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Commonwealth of Massachusetts v. United States Department of Health and Human Services

United States Court of Appeals, First Circuit

May 2, 2019

COMMONWEALTH OF MASSACHUSETTS, Plaintiff, Appellant,
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; ALEX MICHAEL AZAR II, in his official capacity as Secretary of Health and Human Services; UNITED STATES DEPARTMENT OF THE TREASURY; STEVEN T. MNUCHIN, in his official capacity as Secretary of the Treasury; UNITED STATES DEPARTMENT OF LABOR; R. ALEXANDER ACOSTA, in his official capacity as Secretary of Labor, Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Nathaniel M. Gorton, U.S. District Judge]

          Julia E. Kobick, Assistant Attorney General, with whom Maura Healey, Attorney General of Massachusetts, Jon Burke, Assistant Attorney General, Jonathan B. Miller, Assistant Attorney General, and Elizabeth Carnes Flynn, Special Assistant Attorney General, were on brief, for appellant.

          Allan J. Arffa, Crystal Johnson, Elizabeth J. Grossman, Melina M. Meneguin Layerenza, and Paul, Weiss, Rifkind, Wharton & Garrison LLP on brief for amici curiae Planned Parenthood Federation of America, National Health Law Program, and National Family Planning and Reproductive Health Association.

          Michael J. Fischer, Chief Deputy Attorney General, Josh Shapiro, Attorney General Commonwealth of Pennsylvania, Jonathan Scott Goldman, Executive Deputy Attorney General, Aimee D. Thomson, Deputy Attorney General, Xavier Becerra, Attorney General of California, George Jepsen, Attorney General of Connecticut, Matthew P. Denn, Attorney General of Delaware, Karl A. Racine, Attorney General for the District of Columbia, Russell A. Suzuki, Attorney General of Hawai'i, Thomas J. Miller, Attorney General of Iowa, Janet T. Mills, Attorney General of Maine, Brian E. Frosh, Attorney General of Maryland, Lori Swanson, Attorney General of Minnesota, Barbara D. Underwood, Attorney General of New York, Joshua H. Stein, Attorney General of North Carolina, Ellen F. Rosenblum, Attorney General of Oregon, Peter F. Kilmartin, Attorney General of Rhode Island, Thomas J. Donovan, Jr., Attorney General of Vermont, Mark R. Herring, Attorney General of Virginia, and Robert W. Ferguson, Attorney General of Washington, on brief for amici curiae Pennsylvania, California, Connecticut, Delaware, District of Columbia, Hawai'i, Iowa, Maine, Maryland, Minnesota, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, and Washington.

          Erin Bernstein, Supervising Deputy City Attorney, City of Oakland, Laura S. Trice, Lead Deputy County Counsel, Barbara J. Parker, City Attorney, Maria Bee, Attorney, Malia McPherson, Attorney, on brief for amici curiae the City of Oakland, California. Laura S. Trice, Lead Deputy County Counsel, County of Santa Clara, James R. Williams, County Counsel, Greta S. Hansen, Attorney, Adriana L. Benedict, Attorney, on brief for amici curiae the County of Santa Clara, California. Andre M. Davis, City Solicitor, City of Baltimore, Kimberly M. Foxx, State's Attorney for Cook County, Michael N. Feuer, City Attorney of the City of Los Angeles, Charles J. McKee, County Counsel, County of Monterey, William Litt, Deputy County Counsel, County of Monterey, Zachary W. Carter, Corporation Counsel, City of New York, Marcel S. Pratt, City Solicitor, City of Philadelphia Law Department, Dennis J. Herrera, City Attorney, City and County of San Francisco, Peter S. Holmes, Seattle City Attorney, Francis X. Wright, Jr., City Solicitor, City of Somerville, Michael Jenkins, City Attorney, City of West Hollywood, on brief for amici curiae 13 Cities, Counties, and Local Agencies.

          Christopher Escobedo Hart, Emily J. Nash, and Foley Hoag LLP on brief for amicus curiae Public Health Scholars.

          Jamie A. Levitt, Rhiannon N. Batchelder, and Morrison & Foerster LLP on brief for amici curiae American Association of University Women, Service Employees International Union, and 12 Additional Professional, Labor, and Student Associations.

          Diana Kasdan, Center for Reproductive Rights, and Jon M. Greenbaum, Lawyers' Committee for Civil Rights Under Law, on brief for amici curiae Center for Reproductive Rights, Lawyers' Committee for Civil Rights Under Law, California Women's Law Center, GLBTQ Legal Advocates & Defenders, Lawyers' Committee for Civil Rights and Economic Justice, Legal Momentum, Legal Voice, Mississippi Justice Center for Justice, National Center for Lesbian Rights, Women's Law Project.

          Jessie J. Rossman, Matthew R. Segal, ACLU Foundation of Massachusetts, Inc., Brigitte Amiri, ACLU Foundation of New York, Kate R. Cook, and Sugarman Rogers, on brief for amici curiae American Civil Liberties Union, American Civil Liberties Union of Massachusetts, Anti-Defamation League, Leadership Conference on Civil and Human Rights, NARAL Pro-Choice Massachusetts, and National Urban League.

          M. Duncan Grant, Benjamin J. Eichel, and Pepper Hamilton LLP, on brief for amici curiae The Guttmacher Institute.

          Naomi D. Barrowclough, Jeffrey Blumenfeld, Lowenstein Sandler LLP, Fatima Goss Graves, Gretchen Borchelt, Sunu Chandy, Michelle Banker, National Women's Law Center, Sequoia Ayala, Jill Heaviside, Sisterlove, Inc., Jane Liu, National Asian Pacific American Women's Forum, on brief for amici curiae National Women's Law Center, National Latina Institute for Reproductive Health, Sisterlove, Inc., and National Asian Pacific Women's Forum.

          Bruce H. Schneider, Michele L. Pahmer, Gilana Keller, and Stroock & Stroock & Lavan LLP, on brief for amici curiae the Health Professional Organizations, American Nurses Association, American College of Obstetricians and Gynecologists, American Academy of Nursing, American Academy of Pediatrics, and Physicians for Reproductive Health.

          Ernest A. Young on brief for amicus curiae Professor Ernest A. Young.

          Karen Schoen, Attorney, Appellate Staff, Civil Division, U.S. Department of Justice, with whom Joseph H. Hunt, Assistant Attorney General, Andrew E. Lelling, United States Attorney, Hashim M. Mooppan, Deputy Assistant Attorney General, and Sharon Swingle, Attorney, Appellate Staff, were on brief, for appellees.

          Before Torruella, Lynch, and Thompson, Circuit Judges.

          TORRUELLA, CIRCUIT JUDGE. [1]

         The Commonwealth of Massachusetts brought suit on October 6, 2017, to enjoin the enforcement of two federal Interim Final Rules (together, the "IFRs") promulgated by the United States Departments of Health and Human Services ("HHS"), Labor, and the Treasury (the "Departments"), which were to become effective that day. See Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 82 Fed. Reg. 47, 792 (Oct. 13, 2017); Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 82 Fed. Reg. 47, 838 (Oct. 13, 2017).

         The IFRs permitted employers with religious or moral objections to contraception to obtain exemptions from providing health insurance coverage to employees and their dependents for Food and Drug Administration ("FDA")-approved contraceptive care. Such coverage would otherwise be required by guidelines issued pursuant to a provision in the Affordable Care Act, subject to the limitations imposed by the Supreme Court in Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014).

         These IFRs were superseded by final rules (the "Final Rules"), promulgated on November 15, 2018, with an effective date of January 14, 2019. Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 Fed. Reg. 57, 536 (Nov. 15, 2018); Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 Fed. Reg. 57, 592 (Nov. 15, 2018).

         After both sides here moved for summary judgment, the district court determined that Massachusetts lacked standing to challenge the IFRs. Massachusetts v. U.S. Dep't of Health & Human Servs., 301 F.Supp.3d 248, 266 (D. Mass. 2018). And so, it did not reach the merits of the Commonwealth's challenges or its prayer for injunctive relief. The Commonwealth appealed.[2]

         The issue on appeal is narrow: whether the Commonwealth has Article III standing to challenge the rules. We hold that it does. Specifically, we conclude that: (1) in agreement with the position of the United States, the Commonwealth's substantive challenges have not been mooted by the promulgation of the Final Rules, but the Commonwealth's procedural challenge to the IFRs has been mooted; and (2) the Commonwealth has established Article III standing to challenge the substance of the rules by demonstrating a sufficiently imminent fiscal injury under a traditional standing analysis (and so we do not reach the Commonwealth's alternative parens patriae standing argument).

         I.

         A. Factual Background

         1. The Affordable Care Act and the Contraceptive Care Requirement

         The Affordable Care Act requires employer-sponsored health plans to provide coverage for a range of preventive care and related medical services at no cost to the covered employee. See 42 U.S.C. § 300gg-13(a).[3] A provision commonly known as the Women's Health Amendment requires coverage for, "with respect to women, such additional preventive care and screenings . . . as provided for in comprehensive guidelines supported by the Health Resources and Services Administration."[4] Id. § 300gg-13(a)(4).

         While the Women's Health Amendment did not indicate the additional preventive care services that must be covered, it instructed the Health Resources and Services Administration ("HRSA"), part of HHS, to determine the specifics of such required care and services. See 155 Cong. Rec. 511, 987 (daily ed. Nov. 30, 2009) (Senate Amendment 2791).

         In August 2011, HRSA accepted the recommendations of the Institute of Medicine ("IOM") and issued guidelines requiring insurance coverage, at no cost to users, of all "Food and Drug Administration . . . approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity." Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act, 77 Fed. Reg. 8, 725, 8, 725 (Feb. 15, 2012) (quoting HRSA Guidelines, http://www.hrsa.gov/womens-guidelines). In its report, the IOM made extensive factual findings about contraceptive care and public health outcomes. See Institute of Medicine, Clinical Preventive Services for Women: Closing the Gaps (2011). Plans within the guidelines' ambit had to provide such contraceptive coverage for plan years starting on or after August 1, 2012.[5] See 77 Fed. Reg. at 8, 725-26.

         2. The Departments' Regulations and Related Litigation from 2010 to 2016

         Concurrently, the Departments promulgated regulations, which became final in February 2012, that provided an exemption from the requirement to provide contraceptive coverage to "churches, their integrated auxiliaries, and conventions or associations of churches" with religious objections to contraception. 76 Fed. Reg. at 46, 623; see also 77 Fed. Reg. at 8, 725.

         Later regulations also created what the Departments termed an "accommodation" process. Coverage of Certain Preventive Services Under the Affordable Care Act, 78 Fed. Reg. 39, 870 (July 2, 2013). This process allowed nonprofit organizations, including colleges and universities, to submit a form to their health insurance issuers asserting their religious objections to contraception. See id. at 39, 874-77. The insurance issuer was then required to remove contraceptive coverage from the objecting organization's plan, but still had to provide contraceptive coverage to members of the plan (without directly involving the objecting organization) (the "Accommodation"). Id. at 39, 875-80.

         On June 30, 2014, the Supreme Court held in Hobby Lobby that the contraceptive regulatory requirement as applied to closely held corporations violated the Religious Freedom Restoration Act ("RFRA"), 42 U.S.C. § 2000bb-1 et seq. 573 U.S. at 736. That was because the regulations "clearly impose[d] a substantial burden" on closely held employers who had religious objections to contraception, and the regulations were not the least restrictive means of furthering a compelling government interest (assuming arguendo that one existed). Id. at 726, 730-32. The Supreme Court noted that the Accommodation already available to nonprofit organizations with religious objections was less restrictive than "requiring employers to fund contraceptive methods that violate their religious beliefs." Id. at 730.

         After Hobby Lobby, the Departments issued a new rule in 2015 which allowed "Closely Held for-Profit Entit[ies]" who had religious objections to providing contraceptive coverage to use the Accommodation process described above. Coverage of Certain Preventive Services Under the Affordable Care Act, 80 Fed. Reg. 41, 318, 41, 323 (July 14, 2015).

         Nevertheless, numerous religious nonprofit organizations sued to obtain an exemption similar to that provided to churches rather than the more limited Accommodation process (which still allowed for contraceptive coverage for employees of the objecting organizations). Nine circuits considered the issue from late 2014 to early 2016. Eight circuits held that the Accommodation did not substantially burden religious exercise; one held that it did.[6] The Supreme Court granted certiorari in some of these cases (from the Third, Fifth, Tenth, and D.C. Circuits). In a per curiam opinion, it vacated and remanded, instructing that the parties "be afforded an opportunity to arrive at an approach going forward that accommodates petitioners' religious exercise while at the same time ensuring that women covered by petitioners' health plans receive full and equal health coverage, including contraceptive coverage." Zubik v. Burwell, 136 S.Ct. 1557, 1560 (2016) (per curiam) (internal quotation marks omitted).

         After Zubik, the Departments sought comment in July 2016 through a request for information, seeking alternative ways in which the contraceptive coverage mandate and employers' religious beliefs could coexist. Coverage for Contraceptive Services, 81 Fed. Reg. 47, 741, 47, 741 (July 22, 2016). The Departments ultimately stated that, though they received 54, 000 public comments after this request, "includ[ing] [from] the plaintiffs in Zubik, . . . consumer advocacy groups, women's organizations [and] health insurance issuers," by September 20, 2016, "no feasible approach has been identified at this time that would resolve the concerns of religious objectors, while still ensuring that the affected women receive full and ...


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