January 6, 2014

Religious Institutions Update: January 2014

Lex Est Sanctio Sancta
Holland & Knight Update
Nathan A. Adams IV

Timely Topics

On the heels of controversy surrounding the Internal Revenue Service's treatment of conservative groups applying for tax-exempt status, the Treasury Department is accepting comments on proposed regulations that will materially affect many 501(c)(4) and, potentially, 501(c)(5) and 501(c)(6) organizations, especially around election time. The proposed regulations would replace the Treasury Department's "facts and circumstances" test for analyzing what constitutes impermissible "political campaign intervention" by a 501(c)(4) with a concrete "candidate-related political activity" test for activities that will be considered forbidden, including:

  • voter registration drives and "get-out-the-vote" drives
  • preparation or distribution of voter guides that refer to candidates or, in general elections, political parties
  • holding an event within 30 days of a primary election or 60 days of a general election at which a candidate appears
  • communications within 30 days of a primary election or 60 days of a general election which identify a candidate or political party

Comments on the proposed rules are due by February 27, 2014. Equally or more importantly, comments are also due then on: (1) how to measure an organization's "social welfare" activity relative to its total activities to qualify as a 501(c)(4) tax-exempt organization; (2) when material posted by a third party on a 501(c)(4) organization's interactive website (e.g., a blog) should be attributed to the 501(c)(4); and (3) whether its proposed limits on "candidate related political activity" for 501(c)(4) organization should apply to 501(c)(5) and 501(c)(6) organizations. 

These questions signal more debate about what counts as "social welfare," deployment of interactive sites and a broadening of the impact of political activity regulation to encompass more filers. If the proposed rules or questions for comment are of concern to you, there is still an opportunity to influence their final form. Holland & Knight can assist.

Religious Hospital Cannot Establish an ERISA-Exempt Church Plan

In Rollins v. Dignity Health, Case No. C13-1450 TEH, 2013 WL 6512682 (N.D. Cal. Dec. 12, 2013), the court ruled that, because the defendant is not a church or an association of churches, the defendant does not have the statutory authority to establish its own church plan and is not exempt from the Employee Retirement Income Security Act (ERISA). The plaintiff contended that: (1) the defendant's pension benefits plan, under which the plaintiff would be eligible for benefits when she reaches retirement age, violated ERISA; (2) the plan is not an exempt "church plan"; and (3) if the plan is exempt, the exemption violates the Establishment Clause. In contrast, the defendant argued that its plan qualifies as a church plan because it is a tax-exempt entity associated with the Roman Catholic Church and its plan is maintained by a subcommittee associated with the Roman Catholic Church. Contrary to the defendant's private letter ruling and other cases, the court denied the defendant's motion to dismiss the plaintiff's complaint. It ruled that a church plan must be established and maintained for its employees by a church or an association of churches.

The court rejected the defendant's "effort to expand the scope of the church plan exemption to any organization maintained by a church-associated organization…."

Cohabitation Provision in Utah's Bigamy Statute Is Struck

In Brown v. Buhman, No. 2:11-CV-0652-CW, 2013 WL 6568756 (D. Utah Dec. 13, 2013), the court struck on several constitutional grounds the cohabitation prong of Utah's bigamy statute, Utah Code Ann. § 76-7-101 (2013), which provides that "[a] person is guilty of bigamy when, knowing he has a husband or wife or knowing the other person has a husband or wife, the person purports to marry another person or cohabits with another person." The plaintiffs are members of a religious group that believes polygamy is a core religious practice. The court found that Utah government officials are aware of thousands of polygamist families in the state and knew that the plaintiffs were a plural or polygamist family, but their appearance on "The Sister Wives" triggered an investigation. Although the plaintiffs moved to Nevada, the defendants stated there was no guarantee that the plaintiffs would not be prosecuted under Utah's bigamy statute. 

The district court first examined the Utah Supreme Court's interpretation of the bigamy statute, which was that it "criminalizes not only privately 'marrying' someone after having legally married, but also merely cohabitating with a second adult partner after having married a first partner." The district court ruled the second part of the holding inconsistent with federal constitutional claims. In light of the long common law history outlawing polygamy, the district court declined to find that there is a fundamental right: (1) to enter into a second purportedly legal matrimonial union when already legally married; or (2) to enter into a personal relationship that resembles a marriage in its intimacy but claims no legal sanction. Also, in light of Tenth Circuit authority, the court declined to find a fundamental "broadly-defined 'right to sexual activity'" or "to engage in private sexual conduct." Therefore, and because the U.S. Supreme Court previously ruled that federal legislation prohibiting polygamy did not violate Mormons' right to the free exercise of religion, the court ruled that strict scrutiny does not apply to the statute's prohibition of actual polygamy or bigamy.

The court warned, however, that it could "be pressed" to find the Utah bigamy statute "not a neutral law of general applicability," had the plaintiffs proven that the law targeted their religious practice. In addition, the court found that the U.S. Supreme Court had not reached the constitutionality of the cohabitation prong of the Utah bigamy statute. Therefore, the district court considered itself free to rule that the cohabitation prong: (1) was not operationally neutral but primarily enforced against those involved in religious cohabitation; (2) was not generally applicable; (3) invokes hybrid constitutional rights; and (4) is not narrowly tailored to advance a compelling interest. In addition, it ruled that the law was not even rationally related to a legitimate public objective to protect marriage in light of the incongruity between prosecuting religious cohabitation but not nonreligious cohabitation or adulterous cohabitation. In fact, the court observed that the statute penalized people for making a firm marriage-like commitment. The court also expressed skepticism that individuals of ordinary intelligence could know what the law prohibited, and found the prong void-for-vagueness due to arbitrary or discriminatory enforcement.

In a nutshell, the court allowed the statute to remain in force as prohibiting bigamy in the literal sense (i.e., the fraudulent or impermissible possession of two purportedly valid marriage licenses for the purpose of entering into more than one purportedly legal marriage), but not as prohibits cohabitation.

District Courts Reach Opposite Rulings on ACA Religious Organization Accommodation

    a. Plaintiffs Do Not State a Claim under RFRA

In Priests for Life v. United States Department of Health and Human Services, No. 13-1261 (EGS), 2013 WL 6672400 (D.D.C. Dec. 19, 2013), the court dismissed the plaintiffs' lawsuit under the Religious Freedom Restoration Act (RFRA) and the First and Fifth Amendments, founded on their claim that the religious employer exception to the contraceptive coverage mandate contained in the Patient Protection and Affordable Care Act (ACA) unconstitutionally requires them to fill out a self-certification form that initiates and facilitates coverage without direct expense to them of contraceptive products, services and counseling by their health insurer.

The court ruled that the plaintiffs' RFRA claim founders on a requirement that they show that the governmental action forces them to modify their behavior in violation of their beliefs, whereas the accommodation ensures that provision of contraceptive services is by a third party. It was not convinced by the plaintiffs' argument that they had to play an active role in the provision of the services by signing the self-certification form, which they conceded they had no religious objection to in and of itself. The court observed: "[T]he only action required of Priests for Life under the accommodations is consistent with its beliefs. It is only the independent actions of third parties which result in the availability of contraceptive services."

The court also rejected the plaintiffs' free exercise claim that the mandate and accommodation is not neutral in comparison to the total exemption for houses of worship, on the grounds that they are not treated less favorably than other employers. It disagreed with their argument that the mandate is not generally applicable, on the grounds that the regulations do not impose burdens selectively. Likewise, the court rejected the plaintiffs' free speech and expressive association claims, because the regulations underpinning the accommodation regulate conduct without limiting the plaintiffs' speech and in a manner consistent with it; also, because the accommodation does not force the plaintiffs to accept members it does not desire or make group membership less desirable. As a religious accommodation, the court also ruled there was no Establishment Clause violation and, because the mandate is rationally related to legitimate government purposes, no equal protection violation.

In Michigan Catholic Conference v. Sebelius, No. 1:13-CV-1247, 2013 WL 6838707 (W.D. Mich. Dec. 27, 2013), the court likewise ruled that the plaintiffs failed to demonstrate that they are likely to succeed on the merits of their RFRA and First Amendment challenge to the contraceptive coverage mandate. Plaintiff Michigan Catholic Conference qualifies for the religious employer exemption, whereas plaintiff Catholic Charities qualifies for the religious accommodation, but objects to completing the self-certification form and facilitating objectionable services. The court ruled that the claimed burden on the plaintiffs' religious exercise is not substantial by analogy to a law that requires potential jurors to state whether they are able to impose the death penalty. It indicated that posing the question is not any more a substantial burden than requiring Catholic Charities to attest to its religious beliefs before accepting the exemption. "It is true that, once it steps aside, another person may step in and provide coverage of contraceptive services for Catholic Charities' employees," who may then decide to utilize the services, but the court considered any such actions too attenuated to burden Catholic Charities' religious exercise. The court added that the mandate "requires Catholic Charities to do what it has always done — sponsor a plan for its employees, contract with a TPA, and notify the TPA that it objects to providing contraceptive coverage"; thus, the accommodation does not modify defendant's behavior.

The court ruled that, rather than require their participation in a scheme to provide contraceptives, the accommodation does the opposite. For like reasons, it rejected the plaintiffs' free exercise, Establishment Clause and free speech claims, observing that the mandate does not target the defendants' religious practices or treat a particular denomination better than another, and the defendants remain free to speak out against use of contraceptives.

In Little Sisters of the Poor Home for the Aged, Denver, Colorado v. Sebelius, No. 13-cv-2611-WJM-BNB, 2013 WL 6839900 (D. Colo. Dec. 27, 2013), the court denied in part the plaintiffs' motion for preliminary injunction under RFRA, the First Amendment and several other claims, on the grounds that the mandate does not substantially burden their religious exercise. The plaintiffs are controlled by and associated with an international Congregation of Catholic Sisters, which serves needy elderly people. The plaintiffs provide medical coverage to their employees under a church plan exempt from ERISA. As a result, the defendants took the position that they also lack the regulatory authority to require the third-party administrator (TPA) for the plan to administer or pay for contraceptive care. The Final Rules could be construed otherwise, but in light of the government's limiting interpretation, the court ruled "the Final Rules do not require Little Sisters or the Trust to designate, authorize, or create a provider-insured relationship with any third party that will provide their employees with access to contraception, sterilization, or abortifacients." Furthermore, "[b]ecause a church plan and its third party administrator are not subject to ERISA, if these individuals complete the Form on behalf of their respective organizations, they know that they are not 'authoriz[ing] another organization to deliver contraceptives, sterilization, and abortifacients to the Little Sisters' employees and other beneficiaries.'" The court also denied the defendants' motion to dismiss for lack of standing. However, on New Year's eve, Supreme Court Justice Sonia Sotomayor temporarily enjoined the defendants from enforcing the mandate against the plaintiffs pending the receipt of additional documents.

In Catholic Diocese of Nashville v. Sebellius, No. 3:13-01303, 2013 WL 6834375 (M.D. Tenn. Dec. 26, 2013), the court denied the plaintiffs' motion for preliminary injunction under RFRA, the First Amendment and other claims, also on the grounds that the diocese plaintiffs are entirely exempt from contraceptive coverage and the burden of self-certification is too attenuated and speculative to be substantial. "Plaintiffs bear no costs for the services and nothing is provided unless a third party employee independently requests the services from yet another third party — the insurer." The court also found the mandate: (1) neutral and generally applicable, and consistent with the Free Exercise Clause, notwithstanding exemptions inasmuch as they do not disfavor religion; (2) consistent with the Free Speech Clause as regulating conduct, not speech; (3) consistent with the Establishment Clause by not disfavoring one denomination as compared to another; and (4) not interfering with internal church governance by splitting the Catholic Church, because the rules do not regulate hiring, firing or management of employees.

    b. Plaintiffs State a Claim under RFRA

In Roman Catholic Archdiocese of N.Y. v. Sebelius, 2013 WL 6579764 (E.D.N.Y. Dec. 16, 2013), the court found that the mandate substantially burdens the religious exercise of a parochial high school, a nonprofit organization that provides faith-based health care to the poor, and a nonprofit organization that oversees hospitals, nursing homes and a hospice. The plaintiffs: (1) object to completing the self-certification form to qualify for the religious accommodation and to providing the form to their third-party administrator (TPA); and (2) state that the mandate would require them to identify and contract with one or more TPAs that would provide contraceptive coverage. The government responded that the burden of the mandate is too de minimis and attenuated.

The court found no de minimis exception under RFRA and no practical way to evaluate the significance of a burden without impermissibly examining religious doctrine. Furthermore, it found that the plaintiffs' religious objection was not only to the use of the contraceptives, but also to the requirement to actively participate in a scheme to provide such services; also, that it was not the court's role to say that the plaintiffs are wrong about their religious beliefs. Consequently, the court ruled that the non-diocesan plaintiffs demonstrated a substantial burden under RFRA, but not the Archdiocese of New York or the Diocese of Rockville Centre, because they are exempt from the mandate. Moreover, the court ruled that the government failed to demonstrate that it has a compelling governmental interest to apply the mandate without exemption to the non-diocesan plaintiffs or that it could achieve those objectives in a less restrictive fashion. In fact, the court ruled that the government's late revelation (which the court found "difficult to fathom") that the mandate does not require plaintiffs' TPAs to provide contraceptive coverage because they have "church plans" exempt from ERISA "fatally undermines any claim that imposing the mandate on these plaintiffs serves a compelling governmental interest," inasmuch as filling out the self-certification form would ultimately serve no purpose. The court granted the non-diocesan plaintiffs an injunction against enforcement of the mandate, but not the diocesan plaintiffs under RFRA or the First Amendment.

In East Texas Baptist Univ. v. Sebelius, No. H-12-3009, 2013 WL 6838893 (S.D. Tex. Dec. 27, 2013), the court granted the plaintiffs' motion for summary judgment on their RFRA claim, denied the government's cross-motion for summary judgment on the same claim and enjoined the government from applying the regulations that require plaintiffs, their health plans, TPAs or issuers to provide or execute the self-certification forms that enable or require the TPA or issuer to provide health insurance coverage for the plaintiffs' employees for FDA-approved emergency contraceptive devices, products or services. The plaintiffs are two universities associated with the Baptist Church and a third associated with the Presbyterian Church. Both churches believe that the accommodation requires them to take an action that facilitates their employees' free access to abortion-causing drugs, making them complicit in taking innocent life.

The court rejected the government's argument that one of the universities lacks standing because it is self-insured through a church plan. The court found no de minimis exception to RFRA. It ruled there is a substantial burden within the meaning of RFRA if the plaintiffs are compelled or pressured by threat of punitive fines to: (1) themselves take or forbear from an action; and (2) it is their own action or forbearance that they find religiously offensive. The court ruled that the final regulations require both. "[T]here is a causal link between the acts the plaintiffs must do under the accommodation and the provision of contraceptive devices and products to employees on a no-cost sharing basis." Accordingly, the court concluded that the plaintiffs are likely to succeed in showing a substantial burden under RFRA. Moreover, it ruled that the government failed to show that the mandate and accommodation are the least restrictive means of advancing a compelling government interest, because the government failed to show how denying the plaintiffs an exemption would undermine its interest in protecting women's health, and because there are several less restrictive means of serving the government's interests.

Nonliturgical Chaplains Denied Injunction against Navy's Promotion Process

The court In re Navy Chaplaincy v. United States Navy, No. 13-5071, 2013 WL 6819348, ruled that current and former non-liturgical Protestant chaplains were unlikely to establish a likelihood of success on the merits of their Equal Protection and Establishment Clause claims as required to warrant the grant of a preliminary injunction against a facially neutral selection process for promotions of chaplains. Although the plaintiffs showed a 10 percent difference between promotion rates of candidates of the same denomination as the Chief of Chaplains and candidates of nonliturgical denominations, the court found that the plaintiffs did not properly control for nonconfounding variables, so as to establish a likelihood of success in proving defendant's intent to discriminate.

Religious Institutions in the News

Pope Francis is Time Magazine's "Person of the Year." 

The U.S. District Court for the Southern District of California ordered removal of the controversial 59-year-old cross atop La Jolla, California's Mount Soledad within 90 days unless there is a further appeal. 

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