Hobby Lobby Stores, Inc. v. Sebelius

870 F.Supp.2d 1278

HOBBY LOBBY STORES, INC., et al., Plaintiffs,

v.Kathleen SEBELIUS, in her official capacity as the Secretary of the United States Department of Health and Human Services, et al., Defendants.

No. CIV–12–1000–HE.

United States District Court, W.D. Oklahoma.

Nov. 19, 2012.

Charles E. Geister, III, Derek B. Ensminger, Hartzog Conger Cason & Neville, Oklahoma City, OK, Eric S. Baxter, Lori H. Windham, Stuart K. Duncan, The Becket Fund for Religious Liberty, Washington, DC, for Plaintiffs.

Michelle R. Bennett, Washington, DC, for Defendants.

ORDER

JOE HEATON, District Judge.

Plaintiffs, Hobby Lobby Stores, Inc., Mardel, Inc., David Green, Barbara Green, Steve Green, Mart Green and Darsee Lett sued Kathleen Sebelius, Secretary of the United States Department of Health and Human Services (“HHS”), and other government officials and agencies challenging regulations 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 Education Reconciliation Act, Publ. L. No. 111–152, 124 Stat. 1029 (2010) (“Affordable Care Act” or “ACA”). Specifically, plaintiffs object to the preventive care coverage regulations or mandate which they allege forces them to “provide health insurance coverage for abortion-inducing drugs and devices, as well as related education and counseling.” Complaint, ¶ 8. Plaintiffs contend the mandate violates their statutory and constitutional rights and seek both declaratory and injunctive relief. Presently at issue is plaintiffs' motion for preliminary injunction in which they ask the court to prohibit defendants from enforcing the mandate against them. A hearing on the motion was held on November 1, 2012.

This lawsuit is one of many challenging various aspects of the Affordable Care Act. While the legislation is controversial, as another judge has stated in similar circumstances, “this Court's personal views on the necessity, prudence, or effectiveness of the Affordable Care Act are of no moment whatsoever. The only issues concerning the ACA presently before this Court are those raised by the parties: namely, whether [the preventive services coverage provision] passes muster under the Constitution of the United States, and whether it violates the Religious Freedom Restoration Act of 1993, 42 U.S.C. § 2000bb et seq.” Mead v. Holder, 766 F.Supp.2d 16, 19 (D.D.C.2011), aff'd on other grounds, Nat'l Fed'n of Indep. Bus. v. Sebelius, ––– U.S. –––– (2012).

Background

The ACA, signed into law on March 23, 2010, effected a variety of changes to the healthcare system. The Act includes a preventive services 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 ¹ for purposes of this paragraph.

42 U.S.C. § 300gg–13(a). The Health Resources and Services Administration (HRSA) commissioned the Institute of Medicine (IOM) to develop recommendations for the HSRS guidelines. The IOM published a report which proposed, among other things, that insurance plans cover “[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity.” ² Included among the FDA-approved contraceptive methods are diaphragms, oral contraceptive pills, emergency contraceptives such as Plan B and ulipristal, commonly known as the morning-after pill and the week-after pill, respectively, and intrauterine devices. ³

On August 1, 2011, HRSA adopted IOM's recommendations in full, see76 Fed.Reg. 46621; 45 C.F.R. § 147.130, and, on February 15, 2012, HHS, the Department of Labor and the Department of Treasury published rules finalizing the HRSA guidelines. Unless grandfathered or otherwise exempt, employers' group health plans must provide coverage conforming with the guidelines for plan years beginning on or after August 1, 2012. 75 Fed.Reg. 41726, 41729.

Grandfathered health plans are not subject to the preventive services provision of the ACA. 75 Fed.Reg. 34538–01 (June 17, 2010).⁴ Some religious employers also are exempt from providing plans that cover contraceptive services. To qualify as a “religious employer” 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); 76 Fed.Reg. 46621–01, 46623. A temporary enforcement safe-harbor provision applies to other non-profit organizations that do not qualify for any other exemption and “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).⁵ Finally, an employer with fewer than 50 employees is not required to provide any health insurance plan. 26 U.S.C. § 4980H(c)(2)(A).

The individual plaintiffs (collectively the “Greens”), are members of a family that owns and operates Hobby Lobby Stores, Inc. and Mardel, Inc., privately held, for-profit corporations. Hobby Lobby operates 514 arts and crafts stores in 41 states with 13,240 full-time employees. Mardel is a bookstore and educational supply company that specializes in Christian materials. It has 35 stores in 7 states with 372 employees. Both Hobby Lobby and Mardel are operated through a management trust which owns all the voting stock in the corporations.⁶ Each member of the Green family is a trustee of the trust.

Although Hobby Lobby and Mardel are for-profit, secular corporations, the Green family operates them according to their Christian faith. “As part of their religious obligations” the Green family provides health insurance coverage to Hobby Lobby's and Mardel's employees through a self-insured plan. Complaint, ¶ 52. However, “[t]he Green family's religious beliefs prohibit them from deliberately providing insurance coverage for prescription drugs or devices inconsistent with their faith, in particular abortion-causing drugs and devices. Hobby Lobby's insurance policies have long explicitly excluded—consistent with their religious beliefs—contraceptive devices that might cause abortions and pregnancy-termination drugs like RU–486.” Id. at ¶¶ 53–54. The government does not dispute the sincerity of the Greens' beliefs.

Hobby Lobby and Mardel, as secular, for-profit companies, do not satisfy the ACA's definition of a “religious employer” and are ineligible for the protection of the safe-harbor provision. Their health plans also are not grandfathered under the Act. The mandate takes effect as to the corporations' employee health plan on January 1, 2013, as that is the date upon which the plan year begins. Plaintiffs assert that they “face an unconscionable choice: either violate the law, or violate their faith.” Id. at ¶ 133. If Hobby Lobby fails to provide the mandated coverage, plaintiffs contend the corporation will incur penalties of about $1.3 million a day. Mardel also will be fined if it does not comply with the mandate. Plaintiffs seek a preliminary injunction to prevent defendants from enforcing the mandate against them, arguing that the mandate violates their right to free exercise of religion under the First Amendment and their statutory rights under the Religious Freedom Restoration Act of 1993. (“RFRA”), 42 U.S.C. § 2000bb–1.

Legal Standard

A preliminary injunction is an extraordinary remedy and should “not be issued unless the movant's right to relief is ‘clear and unequivocal.’ ” Heideman v. South Salt Lake City, 348 F.3d 1182, 1188 (10th Cir.2003) (quoting Kikumura v. Hurley, 242 F.3d 950, 955 (10th Cir.2001)). To obtain a preliminary injunction the moving party must establish that:

(1) [the movant] will suffer irreparable injury unless the injunction issues; (2) the threatened injury ... outweighs whatever damage the proposed injunction may cause the opposing party; (3) the injunction, if issued, would not be adverse to the public interest; and (4) there is a substantial likelihood [of success] on the merits.

Id. (quoting Resolution Trust Corp. v. Cruce, 972 F.2d 1195, 1198 (10th Cir.1992)). Plaintiffs, as the movants, have the burden of demonstrating that each factor tips in their favor. Id. at 1188–89.

The Tenth Circuit has applied a relaxed “probability of success” requirement when the moving party has “established that the three ‘harm’ factors tip decidedly in its favor.” Id. at 1189. The movant in such cases “need only show questions going to the merits so serious, substantial, difficult and doubtful, as to make them a fair ground for litigation.” Id. (internal quotations omitted). Plaintiffs urge application of the “ ‘less rigorous fair-ground-for-litigation standard.’ ” Heideman, 348 F.3d at 1189 (quoting Sweeney v. Bane, 996 F.2d 1384, 1388 (2d Cir.1993)).

The relaxed standard does not apply if the injunction “is one that alters the status quo and therefore is disfavored.” Northern Natural Gas Co. v. L.D. Drilling, Inc., 697 F.3d 1259, 1266 (10th Cir.2012). Defendants argue that plaintiffs are not seeking to maintain the status quo because, prior to the enactment of the mandate, Hobby Lobby provided coverage for emergency contraceptives that could cause an abortion. The court is not persuaded that the...