Government hits pause on nonprofit mandate

It’s a tale as old as 2011: The government is revisiting its regulation of nonprofits under Obamacare’s contraceptive and abortifacient mandate, for at least the eighth time. Last week the Federal Register posted a “request for information,” seeking input from all parties on a possible alternative to the current mandate.

The action puts on hold the dozens of pending nonprofit cases in the lower courts. That’s where the Supreme Court sent the Little Sisters of the Poor’s challenge, along with every other nonprofit, in May. The high court, apparently tied over the matter, told the federal government and the nonprofits to work out a deal themselves in lower courts.

In June, the lawyers representing dozens of nonprofits did meet with Justice Department (DOJ) lawyers to begin work on a settlement. But then last week the DOJ lawyers announced in court filings across the country the “request for information,” and asked courts to take no action in the meantime. The nonprofits’ lawyers found out the day before the announcement.

The process to create a new regulation is agonizingly slow: First the government issues the “request for information,” then proposes a new regulation, then has a time for “public comment” before the regulation is revisited. Finally, if the government doesn’t make any changes, the regulation goes into effect.

The federal government will collect “information” until Sept. 20. In the past, it has taken months or a year for the Department of Health and Human Services (HHS) to issue an updated “accommodation,” so it’s possible a new regulation wouldn’t appear until after the presidential election—which will determine the status of the Supreme Court’s ninth justice.

According to the RFI, the government is taking this new regulatory action in order to address a “wide variety of stakeholders,” including objecting nonprofits who hadn’t filed lawsuits or who might want a different settlement than whatever lawyers hash out in court.

So far the nonprofits are fine with the delay in their cases. Several filed responses in court, acquiescing to the government’s proposal to put the cases on hold. Kevin Theriot, a lawyer with Alliance Defending Freedom, which represents several of the nonprofits, said his clients aren’t “in a huge hurry” and noted a new administration might approach the regulations differently. The contraceptive mandate is a regulation, not a law, so a new administration could change the mandate without congressional action.

“As long as they’re not enforcing [the mandate] against us and we’re negotiating, I’m optimistic we might come to a better solution,” Theriot said.

Mark Rienzi, a top lawyer with the Becket Fund for Religious Liberty who represents the Little Sisters among others, said Becket’s lawyers will continue to negotiate with government lawyers while HHS works on a potential new regulation.

“We think there are a lot of ways to do this without involving nuns, and we have no objection to the government looking for more information on that,” said Rienzi, adding, “We think the government could’ve done that a long time ago.”

The current “accommodation” for nonprofits is complex, addressing a variety of insurance scenarios. Boiled down, it requires the nonprofits to sign a government form stating their objection to the mandate and authorizing the government to use their insurers or a third party administrator (TPA) to provide the objectionable drugs to the nonprofit employees, theoretically without cost to the employer. One insurance scenario the government isn’t sure how to address is self-insured organizations—the Supreme Court also never addressed self-insured organizations in its ruling on the matter.

The nonprofits are concerned with one part of the government’s recent filing. The government wrote that while the cases are on hold, it has the authority to notify “plaintiffs’ issuers and TPAs of their obligation to make separate payments for contraceptives under the accommodation.”

“[T]he government fails to provide any support for its assertion,” responded Timothy Belz, the lawyer for CNS International Ministries and Heartland Christian College, in a court filing.

Jones Day, the firm that represents most of the Catholic nonprofits challenging the government, filed a similar response to the government’s latest move: “[T]he basis for the government’s asserted regulatory authority remains unclear, as does the mechanism by which issuers or TPAs would ‘make or arrange’ the contemplated ‘payments.’”

But the government can only take that action with nonprofit insurers if the objecting nonprofits have notified the government of who their insurers or TPAs are. Most of the objecting nonprofits have not.

The government seemed annoyed about having to work out another solution after winning most of its cases in the lower courts. That comes through in one passive-aggressive section of the new request for information, which recites the number of victories (eight) the federal government won on the matter in the federal circuit courts. Then it states, “Nevertheless, the departments also are committed to respecting the beliefs of religious employers that object to providing contraceptive coverage. … Consistent with that approach, the departments are issuing this Request for Information (RFI).”