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State of California v. U.S. Department of Health & Human Services

United States Court of Appeals, Ninth Circuit

October 22, 2019

State of California; State of Delaware; Commonwealth of Virginia; State of Maryland; State of New York; State of Illinois; State of Washington; State of Minnesota; State of Connecticut; District of Columbia; State of North Carolina; State of Vermont; State of Rhode Island; State of Hawaii, Plaintiffs-Appellees,
v.
U.S. Department of Health & Human Services; U.S. Department of Labor; R. Alexander Acosta, in his official capacity as Secretary of the U.S. Department of Labor; Alex M. Azar II, Secretary of the United States Department of Health and Human Services; U.S. Department of the Treasury; Steven Terner Mnuchin, in his official capacity as Secretary of the U.S. Department of the Treasury, Defendants, and The Little Sisters of the Poor Jeanne Jugan Residence, Intervenor-Defendant-Appellant. State of California; State of Delaware; Commonwealth of Virginia; State of Maryland; State of New York; State of Illinois; State of Washington; State of Minnesota; State of Connecticut; District of Columbia; State of North Carolina; State of Vermont; State of Rhode Island; State of Hawaii, Plaintiffs-Appellees,
v.
U.S. Department of Health & Human Services; U.S. Department of Labor; R. Alexander Acosta, in his official capacity as Secretary of the U.S. Department of Labor; Alex M. Azar II, Secretary of the United States Department of Health and Human Services; U.S. Department of the Treasury; Steven Terner Mnuchin, in his official capacity as Secretary of the U.S. Department of the Treasury, Defendants-Appellants, and The Little Sisters of the Poor Jeanne Jugan Residence, Intervenor-Defendant. State of California; State of Delaware; Commonwealth of Virginia; State of Maryland; State of New York; State of Illinois; State of Washington; State of Minnesota; State of Connecticut; District of Columbia; State of North Carolina; State of Vermont; State of Rhode Island; State of Hawaii, Plaintiffs-Appellees,
v.
U.S. Department of Health & Human Services; U.S. Department of Labor; R. Alexander Acosta, in his official capacity as Secretary of the U.S. Department of Labor; Alex M. Azar II, Secretary of the United States Department of Health and Human Services; U.S. Department of the Treasury; Steven Terner Mnuchin, in his official capacity as Secretary of the U.S. Department of the Treasury, Defendants, and March for Life Education and Defense Fund, Intervenor-Defendant-Appellant.

          Argued and Submitted June 6, 2019 San Francisco, California

          Appeals from the United States District Court for the Northern District of California, No. 4:17-cv-05783-HSG Haywood S. Gilliam, Jr., District Judge, Presiding

          Brinton Lucas (argued), Sharon Swingle, Lowell V. Sturgill Jr., and Karen Schoen, Appellate Staff; David L. Anderson, United States Attorney; Hashim M. Mooppan, Deputy Assistant Attorney General; Joseph H. Hunt, Assistant Attorney General; Civil Division, United States Department of Justice, Washington, D.C.; for Defendants-Appellants.

          Mark Rienzi (argued), Eric C. Rassbach, Lori H. Windham, Diana M. Vern, Chase T. Harrington, and Chris Pagliarella, The Becket Fund for Religious Liberty, Washington, D.C., for Intervenor-Defendant-Appellant The Little Sisters of the Poor Jeanne Jugan Residence.

          Kenneth J. Connelly (argued), David A. Cortman, and Kevin H. Theriot, Alliance Defending Freedom, Scottsdale, Arizona; Gregory S. Baylor and Christen M. Price, Alliance Defending Freedom, Washington, D.C.; Brian R. Chavez-Ochoa, Chavez-Ochoa Law Offices Ins., Valley Springs, California; for Intervenor-Defendant-Appellant March for Life Education and Defense Fund.

          Karli A. Eisenberg (argued) and Nimrod Pitsker Elias, Deputy Attorneys General; Kathleen Boergers, Supervising Deputy Attorney General; Michael L. Newman, Senior Assistant Attorney General; Xavier Becerra, Attorney General; Office of the Attorney General, Sacramento, California; William Tong, Attorney General; Maura Murphy Osborne, Assistant Attorney General; Office of the Attorney General, Hartford, Connecticut; Kathleen Jennings, Attorney General; Ilona Kirshon, Deputy State Solicitor; Jessica M. Willey and David J. Lyons, Deputy Attorneys General; Delaware Department of Justice, Wilmington, Delaware; Karl A. Racine, Attorney General; Loren L. AliKhan, Solicitor General; Caroline S. Van Zile, Deputy Solicitor General; Graham E. Phillips, Assistant Attorney General; Office of the Attorney General, Washington, D.C.; Clare Connors, Attorney General; Erin Lau, Deputy Attorney General; Department of the Attorney General, Honolulu, Hawaii; Kwame Raoul, Attorney General; Elizabeth Morris, Assistant Attorney General; Office of the Attorney General, Chicago, Illinois; Brian E. Frosh, Attorney General; Steven M. Sullivan, Solicitor General; Kimberly S. Cammarata, Senior Assistant Attorney General; Attorney General's Office, Baltimore, Maryland; Keith Ellison, Attorney General; Jacob Campion, Assistant Attorney General; Office of the Attorney General, St. Paul, Minnesota; Letitia James, Attorney General; Barbara D. Underwood, Solicitor General; Lisa Landau, Bureau Chief, Health Care Bureau; Steven C. Wu, Deputy Solicitor General; Ester Murdukhayeva, Assistant Solicitor General; Office of the Attorney General, New York, New York; Joshua H. Stein, Attorney General; Sripriya Narasimhan, Deputy General Counsel; Department of Justice, Raleigh, North Carolina; Peter F. Neronha, Attorney General; Michael W. Field, Assistant Attorney General; Office of the Attorney General, Providence, Rhode Island; Thomas J. Donovan Jr., Attorney General; Eleanor Spottswood, Assistant Attorney General; Attorney General's Office, Montpelier, Vermont; Mark R. Herring, Attorney General; Toby J. Heytens, Solicitor General; Samuel T. Towell, Deputy Attorney General; Office of the Attorney General, Richmond, Virginia; Robert W. Ferguson, Attorney General; Jeffrey T. Sprung and Alicia O. Young, Assistant Attorneys General; Office of the Attorney General, Seattle, Washington; for Plaintiffs-Appellees.

          Dwight G. Duncan, Colbe Mazzarella, North Dartmouth, Massachusetts, for Amici Curiae Residents and Families of Residents at Homes of the Little Sisters of the Poor.

          Ken Paxton, Attorney General; Jeffrey C. Mateer, First Assistant Attorney General; Kyle D. Hawkins, Solicitor General; Jason R. LaFond, Assistant Solicitor General; Office of the Attorney General, Austin, Texas; Steve Marshall, Attorney General of Alabama; Leslie Rutledge, Attorney General of Arkansas; Christopher M. Garr, Attorney General of Idaho; Lawrence Wasden, Attorney General of Idaho; Jeff Landry, Attorney General of Louisiana; Eric Schmitt, Attorney General of Missouri; Tim Fox, Attorney General of Montana; Doug Peterson, Attorney General of Nebraska; Mike Hunter, Attorney General of Oklahoma; Alan Wilson, Attorney General of South Carolina; Sean Reyes, Attorney General of Utah; Patrick Morrisey, Attorney General of West Virginia; for Amici Curiae States of Texas, Alabama, Arkansas, Georgia, Idaho, Louisiana, Missouri, Montana, Nebraska, Oklahoma, South Carolina, Utah, and West Virginia.

          Miles E. Coleman, Nelson Mullins Riley & Scarborough LLP, Greenville, South Carolina, for Amici Curiae Constitutional Law Scholars.

          Stephanie N. Taub and Lea E. Patterson, First Liberty Institute, Plano, Texas, for Amicus Curiae First Liberty Institute.

          Daniel L. Chen, Gibson Dunn & Crutcher LLP, San Francisco, California; Paul Collins and Robert E. Dunn, Gibson Dunn & Crutcher LLP, Palo Alto, California; for Amicus Curiae Religious Sisters of Mercy.

          Elizabeth O. Gill, ACLU Foundation of Northern California, San Francisco, California; Minouche Kandel, ACLU Foundation of Southern California, Los Angeles, California; Brigitte Amiri, ACLU Foundation, New York, New York; David Loy, ACLU Foundation of San Diego & Imperial Counties, San Diego, California; for Amici Curiae American Civil Liberties Union, ACLU of Northern California, ACLU of Southern California, ACLU of San Diego and Imperial Counties, Anti-Defamation League, Leadership Conference on Civil and Human Rights, and National Urban League.

          Priscilla Joyce Smith, Yale Law School, Brooklyn, New York, for Amicus Curiae Program for the Study of Reproductive Justice at Yale Law School.

          Jamie A. Levitt and Rhiannon N. Batchelder, Morrison & Foerster LLP, New York, New York, for Amici Curiae American Association of University Women, Service Employees International Union, and 16 Additional Professional, Labor, and Student Associations.

          Diana Kasdan and Joel Dodge, Center for Reproductive Rights, New York, New York; Dariely Rodriguez, Dorian Spence, and Phylicia H. Hill, Lawyers' Committee for Civil Rights Under Law, Washington, D.C.; for Amici Curiae Center for Reproductive Rights, Lawyers' Committee for Civil Rights Under Law, California Women's Law Center, GLBTQ Legal Advocates & Defenders, Latinojustice PRLDEF, Lawyers for Civil Rights, Legal Momentum, Legal Voice, Mississippi Center for Justice, National Center for Lesbian Rights, Public Counsel, and Women's Law Project.

          Maura Healey, Attorney General; Elizabeth N. Dewar, State Solicitor; Jonathan B. Miller, Jon Burke, and Julia E. Kobick, Assistant Attorneys General; Elizabeth Carnes Flynn, Special Assistant Attorney General; Office of the Attorney General, Boston, Massachusetts; Thomas J. Miller, Attorney General, Office of the Attorney General, Des Moines, Iowa; Aaron M. Frey, Attorney General, Office of the Attorney General, Augusta, Maine; Gurbir S. Grewal, Attorney General, Office of the Attorney General, Trenton, New Jersey; Hector Balderas, Attorney General, Office of the Attorney General, Santa Fe, New Mexico; Josh Shapiro, Attorney General, Office of the Attorney General, Harrisburg, Pennsylvania; for Amici Curiae Massachusetts, Iowa, Maine, New Jersey, New Mexico, and Pennsylvania.

          Fatima Gross Graves, Gretchen Borchelt, Michelle Banker, and Sunu Chandy, National Women's Law Center, Washington, D.C.; Jane Liu, National Asian Pacific American Women's Forum, Washington, D.C.; Sequoia Ayala and Jill Heaviside, Sisterlove Inc., Atlanta, Georgia; Jeffrey Blumenfeld, Lowenstein Sandler LLP, Washington, D.C.; Naomi D. Barrowclough, Lowenstein Sandler LLP, Roseland, New Jersey; for Amici Curiae National Women's Law Center, National Latina Institute for Reproductive Health, Sisterlove Inc., and National Asian Pacific American Women's Forum.

          Bruce H. Schneider, Michele L. Pahmer, and Giliana Keller, Stroock & Stroock & Lavan LLP, New York, New York, for Amici Curiae Brief of Health Professional Organizations, American Nurses Association, American College of Obstetricians and Gynecologists, American Academy of Nursing, American Academy of Pediatrics, Physicians for Reproductive Health, and California Medical Association.

          Leah R. Bruno, Alan S. Gilbert, Cicely R. Miltich, and Jacqueline A. Giannini, Dentons U.S. LLP, Chicago, Illinois; Joel D. Siegel, Dentons U.S. LLP, Los Angeles, California; for Amici Curiae U.S. Women's Chamber of Commerce and National Association for Female Executives.

          Cindy Nesbit, The Sikh Coalition, New York, New York; Sirine Shebaya, Nimra Azmi, Muslim Advocates, Washington, D.C.; Richard B. Katskee, Carmen N. Green, and Alison Tanner, Americans United for Separate of Church and State; for Amici Curiae Religious and Civil-Rights Organizations.

          Barbara J. Parker, City Attorney; Maria Bee, Erin Bernstein, Malia McPherson, and Caroline Wilson; Office of the City Attorney, Oakland, California; James R. Williams, County Counsel; Greta S. Hansen, Laura S. Trice, and Lorraine Van Kirk, San Jose, California; Office of the County Counsel, San Jose, California; for Amici Curiae 14 Cities, Counties, and Local Agencies.

          Before: J. Clifford Wallace, Andrew J. Kleinfeld, and Susan P. Graber, Circuit Judges.

         SUMMARY[*]

         Affordable Care Act

         The panel affirmed the district court's preliminary injunction barring enforcement in several states of final federal agency rules that exempt employers with religious and moral objections from the Affordable Care Act's requirement that group health plans cover contraceptive care without cost sharing.

         The panel first held that the plaintiff states had standing to sue. The panel held that the panel's prior decision in California v. Azar, 911 F.3d 558, 566-68 (9th Cir. 2018), and its underlying reasoning foreclosed any arguments otherwise. The panel determined that plaintiffs failed to identify any new factual or legal developments since the panel's prior decision that required the panel to reconsider standing here.

         The panel noted that the day after the district court issued its injunction of limited scope, covering the territory of the thirteen plaintiff states plus the District of Columbia, a district court in Pennsylvania issued a similar nationwide injunction. See Pennsylvania v. Trump, 351 F.Supp.3d 791, 835 (E.D. Pa.), aff'd 930 F.3d 543 (3d Cir.), petition for cert. filed, ___ U.S.L.W.__ (U.S. Oct. 1, 2019) (No. 19-431). The panel held that despite the nationwide injunction from Pennsylvania, under existing precedent, this appeal was not moot.

         The panel held that the district court did not abuse its discretion in concluding that the plaintiff states were likely to succeed on the merits of their claim brought under the Administrative Procedure Act. The panel held that given the text, purpose, and history of 42 U.S.C. § 300gg-13(a)(4), also known as the Women's Health Amendment, the district court did not err in concluding that the agencies likely lacked statutory authority under the Affordable Care Act to issue the final rules. The panel determined that, at the preliminary injunction stage, the evidence was sufficient to hold that providing free contraceptive services was a core purpose of the Women's Health Amendment and that nothing in the statute permitted the agencies to determine exemptions from the requirement.

         The panel rejected the argument that the regulatory regime that existed before the rules' issuance-i.e., the accommodation process-violated the Religious Freedom Restoration Act and that the Act required or at least authorized the federal agencies to eliminate the violation by issuing the religious exemption. The panel held that even assuming that agencies were authorized to provide a mechanism for resolving perceived Religious Freedom Restoration Act violations, the Act likely did not authorize the religious exemption at issue in this case. The panel held that the religious exemption contradicts congressional intent that all women have access to appropriate preventative care and the exemption operates in a manner fully at odds with the careful, individualized, and searching review mandated by the Religious Freedom Restoration Act.

         The panel held that regardless of the question of whether the agencies had authority pursuant to the Religious Freedom Restoration Act to issue the exemption, the accommodation process likely did not substantially burden the exercise of religion and hence did not violate the Act. The panel noted that an organization with a sincere religious objection to arranging contraceptive coverage need only send a self-certification form to the insurance issuer or a third-party administrator or send a written notice to the Department of Health and Human Services. Once the organization has taken the simple step of objecting, all actions taken to pay for or provide the organization's employees with contraceptive care is carried out by a third party, i.e., insurance issuer or third-party administrator. The panel held that because appellants likely failed to demonstrate a substantial burden on religious exercise, there was no need to address whether the government had shown a compelling interest or whether it has adopted the least restrictive means of advancing that interest.

         The panel held that the district court did not abuse its discretion by concluding that the plaintiff states were likely to suffer irreparable harm absent an injunction. Referring to the panel's discussion in its prior opinion, the panel reiterated that plaintiff states will likely suffer economic harm from the final rules, and such harm would be irreparable because the states will not be able to recover monetary damages flowing from the final rules. This harm was not speculative; it was sufficiently concrete and supported by the record. Finally, the panel held that there was no basis to conclude that the district court erred by finding that the balance of equities tipped sharply in favor of the plaintiff states and that the public interest tipped in favor of granting the preliminary injunction.

         Dissenting, Judge Kleinfeld stated that because of the nationwide injunction from Pennsylvania, this case was moot and that the panel lacked jurisdiction to address the merits.

          OPINION

          WALLACE, CIRCUIT JUDGE:

         The Affordable Care Act (ACA) and the regulations implementing it require group health plans to cover contraceptive care without cost sharing. Federal agencies issued final rules exempting employers with religious and moral objections from this requirement. The district court issued a preliminary injunction barring the enforcement of the rules in several states. We have jurisdiction under 28 U.S.C. § 1292, and we affirm.

         I.

         We recounted the relevant background in a prior opinion. See California v. Azar, 911 F.3d 558, 566-68 (9th Cir. 2018). We reiterate it here as necessary to resolve this appeal.

         The ACA 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 . . . with respect to women, such additional preventive care and screenings . . . as provided for in comprehensive guidelines supported by the Health Resources and Services Administration [HRSA] . . . .

42 U.S.C. § 300gg-13(a)(4) (also known as the Women's Health Amendment). HRSA established guidelines for women's preventive care that include any "[FDA] approved contraceptive methods, sterilization procedures, and patient education and counseling." Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act, 77 Fed. Reg. 8, 725-01, 8, 725 (Feb. 15, 2012). The three agencies responsible for implementing the ACA-the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury (collectively, agencies)-issued regulations requiring coverage of all preventive care contained in HRSA's guidelines.[1] See, e.g., 45 C.F.R. § 147.130(a)(1)(iv).

         The agencies also recognized that religious organizations may object to the use of contraceptive care and to the requirement to offer insurance that covers such care. For those organizations, the agencies provide two avenues for alleviating those objections. First, group health plans of certain religious employers, such as churches, are categorically exempt from the contraceptive care requirement. See Coverage of Certain Preventive Services Under the Affordable Care Act, 78 Fed. Reg. 39, 870, 39, 874 (July 2, 2013). Second, nonprofit "eligible organizations" that are not categorically exempt can opt out of having to "contract, arrange, pay, or refer for contraceptive coverage." Id. To be eligible, the organization must file a self-certification form stating (1) that it "opposes providing coverage for some or all of any contraceptive services required to be covered under [the regulation] on account of religious objections," (2) that it "is organized and operates as a nonprofit entity," and (3) that it "holds itself out as a religious organization." Id. at 39, 893. The organization sends a copy of the form to its insurance issuer or third-party administrator (TPA), which must then provide contraceptive care for the organization's employees without any further involvement by the organization. Id. at 39, 875-76. The regulations refer to this second avenue as the "accommodation," and it was designed to avoid imposing on organizations' beliefs that paying for or facilitating coverage for contraceptive care violates their religion. Id. at 39, 874.

         The agencies later amended the accommodation process in response to legal challenges. First, certain closely-held for-profit organizations became eligible for the accommodation. See Coverage of Certain Preventive Services Under the Affordable Care Act, 80 Fed. Reg. 41, 318-01, 41, 343 (July 14, 2015); see also Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682, 736 (2014). Second, instead of directly sending a copy of the self-certification form to the issuer or TPA, an eligible organization could simply notify the Department of Health and Human Services in writing, which then would inform the issuer or TPA of its regulatory obligations. 80 Fed. Reg. at 41, 323; see also Wheaton Coll. v. Burwell, 134 S.Ct. 2806, 2807 (2014).

         Various organizations then challenged the amended accommodation process as a violation of the Religious Freedom Restoration Act (RFRA). The actions reached the Supreme Court, and the Supreme Court vacated and remanded to afford the parties "an opportunity to arrive at an approach going forward that accommodates petitioners' religious exercise while at the same time ensuring that women covered by petitioners' health plans receive full and equal health coverage, including contraceptive coverage." Zubik v. Burwell, 136 S.Ct. 1557, 1560 (2016) (internal quotation marks and citation omitted). The Court "express[ed] no view on the merits of the cases," and did not decide "whether petitioners' religious exercise has been substantially burdened, whether the [g]overnment has a compelling interest, or whether the current regulations are the least restrictive means of serving that interest." Id.

         The agencies solicited comments on the accommodation process in light of Zubik, but ultimately declined to make further changes. See Dep't of Labor, FAQs About Affordable Care Act Implementation Part 36, at 4, www .dol.Gov /sites /default /files/ebsa/about-ebsa/our-activiti es/resource-center/faqs/aca-part-36.pdf. The agencies concluded, in part, that "the existing accommodation regulations are consistent with RFRA" because "the contraceptive-coverage requirement [when viewed in light of the accommodation] does not substantially burden the[] exercise of religion." Id.

         On May 4, 2017, the President issued an executive order directing the secretaries of the agencies to "consider issuing amended regulations, consistent with applicable law, to address conscience-based objections to" the ACA's contraceptive care requirement. Promoting Free Speech and Religious Liberty, Exec. Order No. 13, 798, 82 Fed. Reg. 21, 675, 21, 675 (May 4, 2017). Thereafter, effective October 6, 2017, the agencies effectuated two interim final rules (IFRs) which categorically exempted certain entities from the contraceptive care requirement. See Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 82 Fed. Reg. 47, 792, 47, 792 (Oct. 13, 2017); Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 82 Fed. Reg. 47, 838-01, 47, 838 (Oct. 13, 2017). The first exempted all entities "with sincerely held religious beliefs objecting to contraceptive or sterilization coverage" and made the accommodation optional for them. 82 Fed. Reg. at 47, 808. The second exempted "additional entities and persons that object based on ...


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