Liberty University, Inc. v. Jacob Lew

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-2347
LIBERTY UNIVERSITY, INCORPORATED, a Virginia Nonprofit
Corporation; MICHELE G. WADDELL; JOANNE V. MERRILL,
Plaintiffs - Appellants,
and
MARTHA A. NEAL; DAVID STEIN, M.D.; PAUSANIAS ALEXANDER; MARY
T. BENDORF; DELEGATE KATHY BYRON; JEFF HELGESON,
Plaintiffs,
v.
JACOB LEW, Secretary of the Treasury of the United States,
in his official capacity; KATHLEEN SEBELIUS, Secretary of
the United States Department of Health and Human Services,
in her official capacity; SETH HARRIS, Acting Secretary of
the United States Department of Labor, in his official
capacity; ERIC H. HOLDER, JR., Attorney General of the
United States, in his official capacity,
Defendants - Appellees.
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MOUNTAIN STATES LEGAL FOUNDATION; REVERE AMERICA FOUNDATION;
AMERICAN CIVIL RIGHTS UNION; FAMILY RESEARCH COUNCIL; BREAST
CANCER PREVENTION INSTITUTE; LIFE LEGAL DEFENSE FOUNDATION;
LANDMARK LEGAL FOUNDATION; PROJECT LIBERTY; DAVID BOYLE;
MEMBERS OF LEGATUS; CATHOLIC MEDICAL ASSOCIATION; FOUNDATION
FOR MORAL LAW; VIRGINIA FAMILY FOUNDATION; WEST VIRGINIA
FAMILY POLICY COUNCIL; MARYLAND FAMILY ALLIANCE; NORTH
CAROLINA FAMILY POLICY COUNCIL; PALMETTO FAMILY COUNCIL;
AMERICANS UNITED FOR LIFE; ALLIANCE DEFENDING FREEDOM,
Amici Supporting Appellants,
AMERICAN CIVIL LIBERTIES UNION; AMERICAN CIVIL LIBERTIES
UNION OF VIRGINIA, INCORPORATED; AMERICAN NURSES
ASSOCIATION; AMERICAN ACADEMY OF PEDIATRICS, INCORPORATED;
AMERICAN MEDICAL STUDENT ASSOCIATION; CENTER FOR AMERICAN
PROGRESS, d/b/a Doctors for America; NATIONAL HISPANIC
MEDICAL ASSOCIATION; NATIONAL PHYSICIANS ALLIANCE; HARRY
REID, Senate Majority Leader; NANCY PELOSI, House Democratic
Leader; DICK DURBIN, Senator, Assistant Majority Leader;
CHARLES SCHUMER, Senator, Conference Vice Chair; PATTY
MURRAY, Conference Secretary; MAX BAUCUS, Senator, Committee
on Finance Chair; TOM HARKIN, Senator, Committee on Health,
Education, Labor and Pensions Chair; PATRICK LEAHY, Senator,
Committee on the Judiciary Chair; BARBARA MIKULSKI, Senator,
HELP Subcommittee on Retirement and Aging Chair; JOHN D.
ROCKEFELLER, IV, Senator, Committee on Commerce Chair; STENY
HOYER, Representative, House Democratic Whip; JAMES E.
CLYBURN, Representative, Democratic Assistant Leader; JOHN B
LARSON, Representative, Chair of Democratic Caucus; XAVIER
BECERRA, Representative, Vice Chair of Democratic Caucus;
JOHN D DINGELL, Representative, Sponsor of House Health Care
Reform Legislation; HENRY A. WAXMAN, Representative, Ranking
Member, Committee on Energy and Commerce; FRANK PALLONE,
JR., Representative, Ranking Member, Commerce Subcommittee
on Health; SANDER M LEVIN, Representative, Ranking Member,
Committee on Ways and Means; FORTNEY PETE STARK,
Representative, Ranking Member, Ways and Means Subcommittee
on Health; ROBERT E. ANDREWS, Representative, Ranking
Member, Education and Workforce Subcommittee on Health;
JERROLD NADLER, Representative, Ranking Member, Subcommittee
on Constitution; GEORGE MILLER, Representative, Ranking
Member, Education and the Workforce Committee; JOHN CONYERS,
JR., Representative, Ranking Member, Committee on the
Judiciary; JACK M BALKIN, Knight Professor of Constitutional
Law and the First Amendment, Yale Law School; GILLIAN E
METZGER, Professor of Law, Columbia Law School; TREVOR W
MORRISON, Professor of Law, Columbia Law School; AMERICAN
ASSOCIATION OF PEOPLE WITH DISABILITIES; THE ARC OF THE
UNITED STATES; BREAST CANCER ACTION; FAMILIES USA; FRIENDS
OF CANCER RESEARCH; MARCH OF DIMES FOUNDATION; MENTAL HEALTH
AMERICA; NATIONAL BREAST CANCER COALITION; NATIONAL
ORGANIZATION FOR RARE DISORDERS; NATIONAL PARTNERSHIP FOR
WOMEN AND FAMILIES; NATIONAL SENIOR CITIZENS LAW CENTER;
NATIONAL WOMEN’S HEALTH NETWORK; THE OVARIAN CANCER NATIONAL
ALLIANCE; AMERICAN HOSPITAL ASSOCIATION; ASSOCIATION OF
AMERICAN MEDICAL COLLEGES; FEDERATION OF AMERICAN HOSPITALS;
NATIONAL ASSOCIATION OF PUBLIC HOSPITALS AND HEALTH SYSTEMS;
CATHOLIC HEALTH ASSOCIATION OF THE UNITED STATES; NATIONAL
2
ASSOCIATION OF CHILDREN’S HOSPITALS; CHRISTINE O GREGOIRE,
Governor; DR. DAVID CUTLER, Deputy, Otto Eckstein Professor
of Applied Economics, Harvard University; DR. HENRY AARON,
Senior Fellow, Economic Studies Bruce and Virginia MacLaury
Chair, The Brookings Institution; DR. GEORGE AKERLOF,
Koshland Professor of Economics, University of California-
Berkeley, 2001 Nobel Laureate; DR. STUART ALTMAN, Sol C.
Chaikin Professor of National Health Policy, Brandeis
University; DR. KENNETH ARROW, Joan Kenney Professor of
Economics and Professor of Operations Research, Stanford
University, 1972 Nobel Laureate; DR. SUSAN ATHEY, Professor
of Economics, Harvard University, 2007 Recipient of the John
Bates Clark Medal for the most influential American
economist under age 40; DR. LINDA J. BLUMBERG, Senior
Fellow, The Urban Institute, Health Policy Center; DR.
LEONARD E. BURMAN, Daniel Patrick Moynihan Professor of
Public Affairs at the Maxwell School, Syracuse University;
DR. AMITABH CHANDRA, Professor of Public Policy Kennedy
School of Government, Harvard University; DR. MICHAEL
CHERNEW, Professor, Department of Health Care Policy,
Harvard Medical School; DR. PHILIP COOK, ITT/Sanford
Professor of Public Policy, Professor of Economics, Duke
University; DR. CLAUDIA GOLDIN, Henry Lee Professor of
Economics, Harvard University; DR. TAL GROSS, Department of
Health Policy and Management, Mailman School of Public
Health, Columbia University; DR. JONATHAN GRUBER, Professor
of Economics, MIT; DR. JACK HADLEY, Associate Dean for
Finance and Planning, Professor and Senior Health Services
Researcher, College of Health and Human Services, George
Mason University; DR. VIVIAN HO, Baker Institute Chair in
Health Economics and Professor of Economics, Rice
University; DR. JOHN F. HOLAHAN, Ph. D., Director, Health
Policy Research Center, The Urban Institute; DR. JILL
HORWITZ, Professor of Law and Co-Director of the Program in
Law & Economics, University of Michigan School of Law; DR.
LAWRENCE KATZ, Elisabeth Allen Professor of Economics,
Harvard University; DR. FRANK LEVY, Rose Professor of Urban
Economics, Department of Urban Studies and Planning, MIT;
DR. PETER LINDERT, Distinguished Research Professor of
Economics, University of California, Davis; DR. ERIC
MASKIN, Albert O. Hirschman, Professor of Social Science at
the Institute for Advanced Study, Princeton University, 2007
Nobel Laureate; DR. ALAN C. MONHEIT, Professor of Health
Economics, School of Public Health, University of Medicine &
Dentistry of New Jersey; DR. MARILYN MOON, Vice President
and Director Health Program, American Institutes for
Research; DR. RICHARD J. MURNANE, Thompson Professor of
3
Education and Society, Harvard University; DR. LEN M.
NICHOLS, George Mason University; DR. HAROLD POLLACK, Helen
Ross Professor of Social Service Administration, University
of Chicago; DR. MATTHEW RABIN, Edward G. and Nancy S. Jordan
Professor of Economics, University of California-Berkeley,
2001 Recipient of the John Bates Clark Medal for the most
influential American economist under age 40; DR. JAMES B.
REBITZER, Professor of Economics, Management, and Public
Policy, Boston University School of Management; DR. MICHAEL
REICH, Professor of Economics, University of California at
Berkeley; DR. THOMAS RICE, Professor, UCLA School of Public
Health; DR. MEREDITH ROSENTHAL, Department of Health Policy
and Management, Harvard University, Harvard School of Public
Health; DR. CHRISTOPHER RUHM, Professor of Public Policy and
Economics, Department of Economics, University of Virginia;
DR. JONATHAN SKINNER, Professor of Economics, Dartmouth
College, and Professor of Community and Family Medicine,
Dartmouth Medical School; DR. KATHERINE SWARTZ, Professor,
Department of Health Policy and Management, Harvard School
of Public Health; DR. KENNETH WARNER, Dean of the School of
Public Health and Avedis Donabedian Distinguished University
Professor of Public Health, University of Michigan; DR. PAUL
N. VAN DE WATER, Senior Fellow, Center on Budget and Policy
Priorities; DR. STEPHEN ZUCKERMAN, Senior Fellow, The Urban
Institute; NATIONAL WOMEN’S LAW CENTER; AMERICAN ASSOCIATION
OF UNIVERSITY WOMEN; AMERICAN FEDERATION OF STATE, COUNTY
AND MUNICIPAL EMPLOYEES; AMERICAN MEDICAL WOMEN’S
ASSOCIATION; ASIAN & PACIFIC ISLANDER AMERICAN HEALTH FORUM;
BLACK WOMEN'S HEALTH IMPERATIVE; CHILDBIRTH CONNECTION; IBIS
REPRODUCTIVE HEALTH; INSTITUTE OF SCIENCE AND HUMAN VALUES;
MARYLAND WOMEN’S COALITION FOR HEALTH CARE REFORM; MENTAL
HEALTH AMERICA; NATIONAL ASIAN PACIFIC AMERICAN WOMEN’S
FORUM; NATIONAL ASSOCIATION OF SOCIAL WORKERS; NATIONAL
COALITION FOR LGBT HEALTH; NATIONAL COUNCIL OF JEWISH WOMEN;
NATIONAL COUNCIL OF WOMEN’S ORGANIZATIONS; NATIONAL
EDUCATION ASSOCIATION; NATIONAL LATINA INSTITUTE FOR
REPRODUCTIVE HEALTH; OLDER WOMEN’S LEAGUE; PHYSICIANS FOR
REPRODUCTIVE CHOICE AND HEALTH; RAISING WOMEN’S VOICES;
SARGENT SHRIVER NATIONAL CENTER ON POVERTY LAW; SOUTHWEST
WOMEN’S LAW CENTER; WIDER OPPORTUNITIES FOR WOMEN; WOMEN’S
LAW CENTER OF MARYLAND, INCORPORATED; WOMEN’S LAW PROJECT;
PHYSICIANS FOR REPRODUCTIVE HEALTH; AMERICAN COLLEGE OF
OBSTETRICIANS AND GYNECOLOGISTS; AMERICAN SOCIETY FOR
EMERGENCY CONTRACEPTION; ASSOCIATION OF REPRODUCTIVE HEALTH
PROFESSIONALS; AMERICAN SOCIETY FOR REPRODUCTIVE MEDICINE;
SOCIETY FOR ADOLESCENT HEALTH AND MEDICINE; AMERICAN MEDICAL
WOMEN’S ASSOCIATION; NATIONAL ASSOCIATION OF NURSE
4
PRACTITIONERS IN WOMEN’S HEALTH; SOCIETY OF FAMILY PLANNING;
JAMES TRUSSELL; SUSAN F. WOOD; DON DOWNING; KATHLEEN
BESINQUE; AMERICANS UNITED FOR SEPARATION OF CHURCH AND
STATE; THE ANTI-DEFAMATION LEAGUE; THE INTERFAITH ALLIANCE
FOUNDATION; THE NATIONAL COALITION OF AMERICAN NUNS; THE
NATIONAL COUNCIL OF JEWISH WOMEN; THE RELIGIOUS COALITION
FOR REPRODUCTIVE CHOICE; THE RELIGIOUS INSTITUTE; THE
UNITARIAN UNIVERSALIST ASSOCIATION; THE UNITARIAN
UNIVERSALIST WOMEN’S FEDERATION,
Amici Supporting Appellees.
On Remand from the Supreme Court of the United States.
(S. Ct. No. 11-438)
Argued: May 16, 2013 Decided: July 11, 2013
Before MOTZ, DAVIS, and WYNN, Circuit Judges.
Affirmed by published opinion. Judge Motz, Judge Davis, and
Judge Wynn wrote the opinion.
ARGUED: Mathew D. Staver, LIBERTY COUNSEL, Maitland, Florida,
for Appellants. Alisa Beth Klein, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Appellees. ON BRIEF: Anita L.
Staver, LIBERTY COUNSEL, Maitland, Florida; Stephen M. Crampton,
Mary E. McAlister, LIBERTY COUNSEL, Lynchburg, Virginia, for
Appellants. Timothy J. Heaphy, United States Attorney, Roanoke,
Virginia; Neal Kumar Katyal, Acting Solicitor General, Tony
West, Assistant Attorney General, Beth S. Brinkmann, Deputy
Assistant Attorney General, Mark B. Stern, Samantha L. Chaifetz,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellees. Joel M. Spector, MOUNTAIN STATES LEGAL FOUNDATION,
Lakewood, Colorado, for Amicus Mountain States Legal Foundation.
Brian S. Koukoutchos, Mandeville, Louisiana; Charles J. Cooper,
David H. Thompson, COOPER & KIRK, PLLC, Washington, D.C., for
Amicus Revere America Foundation. Peter Ferrara, AMERICAN CIVIL
RIGHTS UNION, Falls Church, Virginia; Daniel M. Gray, LAW
OFFICES OF DANIEL M. GREY, LLC, Falls Church, Virginia; Richard
B. Rogers, RICHARD B. ROGERS,PLC, Alexandria, Virginia, for
Amicus American Civil Rights Union. Kenneth A. Klukowski,
FAMILY RESEARCH COUNCIL, Washington, D.C., for Amicus Family
5
Research Council. Scott J. Ward, Timothy R. Obitts, GAMMON &
GRANGE, P.C., McLean, Virginia; Catherine W. Short, LIFE LEGAL
DEFENSE FOUNDATION, Ojai, California, for Amici Breast Cancer
Prevention Institute and Life Legal Defense Foundation. Richard
P. Hutchison, LANDMARK LEGAL FOUNDATION, Kansas City, Missouri;
Mark R. Levin, Michael J. O'Neill, Matthew C. Forys, LANDMARK
LEGAL FOUNDATION, Leesburg, Virginia, for Amicus Landmark Legal
Foundation. Stephen B. Presser, Raoul Berger Professor of Legal
History, NORTHWESTERN UNIVERSITY SCHOOL OF LAW, Chicago,
Illinois; Kathleen Cassidy Goodman, LAW OFFICE OF KATHLEEN
CASSIDY GOODMAN, Helotes, Texas; Steven W. Fitschen, THE
NATIONAL LEGAL FOUNDATION, Virginia Beach, Virginia; Allen E.
Parker, R. Clayton Trotter, THE JUSTICE FOUNDATION, San Antonio,
Texas, for Amicus Project Liberty. David Boyle, Long Beach,
California, for Amicus David Boyle. Nikolas T. Nikas, Dorinda
C. Bordlee, BIOETHICS DEFENSE FUND, Scottsdale, Arizona, for
Amici 281 Members of Legatus and Catholic Medical Association.
John A. Eidsmoe, FOUNDATION FOR MORAL LAW, Montgomery, Alabama,
for Amicus Foundation for Moral Law. M. Casey Mattox, Michael
J. Norton, Steven H. Aden, ALLIANCE DEFENDING FREEDOM,
Washington, D.C.; Anna R. Franzonello, Mailee Smith, AMERICANS
UNITED FOR LIFE, Washington, D.C., for Amici The Virginia Family
Foundation, West Virginia Family Policy Council, Maryland Family
Alliance, North Carolina Family Policy Council, Palmetto Family
Council, Americans United for Life and Alliance Defending
Freedom. Rebecca Glenberg, AMERICAN CIVIL LIBERTIES UNION OF
VIRGINIA, Richmond, Virginia; Daniel Mach, AMERICAN CIVIL
LIBERTIES UNION FOUNDATION, Washington D.C.; Andrew D. Beck,
Brigitte Amiri, AMERICAN CIVIL LIBERTIES UNION FOUNDATION, New
York, New York, for Amici The American Civil Liberties Union,
The American Civil Liberties Union of Virginia, Americans United
for Separation of Church and State, The Anti-Defamation League,
The Interfaith Alliance Foundation, The National Coalition of
American Nuns, The National Council of Jewish Women, The
Religious Coalition for Reproductive Choice, The Religious
Institute, The Unitarian Universalist Association, and The
Unitarian Universalist Women’s Federation. Ian Millhiser,
CENTER FOR AMERICAN PROGRESS, Washington, D.C., for Amici
American Nurses Association, American Academy of Pediatrics,
American Medical Student Association, Center for American
Progress D/B/A Doctors for America, National Hispanic Medical
Association, and National Physicians Alliance. Professor Walter
Dellinger, Washington, D.C.; Professor H. Jefferson Powell,
GEORGE WASHINGTON UNIVERSITY LAW SCHOOL, Washington, D.C., for
Amici Senate Majority Leader Harry Reid, House Democratic Leader
Nancy Pelosi, and Congressional Leaders and Leaders of
Committees of Relevant Jurisdiction. Gillian E. Metzger, Trevor
6
W. Morrison, New York, New York; Andrew J. Pincus, Charles A.
Rothfeld, Paul W. Hughes, Michael B. Kimberly, MAYER BROWN LLP,
Washington, D.C., for Amici Constitutional Law Professors.
Rochelle Bobroff, Simon Lazarus, NATIONAL SENIOR CITIZENS LAW
CENTER, Washington, D.C., for Amici The American Association of
People with Disabilities, The Arc of the United States, Breast
Cancer Action, Families USA, Friends of Cancer Research, March
of Dimes Foundation, Mental Health America, National Breast
Cancer Coalition, National Organization for Rare Disorders,
National Partnership for Women And Families, National Senior
Citizens Law Center, National Women’s Health Network, and The
Ovarian Cancer National Alliance. Sheree R. Kanner, Catherine
E. Stetson, Dominic F. Perella, Michael D. Kass, Sara A. Kraner,
HOGAN LOVELLS US LLP, Washington, D.C.; Melinda Reid Hatton,
Maureen D. Mudron, AMERICAN HOSPITAL ASSOCIATION, Washington,
D.C.; Ivy Baer, Karen Fisher, ASSOCIATION OF AMERICAN MEDICAL
COLLEGES, Washington, D.C.; Jeffrey G. Micklos, FEDERATION OF
AMERICAN HOSPITALS, Washington, D.C.; Larry S. Gage, President,
NATIONAL ASSOCIATION OF PUBLIC HOSPITALS AND HEALTH SYSTEMS,
Washington, D.C.; Lisa Gilden, Vice President, General
Counsel/Compliance Officer, THE CATHOLIC HEALTH ASSOCIATION OF
THE UNITED STATES, Washington, D.C.; Lawrence A. McAndrews,
President and Chief Executive Officer, NATIONAL ASSOCIATION OF
CHILDREN’S HOSPITALS, Washington, D.C., for Amici American
Hospital Association, Association of American Medical Colleges,
Catholic Health Association of the United States, Federation of
American Hospitals, National Association of Children’s
Hospitals, and National Association of Public Hospitals and
Health Systems. Kristin Houser, Adam Berger, Rebecca J. Roe,
William Rutzick, SCHROETER, GOLDMARK & BENDER, Seattle,
Washington, for Amicus The Governor of Washington. Richard L.
Rosen, ARNOLD & PORTER LLP, Washington, D.C., for Amici Economic
Scholars. Marcia D. Greenberger, Emily J. Martin, Judith G.
Waxman, Lisa Codispoti, NATIONAL WOMEN’S LAW CENTER, Washington,
D.C.; Melissa Hart, UNIVERSITY OF COLORADO LAW SCHOOL, Boulder,
Colorado, for Amici The National Women’s Law Center, American
Association of University Women, American Federation of State,
County and Municipal Employees, American Medical Women’s
Association, Asian & Pacific Islander American Health Forum,
Black Women’s Health Imperative, Childbirth Connection, Ibis
Reproductive Health, Institute of Science and Human Values,
Maryland Women’s Coalition for Health Care Reform, Mental Health
America, National Asian Pacific American Women’s Forum, National
Association of Social Workers, National Coalition for LGBT
Health, National Council of Jewish Women, National Council of
Women’s Organizations, National Education Association, National
Latina Institute for Reproductive Health, Older Women’s League,
7
Physicians for Reproductive Choice and Health, Raising Women’s
Voices, Sargent Shriver National Center on Poverty Law,
Southwest Women’s Law Center, Wider Opportunities for Women,
Women’s Law Center of Maryland, Incorporated, and Women’s Law
Project. B. Robert Piller, Jennifer Blasdell, PHYSICIANS FOR
REPRODUCTIVE HEALTH, New York, New York; Bruce H. Schneider,
Michele L. Pahmer, STROOCK & STROOCK & LAVAN LLP, New York, New
York, for Amici Physicians for Reproductive Health, American
College of Obstetricians and Gynecologists, American Society for
Emergency Contraception, Association of Reproductive Health
Professionals, American Society for Reproductive Medicine,
Society for Adolescent Health and Medicine, American Medical
Women’s Association, National Association of Nurse Practitioners
in Women’s Health, Society of Family Planning, James Trussell,
Susan F. Wood, Don Downing, and Kathleen Besinque.
8
MOTZ, DAVIS, and WYNN, Circuit Judges:
Liberty University and certain individuals (collectively,
“Plaintiffs”) brought this action challenging two provisions of
the Patient Protection and Affordable Care Act: the “individual
mandate,” which requires individuals to purchase a minimum level
of health insurance coverage, and the “employer mandate,” which
requires certain employers to offer such coverage to their
employees and their dependents. The district court dismissed
the lawsuit, upholding the constitutionality of both mandates.
On appeal we held that the Anti-Injunction Act barred us from
considering Plaintiffs’ claims and remanded the case to the
district court with instructions to dismiss for lack of
jurisdiction. See Liberty Univ., Inc. v. Geithner, 671 F.3d 391(4th Cir. 2011). The Supreme Court granted Plaintiffs’ petition
for certiorari, vacated our judgment, and remanded for further
consideration in light of National Federation of Independent
Business v. Sebelius, 132 S. Ct. 2566 (2012) (“NFIB”). See
Liberty Univ. v. Geithner, 133 S. Ct. 679 (2012). After careful
consideration of that case, we affirm the judgment of the
district court.
I.
On March 23, 2010, President Obama signed the Patient
Protection and Affordable Care Act (“Affordable Care Act” or
9
“the Act”) into law. See Pub. L. No. 111-148, 124 Stat. 119(2010). Liberty and two unaffiliated individuals challenge the
individual mandate, which will become effective in 2014, and the
employer mandate, which will become effective in 2015. Before
resolving the legal questions, we summarize the requirements of
the mandates and the relevant facts and procedural history of
this case.
A.
1.
With limited exceptions, the individual mandate imposes a
“penalty” on any taxpayer who is an “applicable individual” and
fails to obtain “minimum essential coverage.” 26 U.S.C.
§ 5000A(a)-(b). “Minimum essential coverage” includes coverage
under various government-sponsored programs, an employer-
sponsored plan, or a health plan offered in the individual
market within a state, as well as certain other coverage. Id.
§ 5000A(f).
Any individual who does not qualify for a listed exemption
is an “applicable individual.” Id. § 5000A(d)(1). The Act
provides two religion-based exemptions. The “[r]eligious
conscience exemption” applies to an individual who is “a member
of a recognized religious sect or division thereof,” id.
§ 5000A(d)(2)(A), and “an adherent of established tenets or
teachings of such sect or division by reason of which he is
10
conscientiously opposed to acceptance of the benefits of any
[life, disability, old-age, retirement, or medical] insurance,”
id. § 1402(g)(1). The sect must have been in existence at all
times since December 31, 1950, and must “make provision for
[its] dependent members.” Id. The “[h]ealth care sharing
ministry” exemption applies to a member of a 501(c)(3)
organization that “has been in existence at all times since
December 31, 1999,” the “members of which share a common set of
ethical or religious beliefs[,] . . . share medical expenses
among members in accordance with those beliefs,” and “retain
membership even after they develop a medical condition.” Id.
§ 5000A(d)(2)(B).
The penalty for failing to obtain minimum essential
coverage is tied to the individual’s income but cannot exceed
the cost of “the national average premium for qualified health
plans” meeting a certain level of coverage. See id. § 5000A(c).
The Secretary of the Treasury has the authority to “assess[] and
collect[] [the penalty] in the same manner” as a tax. Id.
§§ 5000A(g)(1), 6671(a).
2.
If an “applicable large employer” fails to provide
affordable health care coverage to its full-time employees and
their dependents, the employer mandate may require an
“assessable payment” by the employer. Id. § 4980H(a)-(b). The
11
Act defines an “applicable large employer” as an employer who
employed an average of at least fifty full-time employees during
the preceding year. Id. § 4980H(c)(2).
Such an employer must make an assessable payment if at
least one of its full-time employees qualifies for “an
applicable premium tax credit or cost-sharing reduction” to help
pay for health care coverage. Id. § 4980H(a)-(b). An employee
is eligible for an “applicable premium tax credit” or “cost-
sharing reduction” if the employer fails to offer the employee
“affordable” coverage providing “minimum value” and the
employee’s income falls between 100% and 400% of the poverty
line. Id. §§ 4980H(c)(3), 36B(a)-(c); Affordable Care Act
§ 1402(a), (b), (f)(2) (codified at 42 U.S.C. § 18071(a), (b),
(f)(2)). 1
The amount of the assessable payment that an employer
required to make such a payment must pay depends on whether the
employer offers “minimum essential coverage” to its full-time
employees and their dependents. 26 U.S.C. § 4980H(a)-(b). If
the employer fails to offer such coverage, the assessable
1
Coverage is “affordable” if the employee’s required
contribution to the plan does not exceed an indexed percentage
of his household income. 26 U.S.C. § 36B(c)(2)(C)(i). A plan
fails to provide “minimum value” if the plan’s share of the
employee’s health costs is less than 60% of total costs. Id.
§ 36B(c)(2)(C)(ii).
12
payment is calculated by multiplying $2000 by the number of
full-time employees (less thirty), prorated over the number of
months the employer is liable. Id. § 4980H(a), (c)(1),
(c)(2)(D)(i). If the employer does offer such coverage, the
assessable payment is calculated by multiplying $3000 by the
number of employees receiving an applicable premium tax credit
or cost-sharing reduction, prorated on a monthly basis. Id.
§ 4980H(b)(1). The amount of the payment under § 4980H(b)
cannot exceed the amount the employer would owe if liable under
§ 4980H(a). Id. § 4980H(b)(2). As with the individual mandate,
the Secretary of the Treasury has the authority to assess and
collect the exaction in the same manner as a tax. Id.
§§ 4980H(d)(1), 6671(a).
“Minimum essential coverage” includes coverage under an
“eligible employer-sponsored plan,” other than coverage of only
certain excepted benefits (like limited scope dental or vision
benefits), which does not qualify. Id. §§ 4980H(a)(1),
5000A(f)(2)-(3); Public Health Service Act § 2791(c) (codified
at 42 U.S.C. § 300gg-91(c)). An “eligible employer-sponsored
plan” includes a “group health plan,” which is a plan
established or maintained by an employer for the purpose of
providing medical care to employees and their dependents. 26
U.S.C. § 5000A(f)(2); 42 U.S.C. § 300gg-91(a); 29 U.S.C.
§ 1002(1). Thus, employer-provided health care coverage would
13
seem to qualify as minimum essential coverage unless that
coverage applies only to excepted benefits. In effect, then,
§ 4980H(a) imposes an assessable payment on an applicable
employer who fails to offer coverage to its full-time employees
and their dependents, while § 4980H(b) imposes an assessable
payment on an applicable employer who provides coverage that
does not satisfy the mandate’s affordability criteria.
B.
On March 23, 2010, the day the President signed the
Affordable Care Act into law, Plaintiffs filed this action
against the Secretary of the Treasury and other officials
(collectively, “the Secretary”). Plaintiffs sought a
declaration that the individual and employer mandates are
invalid and an order enjoining their enforcement.
1.
In their second amended complaint, the individual
plaintiffs, Michele G. Waddell and Joanne V. Merrill, assert
that they have “made a personal choice not to purchase health
insurance coverage and [do] not want to” do so. 2 Further,
Waddell and Merrill allege that the Act will force them to “pay
2
The district court found that three of the individual
plaintiffs, David Stein, Kathy Byron, and Jeff Helgeson, lacked
standing. Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611,
621-22 (W.D. Va. 2010). Plaintiffs do not challenge that
determination on appeal.
14
for health insurance coverage that is not necessary or desirable
or face significant penalties.” They also assert that they are
Christians “who have sincerely held religious beliefs that
abortions, except where necessary to save the life of the
pregnant mother, are murder and morally repugnant” and that
“they should play no part in such abortions, including no part
in facilitating, subsidizing, easing, funding, or supporting
such abortions since to do so is evil and morally repugnant
complicity.”
Liberty alleges that it employs approximately 3900 full-
time faculty and staff, and that it is self-insured and offers
“health savings accounts, private insurance policies and other
health care reimbursement options to qualified employees.”
Liberty asserts that “depending upon how the federal government
defines ‘minimum essential coverage’ and the affordability
index,” the University could be found to offer coverage
insufficient “to satisfy the federal definition of minimum
essential coverage or coverage that is deemed unaffordable . . .
and therefore could be subjected to significant penalties” and
“substantial financial hardship.” Liberty also alleges that the
employer mandate will “increase the cost of care . . . [and]
will directly and negatively affect [the University] by
increasing the cost of providing health insurance coverage and
15
thus directly affect the ability of the University to carry on
its mission.”
Finally, Liberty asserts that it “is a Christian
educational institution whose employees are Christians who have
sincerely held religious beliefs that abortions, except where
necessary to save the life of the pregnant mother, are murder
and morally repugnant.” It further explains that its religious
beliefs bar it from “play[ing] [any] part in abortions,
including [any] part in facilitating, subsidizing, easing,
funding, or supporting abortions since to do so is evil and
morally repugnant complicity.”
2.
Before the district court, Plaintiffs asserted that the
individual and employer mandates exceeded Congress’s Article I
powers and violated the Tenth Amendment, the Establishment and
Free Exercise Clauses of the First Amendment, the Religious
Freedom Restoration Act, the Fifth Amendment, the right to free
speech and free association under the First Amendment, the
Article I, Section 9 prohibition against unapportioned
capitation or direct taxes, and the Guarantee Clause. The
Secretary moved to dismiss the second amended complaint for lack
of jurisdiction, arguing that Plaintiffs lacked standing and
that the Anti-Injunction Act barred the suit. Alternatively,
the Secretary moved to dismiss all counts for failure to state a
16
claim upon which relief could be granted. The district court
concluded that it possessed jurisdiction but granted the
Secretary’s motion to dismiss for failure to state a claim. See
Liberty Univ., Inc. v. Geithner, 753 F. Supp. 2d 611 (W.D. Va.
2010). Plaintiffs appealed only as to the Article I,
Establishment Clause, Free Exercise Clause, Religious Freedom
Restoration Act, and Fifth Amendment claims.
When we considered the case on appeal, we did not reach the
merits of those claims because we concluded that the Anti-
Injunction Act deprived us of jurisdiction. See Liberty Univ.,
671 F.3d 391. After initially denying certiorari, Liberty Univ.
v. Geithner, 133 S. Ct. 60 (2012), on reconsideration the
Supreme Court granted certiorari, vacated our judgment, and
directed us to give further consideration to the case in light
of NFIB, see Liberty Univ., 133 S. Ct. 679. In NFIB, the Court
held that the Anti-Injunction Act did not bar a challenge to the
individual mandate and upheld that mandate as a lawful exercise
of Congress’s taxing power. 132 S. Ct. at 2584, 2600. Five
members of the Court, however, concluded that the individual
mandate exceeds Congress’s power under the Commerce Clause. Id.
at 2593 (Roberts, C.J.); id. at 2644-50 (Scalia, Kennedy,
Thomas, and Alito, JJ., dissenting) (“joint dissent”).
On remand, we must decide whether the Anti-Injunction Act
bars this pre-enforcement challenge to the employer mandate, and
17
whether Plaintiffs have standing to challenge the mandates. If
neither jurisdictional hurdle prevents our consideration of the
merits of the case, we must determine whether Congress acted
within the scope of its constitutionally delegated powers when
it enacted the employer mandate. Finally, if we find that the
mandates are a valid exercise of Congress’s Article I powers, we
must address Plaintiffs’ religion-based arguments. 3 Our review
is de novo. E.I. du Pont de Nemours & Co. v. Kolon Indus.,
Inc., 637 F.3d 435, 440 (4th Cir. 2011) (reviewing de novo
district court’s grant of motion to dismiss for failure to state
a claim under Fed. R. Civ. P. 12(b)(6)); Estate of Michael ex
rel. Michael v. Lullo, 173 F.3d 503, 506 (4th Cir. 1999)
(reviewing de novo district court’s decision whether to dismiss
for lack of jurisdiction).
II.
The Anti-Injunction Act (“AIA”) provides that “no suit for
the purpose of restraining the assessment or collection of any
3
The plaintiffs raise on appeal new arguments that the
Affordable Care Act violates the Origination Clause and
impermissibly conflicts with various state laws. Plaintiffs had
the opportunity to raise these arguments in the district court
and in the original briefing in this case but did not do so;
thus the arguments are waived. See Wash. Metro. Area Transit
Auth. v. Precision Small Engines, 227 F.3d 224, 227-28 (4th Cir.
2000).
18
tax shall be maintained in any court by any person.” 26 U.S.C.
§ 7421(a). Where it applies, the AIA thus deprives courts of
jurisdiction to entertain pre-enforcement suits seeking to
enjoin the collection of federal taxes. See Enochs v. Williams
Packing & Navigation Co., 370 U.S. 1, 5 (1962). 4
Liberty’s challenge to the employer mandate is a pre-
enforcement suit to enjoin the collection of an exaction that is
codified in the Internal Revenue Code, and which the Secretary
of the Treasury is empowered to collect in the same manner as a
tax. In NFIB, however, the Supreme Court made clear that the
AIA does not apply to every exaction that functions as a tax or
even to every exaction that passes muster as a tax for
constitutional purposes. Rather, the AIA applies only where
Congress intends it to. See NFIB, 132 S. Ct. at 2583 (noting
that, although “Congress cannot change whether an exaction is a
tax . . . for constitutional purposes,” the AIA and the
Affordable Care Act “are creatures of Congress’s own creation”
and “[h]ow they relate to each other is up to Congress”).
4
We note that Plaintiffs request declaratory as well as
injunctive relief. The Declaratory Judgment Act authorizes
federal courts to issue declaratory judgments, except “with
respect to Federal taxes.” 28 U.S.C. § 2201(a). Because the
Declaratory Judgment Act’s tax exception is coextensive with the
AIA, the following analysis also applies to Plaintiffs’ request
for declaratory relief. See Sigmon Coal Co. v. Apfel, 226 F.3d
291, 299 (4th Cir. 2000).
19
When concluding that Congress did not intend to bar pre-
enforcement challenges to the individual mandate, the Court in
NFIB found it most significant that Congress chose to describe
the shared responsibility payment as a “penalty” rather than a
“tax.” See id. (noting that “[t]here is no immediate reason to
think that a statute applying to ‘any tax’ would apply to a
‘penalty’”). Thus, we begin our AIA inquiry with particular
attention to how Congress characterized the exaction set forth
in the employer mandate.
In maintaining that the AIA bars this challenge to the
employer mandate, the Secretary relies heavily on the fact that
the Act twice refers to the employer mandate exaction as a
“tax.” See 26 U.S.C. § 4980H(b)(2), (c)(7). In doing so, the
Secretary virtually ignores the fact that the Act does not
consistently characterize the exaction as a tax. Rather, the
Act initially identifies the employer mandate exaction as an
“assessable payment.” See id. § 4980H(a). The Act then
proceeds to characterize the exaction as an “assessable payment”
six more times. See id. § 4980H(b)(1), (c)(2)(D)(i)(I), (d)(1),
(d)(2), (d)(3). Additionally, the Act once refers to the
exaction as an “assessable penalt[y].” See id.
§ 4980H(c)(2)(D).
Further, on one of the two occasions in which the Act
refers to the employer mandate exaction as a “tax,” it does so
20
in a tax-specific context, where the use of another word would
create confusion. Section 4980H(c)(7) provides: “For denial of
deduction for the tax imposed by this section, see section
275(a)(6).” Section 275(a) states that “[n]o deduction shall be
allowed for the following taxes” and then lists various taxes,
including “[t]axes imposed by chapter[] . . . 43.” The employer
mandate is codified in chapter 43 of the Code. Thus, the Act
presumably refers to the employer mandate exaction as a “tax”
when cross-referencing § 275(a)(6) to make clear that, for
purposes of determining deductibility, the exaction is a tax
imposed by chapter 43.
There may be no equally obvious explanation for the other
instance in which the Act characterizes the employer mandate
exaction as a “tax.” See 26 U.S.C. § 4980H(b)(2) (providing
that the “aggregate amount of tax” assessed for offering
coverage that is unaffordable cannot exceed the amount the
employer would owe under section 4980H(a) for failing to offer
minimum essential coverage). But we simply cannot place much
significance on a single unexplained use of that term. Because
Congress initially and primarily refers to the exaction as an
“assessable payment” and not a “tax,” the statutory text
suggests that Congress did not intend the exaction to be treated
as a tax for purposes of the AIA.
21
Furthermore, Congress did not otherwise indicate that the
employer mandate exaction qualifies as a tax for AIA purposes,
though of course it could have done so. As the Supreme Court
pointed out in NFIB, 26 U.S.C. § 6671(a) provides that the
“penalties and liabilities” found in subchapter 68B of the
Internal Revenue Code are “treated as taxes” for purposes of the
AIA. See NFIB, 132 S. Ct. at 2583. The employer mandate, like
the individual mandate, is not included in subchapter 68B, and
no other provision indicates that we are to treat its
“assessable payment” as a tax. See id. (making the same point
with regard to the individual mandate).
Finally, we note that to adopt the Secretary’s position
would lead to an anomalous result. The Supreme Court has
expressly held that a person subject to the individual mandate
can bring a pre-enforcement suit challenging that provision.
But, under the Secretary’s theory, an employer subject to the
employer mandate could bring only a post-enforcement suit
challenging that provision. It seems highly unlikely that
Congress meant to signal -- with two isolated references to the
term “tax” –- that the mandates should be treated differently
for purposes of the AIA’s applicability. Tellingly, the
Government has pointed to no rationale supporting such
differential treatment.
22
For these reasons, we hold that the employer mandate
exaction, like the individual mandate exaction, does not
constitute a tax for purposes of the AIA. Therefore, the AIA
does not bar this suit.
III.
The Secretary argues that another jurisdictional hurdle –-
standing -- prevents our consideration of the merits of this
case. To establish standing at the motion to dismiss stage, a
plaintiff must plausibly allege that: “(1) it has suffered an
injury in fact that is (a) concrete and particularized and (b)
actual or imminent, not conjectural or hypothetical; (2) the
injury is fairly traceable to the challenged action of the
defendant; and (3) it is likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.
(TOC), Inc., 528 U.S. 167, 180–81 (2000) (internal quotation
marks omitted); see Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007) (at motion to dismiss stage, plaintiff must allege
sufficient facts to render claim plausible). The Secretary
contends that all plaintiffs lack standing because they allege
no actual or imminent injury. We address first Liberty’s
standing and then that of the individual plaintiffs.
23
A.
Liberty has more than fifty full-time employees, and the
Secretary does not contest that it is an “applicable large
employer” subject to the employer mandate. Nevertheless, the
Secretary argues that Liberty has failed to establish standing
because it is speculative whether Liberty will be subject to an
assessable payment under 26 U.S.C. § 4980H. Specifically, the
Secretary contends that the health care coverage Liberty
acknowledges it already provides to its employees qualifies as
minimum essential coverage that may also satisfy the employer
mandate’s affordability criteria.
The Secretary’s argument may well be correct -– as far as
it goes. 5 But Liberty need not show that it will be subject to
an assessable payment to establish standing if it otherwise
5
Liberty alleges that it “could be determined to not offer
coverage sufficient to satisfy the federal definition of minimum
essential coverage or coverage that is deemed unaffordable . . .
and therefore could be subjected to significant penalties.” But
“minimum essential coverage” seems to include coverage under any
employer-sponsored plan, unless that plan covers only excepted
benefits. See 26 U.S.C. §§ 4980H(a), 5000A(f)(2)-(3). Liberty
does not suggest its current plan covers only excepted benefits.
Thus, by definition that plan appears to meet the “minimum
essential coverage” requirement. Further, while it is possible
that Liberty’s current plan fails to provide affordable
coverage, subjecting Liberty to an assessable payment under
§ 4980H(b), Liberty alleges only that its coverage “could” be
deemed unaffordable. The Supreme Court has held that
“threatened injury must be certainly impending to constitute
injury in fact” and “[a]llegations of possible future injury are
not sufficient.” Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138,
1147 (2013) (internal quotation marks omitted).
24
alleges facts that establish standing. In this case, in
addition to alleging that it “could” be subject to an assessable
payment, Liberty alleges that the employer mandate and its
“attendant burdensome regulations will . . . increase the cost
of care” and “directly and negatively affect [it] by increasing
the cost of providing health insurance coverage.”
“[G]eneral factual allegations of injury resulting from the
defendant’s conduct may suffice, for on a motion to dismiss we
presum[e] that general allegations embrace those specific facts
that are necessary to support the claim.” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 561 (1992) (internal quotation marks
omitted); see Bennett v. Spear, 520 U.S. 154, 167-68 (1997).
Thus, to establish standing, Liberty need not prove that the
employer mandate will increase its costs of providing health
coverage; it need only plausibly allege that it will.
Liberty’s allegation to this effect is plausible. Even if
the coverage Liberty currently provides ultimately proves
sufficient, it may well incur additional costs because of the
administrative burden of assuring compliance with the employer
mandate, or due to an increase in the cost of care. See
generally Ass’n of Private Sector Colls. & Univs. v. Duncan, 681
F.3d 427, 457-58 (D.C. Cir. 2012) (increased compliance costs
constitute injury in fact sufficient to confer standing); N.Y.
Civil Liberties Union v. Grandeau, 528 F.3d 122, 131 (2d Cir.
25
2008) (administrative burden constitutes injury in fact for
standing purposes); Frank v. United States, 78 F.3d 815, 823-24
(2d Cir. 1996) (same), vacated on other grounds, 521 U.S. 1114(1997).
Moreover, Liberty’s injury is imminent even though the
employer mandate will not go into effect until January 1, 2015,
as Liberty must take measures to ensure compliance in advance of
that date. See Virginia v. Am. Booksellers Ass’n, 484 U.S. 383,
392-93 (1988) (holding booksellers had standing though
challenged law had not yet been enforced because they “w[ould]
have to take significant and costly compliance measures”
beforehand “if their interpretation of the statute [wa]s
correct”). Thus, Liberty has standing to challenge the employer
mandate.
B.
The individual plaintiffs, after alleging that they do not
have or want to purchase health insurance coverage, assert that
the individual mandate “will create a financial hardship in that
[they] will have to either pay for health insurance coverage
. . . or face significant penalties.”
The Secretary maintains that the individual plaintiffs lack
standing because they may be exempt from the individual mandate
penalty, either because their income is below the mandate’s
threshold level or because they qualify for a proposed hardship
26
exemption. See 26 U.S.C. § 5000A(e)(2) (exempting individuals
with income below filing threshold); 78 Fed. Reg. 7348, 7354-55
(Feb. 1, 2013) (describing proposed hardship exemptions). But,
again, at this early stage, plaintiffs need only provide
“general factual allegations of injury.” Lujan, 504 U.S. at
561. And, we must “accept[] all well-pleaded allegations in the
plaintiff’s complaint as true.” De’Lonta v. Angelone, 330 F.3d
630, 633 (4th Cir. 2003).
The individual plaintiffs allege the individual mandate
will obligate them to buy insurance or pay a penalty, and their
alleged lack of insurance provides sufficient support for that
allegation at this stage of the proceedings. Further, the
individual plaintiffs’ injury is imminent because they must make
preparations to obtain insurance before the mandate goes into
effect. See Am. Booksellers Ass’n, 484 U.S. at 392-93.
Thus, we conclude that the individual plaintiffs have
standing to challenge the individual mandate. We therefore
proceed to the merits.
IV.
A.
Liberty argues that the employer mandate exceeds Congress’s
commerce power because Congress does not have “the power to
order employers to provide government-defined health insurance
27
to their employees.” Post-Remand Opening Br. 18. This is so,
Liberty contends, because the employer mandate “compel[s]
employers to engage in particular conduct or purchase an
unwanted product,” contrary to the dictates of NFIB. Post-
Remand Reply Br. 16. In Liberty’s view, “[a]llowing Congress to
mandate that employers provide health insurance . . . goes far
beyond regulations of wages and hours upheld under the Commerce
Clause.” Post-Remand Opening Br. 19.
The Secretary counters that the employer mandate is a valid
exercise of Congress’s authority under the Commerce Clause
because “[h]ealth coverage benefits form part of an employee’s
compensation package, and ‘it is well-established in Supreme
Court precedent that Congress has the power to regulate the
terms and conditions of employment.’” Post-Remand Resp. Br. 25.
(quoting Liberty Univ., 753 F. Supp. 2d at 635). More
specifically, the Secretary argues that
[i]f employees put their insurance at risk when they
change jobs, they may be “reluctant to switch jobs in
the first place (a phenomenon known as ‘job lock’).”
[Congressional Budget Office, Key Issues in Analyzing
Major Health Insurance Proposals 8 (Dec. 2008)
[hereinafter “CBO, Key Issues”]]. As Congress
understood, the prospect of losing employee insurance
benefits may obstruct interstate mobility, which the
Constitution generally, and the commerce power
specifically, were designed to prevent.
Original Resp. Br. 46–47. The Secretary further contends that
Congress found that “employers who do not offer health
insurance to their workers gain an unfair economic
28
advantage relative to those employers who do provide
coverage, and millions of hard-working Americans and
their families are left without health insurance.”
H.R. Rep. No. 111-443(II), at 985 (2010). Congress
noted that this state of affairs results in “a vicious
cycle because these uninsured workers turn to
emergency rooms for health care which in turn
increases costs for employers and families with health
insurance,” making it more difficult for employers to
provide coverage. Id. at 985–86.
Id. at 53. Thus, the Secretary concludes, “[t]he provision of
health coverage substantially affects commerce just as other
forms of compensation and terms of employment do, and the
businesses run by large employers likewise substantially affect
commerce.” Post-Remand Resp. Br. 27–28. We think the Secretary
has the better argument.
B.
“[T]he determinative test of the exercise of power by the
Congress under the Commerce Clause is simply whether the
activity sought to be regulated is commerce which concerns more
States than one and has a real and substantial relation to the
national interest.” Heart of Atlanta Motel, Inc. v. United
States, 379 U.S. 241, 255 (1964) (internal quotation marks
omitted). “The power of Congress in this field is broad and
sweeping . . . .” Katzenbach v. McClung, 379 U.S. 294, 305
(1964); see also NFIB, 132 S. Ct. at 2585 (Roberts, C.J.) (“[I]t
is now well established that Congress has broad authority under
the [Commerce] Clause.”). “[T]he power to regulate commerce is
29
the power to enact all appropriate legislation for its
protection or advancement; to adopt measures to promote its
growth and insure its safety; to foster, protect, control, and
restrain.” NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1,
36–37 (1937) (internal citations and quotation marks omitted).
Among Congress’s expansive Commerce Clause powers is the
authority to regulate “those activities that substantially
affect interstate commerce.” United States v. Morrison, 529
U.S. 598, 609 (2000). So broad is this power that Congress may
regulate activity without showing that it has “any specific
effect upon interstate commerce,” so long as, “in the
aggregate,” the activity “would represent ‘a general practice
. . . subject to federal control.’” Citizens Bank v. Alafabco,
Inc., 539 U.S. 52, 56-57 (2003) (ellipsis in original) (quoting
Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S.
219, 236 (1948)). Moreover, Congress need not show that the
activity “taken in the aggregate, substantially affect[s]
interstate commerce in fact,” but only that “a ‘rational basis’
exists for so concluding.” Gonzales v. Raich, 545 U.S. 1, 22
(2005) (emphasis added) (quoting United States v. Lopez, 514
U.S. 549, 557 (1995)).
To be sure, Congress’s authority under the Commerce Clause
is not without limits. In NFIB, five justices of the Supreme
Court found that the individual mandate exceeded Congress’s
30
commerce power. 132 S. Ct. at 2585–93 (Roberts, C.J.); id. at
2644–50 (joint dissent). Although “[t]here has been
considerable debate about whether the statements [in NFIB] about
the Commerce Clause are dicta or binding precedent,” 6 these five
justices agreed that the Commerce Clause does not grant Congress
the authority to “compel” or “mandate” an individual to enter
commerce by purchasing a good or service. See NFIB, 132 S. Ct.
at 2587 (Roberts, C.J.) (finding the individual mandate beyond
Congress’s commerce power because it “compels individuals to
become active in commerce by purchasing a product”) (emphasis in
original); id. at 2646–47 (joint dissent) (noting that
“mandating of economic activity” is beyond the scope of the
Commerce Clause). Rather, these justices concluded that the
Commerce Clause permits Congress to regulate only existing
activity.
Chief Justice Roberts’s -- and, to a large degree, the
joint dissenters’ -- analysis focused on the text of the
Commerce Clause, the Court’s cases interpreting that clause, and
6
United States v. Henry, 688 F.3d 637, 641 n.5 (9th Cir.
2012) (citing David Post, Commerce Clause “Holding v. Dictum
Mess” Not So Simple, The Volokh Conspiracy (July 3, 2012, 8:17
AM), http://www.volokh.com/2012/07/03/commerce-clause-holding-v-
dictum-mess-not-so-simple/), cert. denied, 133 S. Ct. 996(2013); see also United States v. Roszkowski, 700 F.3d 50, 58
n.3 (1st Cir. 2012) (declining to “express [an] opinion as to
whether the . . . Commerce Clause discussion was indeed a
holding of the Court”).
31
the practical effect and operation of the individual mandate.
As to the text, Chief Justice Roberts noted that the Commerce
Clause “grants Congress the power to ‘regulate Commerce.’” Id.
at 2586 (emphasis in original) (citing U.S. Const. art. I, § 8,
cl. 3). In the Chief Justice’s view, “[t]he power to regulate
commerce presupposes the existence of commercial activity to be
regulated.” Id. (emphasis in original). In the same vein, the
joint dissenters cited definitions of “regulate” common at the
time of the Constitution’s drafting, and concluded that under
these definitions “regulate” “can mean to direct the manner of
something but not to direct that something come into being.”
Id. at 2644.
As to the Court’s prior cases, the Chief Justice noted that
“all have one thing in common: They uniformly describe the
power as reaching ‘activity.’” Id. at 2587; see also id.
(citing Lopez, 514 U.S. at 560; Perez v. United States, 402 U.S.
146, 154 (1971); Wickard v. Filburn, 317 U.S. 111, 125 (1942);
NLRB, 301 U.S. at 37). The joint dissenters similarly
distinguished the Commerce Clause cases on which the government
relied as “involv[ing] commercial activity,” id. at 2648
(emphasis in original), and “not represent[ing] the expansion of
the federal power to direct into a broad new field,” id. at
2646.
32
Finally, both Chief Justice Roberts and the joint
dissenters expressed substantial concern about the practical and
operational effects of the individual mandate. Chief Justice
Roberts suggested that construing the commerce power to allow
Congress to mandate the purchase of health insurance would
“permit Congress to regulate individuals precisely because they
are doing nothing,” and “would bring countless decisions an
individual could potentially make within the scope of federal
regulation . . . .” Id. at 2587 (emphasis in original). The
joint dissenters expressed a similar concern, stating that
[i]f Congress can reach out and command even those
furthest removed from an interstate market to
participate in the market, then the Commerce Clause
becomes a font of unlimited power, or in Hamilton’s
words, “the hideous monster whose devouring jaws . . .
spare neither sex nor age, nor high nor low, nor
sacred nor profane.”
Id. at 2646 (ellipsis in original) (citing The Federalist No.
33, at 202 (Clinton Rossiter ed., 1961)).
C.
For the reasons set forth within, we find that the employer
mandate is no monster; rather, it is simply another example of
Congress’s longstanding authority to regulate employee
compensation offered and paid for by employers in interstate
commerce. To begin, we note that unlike the individual mandate
(as construed by five justices in NFIB), the employer mandate
does not seek to create commerce in order to regulate it. In
33
contrast to individuals, all employers are, by their very
nature, engaged in economic activity. All employers are in the
market for labor. And to the extent that the employer mandate
compels employers in interstate commerce to do something, it
does not compel them to “become active in commerce,” NFIB, 132
S. Ct. at 2587 (Roberts, C.J.) (emphasis in original); it merely
“regulate[s] existing commercial activity,” id., i.e., the
compensation of employees, see Congressional Budget Office, CBO,
Key Issues 5 (observing that “[e]mployers’ contributions [to
health insurance coverage] are simply a form of [employee]
compensation”). Liberty fails to recognize the distinction
between individuals not otherwise engaged in commerce and
employers necessarily so engaged.
Further, contrary to Liberty’s assertion, the employer
mandate does not require employers to “purchase an unwanted
product.” Post-Remand Reply Br. 16. Although some employers
may have to increase employee compensation (by offering new or
modified health insurance coverage), employers are free to self-
insure, and many do. See 78 Fed. Reg. 7314, 7318 (Feb. 1, 2013)
(confirming that a self-insured group health plan is an eligible
employer-sponsored plan satisfying the Act’s “minimum essential
coverage” requirement); Paul Fronstin, “Self-Insured Health
Plans: State Variation and Recent Trends by Firm Size,” Notes
(Employee Benefit Research Inst.), Nov. 2012, at 2 (“In 2011,
34
68.5 percent of workers in firms with 50 or more employees were
in self-insured plans . . . .”). 7
Having found that the provision regulates existing economic
activity (employee compensation), and therefore stands on quite
a different footing from the individual mandate, we further
conclude that the employer mandate is a valid exercise of
Congress’s authority under the Commerce Clause. It has long
been settled that Congress may impose conditions on terms of
employment that substantially affect interstate commerce, see
United States v. Darby, 312 U.S. 100 (1941) (upholding minimum
wage and overtime provisions of the Fair Labor Standards Act);
NLRB, 301 U.S. 1 (upholding National Labor Relations Act of
1935, which prohibited unfair labor practices), and regulate
activities that have a substantial impact on interstate
mobility, see Heart of Atlanta Motel, Inc., 379 U.S. 241(prohibiting discrimination by hotel operators); Katzenbach, 379
U.S. 294 (prohibiting discrimination by restaurant owners).
Here, Congress did both.
First, the employer mandate regulates a term of employment
(compensation) that substantially affects interstate commerce.
7
We express no opinion as to whether the limitation on the
commerce power announced by five justices in NFIB constitutes a
holding of the Court. Rather, we assume without deciding that
it does, and conclude that the employer mandate is not
restricted by that limitation.
35
Health insurance provided as part of employees’ compensation “is
the primary source of coverage for the nonelderly,” CBO, Key
Issues 4, and “[h]ealth insurance and health care services are a
significant part of the national economy,” 42 U.S.C.
§ 18091(2)(B).
National health spending is projected to increase from
[$2.5 trillion], or 17.6 percent of the economy, in
2009 to [$4.7 trillion] in 2019. Private health
insurance spending is projected to be [$854 billion]
in 2009, and pays for medical supplies, drugs, and
equipment that are shipped in interstate commerce.
Id. “[E]mployers who do not offer health insurance to their
workers gain an unfair economic advantage relative to those
employers who do provide coverage,” and perpetuate a “vicious
cycle,” H.R. Rep. No. 111-443(II), at 985 (2010): “uninsured
workers turn to emergency rooms for health care” they cannot
afford, id.; “health care providers pass on the cost [of the
uncompensated care] to private insurers,” 42 U.S.C.
§ 18091(2)(F); and insurers “pass on the cost to families”
through premium increases, id., making it more expensive -- and
thus, more difficult -- for employers to insure their employees.
“The cost of providing uncompensated care to the uninsured was
[$43 billion] in 2008,” id., and “[t]he economy loses up to
[$207 billion] a year because of the poorer health and shorter
lifespan of the uninsured,” id. § 18091(2)(E). Accordingly,
36
health insurance provided as part of employee compensation has a
substantial impact on interstate commerce.
Second, the employer mandate regulates an activity
(employee compensation) that substantially affects workers’
interstate mobility. The availability and breadth of employer-
sponsored health coverage varies, see, e.g., CBO, Key Issues 44
(observing that “large employers are more likely than small
employers to offer health insurance”), and “[t]he availability
of health insurance options can affect people’s incentives to
enter the labor force, work fewer or more hours, retire, change
jobs, or even prefer certain types of firms or jobs,” id. at
162. “[E]mployees and their dependents typically have to change
plans when changing jobs and could become uninsured if their new
employer does not offer coverage,” id. at 8; “[e]mployment-based
insurance offers a number of advantages,” including “lower
administrative costs” and “favorable tax treatment” that “may be
difficult or impossible for workers to obtain by purchasing
insurance individually,” id. at 164. And “[p]eople who have
medical problems (or have family members with medical problems)
can have an incentive to stay in a job that provides health
insurance benefits in order to cover those preexisting
conditions, even if more productive opportunities exist
elsewhere.” Id. at 164–65. Thus, health insurance provided as
37
part of employee compensation substantially affects interstate
mobility, and thereby interstate commerce.
Our recognition of Congress’s authority to enact the
employer mandate does not “open a new and potentially vast
domain to congressional authority,” NFIB, 132 S. Ct. at 2587(Roberts, C.J.), or “enable the Federal Government to regulate
all private conduct,” id. at 2643 (joint dissent). Requiring
employers to offer their employees a certain level of
compensation through health insurance coverage is akin to
requiring employers to pay their workers a minimum wage, Darby,
312 U.S. at 115, or “time and a half for overtime,” Overnight
Motor Transp. Co. v. Missel, 316 U.S. 572, 577 (1942). Thus,
our conclusion fits squarely within the existing core of the
Supreme Court’s jurisprudence, including the admonition of five
justices in NFIB that Congress may not, through its commerce
power, seek to create commerce in order to regulate it.
D.
For all these reasons, we conclude that Congress had a
rational basis for finding that employers’ provision of health
insurance coverage substantially affects interstate commerce,
see Raich, 545 U.S. at 22, and Congress’s regulation of this
activity does not run afoul of NFIB’s teachings. Accordingly,
we hold that the employer mandate is a valid exercise of
Congress’s authority under the Commerce Clause.
38
V.
A.
Plaintiffs contend that “[t]he Taxing and Spending or
General Welfare Clause does not vest Congress with the authority
to enact the [individual and employer] mandates.” Original
Opening Br. 40. But in NFIB, the Supreme Court held that the
individual mandate exaction constituted a tax and that Congress
acted well within the scope of its constitutionally granted
authority in imposing it. 132 S. Ct. at 2594-2600. Clearly,
then, Plaintiffs’ contention fails with regard to the individual
mandate. And although NFIB did not present the Supreme Court
with an opportunity to address the constitutionality of the
employer mandate, we are convinced that the NFIB taxing power
analysis inevitably leads to the conclusion that the employer
mandate exaction, too, is a constitutional tax.
B.
The Constitution unambiguously grants Congress the power to
“lay and collect Taxes . . . .” U.S. Const. art. I, § 8, cl. 1.
The Supreme Court has defined a tax as a “pecuniary burden laid
upon individuals or property for the purpose of supporting the
government,” United States v. New York, 315 U.S. 510, 515
(1942), and described Congress’s taxing power as “very
extensive,” License Tax Cases, 72 U.S. 462, 471 (1866).
39
In NFIB, the Supreme Court gleaned from precedent a
“functional approach” for determining whether an exaction,
whatever Congress calls it, constitutes a tax. 132 S. Ct. at
2595. Under that approach, the “essential feature” of any tax
is that “it produces at least some revenue for the Government.”
Id. at 2594. Additional characteristics indicative of a tax
include: the absence of a scienter requirement, collection by
the Internal Revenue Service through the normal means of
taxation, and the absence of negative legal consequences beyond
requiring payment to the IRS. Id. at 2595-97. The Supreme
Court illustrated its functional approach with a hypothetical:
Suppose Congress enacted a statute providing that
every taxpayer who owns a house without energy
efficient windows must pay $50 to the IRS. The amount
due is adjusted based on factors such as taxable
income and joint filing status, and is paid along with
the taxpayer’s income tax return. Those whose income
is below the filing threshold need not pay. The
required payment is not called a “tax,” a “penalty,”
or anything else. No one would doubt that this law
imposed a tax, and was within Congress’s power to tax.
. . . Interpreting such a law to be a tax would
hardly “[i]mpos[e] a tax through judicial
legislation.” Rather, it would give practical effect
to the Legislature’s enactment.
Id. at 2597-98 (citation omitted).
By contrast, the Supreme Court dismissed as largely
irrelevant the “regulatory motive or effect of revenue-raising
measures.” Id. at 2599. The Court recognized that some of its
older cases suggested a dichotomy between regulatory and
40
revenue-raising taxes: “A few of our cases policed the[] limits
[of Congress’s ability to use its taxing power to influence
conduct] aggressively . . . .” Id. (citing United States v.
Butler, 297 U.S. 1 (1936); Bailey v. Drexel Furniture Co., 259
U.S. 20 (1922)). But the Court rejected the revenue-versus-
regulatory distinction as defunct. Id. Accordingly, that
Congress “plainly designed” the Affordable Care Act “to expand
health insurance coverage” did not impact the Court’s taxing
power analysis in NFIB. Id. at 2596. The Court did, however,
attempt to distinguish taxes from penalties, explaining that “if
the concept of penalty means anything, it means punishment for
an unlawful act or omission.” Id. (quotation marks omitted).
C.
First, we examine the factors the Supreme Court considered
in upholding the individual mandate exaction as a constitutional
tax. In applying its “functional approach” to that exaction,
the Supreme Court concluded that it “looks like a tax in many
respects.” Id. at 2594. First and foremost, it will produce
“at least some revenue for the Government” -- namely “about $4
billion per year by 2017.” Id. Further attributes that
convinced the Supreme Court that the individual mandate exaction
constitutes a tax include: its “pa[yment] into the Treasury by
taxpayers when they file their tax returns”; the fact that “its
amount is determined by such familiar factors as taxable income,
41
number of dependents, and joint filing status”; and its
inclusion “in the Internal Revenue Code and enforce[ment] by the
IRS, which . . . must assess and collect it in the same manner
as taxes.” Id. (citations, quotation marks, and alterations
omitted). The Supreme Court also distinguished the individual
mandate tax from an exaction the Court invalidated as an
impermissible penalty in Bailey v. Drexel Furniture Co. The
Court noted that the individual mandate, unlike the provision at
issue in Drexel, contains no scienter requirement and does not
constitute “prohibitory financial punishment.” Id. at 2596
(internal quotation marks omitted).
Underscoring that the exaction was no penalty, the Supreme
Court stated that “[n]either the [Affordable Care] Act nor any
other law attaches negative legal consequences to not buying
health insurance, beyond requiring a payment to the IRS . . . .
[I]f someone chooses to pay rather than obtain health insurance,
they have fully complied with the law.” Id. at 2597. The Court
noted that an exaction may become so punitive that the taxing
power no longer authorizes it. Id. at 2599-2600. But because
the individual mandate exaction easily passed taxing power
muster, the Court refrained from delving deeper into that issue.
Id. at 2600 (“[T]he shared responsibility payment’s practical
characteristics pass muster as a tax under our narrowest
interpretations of the taxing power. Because the tax at hand is
42
within even those strict limits, we need not here decide the
precise point at which an exaction becomes so punitive that the
taxing power does not authorize it.” (internal citation
omitted)).
Finally, the Supreme Court swiftly dispelled any notion
that the individual mandate constituted a direct tax subject to
the constitutional apportionment requirement. See id. at 2598-
99; see also U.S. Const. art. I, § 9, cl. 4 (“No Capitation, or
other direct, Tax shall be laid, unless in Proportion to the
Census . . . .”). Having recognized only two types of direct
taxes -- those on individuals as individuals and those on
property -- the Supreme Court held that the individual mandate
payment fits into neither category. NFIB, 132 S. Ct. at 2598-
99.
At the end of the day, the Supreme Court concluded that
when an exaction “need not be read to do more than impose a
tax[,]” “[t]hat is sufficient to sustain it.” Id. at 2598. The
Court held that because the Affordable Care Act’s individual
mandate could be read simply as imposing a tax, Congress had the
power to enact it. The Supreme Court thus squarely rejected
Plaintiffs’ contention that the individual mandate exaction is
not a constitutional tax.
43
D.
Turning now to the employer mandate, it is clear from the
provision’s face that it possesses the “essential feature” of
any tax: “it produces at least some revenue for the
Government.” NFIB, 132 S. Ct. at 2594; see 26 U.S.C. § 4980H.
Indeed, the Congressional Budget Office estimated that the
employer mandate exaction will generate $11 billion annually by
2019. See Liberty Univ., 671 F.3d at 419 (Wynn, J., concurring)
(citing Letter from Douglas W. Elmendorf, Dir., Cong. Budget
Office, to Hon. Nancy Pelosi, Speaker, U.S. House of
Representatives, tbl. 4 (Mar. 20, 2010), available at
http://www.cbo.gov/ftpdocs/113xx/doc11379/AmendReconProp.pdf).
Looking beyond the “essential feature” to other
“functional” characteristics, the exaction the Affordable Care
Act imposes on large employers “looks like a tax in many
respects.” Cf. NFIB, 132 S. Ct. at 2594. The exaction is paid
into the Treasury, “found in the Internal Revenue Code[,] and
enforced by the IRS,” which “must assess and collect it in the
same manner as” a tax. Id.; see also 26 U.S.C. §§ 4980H(d)(1),
6671(a). Further, the employer mandate lacks a scienter
requirement, does not punish unlawful conduct, and leaves large
employers with a choice for complying with the law -- provide
adequate, affordable health coverage to employees or pay a tax.
26 U.S.C. § 4980H(a)-(b). And finally, because the exaction
44
taxes neither individuals as such nor property, it is not a
direct tax subject to the apportionment requirement. Cf. NFIB,
132 S. Ct. at 2598-99.
Relying exclusively on Drexel, Liberty contends that the
employer mandate exaction nevertheless “cross[es] the line” from
a reasonable payment to a “potentially destructive”
unconstitutional penalty. Post-Remand Opening Br. 24-25.
Fatally for Liberty’s argument, Drexel is easily distinguishable
from the case at hand.
In Drexel, the Supreme Court invalidated a “so-called tax
on employing child laborers” as an impermissible penalty. See
NFIB, 132 S. Ct. at 2595 (citing Drexel, 259 U.S. 20). The
Supreme Court did so ostensibly because the penalty: (1)
carried a scienter requirement “typical of punitive statutes,
because Congress often wishes to punish only those who
intentionally break the law”; (2) imposed an “exceedingly heavy”
financial burden -- 10 percent of an offender’s net income --
even if the offender employed only one child laborer for only
one day of the year; and (3) was enforced at least in part by
the Department of Labor, an agency responsible not for
collecting revenue but rather for punishing labor law
violations. NFIB, 132 S. Ct. at 2595 (citing Drexel, 259 U.S.
at 36-37). In stark contrast to the penalty the Court struck
down in Drexel, the employer mandate exaction is devoid of any
45
scienter requirement and does not punish unlawful behavior.
Further, the exaction is collected by the Secretary of the
Treasury in the same manner as a tax. 26 U.S.C. §§ 4980H(d)(1),
6671(a).
Moreover, the amount of the employer mandate exaction is
proportionate rather than punitive. If Liberty offers adequate
health coverage, but that coverage fails to satisfy the employer
mandate’s affordability and minimum value requirements, Liberty
will be taxed $3000 times the number of employees who receive
government assistance, prorated on a monthly basis and subject
to a cap. Id. § 4980H(b)(1)-(2); see supra at 13. And if
Liberty fails to offer adequate health coverage to its full-time
employees, it will be taxed $2000 times thirty less than its
number of full-time employees -- presumably all of whom are
being deprived of coverage -- prorated over the number of months
for which Liberty is liable. 26 U.S.C. § 4980H(a), (c)(1),
(c)(2)(D)(i); see supra at 12-13.
We therefore reject Liberty’s argument that the employer
mandate imposes a penalty rather than a tax.
E.
In conclusion, the Supreme Court has already upheld the
individual mandate exaction as a constitutional tax. NFIB, 132
S. Ct. at 2594-2600. Similarly, the employer mandate exaction
“need not be read to do more than impose a tax.” Id. at 2598.
46
Accordingly, Congress had the power to enact it, and we must
uphold it. For these reasons, as well as those provided supra
in Part IV, we reject Plaintiffs’ contention that Congress
lacked authority under Article I of the Constitution to enact
the employer mandate.
VI.
Finally, Plaintiffs challenge the Act on various religion-
based grounds. In their second amended complaint, Plaintiffs
allege that the Act violates their rights under the First and
Fifth Amendments and the Religious Freedom Restoration Act
(“RFRA”), 42 U.S.C. § 2000bb-1. For the first time on this
appeal, they also seek to challenge on religious grounds certain
regulations implementing the Act. We initially consider the
claims alleged in the second amended complaint and then those
raised for the first time on this appeal.
A.
1.
Plaintiffs maintain that both the employer mandate and the
individual mandate violate their free exercise rights under the
First Amendment and RFRA. Specifically, they allege that the
mandates unlawfully force them to violate their religious belief
47
that “they should play . . . no part in facilitating,
subsidizing, easing, funding, or supporting . . . abortions.” 8
The Free Exercise Clause provides that “Congress shall make
no law . . . prohibiting the free exercise” of religion. U.S.
Const. amend. I. However, the Clause does not compel Congress
to exempt religious practices from a “valid and neutral law of
general applicability.” Emp’t Div., Dep’t of Human Res. v.
Smith, 494 U.S. 872, 879 (1990) (internal quotation marks
omitted). This is so even if such a law “has the incidental
effect of burdening a particular religious practice.” Church of
the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520,
531 (1993).
A neutral law of general applicability thus does not
violate the Free Exercise Clause. The Act is just such a law.
It has no object that “infringe[s] upon or restrict[s] practices
because of their religious motivation,” id. at 533 (emphasis
added), and imposes no “burden[] only on conduct motivated by
religious belief,” id. at 543 (emphasis added). Relying on
8
Plaintiffs have also attempted to characterize their
complaint as raising other religious liberty claims, for
example, that “[t]hey are Christians who believe in living out
their sincerely held religious beliefs in everyday life,
including in the lifestyle choices they make, of which managing
their health care privately is but one example.” See, e.g.,
Original Opening Br. 10. But, as the district court recognized,
“[a] fair reading of the complaint does not support this novel
characterization, and the parties have not briefed these
issues.” Liberty Univ., 753 F. Supp. 2d at 641 n.17.
48
Lukumi, Plaintiffs contend that the Act somehow effects a
“religious gerrymander[].” Original Opening Br. 45; see Lukumi,
508 U.S. at 534-35 (internal quotation marks omitted). But it
does no such thing. Unlike the ordinances struck down in
Lukumi, the Act does not set apart any particular religious
group. See 508 U.S. at 535-38. The Act therefore does not
violate the Free Exercise Clause.
Plaintiffs’ RFRA claim fares no better. RFRA provides
that, “even if the burden results from a rule of general
applicability,” the “Government may substantially burden a
person’s exercise of religion only if it demonstrates that
application of the burden to the person -- (1) is in furtherance
of a compelling governmental interest; and (2) is the least
restrictive means of furthering that compelling governmental
interest.” 42 U.S.C. § 2000bb-1(a)-(b).
Thus, by its own terms, RFRA directs application of strict
scrutiny only if the Government “substantially burden[s]”
religious practice. Id.; see also Goodall by Goodall v.
Stafford Cnty. Sch. Bd., 60 F.3d 168, 171 (4th Cir. 1995) (“[I]f
the [plaintiffs] cannot show that their exercise of religion is
substantially burdened by the [government’s] policy, the
[government] is not required to come forth with proof of its
interest.”). A substantial burden, in turn, requires
“substantial pressure on an adherent to modify his behavior and
49
to violate his beliefs.” Thomas v. Review Bd. of Ind. Emp’t
Sec. Div., 450 U.S. 707, 718 (1981).
Plaintiffs present no plausible claim that the Act
substantially burdens their free exercise of religion, by
forcing them to facilitate or support abortion or otherwise.
The Act specifically provides individuals the option to purchase
a plan that covers no abortion services except those for cases
of rape or incest, or where the life of the mother would be
endangered. See 42 U.S.C. § 18054(a)(6) (requiring that at
least one plan on each exchange exclude non-excepted abortions
from coverage). The Act also does nothing to prevent employers
from providing such a plan. Furthermore, the Act allows an
individual to obtain, and an employer to offer, a plan that
covers no abortion services at all, not even excepted services.
See 42 U.S.C. § 18023(b)(1)(A)(i). 9
Given that the mandates themselves impose no substantial
burden, the option of paying a tax to avoid the mandates’
requirements certainly imposes no substantial burden. On the
9
Plaintiffs also argue that a requirement “that individuals
and employers pay at least one dollar per person per month
directly into an account to cover elective abortions” unlawfully
burdens their religious exercise. Post-Remand Opening Br. 37
(citing 42 U.S.C. § 18023(b)(2)). But this provision applies
only if individuals choose to enroll in a plan through a health
insurance exchange that elects to cover abortions, for which
federal funding may not be used. Post-Remand Resp. Br. 34-35
n.13; see 42 U.S.C. § 18023(b)(1)(B)(i), (b)(2)(A)-(B).
50
contrary, this option underscores the “lawful choice” Plaintiffs
have to avoid any coverage they might consider objectionable.
See NFIB, 132 S. Ct. at 2600; see also Goodall, 60 F.3d at 171(“It is well established that there is no substantial burden
placed on an individual’s free exercise of religion where a law
or policy merely operates so as to make the practice of the
individual’s religious beliefs more expensive.” (internal
quotation marks omitted)).
To the extent Plaintiffs contend that the tax payment
itself is a substantial burden, as the district court explained,
the Act “contains strict safeguards at multiple levels to
prevent federal funds from being used to pay for [non-excepted]
abortion services.” Liberty Univ., 753 F. Supp. 2d at 642-43;
see 42 U.S.C. § 18023(b)(2)(A) (prohibiting use of the Act’s
cost-sharing reduction or tax credits for abortion coverage);
id. § 18023(b)(2)(B)-(C) (requiring separate premiums for
coverage of abortion services); Exec. Order No. 13,535, 75 Fed.
Reg. 15,599 (Mar. 29, 2010) (implementing abortion
restrictions). We note also that “[t]axpayers generally are not
permitted to avoid payment of a tax when their objections
concern the manner in which government revenues are expended.”
Olsen v. Comm’r, 709 F.2d 278, 282 (4th Cir. 1983) (collecting
cases); see also Doremus v. Bd. of Educ., 342 U.S. 429, 433
(1952) (“[T]he interests of a taxpayer in the moneys of the
51
federal treasury are too indeterminable, remote, uncertain and
indirect to furnish a basis for an appeal to the preventive
powers of the Court over their manner of expenditure.”).
Accordingly, Plaintiffs’ free exercise claims –- both under
the Constitution and under RFRA -- fail.
2.
Plaintiffs also allege that the two religious exemptions in
the Act violate the Establishment Clause and their Fifth
Amendment equal protection rights. Of course, the mere
existence of religious exemptions in a statute poses no
constitutional problem. Rather, the Constitution freely permits
exemptions that will allow “religious exercise to exist without
sponsorship and without interference.” Walz v. Tax Comm’n, 397
U.S. 664, 669 (1970). Permissible benevolence morphs into
impermissible sponsorship only when the “proposed accommodation
singles out a particular religious sect for special treatment.”
Bd. of Educ. of Kiryas Joel Vill. Sch. Dist. v. Grumet, 512 U.S.
687, 706-07 (1994). Thus, a court applies strict scrutiny only
to statutes that “make[] explicit and deliberate distinctions
between different religious organizations.” Larson v. Valente,
456 U.S. 228, 246-47 & n.23 (1982).
A statute without such distinctions, even one that has a
disparate impact on different denominations, need only satisfy
the less rigorous test set forth in Lemon v. Kurtzman, 403 U.S.
52602 (1971). See Hernandez v. Comm’r, 490 U.S. 680, 695 (1989);
Koenick v. Felton, 190 F.3d 259, 264-65 (4th Cir. 1999)
(“[U]ntil the Supreme Court overrules Lemon and provides an
alternative analytical framework, this Court must rely on Lemon
in evaluating the constitutionality of legislation under the
Establishment Clause.” (internal quotation marks omitted)); cf.
Cutter v. Wilkinson, 544 U.S. 709, 717 n.6, 720 (2005)
(rejecting an Establishment Clause challenge to a statute making
no explicit religious distinction, without reaching Lemon,
“because it alleviates exceptional government-created burdens on
private religious exercise”). The Lemon test requires “a
secular legislative purpose,” a “principal or primary effect
. . . that neither advances nor inhibits religion,” and no
“excessive government entanglement with religion.” 403 U.S. at
612-13 (internal quotation marks omitted).
The first exemption Plaintiffs challenge is the individual
mandate’s religious conscience exemption. See 26 U.S.C.
§ 5000A(d)(2)(A). Plaintiffs maintain that this exemption
discriminates against their religious practice by applying only
to sects that conscientiously oppose all insurance benefits,
provide for their own members, and were established before
December 31, 1950. The religious conscience exemption adopts an
exemption of the Social Security Amendments of 1965 under 26
U.S.C. § 1402(g), which courts have consistently found
53
constitutional under the Establishment Clause and the Fifth
Amendment. See, e.g., Droz v. Comm’r, 48 F.3d 1120, 1124-25
(9th Cir. 1995); Hatcher v. Comm’r, 688 F.2d 82, 84 (10th Cir.
1979) (per curiam); Jaggard v. Comm’r, 582 F.2d 1189, 1189-90
(8th Cir. 1978) (per curiam); Henson v. Comm’r, 66 T.C. 835,
838-40 (1976); Palmer v. Comm’r, 52 T.C. 310, 314-15 (1969). As
the Supreme Court explained with respect to the § 1402(g)
exemption, “Congress granted an exemption . . . [to] a narrow
category which was readily identifiable,” i.e., “persons in a
religious community having its own ‘welfare’ system.” United
States v. Lee, 455 U.S. 252, 260-61 (1982).
Moreover, this exemption makes no “explicit and deliberate
distinctions” between sects, Larson, 456 U.S. at 246 n.23, and
so is subject only to the Lemon test, see Droz, 48 F.3d at 1124.
The exemption passes the Lemon test because it has a secular
purpose: “to ensure that all persons are provided for, either
by the [Act’s insurance] system or by their church.” Id.; see
also Corp. of Presiding Bishop of the Church of Jesus Christ of
Latter-Day Saints v. Amos, 483 U.S. 327, 335 (1987) (“[I]t is a
permissible legislative purpose to alleviate significant
governmental interference with the ability of religious
organizations to define and carry out their religious
missions.”). The exemption’s principal effects also neither
advance nor inhibit religion, but only assure that all
54
individuals are covered, one way or the other. And there is no
excessive entanglement with religion. Cf. Zelman v. Simmons-
Harris, 536 U.S. 639, 668 (2002) (O’Connor, J., concurring)
(noting that the Court has previously “folded the entanglement
inquiry into the primary effect inquiry,” which “ma[kes] sense
because both inquiries rely on the same evidence”); Madison v.
Riter, 355 F.3d 310, 319 (4th Cir. 2003) (same).
The second individual mandate exemption challenged by
Plaintiffs is the health care sharing ministry exemption. See
26 U.S.C. § 5000A(d)(2)(B). Plaintiffs maintain that it
unconstitutionally selects an arbitrary formation date of
December 31, 1999 as the eligibility cutoff. But even if the
exemption’s cutoff date is arbitrary, it is not
unconstitutional. For neither the cutoff’s text nor its history
suggests any deliberate attempt to distinguish between
particular religious groups. Accordingly, the cutoff need only
satisfy the Lemon test. See Hernandez, 490 U.S. at 695-96; cf.
Larson, 456 U.S. at 254 (applying strict scrutiny only when the
legislative history demonstrated “the provision was drafted with
the explicit intention of including particular religious
denominations and excluding others”).
Applying Lemon, the date serves at least two “secular
legislative purpose[s].” 403 U.S. at 612. First, the cutoff
ensures that the ministries provide care that possesses the
55
reliability that comes with historical practice. Second, it
accommodates religious health care without opening the
floodgates for any group to establish a new ministry to
circumvent the Act. The “primary effect” of the cutoff
accordingly “neither advances nor inhibits religion.” Id.
Further, given that it applies only secular criteria, the cutoff
does not “foster an excessive government entanglement with
religion.” Id. at 613 (internal quotation marks omitted).
Plaintiffs additionally contend that both the religious
conscience exemption and the health care sharing ministry
exemption violate their Fifth Amendment equal protection rights.
In furtherance of this argument they maintain that both
exemptions are subject to the heightened scrutiny that applies
“if the plaintiff can show the basis for the distinction was
religious . . . in nature.” Olsen, 709 F.2d at 283; Post-Remand
Opening Br. 56. Of course, “[i]f the justification for the
distinction is secular, it need only be rational.” Olsen, 709
F.2d at 283; see also City of Cleburne v. Cleburne Living Ctr.,
473 U.S. 432, 441-42 (1985). Here, the distinction made between
sects that oppose insurance and provide for themselves in their
own welfare system and those that do not, and the distinction
made between ministries formed before 1999 and those formed
after, are secular and thus subject only to rational basis
review. See Olsen, 709 F.2d at 283. Both distinctions are
56
rationally related to the Government’s legitimate interest in
accommodating religious practice while limiting interference in
the Act’s overriding purposes. Cf. Corp. of the Presiding
Bishop, 483 U.S. at 335.
We therefore conclude that Plaintiffs have failed to state
any plausible claim that the Establishment Clause or the Fifth
Amendment provide a basis for relief.
B.
In their recent post-remand briefs, Plaintiffs argue at
length that certain regulations implementing neither the
individual nor the employer mandate but another portion of the
Act -- § 1001, codified in part at 42 U.S.C. § 300gg-13 --
violate their religious rights. 10 See, e.g., Post-Remand Opening
Br. 2-5, 43-44. These new regulations require group health
plans to cover all FDA-approved contraceptive methods. See 45
C.F.R. § 147.130(a)(1)(iv) (2011); HRSA, Women’s Preventive
Services: Required Health Plan Coverage Guidelines, available
at http://www.hrsa.gov/womensguidelines.
Plaintiffs’ second amended complaint mentions neither
§ 1001 of the Affordable Care Act nor 42 U.S.C. § 300gg-13.
10
Section 1001 of the Affordable Care Act, inter alia,
amended the Public Health Service Act to require “[a] group
health plan and a health insurance issuer offering group or
individual health insurance” to provide, “with respect to
women,” free “preventative care and screenings.”
57
Further, the complaint does not mention contraception. To be
sure, the complaint specifies that Plaintiffs have “sincerely
held religious beliefs that abortions . . . are murder and . . .
they should play . . . no part in facilitating, subsidizing,
easing, funding, or supporting . . . abortions.” But the
complaint gives no notice that Plaintiffs challenge methods of
contraception or include within their challenge to “abortion”
all the forms of contraception they now label “abortifacients.” 11
Moreover, Plaintiffs did not challenge these regulations,
or make any argument related to contraception or abortifacients,
in the district court, in their first appeal before us, or in
their Supreme Court briefs. The Supreme Court in turn ordered a
limited remand simply “for further consideration in light of
National Federation of Independent Business v. Sebelius,” which
did not discuss this issue. See Liberty Univ., 133 S. Ct. 679.
11
In their new briefs, Plaintiffs seek to challenge as
abortifacients forms of FDA-approved contraception that may act
after fertilization, including emergency contraceptive pills and
intra-uterine devices. See Post-Remand Opening Br. 3-5. But
the Government does not define such contraceptives as
abortifacients or abortion. Well-established federal law
defines “pregnancy” to “encompass[] the period of time from
implantation until delivery.” 45 C.F.R. 46.202(f) (2001). The
forms of contraception that Plaintiffs now challenge, as they
themselves recognize, do not act after implantation, so they do
not terminate a “pregnancy” as defined in this regulation. See
FDA, Birth Control: Medicines To Help You, available at
http://www.fda.gov/ForConsumers/ByAudience/ForWomen/FreePublicat
ions/ucm313215.htm.
58
Nevertheless, for the first time in their post-remand
briefs, Plaintiffs seek to challenge these regulations.
Generally, “a federal appellate court does not consider an issue
not passed upon below.” Singleton v. Wulff, 428 U.S. 106, 120
(1976); accord Muth v. United States, 1 F.3d 246, 250 (4th Cir.
1993). This rule applies with equal force when a party attempts
to raise an issue for the first time after remand. See Rowland
v. Am. Gen. Fin., Inc., 340 F.3d 187, 191 n.1 (4th Cir. 2003).
Of course, in our discretion, we can make “[e]xceptions to
this general rule” but we do so “only in very limited
circumstances.” Muth, 1 F.3d at 250. The Supreme Court has
explained that we are “justified” in making such an exception
when the “proper resolution is beyond any doubt” or “injustice
might otherwise result.” Singleton, 428 U.S. at 121 (internal
quotation marks omitted). We have also recognized that certain
other “limited circumstances” may justify such action, e.g.,
when refusal to do so would constitute plain error or result in
a fundamental miscarriage of justice, Muth, 1 F.3d at 250, or
where there is an intervening change in the case law, Holland v.
Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999).
Plaintiffs do not contend that any of these “limited
circumstances” apply here. There is good reason for this; none
does. We recognize that the Government initially promulgated
the regulations in question while this case was pending (i.e.,
59
approximately a month before the issuance of our earlier
opinion). See Liberty Univ., 671 F.3d 391; 76 Fed. Reg. 46,621(Aug. 3, 2011). But a new implementing regulation cannot
“become a vehicle for converting plaintiffs’ lawsuit into a
challenge to the new regulation” when a “challenge to th[at]
regulation would raise substantially different legal issues from
the . . . arguments [already] propounded in th[e] lawsuit.”
Phillips v. McLaughlin, 854 F.2d 673, 676-77 (4th Cir. 1988);
see also Kinney v. Dist. of Columbia, 994 F.2d 6, 10 (D.C. Cir.
1993) (“[T]he term ‘intervening change in the law,’ [does] not
refer[] to a prospective [regulatory] change that could not
affect rights already accrued . . . .”).
Furthermore, several compelling reasons counsel against
taking up Plaintiffs’ challenge to the new regulations here. To
do so would require us not only to resolve a claim not
considered below, but also to do this in a second appeal three
years after the initiation of this lawsuit. To do so would also
require us to interpret new regulations, implementing a
provision of the Act never challenged in the second amended
complaint. 12 And to do so would require us to consider at this
12
Contrary to the Plaintiffs’ assertion, the second amended
complaint’s reference to § 1302 of the Affordable Care Act did
not preserve for our review a challenge to 42 U.S.C. § 300gg-13.
See Post-Remand Reply Br. 17–20 & n.7 (arguing that the
definition of “‘minimum essential coverage’ requires a
(Continued)
60
premature stage an argument that other appellate courts have
before them in cases in which plaintiffs have properly pled the
issue and a district court has addressed it.
Indeed, several of our sister circuits are considering such
cases, timely filed after the regulations at issue were
promulgated. See, e.g., Hobby Lobby Stores, Inc. v. Sebelius,
No. 12-6294, 2013 WL 3216103 (10th Cir. June 27, 2013) (en
banc); Gilardi v. U.S. Dep’t of HHS, No. 13-5069 (D.C. Cir.
docketed Mar. 5, 2013); Conestoga Wood Specialties Corp. v.
Sec’y of HHS, No. 13-1144, 2013 WL 1277419 (3d Cir. Feb. 8,
circuitous trip through various sections of the Act,” including
§ 1302, which defines “essential health benefits” to “include at
least preventive and wellness services partially defined in 42
U.S.C. § 300gg-13” and “has been part of Plaintiffs’ challenges
from the outset”). Section 1302, codified at 42 U.S.C. § 18022,
gives the Secretary authority to define what must be included in
an “essential health benefits package,” a “wholly different
term” from “minimum essential coverage.” Florida ex rel. Att’y
Gen. v. U.S. Dep’t of HHS, 648 F.3d 1235, 1251 (11th Cir. 2011),
rev’d in part on other grounds, NFIB, 132 S. Ct. 2566.
The term “essential health benefits package” refers to
the comprehensive benefits package that must be
provided by plans in the individual and small group
markets by 2014. The Act does not impose the
essential health benefits package on plans offered by
large group employers to their employees . . . .
“Minimum essential coverage” is the type of plan
needed to satisfy the individual mandate . . . . Many
. . . plan types will satisfy the mandate even if they
do not have the “essential health benefits package”
and regardless of the level of benefits or coverage.
Id. at 1250–51 (internal citations omitted).
61
2013); Grote v. Sebelius, 708 F.3d 850 (7th Cir. 2013); Annex
Med., Inc. v. Sebelius, No. 13-1118 (8th Cir. docketed Jan. 14,
2013); Korte v. Sebelius, No. 12-3841, 2012 WL 6757353 (7th Cir.
Dec. 28, 2012); Autocam Corp. v. Sebelius, No. 12-2673 (6th Cir.
docketed Dec. 26, 2012); Wheaton Coll. v. Sebelius, 703 F.3d 551(D.C. Cir. 2012); O’Brien v. U.S. Dep’t of HHS, No. 12-3357 (8th
Cir. docketed Oct. 4, 2012).
Finding no circumstance justifying a premature resolution
of Plaintiffs’ new arguments and compelling reasons for refusing
to do so in this case, we decline to reach Plaintiffs’ challenge
to the new regulations. 13
VII.
In sum, in light of the Supreme Court’s teachings in NFIB,
we hold that we have jurisdiction to decide this case. On the
merits, we affirm the judgment of the district court dismissing
the complaint in its entirety for failure to state a claim upon
which relief can be granted.
AFFIRMED
13
For similar reasons, we decline to address Plaintiffs’
post-remand arguments that the regulations exempting religious
employers from required contraception coverage and accommodating
eligible non-profit employers unconstitutionally discriminate
against their religious views. See 45 C.F.R. 147.130; 78 Fed.
Reg. 39,869 (July 2, 2013).
62