As we noted in a previous blog entry, the United States Supreme Court recently ruled in two companion cases, Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties v. Sebelius (referred to hereafter as Hobby Lobby) , that regulations issued under the Affordable Care Act (the “ACA”) that compel closely held corporations to provide contraception coverage for their employees violated the Religious Freedom Restoration Act of 1993. The Court concluded that closely held corporations cannot be required to provide contraceptive coverage if doing so would be contrary to sincerely held religious beliefs of the corporation’s owners. The dispute over contraception coverage in Hobby Lobby arose from a provision in the ACA that requires heath care plans to offer free preventive care. Under regulations issued by the Obama administration, the term preventive care was interpreted to include all contraception and sterilization measures approved by the United States Food And Drug Administration (the “FDA”). The owners of Hobby Lobby, and Conestoga Wood Specialties challenged the ACA requirement that health care plans cover certain contraceptives.
The Obama administration has taken its first official action in response to the Hobby Lobby decision. In the form of a Frequently Asked Question (FAQ) regarding implementation of the ACA prepared by the Departments of Labor, Health and Human Services and the Treasury (available at http://www.dol.gov/ebsa/healthreform/), the agencies announced that any closely held corporations that intend to amend health care plans that are subject to ERISA to eliminate some or all of the forms of birth control approved by the FDA must inform their employees of that decision. The new FAQ, issued July 17, 2014, notes that Department of Labor regulations provide that a plan’s summary plan description must include a description of the extent to which preventive services (which as noted above includes contraceptive services) are covered. It thus follows that if an ERISA-covered plan excludes some or all of the approved contraceptive services from coverage, then the plan’s summary plan description must describe the extent of that exclusion. For plans that reduce or eliminate coverage of contraceptive services after having provided such coverage, the disclosure requirements for material reductions in covered services apply. These disclosure requirements generally require disclosure not later than 60 days after the date of adoption of a plan amendment that affects the reduction or elimination. As an aside, the FAQ warns that other disclosure requirements may apply, including disclosure requirements under applicable state laws to the extent not preempted by ERISA.
This move by the Obama administration, which was not unexpected, comes as Congress appears deadlocked on proposed legislation that would override the Hobby Lobby decision. Of course, a deadlocked Congress hardly is news these days. Just this week, an effort by Democrats in the Senate to pass a bill to override the Court’s decision lost a procedural vote to precede (although prospects for passage in the House seemed extremely dim anyway). That vote fell 4 votes short of the 60 votes needed to move forward. Only three Republican senators (Sens. Susan Collins, Lisa Murkowski and Mark Kirk) voted in support of the bill, while all Democrats supported the bill (excluding Senate Majority Leader Harry Reid, who voted no for procedural purposes so that he could bring the bill up again for consideration sometime in the future). It seems like this issue in effect has moved from a legislative battleground to a political one—with all the usual in-fighting and grandstanding (both as common as deadlock in Washington, D.C. these days).