281 F.Supp.3d 553
E.D. Pa.2017Background
- In 2010 the ACA (Women’s Health Amendment) required group and individual health plans to cover HRSA‑recommended preventive services for women, which HRSA interpreted to include all FDA‑approved contraceptives.
- HHS, Treasury, and Labor previously promulgated limited religious exemptions and an accommodation process for some religious objectors; those rules survived litigation and Supreme Court decisions (Hobby Lobby, Wheaton, Zubik) that sought accommodation for religious exercise.
- On Oct. 6, 2017 the Agencies issued two Interim Final Rules (New IFRs): a Religious Exemption (broadly allowing nonprofits and for‑profits to opt out on sincerely held religious grounds) and a Moral Exemption (allowing closely held entities to opt out on sincerely held moral grounds), eliminating prior notice/accommodation requirements and making accommodation optional.
- Pennsylvania sued seeking a preliminary injunction, alleging the New IFRs violated the APA (failure of notice‑and‑comment; arbitrary and capricious / contrary to law), Title VII, equal protection, and the Establishment Clause; the court limited its decision to APA claims.
- The Commonwealth argued the New IFRs would cause many women to lose no‑cost contraceptive coverage, increasing state expenditures for publicly funded family‑planning programs and harming women’s health; the court found Pennsylvania had Article III standing (special solicitude) based on imminent fiscal and quasisovereign injuries.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | Commonwealth will incur imminent fiscal costs from increased use of state‑funded contraceptive programs when employers drop coverage | No concrete injury; fiscal costs stem from state choices and are speculative | Commonwealth has standing; state entitled to special solicitude and showed imminent, traceable fiscal injury likely redressable by injunction |
| APA procedural (notice‑and‑comment) | Agencies unlawfully issued IFRs without pre‑promulgation notice and comment; no statutory authorization or good‑cause justification | HIPAA/related statutes permit interim final rules; good cause exists (urgency, prior comments, litigation) | Likely to succeed: HIPAA does not abrogate APA or authorize bypass; good‑cause exception not met (no deadline, speculation, prior comments insufficient; post‑promulgation comment cannot substitute) |
| APA substantive (arbitrary/capricious / statutory interpretation) | New IFRs exceed statutory authority and contradict ACA’s mandatory coverage and structure (no textual religious/moral exemptions) | Rules required by RFRA to avoid substantial burden on religious exercise; Agencies have discretion | Likely to succeed: statutory text does not authorize broad non‑statutory exemptions; RFRA does not justify the scope (Third Circuit precedent rejects substantial‑burden finding for the accommodation) |
| Preliminary injunction factors (irreparable harm, equities, public interest) | Irreparable harms to state fisc and women’s health; balance and public interest favor maintaining ACA coverage pending review | Agencies and executive interest in implementing policy and resolving litigation; harm to agency interests if enjoined | All four factors favor injunction: irreparable fiscal/health harms, equities and public interest support preserving status quo; injunction granted |
Key Cases Cited
- Massachusetts v. EPA, 549 U.S. 497 (2007) (States receive special solicitude in standing analysis in certain statutory challenges)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (three‑part Article III standing test)
- Texas v. United States, 809 F.3d 134 (5th Cir. 2015) (state standing to challenge federal agency action affecting state fisc)
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) (framework for judicial deference to agency statutory interpretation)
- Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) (agency action cannot contradict statute or administrative structure)
- Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014) (RFRA applies to closely held corporations and exemptions may be required)
- Zubik v. Burwell, 136 S. Ct. 1557 (2016) (remand encouraging accommodation solutions without deciding substantial‑burden question)
- Geneva Coll. v. Sec’y U.S. Dep’t of Health & Human Servs., 778 F.3d 422 (3d Cir. 2015) (Third Circuit: accommodation did not impose a substantial burden under RFRA)
- Real Alternatives, Inc. v. Sec’y Dep’t of Health & Human Servs., 867 F.3d 338 (3d Cir. 2017) (reaffirming limits on extending religious exemptions beyond what law requires)
- Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (standard for preliminary injunctions)