On July 11, 2013, the Fourth Circuit Federal Court of Appeals unanimously affirmed the 2010 decision of district court judge Norman Moon dismissing a case brought by Liberty University and several individual plaintiffs challenging the Affordable Care Act.   The Fourth Circuit had rejected Liberty’s appeal in a 2011 decision, holding that Liberty’s case challenging the individual mandate was barred by the tax Anti-Injunction Act (AIA), which prohibits lawsuits enjoining the collection of a tax.

That Fourth Circuit decision had been vacated, reversed, and remanded by the Supreme Court, however, after it rejected the AIA argument in the National Federation of Independent Business case.  The Supreme Court’s NFIB decision upheld the individual mandate but remanded Liberty University’s case to the Fourth Circuit to decide the remaining issues in the case:  whether the employer mandate is constitutional and whether the ACA violated Liberty University’s religious liberty rights or the First Amendment’s Establishment Clause.  On remand, Liberty University attempted to add several other issues to the case, including an Origination Clause claim and a challenge to HHS regulations requiring coverage of contraceptives.  This history has been described in earlier posts.

Anti-Injunction Act.  The court began by rejecting the government’s defense that Liberty University’s employer mandate claim was barred by the AIA. Although the court recognized that the employer mandate provision labels the exaction that enforces it a tax at a couple of places, it held that the mandate penalty was nonetheless not a tax for purposes of the AIA.  Having been burned once on the AIA issue, the court was not about to decide the case on this basis again.  The court also held that both Liberty University and the individual plaintiffs had standing to sue because, even though the ACA requirements are not yet in effect — and the employer mandate will not be until 2015 — the plaintiffs already have to make arrangements to prepare for them.

Commerce Clause.  But having let the plaintiffs in the courthouse door, the court threw them back out again.  First, the court held that the employer mandate “is simply another example of Congress’s longstanding authority to regulate employee compensation offered and paid for by employers in interstate commerce.”  Unlike the individual mandate found to exceed Congress’s Commerce Clause power in the NFIB case, the employer mandate does not seek to create commercial activity where none had previously existed, but rather to regulate an employer already engaged in commerce.  The court also rejected the plaintiff’s argument that the law required employers to purchase an unwanted product, as employers can always self-insure.  The employer mandate regulates employee health benefits, a term of employment that substantially affects interstate commerce by addressing the national problem of the uninsured, and also affects the interstate mobility of workers.

Taxing Power.  The Fourth Circuit further held that the employer mandate could be separately upheld under Congress’ power to tax.  Relying on the analysis applied to the individual mandate by the Supreme Court in NFIB, the court found that the exaction enforcing the employer mandate was a lawful tax rather than a penalty.

Religious Freedom.  The court then turned to the plaintiffs’ religious rights arguments under the  Constitution’s First and Fifth Amendments and the Religious Freedom Restoration Act (RFRA).  Specifically, the plaintiffs claimed that the law violated their beliefs that “they should play . . .  no part in facilitating, subsidizing, easing, funding, or supporting . . . abortions.”  The court held first that the ACA did not violate the plaintiffs’ religious freedom rights under the First Amendment because it was a “valid and neutral law of general applicability.”  This is all the Supreme Court requires of a law to be valid under the Constitution.

The court went on to hold, however, that the ACA also meets the more demanding test of RFRA — that a federal law not substantially burden the free exercise of religion unless it is the least restrictive means of achieving a compelling governmental interest — because the plaintiffs provided “no plausible claim” that the law forced them to facilitate or support abortion in any way.  Neither the individual nor the employer mandate required the plaintiffs to purchase or provide a health plan that covers abortion.  Not even taxes paid by the plaintiffs would go to fund abortions because the ACA, “contains strict safeguards at multiple levels to prevent federal funds from being used to pay for . . . abortion services,” except in cases of rape, incest, or endangerment of the life of the mother.

The court next addressed the plaintiffs’ claims that the individual mandate’s two religious exemptions violated the Establishment Clause and the Fifth Amendment’s Equal Protection Clause.  Citing Supreme Court precedent, the court held that the ACA’s narrow religious conscience and health care sharing ministry exemptions serve a secular purpose, do not primarily advance or inhibit religion, and avoid excessive entanglement with religion. The religious conscience exemption merely extends an exception to the Social Security and Medicare requirements for religious groups (such as the Amish or Hutterites)    that reject all insurance and take care of the needs of their members within the church; this exception has been repeatedly upheld by the courts.  The health care sharing ministry exemption, which only recognizes ministries that have existed since 1999, ensures that sharing ministries possess “the reliability that comes with historical practice” and have not been formed to circumvent the ACA.  The court also found a rational basis for upholding both exceptions under the Equal Protection Clause.

Finally, the court turned to the plaintiff’s challenge to the contraceptive regulations.  The court noted that the plaintiffs had not challenged these regulations before the district court, on their first appeal, or in their Supreme Court briefs, and that it was too late to raise the issue now.  The court observed in a note that the contraceptives the plaintiffs challenged — including Plan B, Ella, and IUDs — did not act until after implantation, and thus under federal law did not cause abortions.  They were not, therefore, covered by the plaintiffs’ original complaint.  The court noted that numerous other courts are struggling with the contraceptive requirement, and there was no justification for it to get involved in the issue this late in the day.

Origination Clause.  The court also declined to rule on the plaintiffs’ Origination Clause claim, which had also been raised too late.