December 05, 2012
An Important Mandate Decision: EDNY Holds Standing and Ripeness Requirements Satisfied
The United States District Court for the Eastern District of New York has denied in part and granted in part the federal government's Rule 12(b)(1) motion to dismiss the complaint of the Roman Catholic Archdiocese of New York, Catholic Health Care Systems, the Roman Catholic Diocese of Rockville Centre and Catholic Charities, and Catholic Health Services of Long Island (CHSLI). The case is important on the issues of standing and ripeness, inasmuch as it goes in a different direction from several other courts that have addressed these questions. The plaintiffs operate self-insured health plans which they believe do not qualify for grandfathered status, though they all do qualify for the safe harbor (meaning that no enforcement would occur against them until January 1, 2014). The decision is complicated and has several moving parts. Here's the scoop, after the break.
After reviewing the dispositions of the 6 Mandate cases which have to date been resolved on jurisdictional grounds -- and all of which dismissed without prejudice the claims of organizations which qualified for the safe harbor -- the court turned to standing.
First, the court noted that the Second Circuit's injury in fact standing threshold is "low."
Second, the court declined to dismiss the complaint of plaintiff Catholic Health Care Systems ("ArchCare") on the issue of adequate pleading: it held that ArchCare had sufficiently alleged facts to establish that it did not qualify for grandfathered status. But the court dismissed the complaints of the Rockville Centre Diocese and Catholic Charities because it could not tell from the complaint and affidavits whether or not their plans qualified for grandfathered status.
Third, the court declined to dismiss the complaint of the Archdiocese and ArchCare on the basis of the government's claim that these plaintiffs had not adequately pleaded the fact that they do not cover contraceptive services.
Fourth, the court held that the safe harbor did nothing to reduce the certainty of the future application of the Mandate against the remaining plaintiffs: "All the safe harbor does is postpone the date by which plaintiffs must comply with the Coverage Mandate or suffer penalties. That deadline is looming and certain."
Fifth, and this one is the key move, the court addressed the claim that the plaintiffs' injuries are unlikely to occur because of the Advance Notice of Proposed Rulemaking, inasmuch as the government has stated that it plans to change the rule before the end of the safe harbor. Here's the critical language from the court (citations and footnotes omitted):
In addressing the significance of the ANPRM, the Court must navigate between two competing considerations. On one hand, an agency should not be allowed to burden regulated entities with prospective regulation but be able to avoid judicial review of the regulation simply by representing that its view has not finalized and that the regulation may be amended . . . . On the other hand, a plaintiff should not be able to manufacture standing by merely asserting a need to prepare for uncertain future harms because, as defendants argue, "[s]uch reasoning would gut [the] standing doctrine." With these concerns in mind, the Court turns to the operation of the ANPRM and the specific harms to plaintiffs.
The Court will assume that the Departments issued the ANPRM in good faith and not as litigation posturing . . . . But the ANPRM is not a "formally announced change to official government policy." Despite defendants' attempt to characterize the ANPRM as a binding promise not to enforce the Coverage Mandate, the fact is that the ANPRM does not prevent the Coverage Mandate, as it currently exists, from going into effect. It is not a change in policy; it merely seeks input to allow the Departments to consider possible revisions to the Coverage Mandate. The Departments need not make any changes to the Coverage Mandate to accommodate religious groups at all. In this light, the Court finds that plaintiffs' claimed future injuries are certainly impending. The law as it currently written requires that, beginning January 1, 2014, plaintiffs must either pay onerous fines or provide contraceptive coverage in violation of their beliefs. The Departments may alter the Coverage Mandate before that time, but the possibility of a change in the law does not mean that a requirement that will become effective by operation of law is not certainly impending . . . . Thus, plaintiffs' future injuries are sufficiently imminent to constitute injuries in fact. Further, as long as an "agency's act creates a substantial probability of an injury in fact, the causation requirement of Article III is satisfied." By issuing the Coverage Mandate, the Departments have created a substantial possibility of enforcement and, for the reasons discussed, the ANPRM does nothing to eliminate it. Therefore, the Court concludes that, notwithstanding the ANPRM, plaintiffs have standing to bring this suit based on their future injuries.
The possibility of a future amendment to the Coverage Mandate that relieves plaintiffs from their obligation to cover contraceptive services and renders this action moot is speculative and is not sufficient to make plaintiffs' claims non-justiciable.
The court went on to conclude that other courts that had held otherwise "overestimate the significance of the ANPRM and underestimate the finality of the Coverage Mandate."
Sixth, the court held that even if it had not concluded that the future harms were not adequate to confer standing, the fact that the plaintiffs are suffering harms presently -- in the form of budgeting and administrative costs related to handling the mandate, setting aside monies to pay for putative fines, etc. -- are enough to constitute an injury in fact. More rather strong language from the court:
Fundamentally, however, this Court cannot accept that the present costs incurred by plaintiffs are simply the result of their "desire to prepare for contingencies." Quite frankly, ignoring the speeding train that is coming towards plaintiffs in the hope that it will stop might well be inconsistent with the fiduciary duties that plaintiffs' directors or officers owe to their members. As explained above, the practical realities of administering health care coverage for large numbers of employees- which defendants' recognize- require plaintiffs to incur these costs in advance of the impending effectiveness of the Coverage Mandate. That is a business reality that any responsible board of directors would have to appreciate.
Moreover, the First Amendment does not require citizens to accept assurances from the government that, if the government later determines it has made a misstep, it will take ameliorative action. There is no, "Trust us, changes are coming" clause in the Constitution. To the contrary, the Bill of Rights itself, and the First Amendment in particular, reflect a degree of skepticism towards governmental self-restraint and self-correction . . . . Considering the extraordinary political passion surrounding the Coverage Mandate from all sides, there is simply no way to predict what, if any, changes to the Coverage Mandate will be made, even if some policymakers favor certain changes.
The court also declined to dismiss the action on ripeness grounds: it concluded that the suit was both fit for adjudication and that there would be significant hardship to the plaintiffs from withholding judicial review, largely for reasons that run parallel to the standing discussion.
The case is Roman Catholic Archdiocese of New York et al. v. Sebelius, 12 CIV. 2542 (BMC) (December 5, 2012). When I find a link to the decision, I will post it.
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