HHS released its final rule – adopting “without change” the August 2011 interim rule requiring insurers to provide contraceptive services to women without charge on Friday, February 10. The final rule will publish in the Federal Register on February 15, 2012 – starting the clock for judicial review. After three torturous weeks of controversy since Secretary Sebelius announced the rule, judicial review is certain for three interrelated reasons:
- the deep and abiding controversy about the rule itself,
- the final rule makes no change to the salient provisions from the interim rule – reflecting no compromise or adjustment, and
- the final rule is devoid of substantial response to the First Amendment issue vociferously raised by the public commenters and in the recent controversy.
The Controversy:
In August 2011, HHS, DOL, & IRS issued an interim final rule that requires all health insurance plans to cover preventive services for women including recommended contraceptive services without charging a co-pay, co-insurance, or a deductible. The amended interim final rule specified that, for purposes of a religious employer exemption, the employer must: (1) inculcate religious values as its purpose; (2) primarily employ persons who share its religious tenets; (3) primarily serve persons who share its religious tenets; and (4) is a non-profit organization under the certain provisions of the Internal Revenue Code. Many groups considered this definition to be far too narrow and would not include, for example, church-affiliated hospitals.
Secretary of HHS Kathleen Sebelius set off the controversy anew on January 20, 2012, announcing that:
Nonprofit employers who, based on religious beliefs, do not currently provide contraceptive coverage in their insurance plan, will be provided an additional year, until August 1, 2013, to comply with the new law. Employers wishing to take advantage of the additional year must certify that they qualify for the delayed implementation.
But there was no rule and many religious and non-profit organizations chimed in that the not-released rule violated the First Amendment’s guarantee of freedom of religion by imposing actions that would violate the tenets of their beliefs.
Senate Majority Leader Reid was drawn into the fray three weeks later:
This debate that is going on dealing with this issue, dealing with contraception, is a rule that has not been made final yet. There is no final rule. Let’s wait until there is at least a rule we can talk about. There is not a final rule. That is all you read about in the newspapers, why there are discussions going on as we speak. There is not a rule. Everybody should calm down. Let’s see what transpires.
The Compromise or Adjustment:
The White House joined in to make an adjustment to the rule in promising to add a year for insurers for religious non-profits to comply. In reality, the contemporaneous guidance issued by HHS is no more than a promise of non-enforcement – it is not a delayed effective date or a delayed applicability.
As the Wall Street Journal pointed out, based on its reports from the White House prior to the rule being issued:
Under the new policy, religious employers opposed to most forms of birth control wouldn’t be required to directly pay for such coverage in their workers’ insurance policies. Instead, insurance companies would be required to offer contraception without explicitly charging either the religious employer or worker. That shift means the cost of providing the coverage to religious employers is likely to be spread across all policyholders by insurers.
Reading between the lines – the Administration seems to claim it will park the cost in “overhead” that everyone must pay – including the religious employers, unless the rule provides very specific accounting rules that limit the assignment of the cost of contraceptives to non-religious employers. That, in turn, requires additional steps and additional cost to the insurers, which must be recovered from …. Accounting like this in rules is always a slippery slope and HHS is now in the middle of its slide.
The final rule resolves none of these issues.
The Final Rule Litigation Issues:
HHS’s February 10 final rule claims that it is adopting the interim rule “without change,” but it then proceeds to amend the rules – just not the rules affecting requirements for insurance coverage of contraceptives. HHS’s new promise is to work with stakeholders to amend the rules and not enforce. No Administration can make such a promise with any assurance – no one should rely on such a promise.
HHS’s response in the final rule to the more than 200,000 comments is contained in a mere 2½ conclusory pages, containing minimal references to the First Amendment and the Religious Freedom Restoration Act (RFRA) and no explanation of the extensive judicial precedent and arguments. Although HHS claims that it “carefully considered” the comments, the final rule reflects no such careful consideration.
The interim rule provided that HHS would issue “guidelines” for the determination of applicability. HHS issued guidance with the final rule that provides a “one-year safe harbor from enforcement.” But guidelines are not binding rules. Reminiscent of Medicare and Medicaid accounting, these guidelines will create an avalanche of disputes.
Whatever the merits of the policy decision, First Amendment and RFRA suits are sure to follow – the only question is when (if not already)? Whether regulatory and Administrative Procedure Act issues are included in that litigation is equally sure.