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
- 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.
- Whether the WCEA’s narrow “religious employer” exemption violates the Establishment Clause by impermissibly preferring certain religious entities or creating excessive church-state entanglement.
- 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.