## Facts

- The Affordable Care Act (ACA) requires certain employer-sponsored health plans to cover women’s preventive care without cost sharing, as set out in guidelines supported by the Health Resources and Services Administration (HRSA); HRSA’s guidelines included FDA-approved contraceptives.
- Religious employers objected to providing contraceptive coverage on religious grounds, leading the federal agencies responsible for implementing the ACA (HHS, Labor, and Treasury) to create exemptions for some religious entities and an accommodation process for others.
- In 2017, after ongoing disputes about the contraceptive requirement and the accommodation, the Departments issued “Interim Final Rules with Request for Comment” that significantly expanded which entities could claim an exemption from contraceptive coverage based on religious objections, and also created a separate exemption tied to moral objections.
- The Departments accepted public comments and later issued final rules in 2018 that continued the expanded religious exemption and the moral exemption.
- The Commonwealth of Pennsylvania, joined by other states (including New Jersey), sued in federal district court, arguing the exemptions were invalid under the Administrative Procedure Act (APA) and beyond the agencies’ authority under the ACA.
- The Little Sisters of the Poor Saints Peter and Paul Home, a religious nonprofit employer affected by the contraceptive coverage requirement, intervened in support of the federal government.
- The district court issued a nationwide preliminary injunction blocking enforcement of the 2018 final rules; the Third Circuit affirmed, concluding the agencies likely lacked statutory authority and that the rulemaking was procedurally flawed under the APA.
- The Supreme Court granted certiorari to review the Third Circuit’s decision.

## Issues

1. Whether the Departments had statutory authority under the ACA to issue rules creating broad religious and moral exemptions from the contraceptive-coverage requirement in employer health plans.
2. Whether the 2018 final rules were procedurally valid under the APA, including whether notice-and-comment requirements were satisfied despite the earlier use of interim final rules.

## Decision

- The Supreme Court reversed the Third Circuit and lifted the nationwide preliminary injunction against the 2018 final rules.
- The Court held the ACA’s text gives HRSA and the implementing Departments broad authority to define the preventive-services guidelines and to include exemptions, which supported the challenged religious and moral exemptions.
- The Court held the 2018 final rules were not procedurally defective under the APA because the agencies used notice-and-comment rulemaking for the final rules.
- The Court also concluded the agencies could take the Religious Freedom Restoration Act (RFRA) into account when deciding whether and how to craft exemptions.
- Separate opinions agreed on statutory authority but differed on how far the Court should go regarding RFRA and on whether the exemptions might still be vulnerable on remand under APA arbitrary-and-capricious review.
- The dissent would have found the exemptions unauthorized and faulted the rules for shifting costs and burdens to employees and dependents who would lose contraceptive coverage.

## Legal Principles

- When a statute requires coverage as provided in HRSA-supported guidelines, and leaves key content choices to the agency, HRSA and implementing agencies have substantial discretion to define both the scope of covered services and the availability of exemptions.
- Agencies may consider RFRA when issuing regulations that affect religious exercise, including by creating exemptions intended to avoid substantial burdens on religious objectors.
- Final rules issued through notice-and-comment rulemaking can satisfy the APA’s procedural requirements even if the agencies previously issued interim final rules addressing the same topic.
- A rule can fall within an agency’s statutory authority and still face later challenges under the APA’s arbitrary-and-capricious standard based on the adequacy of the agency’s explanation and consideration of affected parties.

## Conclusion

In *Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania et al.*, the Supreme Court held that the ACA permitted the Departments to issue Trump-era regulations granting expanded religious and moral exemptions from the contraceptive-coverage requirement and that the 2018 final rules satisfied the APA’s notice-and-comment procedures, reversing the Third Circuit’s injunction while leaving room for further APA merits review on remand.


Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania et al., 140 S.Ct. 2367 (2020)