ACA and RFRA: Setting the Scene

The Affordable Care Act (ACA, commonly known as Obamacare) requires employers with 50 or more employees to provide health insurance. This insurance must cover certain contraceptive methods, including the so-called “morning after” pill. However, regulations under the ACA allow non-profit religious organizations to opt-out of providing contraceptive coverage to their employees by filing a notice of their religious objection to the Department of Health and Human Services (HHS) or the insurer or third-party administrator (TPA) of their health plan. Following an organization’s opt-out, the ACA will then require the insurer or TPA to provide separately for contraceptive coverage for the objecting employer’s employees.

The Religious Freedom Restoration Act (RFRA) states that the government may not substantially burden a person’s exercise of religion unless the government satisfies the compelling interest test. The government satisfies the compelling interest test where (1) the burden’s application is in furtherance of a compelling government interest, and such application is (2) the least restrictive means of furthering that compelling interest.

In Burwell v. Hobby Lobby the Court ruled that closely-held corporations are “persons” for purposes of RFRA, therefore the government is not challenging the assertion that nonprofit religious organizations are “persons” who can exercise religion. According to Hobby Lobby, a person’s exercise of religion is substantially burdened where the person demonstrates that their sincerely held religious beliefs prohibit compliance with the law. Thus, “a religious objector is entitled to “draw a line” regarding the conduct” prohibited by his religion, and as they do so sincerely, the Court will not question whether the line is logical.

Under the First Amendment, a law that is not neutral as to religion must satisfy the compelling interest test. In Church of Lukumi v. City of Hialeh, the Supreme Court held that a law is not neutral as to religion if it selectively imposes burdens on religious groups, and the law does not impose those burdens on similar nonreligious activity. RFRA reaches further by requiring neutral, federal statutes (such as the ACA) to satisfy the compelling interest test if they substantially burden a person’s religious exercise.

 

Zubik: The Present Dilemma

 

In a series of US Circuit Court cases, religious organizations argue that opting out of providing coverage, while filing notice, violates their religious beliefs because such notification would trigger provision of coverage by the TPA or insurer. Thus, they feel that opting out would nonetheless make them complicit in providing contraceptives to their employees. Many Circuit Courts have rejected this argument. However, in September 2015, the 8th Circuit held for the religious organizations. In November 2015, the Supreme Court granted certiorari for Zubik v. Burwell to resolve this split among the circuits.

In Sharpe Holdings v. HHS, the 8^th Circuit reasoned (along the lines of Hobby Lobby) that filing notice must constitute a substantial burden on sincerely held beliefs because filing that notice would make them complicit in providing contraceptives and destroying fertilized eggs, and the court would not second-guess that belief’s logic. The court concluded that the religious organizations must prevail because opting-out by filing notice is not the least restrictive means of achieving the Government’s interests—the court found that the Government, instead of an insurer or TPA, could pay for the contraceptives through reimbursements, tax credits, etc. Indeed, Sharpe held that the Government’s assumption of the cost is “[t]he most straightforward way of doing this.”

However, the D.C. Circuit would not permit the Government’s assumption of the cost because such an approach does not further one of the ACA’s compelling interests: seamless contraceptive coverage to employees. The D.C. Circuit reasoned that, if the employer opts out by filing notice, the employee seamlessly receives coverage from “the same insurers and TPAs that are “already paying for [their] other medical and pharmacy services.”” However, if the Government were to assume the contraceptive costs for an uncovered employee, for example through reimbursements, then the employees are burdened (and coverage is no longer seamless) because they must (1) pay up-front and await reimbursement or (2) “take additional steps to obtain contraceptive coverage elsewhere.”

Accounting for Third-Party Harms: The Proposed Resolution

 

The goal of this post is not to predict the Supreme Court’s ruling in Zubik. Instead, the goal is to advocate for a shift in RFRA’s interpretation. In deciding whether a religious organization is substantially burdened, instead of (A) merely deferring to sincere religious beliefs or (B) asking a court to examine the logic of those religious beliefs, the Supreme Court should (C) account for harms to third-parties in Zubik in order to prevent the disappearance of the substantial burden requirement.

If courts, in nearly all RFRA cases, deferred to a claimant’s assertion that the government substantially burdened his sincerely-held religious beliefs, this would “rob[] RFRA of its meaning.” According to Professor Caroline Corbin, “[t]o simply assume a substantial burden whenever someone claims one exists…essentially reads out [this] requirement.”

Countless unsettling hypotheticals jump to mind: could a landlord refuse to rent to unmarried couples based on his religious belief that “facilitating [unmarried] cohabitation in any way is tantamount to facilitating sin[?]” Could an employee who requested time-off for a religious holiday successfully claim that he is substantially burdened by his employer hiring a replacement worker for that holiday, since the claimant’s request triggered that hiring?

If the Court rules for the religious organizations in Zubik, then courts seemingly must apply the compelling interest test to both hypotheticals. Moreover, what happens if the Court adopts the reasoning in Sharpe? If courts hold that where the Government’s assumption of the cost furthers the lawmakers’ interests then the government cannot meet its burden, how often will anything satisfy the compelling interest test?

The substantial burden requirement cannot be so insubstantial. As noted in US v. Lee, in order to preserve important government functions, certain claims for religious exemptions from neutral laws must fail. In Lee, the Court held that requiring an Amish employer to pay Social Security taxes did not violate the Free Exercise Clause because “[t]he tax system could not function if [religious] denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates their religious belief.”

To preserve neutral government laws, courts cannot interpret RFRA as a blank check for religious exemptions. Without a heightened substantial burden requirement in RFRA, as the 5^th Circuit warned, “the possibilities” for religious exemptions to neutrally applicable laws “are endless, but we doubt Congress, in enacting RFRA, intended for them to be.” Indeed, during its enactment, House members called for RFRA to represent a “shield to protect religious liberty” and not be used, for example through religious exemptions to antidiscrimination laws, “as a sword to attack the rights of…unmarried couples, single parents, [and] lesbians and gays.”

Courts can avoid near-constant satisfaction of the substantial burden requirement if they rule that no burden is “substantial” if granting an exception for religious individuals would impose undue harm on third parties. In this way, courts interpreting RFRA would only find a substantial burden if (1) the claimant’s sincere religious belief would be infringed upon by the government and (2) relieving such infringement would not impose undue harm on a third-party. Indeed, the Supreme Court previously (in the context of the First Amendment), in Caldor and Cutter, prohibited the government from privileging religious conduct at the expense of third parties who do not benefit from the religious exemptions.

Aside from simply reining in the Court’s interpretation of RFRA, the Court should consider third-party harms as a matter of fundamental fairness. If the Court ruled that the Government should assume the cost of contraceptive coverage, by providing reimbursements to uncovered individuals, then employees would be harmed by paying out-of-pocket for contraceptives as they await their Government’s reimbursement (and the harm from this approach is worsened where individuals lack the funds to pay up-front). Admittedly, achieving a “sensible balance” between religious and governmental interests is often a difficult process since neither interest can be exactly quantified, but exempting religious individuals from providing neutral, obligatory coverage while the rest of society covers those costs does not seem like any balance at all.