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Howe v. Burwell

United States District Court, D. Vermont

July 21, 2015

ALAN LYLE HOWE, JR., Plaintiff,
SYLVIA BURWELL, in her official capacity as Secretary of the United States Department of Health and Human Services; THOMAS PEREZ, in his official capacity as Secretary of the United States Department of Labor; JACOB J. LEW, in his official capacity as Secretary of the United States Department of the Treasury; KATHERINE ARCHULETA, in her official capacity as the Director of the Office of Personnel Management; UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; UNITED STATES DEPARTMENT OF LABOR; UNITED STATES DEPARTMENT OF THE TREASURY; and OFFICE OF PERSONNEL MANAGEMENT; VERMONT HEALTH CONNECT; DEPARTMENT OF VERMONT HEALTH ACCESS; and STEVEN M. CONSTANTINO, in his official capacity as Commissioner of Vermont Health Access, Defendants.


CHRISTINA REISS, Chief District Judge.

On April 9, 2015, the court heard oral argument on Plaintiff Alan Lyle Howe, Jr.'s motion for a preliminary injunction (Doc. 2) and took it under advisement. Pursuant to Fed.R.Civ.P. 12(b)(1) and Fed.R.Civ.P. 12(b)(6), Defendants[1] subsequently filed motions to dismiss Plaintiff's claims (Docs. 39, 40), Plaintiff filed his opposition, and on June 8, 2015 those motions became ripe for adjudication.

In his four count Verified Complaint, Plaintiff seeks declaratory and injunctive relief arising out of the segregation of a portion of his health insurance premiums to cover non-federally funded ("NFF") abortion services as required by the Affordable Care Act (the "ACA"), 42 U.S.C. § 18023(b)(2). He alleges that forcing him to pay for NFF abortion services is contrary to his genuinely held religious beliefs, violates his constitutional rights, and fails to reflect accommodations to which he is entitled.

In Count I, Plaintiff alleges that the Federal Defendants have violated the federal Religious Freedom Restoration Act (the "RFRA"), 42 U.S.C. § 2000bb-1, because they have failed to offer an accommodation for a substantial burden on his religious beliefs. In Count II, he alleges that the State Defendants violated the Free Exercise Clause in Chapter 1, Article 3 of the Vermont Constitution on the same basis. In Count III, Plaintiff alleges a parallel claim against all Defendants under the Free Exercise Clause of the First Amendment to the U.S. Constitution. In Count IV, Plaintiff alleges that Defendants infringed upon his right to receive information regarding NFF abortion services coverage in violation of the Free Speech Clause to the First Amendment of the U.S. Constitution.

Plaintiff seeks a preliminary injunction only with regard to his RFRA and Free Exercise claims and only against the Federal Defendants and State Defendant Commissioner Constantino. Defendants oppose Plaintiff's request for preliminary injunctive relief, arguing, among other things, that Plaintiff lacks standing to seek relief that can only be provided by third party health insurers who are not before the court.

Defendants' motions to dismiss seek dismissal of all claims against them on a variety of grounds including lack of subject matter jurisdiction, standing, ripeness, failure to state a claim, and sovereign immunity. Plaintiff opposes dismissal.

Plaintiff is represented by M. Casey Mattox, Esq., Michael J. Tierney, Esq., and Steven H. Aden, Esq. The Federal Defendants are represented by Assistant United States Attorney Caroline L. Wolverton and Assistant United States Attorney Nikolas P. Kerest. The State Defendants are represented by Vermont Solicitor General Bridget C. Asay and Vermont Assistant Attorney General Jon T. Alexander.

I. Factual and Procedural Background.

A. Plaintiff's Verified Complaint and the ACA.

Plaintiff works part-time and is not entitled to health insurance from his employer. He is also not entitled to any form of public assistance to defray his healthcare costs. He avers that he "is a Christian and believes in the sanctity of human life from the point of conception." (Doc. 1 at 6, ¶ 19.) He further avers that he "is strongly opposed to paying for the destruction of human life by others through insurance coverage for elective abortion." Id. Plaintiff has no dependents and thus no possibility of ever using insurance coverage for abortion services. Defendants do not contest whether Plaintiff's religious beliefs are genuinely held.

The ACA requires non-exempt individuals[2] to obtain and maintain "minimum essential coverage" (the "individual mandate") or pay a tax penalty.[3] See 26 U.S.C. § 5000A(a). Plaintiff has not applied for an exemption from the ACA's individual mandate and he avers that he is not entitled to one.

For non-exempt individuals, Congress has authorized the states to establish their own health insurance exchanges ("Exchanges") through which state residents may purchase health insurance from insurers that have agreed to participate in the state's Exchange. See 42 U.S.C. § 18041(b). In Vermont, VHC is the Exchange. As an Exchange, VHC certifies that the health insurance offered to Vermonters provides coverage for certain essential health benefits; determines plan enrollment eligibility; calculates the value of certain subsidies; and certifies exemptions from the tax penalty. Id. §§ 18021(a)(1)(B); 18031(d)(4). Commissioner Constantino, as Commissioner of VHA, is responsible for the administration of VHC.

In the fall of 2013, Plaintiff was advised that, due to the ACA, his health insurance plan was being cancelled and he would need to enroll in a plan through VHC. For the 2014 plan year, Plaintiff selected the Blue Cross and Blue Shield of Vermont Blue Rewards Non-Standard Silver plan (the "BCBSVT plan") through VHC. Plaintiff alleges that he examined the Summary of Benefits and Exclusions for the BCBSVT plan and erroneously concluded that it did not offer coverage for NFF abortion services. The State Defendants contest this allegation and proffer evidence that Plaintiff had access to the notification required by law that the BCBSVT plan offered coverage for NFF abortion services.[4] See Doc. 29-8 at 19 (2014 BCBSVT Certificate of Coverage) (listing covered outpatient medical services for the BCBSVT plan as including "abortion services"); Doc. 29-9 at 20 (2015 BCBSVT Certificate of Coverage) (same).

Under the ACA, an insurer offering a health insurance plan has a "[v]oluntary choice [to provide] coverage of abortion services[.]" 42 U.S.C. § 18023(b)(1). The ACA thus neither requires health insurers to provide coverage for NFF abortion services, nor prohibits them from doing so. A state may enact legislation that "prohibit[s] abortion coverage" in qualified health plans ("QHPs") offered by a state's Exchange. See 42 U.S.C. § 18023(a). Vermont's General Assembly has chosen not to do so.

Pursuant to the Hyde Amendment, federal funds may not be used to pay for abortion services except in the case of rape, incest, or danger to the life of the mother.[5] In order to comply with the Hyde Amendment, a health insurer that chooses to offer coverage for NFF abortion services must segregate a portion of each subscriber's premium as a "separate payment" to pay for those services (the "segregation requirement") and must collect at least "$1 per enrollee, per month" and place that money into a separate account (the "allocation account"). 42 U.S.C. § 18023(b)(2)(D)(ii)(III). The insurer must pay for all NFF abortion services out of the allocation account, although it may use any excess monies to pay for other benefits and services. It is undisputed that the BCBSVT plan uses only 4% of the funds collected as separate payments for NFF abortion services.

Plaintiff paid his first monthly premium for the BCBSVT plan on March 21, 2014. Because of the amount of his income, Plaintiff was entitled to federal and state subsidies totaling $376 per month to cover a monthly premium of $395.

In November 2014, Plaintiff alleges that he became aware that the BCBSVT plan provided coverage for NFF abortion services and segregated a portion of Plaintiff's premium to pay for those services in accordance with the ACA's segregation requirement. The State Defendants contest this claim and proffer evidence that Plaintiff ceased paying his health insurance premiums prior to the November 2014 date. In addition, the State Defendants proffer evidence that Plaintiff's health insurance plan prior to the ACA also provided coverage for NFF abortion services. In light of these contested facts, Plaintiff agrees that the court cannot rely on Plaintiff's assertion that he cancelled his health insurance coverage because of his genuinely held religious beliefs. Instead, the court can only rely on Plaintiff's representation that he seeks to obtain health insurance now and in the future that either does not provide coverage for NFF abortion services or that does not require a separate payment which is segregated and used for NFF abortion services.

Every health insurance plan offered on VHC at this time provides coverage for NFF abortion services. Moreover, Defendants represent that every health insurance plan available in Vermont from a source other than VHC also provides coverage for NFF abortion services.

The ACA authorizes OPM through its Director to contract with health insurers in order to offer at least two multi-state QHPs through each state's Exchange. 42 U.S.C. § 18054(a)(1). The ACA provides that at least one of these multi-state QHPs must not provide coverage for NFF abortion services. Id. § 18054(a)(6). A health insurer cannot be compelled to offer a multi-state QHP and, at present, no health insurer has contracted with OPM to offer a multi-state QHP in Vermont.

If Plaintiff does not comply with the individual mandate, he will be responsible for the tax penalty no earlier than April 18, 2016 when his 2015 federal tax return must be filed. In his Verified Complaint, Plaintiff makes no allegation that he needs to arrange his finances now in order to pay the tax penalty when and if it becomes due.

B. The Parties' Stipulations and Plaintiff's Revised Requests for Relief.

The Federal Defendants have stipulated that they "are willing to forego enforcement of 42 U.S.C. § 18023(b)(2)'s segregation requirement as to an insurer who agrees to insure Mr. Howe and not segregate any portion of his payment for the NFF abortion account, so long as no plan offered through [VHC] excludes NFF abortion coverage." (Doc. 40 at 4.) The Federal Defendants further represent that they tried to persuade the two health insurers that offer insurance coverage through VHC to create a plan for Plaintiff that does not provide coverage for NFF abortion services but were unsuccessful. Although these representations have no evidentiary value, they cast doubt on Plaintiff's argument that an injunction is likely to cause third party insurers, who are not subject to the injunction, to alter their behavior and provide Plaintiff with the health insurance he desires.[6]

The State Defendants, in turn, have agreed to extend VHC's February 15, 2015 enrollment deadline and provide a special enrollment period for Plaintiff if the court rules in his favor. See Doc. 8 at 2, ¶ 4 ("Counsel for the Vermont Defendants represent that they will permit a special enrollment period after February 15, 2015, if needed to effectuate any order of this Court in Plaintiff's favor, and counsel for the federal Defendants represent that they will not oppose such action.").

In his motion for a preliminary injunction, Plaintiff requests the following relief:

Howe requests a preliminary injunction against Defendants, ordering them not to apply or enforce against him 45 C.P.R. § 156.280(e)(ii)(3) and 42 U.S.C. § 18023(b)(1)(B)(i)(II) ([the separate payment and segregation requirement]), which require Howe to directly pay for others' elective abortions, 42 U.S.C. [§] 5000A(b)(1) ("the individual mandate"), which imposes fines on Howe because he is unable to obtain a plan through Vermont Health Connect without violating his religious convictions against paying for others' abortions, and from otherwise enforcing the Affordable Care Act ("ACA") and Access Health Connecticut [presumably the reference is intended to be to VHC] so as to withhold benefits from and punish Howe because of his religious beliefs against enabling and paying for others' elective abortions.

(Doc. 2 at 2.) At oral argument, Plaintiff conceded that the court cannot compel third party insurers to provide health insurance that does not offer coverage for NFF abortion services. Accordingly, to the extent his motion contains such requests, they are withdrawn.[7]

In his briefing, Plaintiff seeks to extend his request for injunctive relief to include an order that Defendants "pay for [his] health expenses in the short term while they work toward a more permanent solution" or "[a]t a bare minimum, Defendants can provide [him] the subsidies to which he would be entitled were he able to enroll in a plan through Vermont Health Connect." (Doc. 41 at 14.)

II. Conclusions of Law and Analysis.

A. Standards for Dismissal and Injunctive Relief.

The Federal Defendants seek dismissal of all claims against them for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) and for failure to state a claim for which relief may be granted pursuant to Fed.R.Civ.P. 12(b)(6). The State Defendants seek dismissal of the claims against them on this same basis and assert Eleventh Amendment immunity as well.

"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). "In resolving a motion for lack of subject matter jurisdiction under Rule 12(b)(1), a district court... may refer to evidence outside the pleadings." Id.

"A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Id. "[B]ecause jurisdiction must be shown affirmatively, courts do not draw inferences from the pleadings in favor of the petitioner." Lakhani v. U.S. Citizenship & Immigration Servs., 2013 WL 3829624, at *2 (D. Vt. July 23, 2013). "Determining subject matter jurisdiction is a threshold inquiry, ' and should be addressed prior to any consideration of the Complaint's substantive merits." Grundstein v. Vermont, 2011 WL 6291955, at *2 (D. Vt. Dec. 15, 2011) (quoting Arar v. Ashcroft, 532 F.3d 157, 168 (2d Cir. 2008)).

In deciding a motion to dismiss under Rule 12(b)(6) for failure to state a claim, a court assumes "all well-pleaded, nonconclusory factual allegations in the complaint to be true, " Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 124 (2d Cir. 2010), and determines "whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The court also draws "all reasonable inferences in the plaintiff's favor." Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009) (internal quotation marks omitted). However, the court does not credit "legal conclusions" or "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Iqbal, 556 U.S. at 678. To survive ...

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