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Healthcare Business News
 

Court grants Michigan firm relief from ACA contraceptive mandate


By Matt Dunning, Crain's Business Insurance
Posted: November 2, 2012 - 12:00 pm ET
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A federal judge in Michigan has granted a preliminary injunction blocking the government from forcing a family-owned outdoor power equipment company to include contraception coverage in its employee health benefits.

Weingartz Supply Co. and its owner, Daniel Weingartz, sued the U.S. Department of Health and Human Services in May over provisions of the Patient Protection and Affordable Care Act that require most employers to provide cost-free coverage for birth control prescriptions, sterilization, preventive screenings and other forms of women's reproductive care.

In the lawsuit, filed May 17 in the U.S. District Court for the Eastern District of Michigan, Mr. Weingartz claimed he designed his Utica, Mich.-based company's employee health insurance plan specifically to align with his faith as a practicing Catholic, which precludes him from incorporating contraceptives of any kind into his employees' coverage.

Mr. Weingartz's lawsuit argued that the law's contraception mandate violates his company's rights under the Religious Freedom Restoration Act and — by logical extension — the First Amendment of the U.S. Constitution, echoing similar complaints from predominantly Catholic employers filed in several other federal district courts during the past 12 months.

On Wednesday, Judge Robert Cleland agreed to grant Mr. Weingartz a preliminary injunction, largely on the basis that the lawsuit would likely not be decided until after Jan. 1, 2013, the date by which Weingartz Supply would need to alter its employee health plan or pay penalties.

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'Sincere exercise of religious beliefs'

“The harm in delaying the implementation of a statute that may later be deemed constitutional must yield to the risk presented here of substantially infringing the sincere exercise of religious beliefs,” Judge Cleland said in his decision, noting that while the federal government's interest likely would be harmed by way of the injunction, “the balance of harms tips strongly in Mr. Weingartz' favor.”

“The government will suffer some, but comparatively minimal harm if the injunction is granted,” Judge Cleland said.

The coverage requirement for contraception for most employers goes into effect for plan years that begin on or after Aug. 1, 2012. Religious organizations, such as churches that primarily employ those with the same beliefs, are exempt from the mandate. In March, HHS announced a temporary “safe harbor” exemption for nonprofit affiliates of religious organizations lasting until August 2013.

By then, HHS has said it plans to have issued further guidance regarding permanent accommodations for nonprofit religious affiliates.

Legatus, an Ave Maria, Fla.-based nonprofit business group for Catholic employers, of which Mr. Weingartz is a long-term member, also sought an injunction in the lawsuit but was denied. The nonprofit group currently lacks standing to challenge the law, Judge Cleland ruled, because it is shielded from implementing the required changes to its benefits plan by the temporary safe harbor rule.

Second ruling in favor of for-profit employers

The decision in favor of Mr. Weingartz marks the second time a federal court has temporarily blocked the PPACA contraception mandate for a secular, for-profit employer claiming that the law infringes on its right to freely exercise its religious beliefs.

Hercules Industries Inc., a Denver-based heating and air conditioning company, was granted a preliminary injunction in July in the U.S. District Court for the District of Colorado.

However, the circumstances of the two rulings were markedly different. In Colorado, Judge John Kane ruled that the government had failed to demonstrate a legally compelling interest in applying the mandate to Hercules Industries. In particular, Judge Kane said the law's exemption for “grandfathered” health plans — plans in effect prior to March 23, 2010 — from the requirement “completely undermines” any justification for enforcing the law on Hercules Industries individually.

On Wednesday, Judge Cleland disagreed, noting that the exemption was intended to effect the gradual implementation of the PPACA's provisions, and that it “seems to be a reasonable plan for instituting an incredibly complex health care law while balancing competing interests.”

Moreover, Judge Cleland said that Mr. Weingartz and the government had demonstrated some likelihood of winning the case on the merit of their arguments, though “not a strong likelihood.”


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