For decades, “conscience clauses” in statutes governing health care have protected the rights of employees from acting against their religious and moral beliefs. Critics of these provisions insist that there is a greater risk of discrimination against patients than discrimination against employees. Recently, in New York v. Department of Human and Health Services, Judge Engelmayer penned a one-hundred-and-forty-seven-page opinion striking down a regulation attempting to expand such protections for health care employees. The regulation at issue would likely have further limited access to abortions at a time when such access is already restrained by stringent regulation of disclosures and information. As such, arbitrary and capricious review of the agency action was crucial. Indeed, the court’s briefing revealed that the regulation lacked a justification. However, the court’s finding that the regulation was unconstitutionally coercive might have the unintended effect of constraining the ability of the federal government to expand health care access in the future.
In January 2018, following guidance from the U.S. Attorney General on the scope of the Free Exercise Clause, the U.S. Department of Health and Human Services (HHS) undertook a rulemaking to strengthen the protections afforded by conscience clauses. The result was a far-reaching rule entitled “Protecting Statutory Conscience Rights in Health Care; Delegations of Authority.” The rule reinstated a 2008 regulation that had been rescinded in 2011 due to concerns that it might improperly restrict access to health care. But where the 2008 rule covered conscience clauses in only three statutes, the new rule applied to over thirty statutes governing access to abortion, assisted suicide, and counseling and referral, among other services. In relevant part, the rule expanded conscience clauses to prohibit inquiry into whether potential employees would object to certain services, even if those services were likely to be a part of that employees’ duties. The rule also granted HHS’s Office of Civil Rights expansive enforcement power, including the authority to withdraw federal funding for violations of conscience clauses. Lastly, the rule required prominent notice of conscience provisions either on service provider websites or in the workplace. HHS justified its decision by reference to a “significant increase” in complaints it had received and general confusion about conscience provisions following rescission of the 2008 rule.
Following the adoption of the regulation, nineteen states, the District of Columbia, three local governments, Planned Parenthood, and National Family Planning and Reproductive Health Association and Public Health Solutions, Inc. brought various administrative and constitutional claims against HHS. These claims were consolidated in one case in the District Court for the Southern District of New York, and the plaintiffs moved for summary judgment.
Judge Engelmayer granted the plaintiffs’ motion for summary judgement and struck down the regulation, finding that it violated both the Administrative Procedure Act (APA) and the U.S. Constitution. First, the court refuted HHS’s contention that the regulation was a mere “housekeeping matter[],” explaining that it eliminated the “undue hardship” defense enshrined in Title VII of the Civil Rights Act, and broadened the set of services that employees could refuse to provide. The court then concluded that HHS had acted outside of its authority in enacting the regulation. It invoked the “major questions” doctrine, concluding that Congress was unlikely to delegate authority to HHS to promulgate a rule that applied “across a vast health care industry” and “jeopard[ized] billions of dollars of federal health care funds.”
Next, the court found that the rule was arbitrary and capricious under § 706 of the APA because the agency’s justifications for its rule conflicted with the agency record and because the rule failed to address important aspects of the problem. In briefing, the agency acknowledged that very few of its complaints concerned conscience provisions, despite initially insisting that it had seen a significant increase in complaints. The agency had also failed to justify its change in position on whether the rule would inhibit access to health care despite “overwhelming” comments on this issue. For similar reasons, the final rule was not a logical outgrowth of the agency’s initial proposal.
Turning to the plaintiffs’ constitutional claims, the court found that the rule was an unauthorized — and unconstitutional — encroachment on Congress’s spending power. The rule also violated the Spending Clause because it was unduly coercive (per the Supreme Court’s decision in NFIB v. Sebelius) and attached retroactive and ambiguous conditions to federal funding on states.
The court’s thorough review of the reasons provided in the agency record demonstrates the importance of the judiciary’s role in arbitrary and capricious review of agency action. The Attorney General’s memorandum, prompted by an executive order from the president, hinted that the agency’s action was solely politically motivated. Especially where agencies act outside their authority, careful review by courts can safeguard against overtly political decisionmaking and drive agencies to promulgate rules based on expertise rather than political pressure. HHS attempted to justify its rule by reference to a documented “environment of discrimination.” But direct questioning of agency officials in this case exposed the argument that the agency had received over three hundred complaints about conscience provisions as “flatly untrue.” During briefing, after review of the complaints, the court asked: “Yes or no: Are we down to about 20 that actually implicate these statutes as opposed to other problems?” The government’s response was: “Yes. In that ballpark.” As Professor Allison Orr Larsen has highlighted, district courts have uncovered several attempts to use false information as a basis for laws restricting access to healthcare — access to abortion in particular. Where access to health care is at stake, the judicial fact-finding function is crucial.
However, as the regulation violated the APA on various grounds, Judge Engelmayer need not have gone on to find that the regulation was unconstitutionally coercive. The Supreme Court struck down a federal rule as unlawfully coercive under the Spending Clause for the first time in NFIB v. Sebelius. The difficulty in identifying and defining coercive action means that the doctrine could undermine the system of federal regulation in the United States. In response to this concern, commentators argued that the Supreme Court’s holding in NFIB would not extend past the unique facts of that case. While the Court did not clarify the scope of the doctrine in NFIB, its conclusion seemed to rest in part on the amount of funding at stake and the size and character of the change to Medicaid under the Affordable Care Act. In this case, the court compared this regulation to the Medicaid expansion, noting that it “forces these entities to alter their arrangements . . . or else endanger their federal funding.” This formulation of the ruling in NFIB glosses over differences in the two systems of regulation.
The invocation of this indeterminate doctrine in this case justifies initial fears. Because of the uncertainty and potentially far-reaching implications of scrutinizing federal action for coercion, courts should be hesitant to find other regulations unconstitutionally coercive. Extending the “coercion” doctrine from the Supreme Court’s decision in NFIB v. Sebelius might risk slowly encroaching on regulations based on sound public policy. In the health care context, expanding the power of federal courts to strike down agency action based not on the rationality of the decision but on its neutral effects on states might end up harming abortion seekers and others who lack access to basic health care — populations the plaintiffs were initially concerned would be harmed by the HHS regulation.