Sharpe Holdings, Inc. v. United States Department of Health and Human Services

CNS International Ministries, Inc. (CNC) and Heartland Christian College (HCC), both nonprofit religious organizations, requested an injunction enjoining the government from enforcing certain provisions of the Patient Protection and Affordable Care Act (ACA).

Both organizations had strong Christian identities and were against abortion, including methods of contraception that they viewed as equivalent to abortion due to their effect of preventing an already fertilized egg from developing. Under the authority of the ACA, the U.S. Department of Health and Human Services (HHS) issued guidelines providing a contraceptive mandate that stated that employers must cover all approved contraceptive methods. Any employer that offered employees a group health plan, as both CNS and HCC did, would be penalized $100 a day per affected individual if it did not comply with the contraceptive mandate.

The ACA provided an exemption from the contraceptive mandate for group health plans sponsored by religious employers, which neither organization qualified as. However, it also provided an “accommodation” for some religious organizations that did not qualify for the exemption. The accommodation allowed these organizations to contract with third-party administrators by completing several forms authorizing the administrator to provide contraceptive coverage to those under the religious organizations’ group health plans. CNC and HCC argued that the contraceptive mandate and the accommodation process imposed a substantial burden on their exercise of religion in violation of the Religious Freedom Restoration Act as well as the First Amendment to the U.S. Constitution. They further argued that the government was coercing them to violate their religious beliefs without furthering a compelling government interest.

The District Court issued a preliminary injunction enjoining the government from enforcing the ACA regulations regarding the contraceptive mandate against CNS and HCC. The government appealed.

The Court affirmed the District Court’s issuance of a preliminary injunction and held that CNS and HCC were likely to succeed on the merits of their challenge to the contraceptive mandate and the accommodation regulations. They had established both that there was a substantial burden on their exercise of their religion and that the government’s actions were not the least restrictive means of achieving its compelling interests.

The Religious Freedom Restoration Act provides that a federal law may not “substantially burden a person’s exercise of religion” unless the government shows that the burden is in furtherance of a compelling interest and is the “least restrictive means” of furthering that interest. Government action is considered to substantially burden the exercise of religion when it coerces a person into violating their beliefs or functions as a punishment for their beliefs. The government argued that the accommodation was not a substantial burden because CNS and HCC were not complicit in carrying out the mandate; instead, the third-party administrators were obligated under the ACA to provide the coverage at issue. However, the Court found that the government imposed a substantial burden on CNS and HCC due to the financial penalties imposed on them if they did not follow the contraceptive mandate.  Both organizations sincerely felt that complying with the accommodation process would violate their religious beliefs; the Court did not inquire into the reasonableness of that belief and ruled that the process was a substantial burden.

The Court also found that although the government had compelling interests in safeguarding public health and ensuring women had equal access to health care, it did not prove the mandate and accommodation process were the least restrictive means of achieving these interests. The Court pointed to other alternatives such as the government itself assuming the cost or making contraceptives available through its own healthcare exchanges.

“In light of CNS and HCC’s sincerely held religious beliefs, we conclude that compelling their participation in the accommodation process by threat of severe monetary penalty is a substantial burden on their exercise of religion. See Hobby Lobby, 134 S. Ct. at 2778 (‘Arrogating the authority to provide a binding national answer to this religious and philosophical question, [the government] in effect tell[s] the plaintiffs that their beliefs are flawed. For good reason, we have repeatedly refused to take such a step.’). That they themselves do not have to arrange or pay for objectionable contraceptive coverage is not determinative of whether the required or forbidden act is or is not religiously offensive. See id. at 2778; Thomas, 450 U.S. at 715. We thus conclude that CNS and HCC have shown a substantial likelihood of success on the merits of their claim that the contraceptive mandate and accommodation process impose a substantial burden on their religious beliefs. “The government has asserted that its compelling interests in safeguarding public health and in ensuring that women have equal access to health care are furthered by the contraceptive mandate and the accommodation process.” Page 20.