Amy Zink, Class of 2021; Kim Harvey Looney, Partner at Waller

The Court of Appeals for the Third Circuit has upheld a lower court ruling in Commonwealth of Pennsylvania v. President United States of America et al., which granted a nationwide preliminary injunction against religious and moral exemptions for employers to the Affordable Care Act’s (ACA) contraceptive mandate.

In the opinion written by Circuit Judge Patty Shwartz, the panel found that states had standing to bring the suit because they could establish a concrete and particularized injury from the exemptions. The panel found that the states would suffer concrete financial injury from the increased use of state-funded services due to women turning to state-funded services for their contraceptive needs. Further, the states would also see increased costs from the unintended pregnancies that may result from the loss of coverage due to the religious and moral exemptions.

The Third Circuit also determined the District Court correctly concluded that the states have a reasonable probability of showing that the Final Rules violate the Administrative Procedure Act (APA). The federal government argued that HIPAA allows the Secretary of Health and Human Services to issue interim final rules without notice and comment. The applicable section of HIPAA states that the Secretary “may promulgate any interim final rules as the Secretary determines are appropriate to carry out” certain provisions of HIPAA. The Third Circuit rejected that argument, holding that HIPAA did not excuse the agencies from APA procedures and therefore did not provide a basis for issuing interim final rules without notice and comment. The panel was also unconvinced that the Religious Freedom Restoration Act required a religious exemption from the Final Rules. The Third Circuit could not find infringement on the religious exercise of covered employees nor could they find a basis to conclude the accommodation process infringes on the religious exercise of any employer.

This decision is unlike the ruling in The Little Sisters of the Poor Jeanne Jugan Residence v. California, et al. in the Ninth District, which affirmed the preliminary injunction but rejected the injunction’s nationwide scope, ruling that the preliminary injunction was overbroad and that district judges must require a showing of nationwide impact to foreclose litigation in other districts. The Third Circuit found that the District Court did not abuse its discretion in concluding that a nationwide injunction is necessary because it was not more burdensome to the defendant than necessary, and the nationwide injunction was required to provide relief to the states.

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