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.”