## Facts

- California enacted the Women’s Contraception Equity Act (WCEA), requiring certain health and disability insurance contracts that include prescription drug coverage to also cover prescription contraceptives.
- The WCEA did not require employers to offer prescription drug coverage; the coverage obligation applied only if an employer chose a plan that covered prescription drugs.
- The WCEA included a narrow “religious employer” exemption allowing qualifying entities to obtain prescription-drug coverage excluding contraceptives contrary to the entity’s religious tenets.
- Catholic Charities of Sacramento, Inc., a church-affiliated nonprofit providing social services and employee health insurance with prescription drug coverage, did not satisfy the statutory definition of “religious employer.”
- Catholic Charities sued state officials responsible for enforcing the insurance statutes, seeking declaratory and injunctive relief and alleging violations of federal and state free-exercise and establishment provisions.
- The trial court denied a preliminary injunction; writ relief was denied by the Court of Appeal; the California Supreme Court granted review.

## Issues

1. Whether applying the WCEA’s contraceptive-coverage requirement to a church-affiliated nonprofit that offers prescription drug coverage violates the Free Exercise Clause of the U.S. or California Constitutions.
2. Whether the WCEA’s narrow “religious employer” exemption violates the Establishment Clause by impermissibly preferring certain religious entities or creating excessive church-state entanglement.
3. Whether the challenged scheme unlawfully interferes with religious autonomy by conditioning participation in employee health coverage on compliance with contraceptive-coverage rules.

## Decision

- The California Supreme Court affirmed and upheld the WCEA as applied to Catholic Charities.
- The court held the WCEA was a neutral, generally applicable regulation of insurance coverage and did not target religious practice.
- The court concluded the statute imposed, at most, an indirect burden arising from the employer’s choice to offer prescription drug coverage.
- The court held the Constitution did not require the Legislature to grant Catholic Charities a broader religious exemption than the one provided.
- The court rejected establishment-clause challenges, finding no unconstitutional denominational preference or excessive entanglement in applying the exemption’s criteria.

## Legal Principles

- A neutral, generally applicable law that incidentally burdens religious exercise does not violate the Free Exercise Clause merely because it affects religiously motivated conduct.
- Legislatures may create limited religious accommodations without being constitutionally compelled to extend them to all religiously affiliated entities.
- Conditioning regulatory consequences on an entity’s voluntary participation in a benefit program can be treated as an indirect burden on religious exercise when the law regulates the program’s terms rather than compelling religious conduct.
- A religious exemption does not violate the Establishment Clause when its criteria can be applied through objective, organizational features (purpose, structure, tax status) without resolving religious doctrine.
- Under California’s religion clauses, a generally applicable statute regulating insurance benefits may be sustained where the law is not aimed at religion and serves strong public interests such as eliminating gender-based disparities in health benefits.

## Conclusion

The California Supreme Court sustained the WCEA’s requirement that prescription-drug plans include contraceptive coverage and held that limiting the statutory exemption to a narrow class of “religious employers” neither burdened free exercise in a constitutionally prohibited way nor created an unconstitutional establishment of religion.


Catholic Charities of Sacramento, Inc. v. Superior Ct., 32 Cal. 4th 527, 85 P.3d 67 (Cal. 2004)