Employee Benefits at the Collision Point between the First Amendment’s Free Exercise of Religion Guarantee and Title VII’s Prohibition Against Discrimination “Based on Sex”:
Guidance for Religious Employers, Insurers, and Providers
In an article intended to guide our readers through an area of the law fraught with uncertainty, it might be best to begin by recalling the warning of St. Augustine of Hippo, who cautions us that “error” means more than just making a mistake of judgment. One also falls into error by being “certain about the uncertain and uncertain about the certain”. In law – which far too often knots itself into a tangle of crisscrossing and overlapping threads of rights and responsibilities – oftentimes the best we can do to avoid error is simply to recognize the uncertainty for what it is and make the best decisions we can, given the information available.
And so we do here.
The First Amendment to the United States Constitution guarantees: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof”. Simple enough – we can’t have a “State Church”, like the Church of England, and the government isn’t allowed to repress religions that it doesn’t like. So far, so good.
This very same Constitution of ours, through the workings of Amendments I, IV, XIII, XIV, and XV, also gave rise to Title VII of the Civil Rights Act of 1964, which makes it illegal for an employer “to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin”.
Taking account that:
- employee benefits, including health insurance, are “conditions, or privileges of employment”;
- “sex” under Title VII, has been defined to include “transgender status”; and
- Section 1557 of the Affordable Care Act specifically prohibits discrimination “on the basis of […] sex […] in certain health programs and activities”,
one sees that the term “collision point” used in the title of this article, is no fanciful hyperbole, but rather an inevitability as “certain” as gravity itself. There will be a collision, and it will be between those who believe that medical procedures associated with gender transition (e.g., orchiectomy, penectomy, mastectomy, vaginectomy, etc.) should be excludable from required medical insurance coverage, and those who believe they should not.
And so it was.
In the Courts
The first important religious freedom case to address employee benefits was decided in 2014, and it was important because it made clear that it’s not just religious institutions (churches, synagogues, mosques, faith-based non-profit corporations, etc.) that have rights under the Free Exercise clause, but individuals as well. In that case, the Plaintiff, a retail store, challenged the ACA’s requirement that all employers must cover and pay for their employees’ access to contraceptives, which they said was against their religious beliefs. A majority of the Supreme Court, ruled that birth control is different from other forms of preventive health care and that under the Religious Freedom Restoration Act (“RFRA”), an employer has a right to make insurance coverage decisions based on sincerely-held religious beliefs.
In May of 2016, The Federal Department of Health and Human Services (“HHS”) promulgated final regulations that included broad nondiscrimination requirements that it applied to any insurer receiving federal financial assistance (for example, relating to participation in the ACA’s health insurance exchanges), including when the insurer acted as a third-party administrator (TPA) for an employer-sponsored health plan. On First Amendment grounds, therefore, a group of Plaintiffs brought suit to enjoin (i.e., render temporarily unenforceable) these Regulations, arguing passionately:
Plaintiffs are entitled to summary judgment as a matter of law because HHS’s attempt to redefine “sex” violates the Administrative Procedure Act. Its attempt to force doctors to violate their religious beliefs violates the Religious Freedom Restoration Act. Its attempt to manipulate the States violates the Spending Clause. Its attempt to control doctors’ speech violates the Free Speech Clause. Its rule violates the Due Process Clause and the First Amendment for being hopelessly vague. And it violates Plaintiffs’ right under the Due Process Clause to refrain from performing invasive medical procedures that violate their conscience.
The court granted the injunction in December 2016 with respect to the prohibition on discrimination based on gender identity and termination of pregnancy, and HHS went back to the drawing board, promulgating new Regulations in May of 2019, which did not include the enjoined provisions. In the Final Rule, the Office for Civil Rights (OCR) set forth a catalogue of existing conscience protections, including:
- Conscience protections related to abortion, sterilization, and certain other health services applicable to the Department of Health and Human Services and recipients of certain Federal funds encompassed by 42 U.S.C. 300a-7 (the “Church Amendments”);
- Conscience protections for health care entities related to abortion provision or training, referral for such abortion or training, or accreditation standards related to abortion (the “Coats-Snowe Amendment,” 42 U.S.C. 238n);
- Protections from discrimination for health care entities that do not provide, pay for, provide coverage of, or refer for abortions under programs funded by the Department’s appropriations acts (e.g., Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2019, Div. B., sec. 507(d), Public Law 115-245, 132 Stat. 2981 (Sept. 28, 2018) (the “Weldon Amendment”); id., sec. 209);
- Protections from discrimination under the Patient Protection and Affordable Care Act (“ACA”) for health care entities that do not provide any health care item or service furnished for the purpose of causing, or for the purpose of assisting in causing, the death of any individual, such as by assisted suicide, euthanasia, or mercy killing, applicable to the Federal Government and any State or local government that receives Federal financial assistance (42 U.S.C. 18113); and conscience protections for providers, organizations, or their employees regarding counseling regarding the same (42 U.S.C. 14406(1));
- Conscience protections regarding exemptions applicable to the ACA’s individual mandate (26 U.S.C. 5000A; 42 U.S.C. 18081);
- Conscience protections under the ACA for qualified health plans related to coverage of abortion, and for individual health care providers and health care facilities that do not provide, pay for, provide coverage of, or refer for abortions (42 U.S.C. 18023(b)(1)(A) and (b)(4));
- Conscience protections for Medicare Advantage organizations and Medicaid managed care organizations with moral or religious objections to counseling or referral for certain services (42 U.S.C. 1395w-22(j)(3)(B) and 1396u-2(b)(3)(B));
- Conscience protections related to the performance of advanced directives (42 U.S.C. 1395cc(f), 1396a(w)(3), and 14406(2));
- Conscience and nondiscrimination protections for organizations related to Global Health Programs, to the extent such funds are administered by the Secretary of HHS (the “Secretary”) (22 U.S.C. 7631(d));
- Conscience protections attached to Federal funding, to the extent such funding is administered by the Secretary, regarding abortion and involuntarily sterilization (22 U.S.C. 2151b(f), see, e.g., the Consolidated Appropriations Act, 2019, Pub. L. 116-6, Div. F, sec. 7018 (the “Helms, Biden, 1978, and 1985 Amendments”));
- Conscience protections from compulsory health care or services generally (42 U.S.C. 1396f and 5106i(a)), and under specific programs for hearing screening (42 U.S.C. 280g-1(d)), occupational illness testing (29 U.S.C. 669(a)(5)); vaccination (42 U.S.C. 1396s(c)(2)(B)(ii)), and mental health treatment (42 U.S.C. 290bb-36(f)); and
- Protections for religious nonmedical health care providers and their patients from certain requirements under Medicare and Medicaid that may burden their exercise of their religious beliefs regarding medical treatment (e.g., 42 U.S.C. 1320a-1(h), 1320c-11, 1395i-5, 1395x(e), 1395x(y)(1), 1396a(a), and 1397j-1(b)).
Protecting Statutory Conscience Rights in Health Care; Delegations of Authority, 84 FR 23170-01.
The Bostock Decision
In June of 2020, the United States Supreme Court, in a case predicted by Justice Alito, in dissent, to be “virtually certain to have far-reaching consequences”, determined that “sex”, as referred to in the nondiscrimination statutes, also encompasses “sexual orientation or gender identity”. Bostock v. Clayton Cty., Georgia, 140 S. Ct. 1731, 1778, 207 L. Ed. 2d 218 (2020). Referring specifically to health care, Justice Alito explained:
Healthcare benefits may emerge as an intense battleground under the Court’s holding. Transgender employees have brought suit under Title VII to challenge employer-provided health insurance plans that do not cover costly sex reassignment surgery. Similar claims have been brought under the Affordable Care Act (ACA), which broadly prohibits sex discrimination in the provision of healthcare.
Such claims present difficult religious liberty issues because some employers and healthcare providers have strong religious objections to sex reassignment procedures, and therefore requiring them to pay for or to perform these procedures will have a severe impact on their ability to honor their deeply held religious beliefs.
Bostock v. Clayton Cty., Georgia, 140 S. Ct. 1731, 1781–82, 207 L. Ed. 2d 218 (2020).
Hope for Clarity
In the wake of Bostock, the Supreme Court of North Dakota decided the case of Religious Sisters of Mercy v. Azar, 2021 WL 191009 (D.N.D. 2021). Interpreting the Religious Freedom Restoration Act (RFRA), the Court held that the Act had been designed to provide “very broad protection for religious liberty”. Specifically, the RFRA forbids government from substantially burdening a person’s exercise of religion unless the burden: (1) is in furtherance of a compelling governmental interest, and (2) is the least restrictive means of furthering that compelling interest.
The court held, on the first point, that the ACA imposed a “substantial burden” on the plaintiffs’ exercise of religion by forcing them to perform or cover “gender affirmation services”. To the second point, even if the government could have demonstrated a “compelling interest”, the statute would still fail as to the plaintiffs because the government had “less restrictive alternatives” to accomplish its goals beyond forcing the Catholic plaintiffs to perform and cover gender-transition procedures in violation of their religious beliefs. If the aim had been to expand financial support, then “[t]he most straightforward way of doing this would be for the Government to assume the cost of providing” gender-transition procedures for those “unable to obtain them under their health-insurance policies due to their employers’ religious objections”, or to provide “subsidies, reimbursements, tax credits, or tax deductions to employees” or to pay for services “at community health centers, public clinics, and hospitals with income-based support.”
Meanwhile, the Department of Health and Human Services issued a Notification, effective May 10, 2021, indicating that it will interpret the ACA’s “prohibition on discrimination on the basis of sex to include: (1) discrimination on the basis of sexual orientation; and (2) discrimination on the basis of gender identity”. However, the Notification also provides that the Office of Civil Rights will comply with the Religious Freedom Restoration Act and “all other legal requirements”, as well as “applicable court orders that have been issued in litigation”, including Franciscan Alliance, Inc. v. Azar, Whitman-Walker Clinic, Inc. v. U.S. Dep’t of Health & Hum. Servs., 485 F. Supp. 3d 1 (D.D.C. 2020), Asapansa-Johnson Walker v. Azar, No. 20-CV-2834, 2020 WL 6363970 (E.D.N.Y. Oct. 29, 2020)11; and Religious Sisters of Mercy v. Azar.
What, then, is the lay of the land for self-insured and fully-insured employers, insurers, brokers, TPA’s, and providers? “Uncertain”, of course, yet “the fitting and proper thing would be to be able to say, in speech or judgment, ‘Yes, yes. No, no’”, and I expect the venerable Archbishop of Milan wouldn’t let us get away without providing a little more guidance than that. What can be said is this: The “free exercise of religion” is a “fundamental right” that does not lose its Constitutional protection outside the walls of a house of worship. Individuals or group of individuals cannot be compelled to speak, to refrain from speaking, or to sponsor health insurance provisions that violate sincerely-held religious belief. This much is certain.
 ENCHIRIDION DE FIDE, SPE ET CHARITATE LIBER UNUS, S. Aurelii Augustini, Cap. V, para. 17 (“Aliud non sit errare quam verum putare quod falsum est, falsumque quod verum est, vel certum habere pro incerto, incertumve pro certo, sive falsum sive sit verum, idque tam sit in animo deforme atque indecens quam pulchrum ac decorum esse sentimus vel in loquendo vel in assentiendo: Est, est; non, non”).
 …for reasons which would take a semester-long course in Constitutional Law to fully flesh out, and which will not be discussed here. You’re welcome.
 42 U.S.C.A. § 2000e-2(a)(1).
 Here, for reasons of (attempted) conciseness, we will primarily be discussing medical benefits touching on the transgender issue. To further broaden the scope of this article to include, e.g. abortion, contraception, or employment discrimination in general, would push our topic from “uncertain” to “unending”.
 Similarly, the “ministerial” and “church” exceptions to Title VII will not be discussed here.
 FRANCISCAN ALLIANCE, INC.; Specialty Physicians of Illinois, LLC,; Christian Medical & Dental Associations; – and – State of Texas; State of Wisconsin; State of Nebraska; Commonwealth of Kentucky, by and through Governor Matthew G. Bevin; State of Kansas; State of Louisiana; State of Arizona; and State of Mississippi, by and through Governor Phil Bryant, Plaintiffs.
 ENCHIRIDION DE FIDE, SPE ET CHARITATE LIBER UNUS, S. Aurelii Augustini, Cap. V, para. 17 (“[… Q]uam pulchrum ac decorum esse sentimus vel in loquendo vel in assentiendo: Est, est; non, non”).