. Sebelius, 2012 WL 3637162 (D. D.C., Aug. 24, 2012).

But he said a temporary stay for Weingartz was appropriate, because while the government might suffer comparatively minimal harm if the injunction is granted, the employer could experience far greater harm through infringement of its religious beliefs.

Weingartz said the contraceptive coverage mandate was harmful because it forced the company to choose between violating its religious objections and paying fines of $2,000 for all but the first 30 of its employees. That the court said was a plausible argument.

The court assumes that [Weingartz is] likely to show at trial that the HRSA Mandate substantially burdens the observance of the tenets of Catholicism.

The government argued that the contraceptive mandate was of high importance because: (1) Control over pregnancy improves women’s and newborns’ health; and (2) it furthers gender equality in the workplace. Weingartz said these reasons had a “tenuous” and “generic” connection to health outcomes, and that contraceptive medical risks outweigh the benefits.

The government also reasoned there would be a slippery slope if it granted religious exemptions to secular, for-profit companies. That would open the door for owners of other secular businesses to request religious exemptions and permit them to impose their religious beliefs on their employees.

The government might show that its arguments are compelling, but further proceedings will be needed, the court said.

Open questions included: whether female employees have easy cheap alternatives to obtaining contraception; and whether the government has chosen the least restrictive means of achieving its public health goals, the court noted.

The court also will have to consider the limits to how religious observance can constrain the regulation of commerce.

… every person cannot be shielded from all the burdens incident to exercising every aspect of the right to practice religious beliefs. When followers of a particular sect enter into commercial activity as a matter of choice, the limits they accept on their own conduct as a matter of conscience and faith are not to be superimposed on the statutory schemes which are binding on others in that activity.

But the biggest reason for the stay is that the mandate takes effect on Jan. 1, 2013, a date that comes before litigants could collect and organize arguments responding to each open question.

No ruling on the merits can occur, therefore, until well after January 1, 2013, the date on which [Weingartz Supply] will be required to abide by the [contraceptive] Mandate absent an injunction.

Because each side shows some, but not strong, likelihood of successfully arguing their case, the preliminary injunction is warranted, the court concluded.

Backlash to Required Contraceptive Coverage

When the government first implemented reform’s contraceptive mandate, it ran into opposition from religious groups.

In response on Aug. 3, 2011, the U.S. Department of Labor created a rule (76 Fed. Reg. 46623) exempting non-profit religious employers (defined as having inculcation of religious values as its primary purpose, staffed with religious employees and serving people with similar religious orientations).

And in response to comments from concerned non-religious employers, on Feb. 10, 2012, the U.S. Department of Health and Human Services set up a temporary safe harbor for non-religious non-profit organizations that had religious objections. It was amended on Aug. 31, 2012, to admit more employers. However, those employers had to be non-profit organizations.

In cases such as these, the government argues that it is expanding existing safe harbors to accommodate non-exempt, non-grandfathered religious organizations’ religious objections, making challenges to the contraceptive mandate premature.

Note: In July, a federal judge in Colorado temporarily prevented the government from requiring the Catholic owners of Hercules Industries Inc. from covering birth control in its health plan. It held that a stay of enforcement would not hinder the government in pursuing an important public health goal. (See the September 2012 newsletter.)

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