Catholic Benefits Association Wins HHS Reprieve
Recent court decision was a win for religious freedom
BY Joan Frawley Desmond
June 29-July 12, 2014 Issue | Posted 6/24/14 at 4:45 PM
OKLAHOMA CITY — On June 4, Bob Gallagher, the owner and CEO of Good Will Publishers, received the news that he had been praying for: His family company, along with the hundreds of other Catholic employers that joined a class-action lawsuit against the federal Health and Human Services’ mandate, had obtained relief from a U.S. district court in Oklahoma City.
The class-action lawsuit was brought by the Catholic Benefits Association (CBA), an umbrella group for Catholic employers with either group health insurance or self-funded health plans that are morally compliant with Catholic teaching.
In his 21-page ruling that provided injunctive relief, U.S. district court Judge David Russell found that the for-profit and nonprofit Catholic plaintiffs would likely win on the merits of their claim that the HHS mandate violated their free-exercise rights under the Religious Freedom Restoration Act. He barred the federal government "from any effort to apply or enforce" the law against the 459 Catholic employers and 1,953 parishes that are members of the Catholic Benefits Association.
Archbishop William Lori of Baltimore, the president of the board of the Catholic Benefits Association, applauded the ruling as a first step in a promising new initiative that is designed both to provide affordable health insurance that complies with Church teaching and to defend the right of Catholic employers to choose plans in accord with their moral beliefs.
"We formed the Catholic Benefits Association to support Catholic employers in providing quality, cost-competitive, morally compliant health-care benefits for their employees. Yesterday’s decision makes this a reality," said Archbishop Lori in a statement released after the ruling.
In an interview with the Register, Archbishop Lori explained that the Catholic Benefits Association "owns the Catholic Insurance Co., which provides claims administration and stop-loss coverage for Catholic employers of self-funded plans."
He said that the Catholic Benefits Association opened its doors in February and quickly attracted a flood of members. Archbishops Paul Coakley of Oklahoma City, Charles Chaput of Philadelphia and Peter Sartain of Seattle are also on the board.
"Catholic employers are coming together, yoking our buying power to work through a third-party administrator and to do so in a way that is morally compliant," he said.
Filed in March, the class-action lawsuit brought by the Catholic Benefits Association represents three groups of plaintiffs: "exempted" dioceses and archdioceses, Catholic nonprofits that received an "accommodation" from the White House that the U.S. bishops have deemed to be unacceptable and for-profit family companies that received no relief from the government.
Judge Russell rejected the government’s argument that the CBA lacked standing to represent all its members in the lawsuit. The court found that "because the CBA’s members are so uniform in their beliefs — particularly their beliefs that contraceptives are objectionable — the court finds that the CBA can properly present its members’ claims in this case such that the participation of the individual members of the CBA is not required."
Martin Nussbaum, general counsel for the Catholic Benefits Association, emphasized that the ruling was especially important because it advanced an urgent broader mission to provide solutions for Catholic business owners like Bob Gallagher, who have run out of options for affordable, morally compliant health insurance.
"This opinion establishes that the Catholic Benefits Association has associational standing to bring claims on behalf of its hundreds of member employers, each of whom now enjoys the freedom to provide health-care benefits to employees consistent with Catholic values — unless another court overturns that decision," Nussbaum told the Register.
But the legal victory also points to a second, equally promising advance for Catholic employers like Gallagher, who lives in North Carolina — one of 30 states that require employers to provide contraception in their employee health plans.
Russell’s ruling does not formally affect North Carolina’s contraceptive mandate, but it gives Gallagher a path for dealing with it, said Nussbaum. Now, with the establishment of the Catholic Benefits Association and the Catholic Insurance Co., Good Will Publishing can participate in a self-funded plan that will not be subject to the state mandate. Group insurance is subject to state and federal mandates, but self-funded plans are not.
In short, said Nussbaum, CBA litigants get an exemption from the federal mandate, while self-funded plans obtained through the Catholic Insurance Co. shield Catholic employers from compliance with state mandates.
In his ruling, Russell did not address the likely impact of his decision on the Catholic Benefits Association and its future mission. Rather, he focused on the technical issue of standing and then turned to the merits of the plaintiffs’ argument that the HHS mandate violated their free-exercise rights under the Religious Freedom Restoration Act (RFRA).
Citing legal precedent — including decisions in favor of Hobby Lobby’s legal challenge to the mandate, which was awaiting a decision from the U.S. Supreme Court as of press time — the judge essentially agreed with the plaintiffs and rejected the government’s argument that a temporary injunction would undermine the public-health goals of the federal mandate and result in harm to the plaintiffs’ employees.
"Defendants contend that there is inherent harm in prohibiting them from enforcing the challenged regulations against these plaintiffs. Yet defendants have already exempted health plans covering millions of others, including those plans of many religious organizations," stated Russell in his decision, which expressed skepticism about the government’s argument.
"By comparison, the harm posed to these plaintiffs absent relief is quite tangible — they will either face severe monetary penalties or be required to violate their religious beliefs."
However, Russell rejected a similar claim from a number of dioceses and archdioceses that had joined the lawsuit. They had argued that the federal law burdened their religious freedom, in part, by effectively creating a two-tier health-insurance system for exempted places of worship and non-exempted charities and schools. But the judge did not agree with this claim and simply noted that dioceses were exempt from compliance with the mandate.
The Religious Freedom Restoration Act directs the government to enact laws that do not burden the free exercise of religion without a compelling state interest. Once that threshold has been met, the government must choose the least burdensome means of advancing its interests.
‘Ideal Vehicle for Us’
Gallagher, the CEO of Good Will Publishing, which owns Saint Benedict Press, is waiting to see if the government appeals Russell’s decision. But for now, he is relieved to have a favorable decision — and to have an affordable health-insurance plan that reflects his beliefs.
"We have been very active on this issue for a number of years," said Gallagher, who added that when his last plan had unexpectedly added abortion services, Good Will had been forced to change to a much more expensive plan.
"The CBA is the ideal vehicle for us," he concluded. "When I heard about it, I said, ‘Wow, this is what I have been saying needed to be done for a long time.’"
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