Ruling on the last full day of the Trump Administration, one of the federal trial judges appointed by the outgoing president ruled that the Religious Freedom Restoration Act (RFRA) bars the federal government from enforcing the non-discrimination requirement of the Affordable Care Act (ACA) Section 1557 or Title VII of the Civil Rights Act of 1964 against Catholic plaintiffs to require them either to fund or perform gender transition procedures. Religious Sisters of Mercy v. Azar, 2021 WL 191009, 2021 U.S. Dist. LEXIS 9156 (D.N.D., January 19, 2021). Chief Judge Peter D. Welte denied summary judgment to co-plaintiff the State of North Dakota, which sought a declaration that it is not required to provide such procedures in its state health institutions or to its employees or through its Medicaid program, and found that the Plaintiffs lacked standing on their claims concerning performance of abortions and sterilizations, as the court found that various provisions of the ACA and other federal laws already relieved them of obligations in that regard.
Judge Welte issued his opinion just a few days after hearing oral argument on the summary judgment motions, but the case has been pending for a long time and it is likely that he had most of the lengthy, analytical opinion drafted well in advance of the argument, on the basis of the suit papers.
The case was complicated by the history of the federal government’s positions on the issue in question, which changed to the extent of the Trump Administration withdrawing an Obama Administration regulation from 2016 and replacing it with a new regulation, formally announced just days before the Supreme Court’s Bostock v. Clayton County decision. In Bostock, 140 S. Ct. 1731 (June 15, 2020), the Court determined that Title VII’s ban on discrimination because of sex necessarily extended to claims of discrimination because of sexual orientation and transgender status.
The final regulation announced days before Bostock acknowledged that the case had been argued and indicated that its outcome could affect the scope of the ACA’s non-discrimination requirement. In its explanatory Prologue to the regulation, HHS reiterated the Trump Administration’s view – presented to the Court in Bostock by the Solicitor General – that discrimination because of sex does not encompass discrimination because of gender identity. Confident that they were going to win, their new regulation, intended to supplant the Obama Administration’s regulation, removed the earlier regulation’s definition of “sex” so that it no longer specified “gender identity.” They went ahead and officially published the new regulation as previously schedule in the Federal Register a few days after Bostock was decided, making no effort to delay publication in order to take account of that decision. The result was peculiar: a regulation formally published just days after a Supreme Court decision that admittedly could affect the substance of the regulation, but utterly failing to grapple with that effect.
The Trump Administration’s brazen decision to go ahead with final publication without taking Bostock into account persuaded several other federal district courts to conclude that the final regulation’s definition of sex violated the Administrative Procedure Act as being inconsistent with the ACA statute’s non-discrimination requirement and/or because it was adopted arbitrarily by failing to consider the Bostock decision. Other district courts have also criticized HHS’s assertion in the regulation that Title IX’s religious entity exemption was relevant to the ACA, inasmuch as the ACA’s non-discrimination provision specifies that entities covered by it were subject to the kinds of discrimination prohibited by Title IX, which exempts religious schools from its sex discrimination requirements. The Trump Administration had also persisted in rejecting arguments that Bostock’s interpretation of Title VII necessarily applied to Title IX and other federal sex discrimination laws.
The day after Judge Welte issued his decision, President Biden included among his first Executive Orders one instructing the Executive Branch to apply Bostock to all federal sex discrimination laws. While EO’s are not interpretively binding on the courts, they are binding on how Executive Branch agencies interpret and enforce their statutory mandates, so the new leadership in HHS and, eventually, the EEOC (where the president gets to appoint one new member of the Commission each year, relatively quickly tipping the balance to the new Administration’s viewpoint regarding the definition of sex discrimination.
But that is neither here nor there regarding the central question in this case, at least as framed by Judge Welte in response to the Catholic plaintiffs, which is whether the government is precluded from enforcing any such non-discrimination requirement against the plaintiffs according to their religiously-based objections, in light of the Religious Freedom Restoration Act.
In Bostock, Justice Neil Gorsuch referred to RFRA as a “super statute” that may override non-discrimination requirements of Title VII (and by extension Title VII and the ACA) in an “appropriate case.” Is this such an appropriate case? That turns on whether application of the non-discrimination requirement imposes a substantial burden on the free exercise of religion by the Catholic plaintiffs, in which case Judge Welte characterizes the level of judicial review to be applied to the government’s policy as “strict scrutiny” such that the policy can only be applied if it is the least intrusive way to achieve a compelling government interest.
The court found that “compliance with the challenged laws would violate the Catholic Plaintiffs’ religious beliefs as they sincerely understand them. . . In meticulous detail, the Catholic Plaintiffs have explained that their religious beliefs regarding human sexuality and procreation prevent them from facilitating gender transitions through either medical services or insurance coverage.”
As to the compelling interest test, the court found that the Defendants “never attempt to make that showing here.” Of course, Defendants are the Trump Administration’s HHS (for the ACA) and EEOC (for Title VII). The rule HHS published in June 2020 “conceded to lacking a ‘compelling interest in forcing the provision, or coverage, of these medically controversial [gender-transition] services by covered entities.’” By contrast, of course, when the Obama Administration opined on this in 2016, HHS specified a compelling interest in ensuring nondiscriminatory access to healthcare, and the EEOC asserted a compelling interest in ensuring non-discriminatory employee benefits plans. But Judge Welte noted Supreme Court authority that those interests are stated at too high a level of generality to meet the RFRA test, directing courts to “scrutinize the asserted harm of granting specific exemptions to particular religious claimants and to look to the marginal interest in enforcing the challenged government action in that particular context.” Responding to this command, wrote Welte, “Neither HHS nor the EEOC has articulated how granting specific exemptions for the Catholic Plaintiffs will harm the asserted interests in preventing discrimination. . . In short, the Court harbors serious doubts that a compelling interest exists. This issue need not be resolved, however,” he continued, “because the Defendants fail to meet the rigors of the least-restrictive-means test.”
The “least-restrictive means” test is the third part of the RFRA analysis. Even if the government’s interest is compelling, the question is whether there is a way to achieve that interest without burdening the free exercise rights of the plaintiffs. Is requiring Catholic entities to perform or finance gender transition the “only feasible means to achieve its compelling interest,” asks the court. Here, resorting to the Supreme Court’s Hobby Lobby case, Welte suggests that “the most straightforward way of doing this would be for the Government to assume the cost of providing gender transition procedures for those unable to obtain them under their health-insurance policies due to their employers’ religious objections.” And, he opined, “if broadening access to gender-transition procedures themselves is the goal, then ‘the government could assist transgender individuals in finding and paying for transition procedures available from the growing number of healthcare providers who offer and specialize in those services,’” quoting Franciscan Alliance, a decision from the Northern District of Texas that had preliminarily enjoined the government from bringing enforcement actions under Section 1557 against religious objectors. (That injunction was dissolved when the Trump Administration indicated to that court that it did not intend to enforce Section 1557 against religious objectors and would replace the 2016 Obama Administration regulation with one that did not require such coverage.) And, said the court, the Defendants had not shown that “these alternatives are infeasible.”
Thus, the court granted summary judgment and issued a permanent injunction against enforcement of Sec. 1557 or Title VII against the Catholic Plaintiffs in this case. The court did not issue a nationwide injunction, however, limiting its injunction to the plaintiff organizations in this case, and as noted finding that the state of North Dakota did not have standing on these questions, rejecting its Spending Clause argument that the government was wrongly coercing the state to fund gender transition through the Medicare and Medicaid programs.
It is worth noting that this litigation was not brought on by an actual case of a transgender individual seeking gender transition services from a Catholic health care organization, or the employee of a Catholic entity challenging the failure of the employer’s health insurance to cover the procedures, or in response to a challenge to the state’s failure to cover these procedures for its employees or Medicaid participants. This was affirmative litigation brought by the state and the Catholic plaintiffs preemptively, seeking to establish judicial cover for their discriminatory policies. As such, and significantly, the interests of transgender people were not directly represented in this case although the ACLU participated as amicus curiae. (Curiously, the Westlaw report of the case did not list the ACLU among counsel, but the Lexis report did as of January 23 when this account was written.) The Plaintiffs were represented by the North Dakota Attorney General’s Office, The Becket Fund for Religious Liberty, and private counsel for several of the Catholic institutional plaintiffs. The government (i.e., the Trump Administration) was represented by the Justice Department and the U.S. Attorney’s Office for North Dakota, which of course was happy to let the Plaintiffs win in light of the Administration’s position opposing the Bostock ruling and their issuance of the 2020 Regulation (which the court could plausibly have found mooted the case, were it not for the fact that he was ruling the day before President Biden was to be inaugurated). Now it is up to the Biden Administration to take over and appeal this decision to the 8th Circuit, in light of the President’s January 20 Executive Order.Tags: ACLU, Affordable Care Act, American Civil Liberties Union, Biden Administration, Bostock v. Clayton County, Department of Health and Human Services, discrimination because of gender identity, discrimination because of sex, Discrimination because of transgender identity, Equal Employment Opportunity Commission, exclusion of gender transition from health insurance coverage, Justice Neil Gorsuch, religious exemption from compliance with anti-discrimination laws, Religious Freedom Restoration Act, Religious Sisters of Mercy v. Azar, Section 1557 of the ACA, Title VII of the Civil Rights Act of 1964, Trump Administration, U.S. District Court for North Dakota, U.S. District Judge Peter D. Welte, US Supreme Court