Catholic Charities Philadelphia v. Burwell, CIVIL ACTION NO. 14-3096

CATHOLIC CHARITIES OF THE ARCHDIOCESE OF PHILADELPHIA, et al. Plaintiffs, v. SYLVIA BURWELL, in her official capacity as Secretaryof the Department of Health and Human Services, et al. Defendants.

CIVIL ACTION NO. 14-3096

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

June 26, 2014

MEMORANDUM

BUCKWALTER, S. J.

Pending before the Court are Plaintiffs Catholic Charities of the Archdiocese of Philadelphia, St. John's Orphan Asylum, St. Edmond's Home for Crippled Children, Don Guanella Village of the Archdiocese of Philadelphia, Divine Providence Village, The Philadelphia Protectory for Boys, Catholic Community Services, Inc., Nutritional Development Services, Inc., Catholic Health Care Services Supportive Independent Living, St. Monica Manor, St. John Neumann Nursing Home, Immaculate Mary Home, St. Francis Country House, St. Martha Nursing Home, St. Mary Manor, St. John Vianney Center, Catholic Clinical Consultants, and the Roman Catholic Archdiocese of Philadelphia (collectively "the Archdiocese" or "Plaintiffs")'s Motion for a Preliminary Injunction. For the following reasons, Plaintiffs' Motion for a Preliminary Injunction is denied.

I. BACKGROUND

A. The Parties

Plaintiff Roman Catholic Archdiocese of Philadelphia is a territory of the RomanCatholic Church constituting the counties of Philadelphia, Bucks, Chester, Delaware, and Montgomery in Pennsylvania. (Pls.' Mot. for Prelim. Inj., Decl. of Joseph A. Sweeney, Jr. (Sweeney Decl.) ¶¶ 11-12.) Catholic Human Services of the Roman Catholic Archdiocese of Philadelphia is an organization overseeing the operations of the remaining Plaintiffs. (Id. ¶¶ 5,7.) Defendants Sylvia Burwell,¹ Thomas Perez, and Jacob Lew (collectively "the Government" or "Defendants") are the Secretaries of the U.S. Departments of Health and Human Services ("HHS"), Labor, and Treasury, respectively.

B. Plaintiffs' Religious Beliefs and Self-Insured Health Care Plan

Plaintiffs' mission is to "proclaim to everyone the Good News that Jesus Christ is the Light of the world, who offers to all who follow Him the light of life." (Id. ¶ 13.) Plaintiffs' programs are "driven by, and grounded in, Catholic teaching[.]" (Id. ¶ 9.) "The [Roman Catholic] Church teaches that life begins at the moment of conception, sexual union should be reserved to committed marital relationships in which husband and wife are open to the transmission of life, and, therefore, artificial interference with life and conception are contrary to core beliefs." (Id. ¶ 146.) As such, "[t]he Church opposes directly or indirectly providing or facilitating the use of contraceptive services" or "associat[ing] in any way with the provision of contraceptive services." (Id. ¶¶ 147, 153.)

Plaintiffs provide health insurance to more than 4,000 employees through a self-insured plan, with Independence Blue Cross serving as its third-party administrator. (Id. ¶ 6, 139.) Plaintiffs' self-insured health care plan is a "church plan," exempted from the requirements of theEmployee Retirement Income Security Act of 1974 ("ERISA") under 29 U.S.C. § 1003(b)(2). (Id. ¶ 138.) Plaintiffs' plan "does not offer coverage for contraceptives, with the exception of prescription and use of contraceptive medications for non-contraceptive, medical purposes." (Id. ¶ 142.) Plaintiffs' current health care plan began on July 1, 2013, and will expire on June 30, 2014. (Id. ¶ 135.)

C. Contraceptive Coverage Requirement Under the ACA and the Exemption for Eligible Religious Organizations

1. Contraceptive Coverage Requirement

On January 1, 2014, many provisions of the Patient Protection and Affordable Care Act ("ACA") went into effect. Among the new rules was a requirement that group health plans for organizations with at least fifty full-time employees provide coverage, without cost-sharing, for "such additional preventative care and screenings . . . as provided for in comprehensive guidelines supported by the Health Resources and Services Administration ["HRSA"]" including "the full range of [Food and Drug Administration]-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity."² 26 U.S.C. § 4980H(c)(2); 42 U.S.C. § 300gg-13(a)(4); Inst. of Med. Clinical Preventative Servs. forWomen: Closing the Gaps, 10-12 (2011).³ This is the so-called "contraceptive mandate." Certain group health plans were exempted from this requirement under a "grandfathering" provision.⁴ 42 U.S.C. § 18011; 45 C.F.R. § 147.140; 29 C.F.R. § 2590.715-1251; 26 C.F.R. § 54.9815-1251T.

2. Rights and Responsibilities of Eligible Religious Organizations and EBSA Form 700

Religious organizations with more than fifty employees may exempt themselves from the group health plan contraceptive coverage requirements if they meet the following criteria:

(1) The organization opposes providing coverage for some or all of any contraceptive services required to be covered under [45] § 147.130(a)(1)(iv)⁵ on account of religious objections.

(2) The organization is organized and operates as a nonprofit entity.

(3) The organization holds itself out as a religious organization.

(4) The organization self-certifies . . . and makes such self-certification available for examination upon request by the first day of the first plan year to which the accommodation in paragraph (c) of this section applies. The self-certification must be executed by a person authorized to make the certification on behalf of the organization, and must be maintained in a manner consistent with the record retention requirements under section 107 of the Employee Retirement Income Security Act of 1974.

45 C.F.R. § 147.131(b).

To self-certify as an "eligible organization," an organization executes and delivers to its health care plan administrator Employee Benefits Security Administration ("EBSA") Form 700. (Compl., Ex. A, EBSA Form 700.) In completing and signing EBSA Form 700, an organization's signing official certifies that "on account of religious objections, the organization opposes providing coverage for some or all of any contraceptive services that would otherwise be required to be covered; the organization is organized and operates as a nonprofit entity; and the organization holds itself out as a religious organization." (Id.) The form provides further notice specifically to "Third Party Administrators of Self-Insured Health Plans" that the self-insuring eligible organization "[w]ill not act as the plan administrator or claims administrator with respect to claims for contraceptive services, or contribute to the funding of contraceptive services" and that the completed certification "is an instrument under which the plan is operated." (Id.)

Should an otherwise non-exempt organization fail to either self-certify as an eligible religious organization or comply with the ACA's contraceptive coverage requirements, the organization is subject to a tax equal to "$100 for each day in the noncompliance period with respect to each individual to whom such failure relates." 26 U.S.C. § 4980D(b)(1), (e)(1). Plaintiffs estimate that the amount of the potential tax it would have to pay for noncompliance would be $160,000 per day. (Sweeney Decl. ¶ 145.)

3. Rights and Responsibilities of Third-Party Administrators

A third-party administrator may not charge a self-certified eligible religious organization any premiums, fees, or other charges, directly or indirectly, with respect to contraceptives. 29 C.F.R.§ 2590.715-2713A(b)(2). If a third-party administrator pays for and providescontraceptives to the participants and beneficiaries of the eligible organization's group health plan, the third-party administrator may seek reimbursement for the "total dollar amount of the payments for contraceptive services" plus "an allowance for administrative costs and margin . . . no less than 10 percent of the total dollar amount of the payments for contraceptive services." 29 C.F.R.§ 2590.715-2713A(d); 45 C.F.R. § 156.50(d)(2-3).

D. Procedural History

Plaintiffs initiated the present litigation on June 2, 2014. Plaintiffs bring three counts against Defendants: (1) a violation of the Religious Freedom Restoration Act ("RFRA"), 42 U.S.C. § 2000bb-1; (2) a violation of the Free Exercise Clause of the First Amendment to the U.S. Constitution; and (3) a violation of the Freedom of Speech Clause of the First Amendment to the U.S. Constitution. On the same day they filed their Complaint, Plaintiffs moved for a preliminary injunction, seeking an order enjoining Defendants from "requir[ing] Plaintiffs to provide contraceptive coverage," "requir[ing] Plaintiffs to sign EBSA Form 700," "in any way requir[ing] Plaintffs to authorize or facilitate the provision of contraceptive coverage to their employees," or assessing "any fine, penalty, or tax . . . for failing to execute and deliver EBSA Form 700[.]" On June 17, 2014, Defendants filed their Response in Opposition. On June 20, 2014, the Plaintiffs filed their Reply. This Court heard oral argument on the Motion on June 24, 2014, making it ripe for review.

II. DISCUSSION

Plaintiffs seek a preliminary injunction pursuant to Federal Rule of Civil Procedure 65. Fed. R. Civ. P. 65. To be entitled to a preliminary injunction, a movant must show "(1) a likelihood of success on the merits; (2) he or she will suffer irreparable harm if the injunction isdenied; (3) granting relief will not result in even greater harm to the nonmoving party; and (4) the public interest favors such relief." Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102, 109 (3d Cir. 2010) (quoting Miller v. Mitchell, 598 F.3d 139, 147 (3d Cir. 2009)). "A plaintiff's failure to establish any element in its favor renders a preliminary injunction inappropriate." NutraSweet Co. v. Vit-Mar Enters., Inc., 176 F.3d 151, 153 (3d Cir. 1999) (citing Optician's Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 192 (3d Cir. 1990)). The Court begins its analysis by assessing the likelihood...