August 9 Update
Appellate court rejects challenge to contraceptive coverage accommodation for religious organizations. In another decision released on August 7, 2015, the Second Circuit federal court of appeals reversed a lower court decision in Catholic Health Care System v. Burwell and upheld the accommodation offered to religious organizations that object to providing contraceptive coverage to their employees. Under the most recent version of that accommodation, religious organizations can simply notify the government of their objection to providing contraceptive coverage and the government will then require the insurer that covers, or third-party administrator that administers the plan covering, the organization’s employees to provide contraceptive coverage without any further involvement of the organization. Where the organization participates in a church plan, as was true with the plaintiffs in this case, the government cannot require the third-party administrator to provide coverage, but offers financial incentives for it to do so.
The court held that it was up to the court, and not to the plaintiffs, to determine whether the accommodation substantially burdened the plaintiffs’ religious beliefs within the terms of the Religious Freedom Restoration Act (RFRA), under which the case was brought. It then concluded that the notification requirement did not impose a substantial burden.
In upholding the contraception accommodation against the RFRA challenge, the Second Circuit joins the Third, Fifth, Sixth, Seventh, Tenth, and D.C. Circuits. Challenges remain pending in the Eighth and Eleventh Circuits. The Supreme Court earlier this year remanded Sixth and Seventh Circuit decisions for the government for reconsideration in light of last year’s Hobby Lobby decision. The Seventh Circuit reaffirmed its decision, but the Sixth Circuit case is still pending.
Petitions requesting Supreme Court review have been filed in the Third, Fifth, Tenth, and D.C. Circuits and the Supreme Court has enjoined enforcement of the accommodation in the Third Circuit pending disposition of the petition for certiorari. To date, however, no federal appellate court has decided to invalidate the most recent accommodation, and unless one of the circuits does, or unless the Supreme Court decides to hear the case without a split among the circuits, the accommodation will remain in place.
Forms and instructions regarding individual and employer mandates. In another matter, the Internal Revenue Service has just released draft 2015 forms 1095-B and 1095-C reporting forms, as well as the 2015 instructions for forms 1095-B and 1095-C and for forms 1094-B and 1094-C.
The form 1095-B is to be used by insurers, self-insured large employers, and government programs to inform taxpayers and the IRS as to whether individuals have minimum essential coverage and thus are free from the individual responsibility penalty. Form 1095-C is used by employers subject to the employer responsibility provision to report to their employees and to the IRS offers of employee coverage. Forms 1094-B and 1095-B are transmittal forms used by insurers and employers to transmit groups of forms to the IRS. The use of these forms was voluntary in 2014 but is mandatory for 2015.
The 2014 reporting forms were discussed in an August, 2014 Health Affairs Blog post. The 2015 1095-B and 1095-C are virtually the same as the 2014 forms except that they include a continuation page to add additional covered individuals, and a blank for the month in which a plan started was added to the 1095-C. Small changes have also been made in the 1094 forms.
The instructions for the forms, however, have changed significantly. The instructions for forms 1094-C and 1095-C, for example, are now seventeen pages long while the 2014 instructions were thirteen pages in length.
The changes in the “B” form instructions include:
- A clarification that no form needs be filed for certain forms of supplemental coverage.
- New instructions on when to file for 2015, for requesting extensions for the time to file, and for requesting waivers from electronic filing requirements
- Instructions on and on how to file corrected returns, including examples.
- Reference to instructions, not yet available, for developing substitute forms for statements to recipients.
- Instructions for filing for an extension of time for furnishing statements to recipients.
- Information on penalties for failure to report.
- A statement that for 2015, the IRS will not impose penalties for good faith efforts to comply with information reporting requirements.
The changes in the “C” form instructions include:
- Reference to instructions, not yet available, for developing substitute forms for statements to recipients.
- Further instructions on filing, including instructions on when to file for 2014 and for requesting extensions for the time to file or waiver of electronic filing requirements.
- Instructions for filing corrected forms.
- Instructions for requesting an extension of time to furnish statements to recipients.
- Information on penalties for failure to report.
- A statement that for 2015, the IRS will not impose penalties for good faith efforts to comply with information reporting requirements.
- Further instructions and an example for using the 98 percent offer method.
- Instructions for use of a new box on the 1095-C that indicates the month on which a plan year started. The use of this box is optional in 2015 but may be mandatory in 2016.
- Further instructions on how offers of COBRA continuation coverage should be reported.
- Instructions on how breaks in service should be handled for employees.
- Clarification that minimum value plans must offer substantial coverage of hospital and physician services.
These forms and instructions are obviously quite complex and insurers and employers will need to review them carefully in preparation for filing for the first time in 2015.
Original Post
On August 7, 2015, the United States Court of Appeals for the District of Columbia Circuit rejected a petition for a rehearing en banc (by the entire court) in the case of Sissel v. Department of Health and Human Services. Mr. Sissel had sued, claiming that the Affordable Care Act’s individual responsibility requirement had been adopted in violation of the Constitution’s Origination Clause and should therefore be invalidated. Mr. Sissel’s claim had been rejected by both the district court and a panel of the appellate court. The August 7 decision upholds the panel’s decision.
Four of the eleven D.C. Circuit judges who ruled on the motion for a rehearing en banc dissented from the decision of the entire court — not because they disagreed with the result, however, but because they disagreed with the panel’s reasoning. The three judges who wrote the original panel decision concurred in the rehearing denial, contending that their initial decision was not only right as to the result but also as to the reasoning.
The Origination Clause, article I, section 7, clause 1 of the Constitution states that “[a]ll Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.” The panel had held that the Origination Clause does not apply to the ACA because it was a bill to overhaul the nation’s health care system, not to raise revenue. In their concurring opinion, the three members of the original panel contended that their decision was supported by controlling Supreme Court precedent, and was the most appropriate approach to resolving the case.
The four dissenters took strong exception to the panel’s conclusion, arguing that the ACA was in fact a bill that raised substantial revenue. They would not have invalidated the ACA, however. Rather, they contended that the court should have relied on the plenary authority of the Senate to amend House bills that in fact were revenue bills. The Service Members Home Ownership Tax Act of 2009, the original House bill that the Senate amended to create the ACA, was in fact a bill to raise revenue. There is no requirement that Senate amendments be germane to the original House legislation, and the “gut and replace” approach used by the Senate has often been used before for adopting legislation. Therefore the ACA is valid.
The opinions are full of learned analysis of the controlling Supreme Court cases and of the positions of the framers of the Constitution. The dissenters argue forcefully that their approach is necessary to preserve the principle of separation of powers and, indeed, individual liberty itself. In the end, however, the dissenters would have simply reversed and remanded, vacating the panel decision and ruling for the government on the grounds that the House legislation was properly amended in the Senate.
Whichever side prevailed in this dispute, the ACA would still have been preserved. Mr. Sissel is reportedly going to seek Supreme Court review, but it is hard for me to believe that the Supreme Court will take certiorari to resolve this issue if nothing turns on it in the result, particularly given the grief that ACA cases have caused the Court in the past.
The Fifth Circuit Court of Appeals is currently considering a request for a rehearing en banc in another Origination Clause case, Hotze v. Burwell. In that case, a panel of the Fifth Circuit Court of Appeals threw the case out on jurisdictional grounds; the panel held that the individual plaintiffs were not injured by the individual mandate which they questioned, and that a challenge to the employer mandate brought by employers was barred by the Tax Anti-Injunction Act, which prohibits lawsuits to enjoin the collection of a tax. Although the decision of the D.C. Circuit does not touch on those issues, as a practical matter the Fifth Circuit may be less likely to grant en banc review—which is rarely granted in any event—if it is persuaded that the end result would be to rule for the government, as the Texas district court originally did in Hotze and as all of the judges of the D.C. Circuit would have done in Sissel.
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