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Federal Court Blocks Trump Regulation Revoking Health Care Protections for Transgender People

Posted on: August 18th, 2020 by Art Leonard No Comments

U.S. District Judge Frederic Block ruled on August 17 that a new Trump Administration Rule that rescinded the Obama Administration’s Rule prohibiting gender identity discrimination in health care will not go into effect on August 18, its scheduled date, and he granted a preliminary injunction against the new Rule’s enforcement.  Judge Block sits in the U.S. District Court for the Eastern District of New York, in Brooklyn. Walker v. Azar, 2020 U.S. Dist. LEXIS 148141.

After President Obama signed the Affordable Care Act (ACA) into law in 2010, the Department of Health and Human Services (HHS) decided to adopt a rule providing an official interpretation of the non-discrimination requirements contained in Section 1557 of that statute.  Section 1557 incorporates by reference a provision of Title IX of the Education Amendments of 1972, which forbids discrimination because of sex in educational institutions that get federal funding.  In the past, HHS and federal courts have looked to decisions interpreting the sex discrimination provision in Title VII of the Civil Rights Act of 1964, which bans sex discrimination in employment, in interpreting Title IX.

By the time HHS had finished writing its rule in 2016, both the Equal Employment Opportunity Commission and several federal appeals courts had interpreted Title VII to ban discrimination because of an individual’s gender identity.  The Obama Administration followed these precedents and included a prohibition on gender identity discrimination in its ACA rule.  Several states and a religious health care institution then joined together to challenge the rule before a federal district judge in Fort Worth, Texas, who was notoriously receptive to issuing nationwide injunctions against Obama Administration policies, and the court was true to that practice, holding that the inclusion of gender identity was contrary to the “original meaning” of the term “because of sex” when it was adopted by Congress in Title IX back in 1972.  The case is Franciscan Alliance, Inc. v. Burwell, 227 F. Supp. 3d 660 (N.D. Tex. 2016).

The new Trump Administration rule that was challenged in the August 17 ruling was intended by the Department of Health and Human Services to codify the decision by district court in Franciscan Alliance.  Franciscan Alliance was issued in December 2016, just weeks before the Trump Administration took office.  Had Hillary Clinton been elected president, the incoming administration would likely have appealed the Fort Worth decision to the U.S. Court of Appeals for the 5th Circuit. But the Trump Administration informed the district court that it was not appealing and instead would not enforce the Obama Administration rule and would eventually replace it.

Judge Block emphasized this history as he set out his reasons for finding that Human Rights Campaign (HRC) and its volunteer attorneys from Baker & Hostetler LLP, were likely to succeed on the merits of their claim that the Trump Rule was both inconsistent with the ACA, and that HHS was “arbitrary and capricious” in adopting this new Rule and publishing it just days after the Supreme Court had ruled in Bostock v. Clayton County that discrimination against a person because of their transgender status was “necessarily discrimination because of sex.”

The Supreme Court had heard oral arguments in the Bostock case, which concerned the interpretation of Title VII, on October 8, 2019, while HHS was working on its proposed new rule.  The HHS attorneys knew that the Supreme Court would be issuing a decision by the end of its term, most likely in June 2020.  One of the three cases consolidated in Bostock involved a gender identity discrimination claim by Aimee Stephens against Harris Funeral Homes. The Equal Employment Opportunity Commission (EEOC) had sued the employer on Stephens’ behalf.  The 6th Circuit Court of Appeals ruled that Harris Funeral Homes violated Title VII by discharging Stephens for transitioning, and the Supreme Court granted review on the specific question whether discrimination because of transgender status violates Title VII.  HHS concedes in the “preamble” of its new rule that interpretations of Title IX (and thus Section 1157) generally follow interpretations of Title VII.

October 2017, then-Attorney General Jeff Sessions issued a memorandum to the Executive Branch explaining the Trump Administration’s position that bans on sex discrimination in federal law did not extend to claims of discrimination because of sexual orientation or gender identity.  Thus, although the U.S. Solicitor General normally represents federal agencies such as the EEOC when their decisions are appealed to the Supreme Court, that office actually joined in  arguing on behalf of Harris Funeral Homes, leaving it to the ACLU LGBT Rights Project to represent Aimee Stephens before the Supreme Court.

The Trump Administration was so confident that the Court would rule against Stephens that it decided to go ahead with its new Rule, effectively revoking the Obama Administration’s Rule, although the “preamble” did acknowledge that a decision by the Supreme Court in the Title VII case could affect the interpretation of Section 1557.  LGBTQ rights advocates waited impatiently for a ruling in the Bostock case as the Court began to wind up its Term in June.  The Trump Administration was no more patient, announcing its new Rule a few days before the Supreme Court announced its decision in Bostock, apparently assuming that the Court would rule against Stephens.  Without publicly reacting to the Supreme Court’s opinion, or even revising its new Rule to acknowledge that the Trump Administration’s interpretation of “discrimination because of sex” had been rejected by the Supreme Court (in an opinion by Trump’s first appointee to the Court, Justice Neil Gorsuch), HHS went ahead and published the new Rule five days later.

Over the following weeks, challenges to the new Rule were filed in four different federal courts.  HRC filed suit on behalf of two transgender women who had encountered discrimination from health care institutions covered by the ACA.  Judge Block found that their experiences gave them formal standing to challenge the new Rule. Judge Block reached his decision the day before the new Rule was to go into effect.

He found that the well established practice of following Title VII interpretations in sex discrimination cases was likely to be followed under the ACA, just as it was under Title IX, and thus the plaintiffs were likely to succeed in their claim that the new Rule was inconsistent with  the statute.  He noted that just two weeks earlier, the 11th Circuit Court of Appeals had followed the Bostock decision in finding that a Florida school district violated Title IX by denying appropriate restroom access to a transgender student.

Furthermore, the failure of the new rule, published after the Bostock decision, to mention that ruling or to offer any reasoned explanation why it should not be followed, was likely to be found to be “arbitrary and capricious,” so the adoption of the new Rule probably violated the Administrative Procedure Act (APA), the federal law that details how federal agencies are to proceed in adopting new rules and regulations or rescinding old ones.

Because of the December 2016 ruling in Franciscan Alliance and the subsequent non-enforcement policy by the Trump Administration, the Obama Administration’s Rule has not been enforced by HHS since December 2016.  But the ACA allows individuals who suffer discrimination to sue on  their own behalf to enforce the statute, and there have been numerous lawsuits under Section 1557 successfully challenging exclusion of transgender health care from coverage under health insurance policies that are subject to the ACA.

Judge Block’s stay of the effective date and injunction against enforcing the new Rule gives the green light to HHS to resume enforcing Section 1557 in gender identity discrimination cases consistent with the Bostock ruling.  While there are probably plenty of career agency officials in the HHS Office of Civil Rights who would like to do so, any significant effort in that direction seems unlikely so long as Trump remains in office.  For now, the main impact of Judge Block’s order will be to clear a potential obstacle for transgender litigants under Section 1557, as the opinion persuasively explains how Justice Gorsuch’s reasoning in Bostock compels protecting transgender health care patients under the ACA.

The  practical effect of Judge Block’s ruling now is to place the burden on HHS if it wants to  continue defending its new Rule.  HHS must provide a reasoned explanation to the Court about why the Bostock interpretation of “discrimination because of sex” should not be followed under Section 1557.  The simplest way for HHS to proceed consistent with the court’s order would be to strike those portions of the preamble discussing this subject, and to substitute a simple statement that Section 1557’s ban on discrimination because of sex includes claims of discrimination because of sexual orientation  or gender identity consistent with  the U.S. Supreme Court’s interpretation of similar statutory language in the Bostock case.

Unanimous Federal Appeals Panel Blasts Trump Administration in HIV-Military Discharge Cases

Posted on: January 14th, 2020 by Art Leonard No Comments

A unanimous three-judge panel of the U.S. Court of Appeals for the 4th Circuit, based in Richmond, Virginia, blasted the Trump Administration on January 10 for relying on “outmoded”  information that is “at odds with current science” when the Air Force moved to discharge otherwise healthy HIV-positive service members based on the spurious assertion that they were not available for deployment outside the United States.  Roe v. U.S. Department of Defense, 2020 U.S. App. LEXIS 821, 2020 Westlaw 110826 (4th Cir., Jan. 10, 2020).

The court affirmed a preliminary injunction that was issued last year by U.S. District Judge Leonie M. Brinkema, barring the discharges while the case proceeds to an ultimate ruling on the merits.  The court’s opinion, written by Circuit Judge James Wynn, provides a detailed review of relevant Defense Department policies  and current medical facts, leaving little doubt that Judge Brinkema’s conclusion that plaintiffs are likely to win their case is solidly grounded in legal reasoning.

The three-judge panel consisted of Wynn, who was appointed by Barack Obama, and Albert Diaz and Henry Floyd, both also appointed by Obama.  At the time of his nomination to the court of appeals, Judge Floyd was a District Judge who had been appointed by George W. Bush.

Lambda Legal and Outserve-SLDN brought the case on behalf of two service members, anonymously identified as Richard Roe and Victor Voe, as well as other Outserve members who are HIV-positive and subject to discharge for that reason.  Both Roe and Voe had years of meritorious service when they were diagnosed as HIV-positive in 2017 as a result of the Defense Department’s policy of periodically requiring personnel to submit to HIV testing.  Both men immediately went into treatment, are taking retroviral therapy, have undetectable HIV, and are healthy and uncompromised in their ability to perform their duties.

Defense Department written policies state unequivocally that HIV-positive personnel who are “determined to be fit for duty will be allowed to serve in a manner that ensures access to appropriate medical care.”  The Air Force has a written policy stating that HIV-positive status “alone is not grounds for medical separation or retirement,” and states that “force-wide, HIV-infected employees are allowed to continue working as long as they are able to maintain acceptable performance and do not pose a safety or health threat to themselves or others,” and “may not be separated solely on the basis of laboratory evidence of HIV infection.”

The Catch-22, however, comes with the Air Force’s insistence that personnel must be deployable anywhere in the world, and in particular to the central theater of Air Force active operations, known as CENTCOM, which covers operations spanning North Africa, Central Asia, and the Middle East.  Under a rule known as “Modification 13,” personnel who are “found to be medically non-deployable will not enter [the Central Command area] until the non-deployable condition is completely resolved or an approved waiver is obtained.”  It lists “confirmed HIV infection” as “disqualifying for deployment.”  The official in charge of granting waivers has stated that it is highly unlikely that a waiver would be granted for HIV-positive servicemembers to be deployed to CENTCOM’s area, and in fact no such waiver has ever been granted.

In this litigation, the Defense Department takes the position that neither it, nor in particular the Air Force, has an absolute ban on continued employment of healthy HIV-positive personnel.  On the other hand, since most of the Air Force’s current activity is in the CENTCOM area, Modification 13 prohibits deployment of HIV-positive personnel to CENTCOM without a waiver, and the official in charging of granting waivers does not grant them for HIV-positive personnel, there is, de facto, a ban.

The lawsuit claims that the discharge of Roe, Voe and similarly-situated service members for being HIV-positive violates the Administrative Procedure Act (APA), as being “arbitrary and capricious” in light of the facts of their individual cases, and also violates the Equal Protection requirements of the 5th Amendment.  Judge Brinkema and the court of appeals narrowed their attention to the alleged APA violation, under the well-established approach of avoiding making a constitutional ruling if the plaintiff can prevail based on a statutory claim.

In this case, it seemed clear to Brinkema and the appeals panel that the government’s position was inconsistent with medical facts, based on outmoded ideas about HIV and current treatments. The court emphasized that Roe and Voe take daily pills that do not require any special treatment (refrigeration, for example, or shielding from temperature extremes, which were required for some HIV treatments prior to the introduction of the pills now in use) and have not generated any significant side effects for either man.  The court summarizes the well-established science that somebody with undetectable levels of HIV presents virtually no risk of transmission through casual contact, and even blood exposure or sexual contact with somebody under retroviral treatment whose HIV level is undetectable is highly unlikely to result in transmission.

Both men present themselves as fully capable of performing their duties, and in both cases their commanding officers have endorsed their request to be allowed to continue serving, as have military physicians.  However, the Air Force, despite the requirements in published policies to evaluate each case on its individual merits, has maintained a de facto categorical exclusion.  Each man appealed the initial rulings against them internally, and both were met with virtually identical formulaic statements that they had to be discharged on medical grounds under the deployability rules, suggesting that their cases did not receive individualized consideration.

“To comply with the APA,” wrote Judge Wynn, “the agency must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found the choice made.  Agency action is arbitrary and capricious when the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”

Analyzing these requirements, Wynn pointed out that “the Government has taken inconsistent positions on whether HIV-positive servicemembers may deploy to CENTCOM’s area of responsibility.” Prior to this litigation, the Government has treated Modification 13 as “a categorical ban,” but now it tries to appear to conform to APA requirements by emphasizing the possibility of a waiver being granted.  But this position is belied by the evidence that waivers have not been granted in any HIV case, despite the facts concerning these plaintiffs.

“If Modification 13 is not a categorical ban,” wrote Wynn, “the Air Force acted arbitrarily by treating them as categorically ineligible to deploy to CENTCOM’s area of responsibility and denying Plaintiffs the required individualized assessment of their fitness for continued service.  If Modification 13 is a categorical ban, the Government failed to satisfy the APA’s requirements in promulgating their policy.”

The court of appeals concluded that Judge Brinkema “rightly found that Plaintiffs are likely to succeed on their claim that the Air Force’s discharge decisions were arbitrary and capricious, in violation of the APA.”  This is the threshold factor in deciding whether to issue a preliminary injunction to pause the discharge process while the case is litigation has been met.  In this case, the men were designated for discharge without any individualized assessment, and furthermore without even applying for a waiver and being turned down, since the Air Force’s decision-makers predicted that CENTCOM would deny a waiver in their cases, making any such application virtually futile.  “Such a categorical predictive assessment is not ‘a satisfactory explanation’ for discharging each servicemember,” wrote Wynn, “and in using this predictive assessment to discharged these servicemembers, the Air Force violated Department of Defense regulations, failed to consider important aspects of the criteria for discharge, and explained its decision in a manner contrary to the evidence before it.”

Indeed, wrote Wynn, “Upon review, each explanation offered by the Government for the policy is unsupported by the record or contradicted by scientific evidence, leading us to conclude Plaintiffs have adequately shown that the Government failed to consider the relevant evidence and offers explanations so contrary to that evidence as to be arbitrary.”

For example, the court found the Government’s claim that HIV requires “highly specialized” treatment to be unsupported by the record in this case, which shows that managing HIV through anti-retroviral medications involves taking a single daily pill, “which does not require special storage or handling,” minimal side effects, and periodic blood tests that  can be simply performed by any general practitioner in the field, which are reduced to once a year after somebody has been “undetectable” for a period of two years.

The court similarly dismissed some of the standard arguments that were made earlier in the epidemic prior to current treatment protocols, and found that “the risk of battlefield transmission is unsupported by the record,” given the medical evidence that those with undetectable viral loads don’t transmit the virus.  The court found that the Defense Department’s own internal research showed that out of 1.13 million Army servicemembers deployed to Afghanistan or Iraq between 2001 and 2007, only 131 seroconverted, a lower rate than among servicemembers who were not deployed to those countries, and there was only one documented case of a servicemember who had seroconverted during deployment.  Furthermore, there was no documentation of any servicemember contracting HIV through non-sexual means, and no instances of transmission through  trauma care, blood splash, transfusion, or other battlefield circumstances.  In short, the government’s explanations for its policy were contradicted by the data it generated through its own internal studies.

“A ban on deployment may have been justified at a time when HIV treatment was less effective at managing the virus and reducing transmission risks,” wrote Wynn.  “But any understanding of HIV that could justify this ban is outmoded and at odds with current science.  Such obsolete understandings cannot justify a ban, even under a deferential standard of review and even according appropriate deference to the military’s professional judgements.”  As to Modification 13, relied upon so heavily by the Air Force in this case, it “evidences a complete failure to reasonably reflect upon the information contained in the record and grapple with contrary evidence – disregarding entirely the need for reasoned decision-making.”

The court found that plaintiffs easily met the other tests for obtaining preliminary relief, showing they are likely to suffer irreparable harm if they are given medical discharges.  Such discharges would effectively require them to “out” themselves as HIV-positive when they apply for non-military employment, and the interruption of their military careers would set them back in tangible and intangible ways if they ultimately won their cases and the Air Force was ordered to take them back.

The court also endorsed Judge Brinkema’s conclusion that the balance of the equities and the public interest support requiring the Air Force to keep these men employed while their cases are pending.  As to the argument that the injunction improperly intrudes into military personnel decision-making, the court agreed with Judge Brinkema that the relief request by the plaintiffs “that Defendants adhere to their stated policies and make nonarbitrary, personalized determinations about each individual’s fitness for service did not do violence to the notion of military independence.”

Thus, the court upheld Judge Brinkema’s order that the Air Force not discharge “active-duty servicemembers because they are classified as ineligible to deploy to CENTCOM’s area of responsibility due to their HIV status.”  The court rejected the government’s ritualistic opposition to a nation-wide injunction, finding that Supreme Court precedents support such relief in a case such as this.

In a parting shot, Judge Wynn wrote, “The Government’s explanations for why it has imposed an effective ban on deploying HIV-positive servicemembers to CENTCOM’s areas of responsibility are at odds with modern science.”  After concisely summarizing the basic evidence, he commented, “the Government did not consider these realities when discharging these servicemembers, instead relying on assumptions and categorical determinations.  As a result, the Air Force denied these servicemembers an individual determination of their fitness for military service,” which violates the APA.

Lambda Legal’s lead attorney on the case is Scott Schoettes of Lambda’s Chicago office.  Outserve-SLDN’s lead attorney is Peter Perkowski, Washington, D.C.  Amicus briefs were filed on behalf of a variety of individuals and groups, represented by Winston & Strawn LLP and Dentons US LLP, as well as GLBTQ Legal Advocates & Defenders, a Boston-based public interest law firm.

 

New York Federal Judge Vacates Trump Administration “Conscience” Regulation

Posted on: November 12th, 2019 by Art Leonard No Comments

U.S. District Judge Paul A. Engelmayer issued an extraordinarily lengthy opinion on November 6, concluding that a regulation adopted by the Trump Administration’s Department of Health and Human Services (HHS) intended to protect from discrimination employees in the health care industry who refused to provide services because of their religious beliefs is invalid.   The case is State of New York v. U.S. Department of Health and Human Services, 2019 WL 5781789, 2019 U.S. Dist. LEXIS 193207 (S.D.N.Y.).

 

The lawsuit was brought by a coalition of states, cities, Planned Parenthood, and a Family Planning and Reproductive Health services organization, that stood to lose substantial federal funding for their programs if they were found to violate the regulation, which imposed substantial compliance requirements on them.  They argued that the measure violated the First Amendment’s prohibition on an “establishment of religion.”  But Judge Engelmayer, rejecting a “facial” Establishment Clause challenge, instead premised his ruling on other arguments by the plaintiffs, asserting violations of the Administrative Procedure Act (APA) and the Spending Clause and Separation of Powers requirements of the Constitution.

 

Judge Engelmayer summarized the Rule, which was adopted on May 21 (84 Fed. Reg. 23,170 – codified at 45 C.F.R. pt. 88), originally set to go into effect on July 22, to “interpret and provide for the implementation of more than 30 statutory provisions that recognize the right of an individual or entity to abstain from participation in medical procedures, programs, services, or research activities on account of a religious or moral objection.”  The statutory provisions, usually added to particular laws as amendments offered by legislators during congressional consideration of the bills, are usually referred to as “conscience provisions.” After this lawsuit was filed, HHS agreed to delay the effective date of the regulation until November 22, so it has never actually gone into effect and will not go into effect any time soon unless the government obtains a stay of Judge Engelmayer’s opinion pending an appeal.

 

Most of the conscience provisions are intended to protect employees who refuse to participate in performing abortions, sterilizations, or assisted suicides, but some go further, extending to any medical practice or procedure, and theoretically could protect employees who refuse to provide services to LGBTQ people due to religious or moral objections.  While some of the provisions were aimed specifically at licensed health care professional employees who actually perform such procedures, others could theoretically apply to any employee – such as an orderly, an ambulance driver, or anybody else employed in a supportive or administrative role – whose religious or moral beliefs would be compromised by providing the service in question.

 

In addition to describing the various statutory conscience provisions, Judge Engelmayer noted a provision in Title VII of the Civil Rights Act of 1964, which requires employers to make a “reasonable accommodation” to the religious practices or beliefs of employees, with the test of reasonableness being whether the accommodation would impose an undue hardship on the employer.  The Supreme Court has traditionally interpreted this provision to require employers to bear no more than a “de minimus” expense to accommodate religious objectors.

 

The George W. Bush administration promulgated a conscience regulation late in 2008 that was to take effect on the first day of the Obama Administration, but a legal challenge was filed and although “much of the rule” did take effect while the litigation continued, many contentious provisions were never rigorously enforced and HHS rescinded much of that Rule in 2011.

 

After taking office, President Trump issued an executive order titled “Promoting Free Speech and Religious Liberty,” which directed the Attorney General to “issue guidance interpreting religious liberty protections in federal law” and generally stating that the federal government should protect religious freedom to the extent possible under the Constitution.  On October 6, 2017, Attorney General Jeff Sessions issued a memorandum proclaiming that under the 1st Amendment’s Free Exercise Clause, an individual has “the right to perform or abstain from performing certain physical acts in according with one’s beliefs,” mentioning many of the statutory conscience provisions.  HHS then proceeded to issue a notice of proposed ruling-making to translate Sessions’ memorandum into written regulations, publishing its “final rule” on May 21, 2019.

 

Judge Engelmayer found that the 2019 Rule “substantially expands” on the 2008 Rule, applying to more than 30 conscience provisions (where the 2008 Rule applied to only three of them). He includes a detailed description of the Rule, including its very broad definition of which employees and entities are covered, a very broad definition of what counts as “discrimination,” and detailed procedures that employers in the health care field are supposed to follow to ensure that employees know about their rights to object or abstain, including requirements to certify their compliance with the Rule as a condition of receiving funding under federal programs, such as Medicare.  The stated intent of the Rules is to go as far as the Constitution and statutes allow in protecting those who object to doing their job because of religious, moral or ethical objections to particular procedures or practices by holding the loss of funding over employers who fail to accommodate religious objectors to the extent spelled out in the Rule.

 

The plaintiffs advanced five constitutional arguments against the rule.  They first argued that it violates the Establishment Clause, by forcing recipients of federal funds to “conform their business practices to the religious practices of their employees, imposing an absolute duty to accommodate such practices,” going far beyond the existing accommodation duty under Title VII of the Civil Rights Act.  Second, they argued it violates the Spending Clause because the threat to withhold all federal funding for is “unconstitutionally coercive” and because the conditions it imposes are “ambiguous, retroactive, not reasonably related to the purpose of HHS’s programs under which the funds are provided, and thus unconstitutional.”  They argued that the Rule violates the constitutional separation of powers by, among other things, empowering the executive branch to unconstitutionally impound funds that Congress has appropriated.  They also made two Fifth Amendment arguments: void for vagueness as a result of ambiguities and inconsistences with other federal laws, inviting arbitrary enforcement; and violating the due process rights of patients to privacy and liberty, in particular by interfering with patients’ ability to obtain abortions and other procedures to which some health care workers object.

 

Judge Engelmayer rejected the government’s argument that the rule was merely a “housekeeping” measure intended to consolidate enforcement of the various statutory conscience provisions by centralizing enforcement in HHS’s Office of Civil Rights and to standardize definitions and requirements that varied among the thirty statutes.  Instead, he found, the Rule made substantive changes in the law.

 

“On this threshold dispute,” wrote the judge, “there is a definite answer.  Although the 2019 Rule has housekeeping features, plaintiffs’ description of it as largely substantive – and, indeed, in key respects transformative—is correct.  And HHS’s characterization of the Rule as solely ministerial cannot be taken seriously.”  He noted that the government had actually abandoned this position during oral argument.  “Whether or not the rule was properly adopted,” he wrote, it “unavoidably would shape the primary conduct of participants through the health care industry. It would upend the legal status quo with respect to the circumstances and manner in which conscience objections must be accommodated.  And the maximum penalty the Rule authorizes for a violation of the Conscience Provisions – the termination of all of a recipient’s HHS funding, from whatever program derived – is new, too.”

 

Supporting this conclusion, Judge Englemayer explained how the rule vastly expanded employers’ religious accommodation requirements under Title VII of the Civil Rights Act, how it substantially broadened the definition of “protected activities” of religious objectors, down to the level of protecting a receptionist who might refuse to schedule a patient for a procedure to which the receptionist has ethical objections.  Unlike the statutory conscience provisions, he noted, the Rule would “for the first time” permit “abstention from activities ancillary to a medical procedure, including ones that occur on days other than that of the procedure.”  It also extended the definition of “covered entities” from health care providers to pharmacists and medical laboratories, and significantly expands the financial exposure of covered entities by authorizing draconian cut-offs of funding.

 

Judge Engelmayer decided the Rule is not a facial violation of the Establishment Clause, which would require finding that all of its provisions are unconstitutional in all their potential applications, but he acknowledged that it could be challenged “as applied” to particular situations – a test that might never arise because of his action in declaring the Rule invalid on other grounds.

 

First, the judge found that HHS did not comply with the requirements of the Administrative Procedure Act governing the adoption of regulations, by going beyond the limits of rulemaking authority.  Agencies must base their rules and regulations on statutory policy decisions expressed by Congress, and cannot engage in legislating beyond those policy decisions.  The judge found that in this Rule HHS went over the line into legislation, especially noting the way the Rule expanded definitions, covered entities, enforcement authority, and penalties.  He found that HHS did not have authority under the APA to make all of these substantive legal changes without specific authorization in the statutes.

 

The sheer scale of the Rule’s potential impact played a large part in the decision.  The judge found that the Rule “puts in jeopardy billions of dollars in federal health care funds.  In fiscal year 2018, for example,” he wrote, “the State Plaintiffs received $200 billion in federal health care funding.  New York alone received $46.9 billion. The Provider Plaintiffs similarly received hundreds of millions in funding from HHS.”  He also noted the political significance of the Rule, as it took positions beyond those actually taken by Congress on such controversial issues as abortion and assisted suicide.

 

“In a case involving economic consequences and political dynamics on such a scale,” wrote the judge, “the Supreme Court teaches that ‘we expect Congress to speak clearly’ were it to delegate rulemaking authority. . .  Far from speaking clearly here, in none of the three statutes at issue did Congress give any indication that it intended to subcontract the process of legal standard-setting to an administrative agency in particular, or HHS in particularly,” noting that the three principal statutes with Conscience Provisions don’t even mention HHS.  And, the judge rejected the government’s contention that such a delegation was “implicit” in the enactment of those conscience provisions.  He noted that the Supreme Court had rejected a similar “implicit delegation” argument in connection with its interpretation of Title VII’s accommodation provisions and the attempts by the EEOC to interpret them.

 

He also concluded that HHS did not act in accordance with law in promulgating the rule, having taken shortcuts (rather typical of the Trump Administration) in skirting the detailed procedures set out in the APA.  The two most important flaws the court found were establishing rules that conflict with Title VII, and rules conflicting with the Emergency Medical Treatment and Labor Act (EMTLA), by purporting to authorize employees with religious objections to withhold services in emergency situations.  The judge found that two basic Title VII concepts that the Rule “overrides” are key components of the specific language Congress adopted in 1972 amendments to Title VII “to address workplace religious objections.”  An agency cannot displace express statutory provisions by adopting a contrary rule.  Similarly, he noted that EMTLA “does not include any exception for religious or moral refusals to provide emergency care” and courts had declined to “read in” exceptions to that statute’s mandates, but the HHS Rule “applies in emergency-care situations,” purporting to create a “conscience exception” in a law that does not have one.

 

Also, turning to the APA’s substantive requirements, an agency that is adopting a rule that changes the law is required to document the need for such a change.  In this case, HHS just lied, claiming that there had been a substantial increase in complaints by health care employees about being forced to perform objectionable procedures or being disciplined for refusing to do so.  “In fact, upon the Court’s review of the complaints on which HHS relies,” wrote Engelmayer, “virtually none address the Conscience Provisions at all, let alone indicate a deficiency in the agency’s enforcement capabilities as to these laws.  And HHS, in this litigation, admitted that only a tiny fraction of the complaints that its Rule invoked as support were even relevant to the Conscience Provisions.  A Court ‘cannot ignore the disconnect between the decision made and the explanations given,’” he wrote, quoting from Chief Justice John Roberts’ opinion in June striking down the Trump Administration’s attempt to add citizenship questions to the 2020 Census Forms.  In that case, the Supreme Court found evidence that the Administration wanted to add the questions for political purposes, but prompted the Justice Department to come up with a phony justification invoking data needs to enforce the Voting Rights Act, even though experts in the Census Bureau warned that adding the questions would make the Census count less accurate by deterring non-citizens resident in the U.S. from participating.  He pointed out that the large majority of religiously-connected complaints received by HHS had to do with vaccinations, “which HHS admits fall outside the scope of the Conscience Provisions and the Rule.”

 

He also found unconvincing other explanations offered by HHS, and was especially critical of ways in which the Final Rule differed from the Rule as it was originally proposed and published for public comment concerning the definition of “discrimination.”  The judge concluded, in sum, that failed procedures in adopting the Rule under the APA were sufficient to invoke the court’s authority to declare the rule invalid and order it to be “vacated.”

 

But there was more, because the judge also found constitutional violations both of separation of powers and the Spending Clause.

 

Judge Engelmayer focused on the Rule’s remedial provision authorizing the termination of all HHS funding to an entity found to have violated the Rule, finding that this had not been authorized by Congress.  Thus, its adoption was a serious violation of the separation of powers.  He agreed with plaintiffs that the Rule “is inconsistent with the separation of powers because it allows HHS to withhold congressionally-appropriated federal funds to an extent that neither the [statutory] Conscience Provisions nor any other statute authorizes.  By claiming the power to do so, plaintiffs argue, HHS arrogates to itself, an executive agency, a power the Constitution allocates uniquely to Congress.”

 

Responding to this argument, the judge pointed out that an agency “must exercise its delegated spending authority consistent with specific congressional grant” and that an “agency may not withhold funds in a manner, or to an extent, unauthorized by Congress.” Thus, the remedial provision of the Rule exceeds the agency’s authority.

 

Furthermore, he found other violations specifically routed in the Supreme Court’s interpretation of the Spending Clause.  He noted four principles relevant to this case: “conditions based on the receipt of federal funds must be set out unambiguously,” the “financial inducement offered by Congress” must not be “impermissibly coercive,” the conditions must relate “to the federal interest in the project and to the overall objective thereof,” and “the power may not be used to induce the States to engage in activities that would themselves be unconstitutional.”  Judge Engelmayer found it clear that the Rule violated at least the first two of these principles, pointing to specific ambiguities and internal contradictions in the Rule. And the draconian forfeiture of all funding as a remedy for a violation of the Rule was “impermissibly coercive.”

 

Finally, he concluded that the faults he had detected merited an order to the agency to vacate the Rule.  He pointed out that it has long been “standard practice under the APA” for a court to order that a rule be vacated when the court determines that “agency regulations are unlawful.”  He quoted a Supreme Court opinion on point, stating that “regulations subject to the APA cannot be afforded the force and effect of law if not promulgated pursuant to the statutory minimum found in that Act.”  The APA itself says that a court shall “hold unlawful and set aside agency action, findings and conclusions” that the court finds to be “arbitrary and capricious, not in accordance with law, in excess of statutory authority, unconstitutional, or made without observance of procedures required by law.”

 

The judge rejected the government’s suggestion that he could go through the Rule stripping out objectionable parts and letting the rest go into effect, commenting that “the APA violations that the Court has found… are numerous, fundamental, and far-reaching.  The Court’s finding that HHS lacked substantive rule-making authority as to three of the five principal Conscience Provisions nullifies the heart of the Rule as to these statutes.  The Court’s finding that the agency acted contrary to two major existing laws (Title VII and EMTALA) vitiates substantive definitions in the Rule affecting health care employment and emergency contexts.  The Court’s finding that HHS failed to give proper notice of the definition it adopted of “discriminate or discrimination” voids that central dimension of the Rule.”  Letting a few selected provisions go into effect would “ignore the big picture: that the rulemaking exercise here was sufficiently shot through with glaring legal defects as to not justify a search for survivors.”

 

He also rejected HHS’s suggestion, common to Trump Administration arguments when courts are finding its executive actions invalid, that his order should be limited in effect to the Southern District of New York, or just to the named plaintiffs in the case, pointing out that this would lead to a proliferation of litigation around the country “to assure that such a Rule was never applied,” finding plenty of precedential support for this position in prior court of appeals opinions supporting trial court orders to vacate unlawfully promulgated rules.

 

“The Conscience Provisions recognize and protect undeniably important rights,” wrote Engelmayer.  “The Court’s decision today leaves HHS at liberty to consider and promulgate rules governing these provisions.  In the future, however, the agency must do so within the confines of the APA and the Constitution.”