Editor’s Note: Since the start of the Trump administration, healthcare has faced an avalanche of change. The disputes arising from the flood of new developments encompass both legal and regulatory challenges—and are being played out in both courts and government agencies. Ultimately, they may trigger significant shifts in existing healthcare law. In a recent webinar, Manatt explored the game-changing trends and cases to watch in 2018. In a new series summarizing the program, Manatt examines how the transforming healthcare environment is affecting litigation—and remapping the legal and regulatory landscapes. This month, we look at conscience rights and civil rights in healthcare. Watch for part 2 of our series in June, focusing on the False Claims Act and fraud and abuse enforcement trends.

To view the full webinar free on demand, click here. To download a free copy of the webinar presentation, click here.

How Did We Get Here?

The free exercise clause is found in the First Amendment of the Bill of Rights and provides that “Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof.” In the modern era, the battle between access to healthcare and free exercise was triggered by Roe v. Wade, which led to a series of federal laws passed to ensure that federal funds are not used to coerce those with sincerely held religious beliefs to perform objectionable procedures. Examples include:

  • The Church Amendment (1973), exempting private hospitals receiving federal funds from any requirement to provide abortions or sterilization
  • The Coats Snowe Amendment (1996), stating that the government may not discriminate against healthcare entities that refuse to provide or train for abortions
  • The Weldon Amendment (since 2004)—adopted in connection with appropriations for the Departments of Labor, Health & Human Services (HHS) and Education—providing that none of the funds made available in the appropriations act may be made available to a federal agency or program or a state or local government if that agency, program or government subjects any institutional or healthcare entity to discrimination on the basis that it does not provide, pay for, provide coverage of or refer for abortions.

All of these statutes affirm the right of facilities or individuals not to provide procedures (or training for procedures) that go against their religious beliefs in order to receive federal funds.

After Roe v. Wade, there were a number of lawsuits against religious hospitals challenging their choice not to provide certain procedures, particularly abortion and sterilization. Many of these cases were set up as a conflict between free exercise rights and privacy rights. Each of these cases was decided in favor of the hospital’s free exercise right to choose which procedures it would permit in its facility.

Free exercise cases began being analyzed under the “Sherbert test” about 50 years ago. (Sherbert v. Verner, 374 U.S. 398 (1963)) Sherbert involved a woman who was fired for refusing to work on the Sabbath and then was denied unemployment benefits. The court found that the plaintiff’s free exercise rights were violated and imposed a strict scrutiny standard on laws that burden free exercise rights, finding that the government must show both a compelling interest and narrow tailoring for the law to survive.

Sherbert remained the standard until 1990, when it was overturned by Employment Division v. Smith (494 U.S. 872), which dealt with a very similar situation. Two individuals were terminated after participating in a Native American religious ceremony in which they ingested peyote, and they too were denied unemployment benefits. The individuals won at every level of court except the Supreme Court. In an opinion authored by Justice Scalia, the Supreme Court held that the right of free exercise does not relieve an individual of the obligation to comply with a “valid and mutual law of general applicability.” Justice Scalia went on to criticize the Sherbert strict scrutiny standard, finding that a society that adopted such a standard would be “courting anarchy.”

Both Democrats and Republicans were incensed by Smith. In response, Congress virtually unanimously passed the Religious Freedom Restoration Act (RFRA) in 1993. The purpose of the law, similar to Sherbert, was to hold that a law of general applicability could not burden free exercise rights unless it furthered a compelling government interest and was the least restrictive means for doing so.

When RFRA was enacted, it was intended to apply both to federal and state laws. In 1997, however, the Supreme Court held that Congress didn’t have the authority to extend RFRA to the states. In response, 21 states passed “state RFRA” laws that apply the RFRA standard to state laws that burden free exercise rights. For the 29 states that did not pass state RFRA laws, the Smith standard still applies, meaning that a state law that burdens free exercise rights would be examined under a lower standard than it would be under RFRA.

In 2014, the Supreme Court expanded RFRA’s scope in Hobby Lobby (134 S. Ct. 2751 (2014)), which recognized that for-profit corporations can have religious beliefs. Currently, the Supreme Court is considering Masterpiece Cakeshop (Masterpiece Cakeshop v. Colorado Civil Rights Comm’n, Docket No. 16-111, argued December 5, 2017)). The case involves a for-profit bakery and baker who refused to bake a custom cake for a same-sex wedding, claiming it was contrary to his religious beliefs, and returns to the issue presented in Smith: what burden a state law can place on free exercise rights.

Federal Anti-discrimination Laws: Sexual Orientation and Gender Identity

The main anti-discrimination statute applicable here is Section 1557 of the Affordable Care Act(ACA):

Affordable Care Act, 42 U.S.C. § 18116 “[A]n individual shall not, on the ground prohibited under title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), or section 794 of title 29, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any health program or activity, any part of which is receiving Federal financial assistance . . .”

It’s important to note that Section 1557 incorporates four existing anti-discrimination laws. By reference to the repeated “et seq.” notations, it appears that it was Congress’s intent to bring along the whole statutory scheme in each of these four laws.

Title IX prohibits discrimination on the basis of sex in any education program or activity receiving federal financial assistance. As applied in section 1557, it extends to discrimination in health programs or activities. Title IX expressly includes an exemption for religious organizations to the extent that its application would be inconsistent with the religious tenets of the organization.

Title IX cases are often interpreted in the courts in the same way as cases under Title VII of the Civil Rights Act, which applies in the employment context. For about 30 years after Title VII of the Civil Rights Act was enacted, “sex” was considered to be the biological distinction between men and women. In 1998, however, in Price Waterhouse (Price Waterhouse v. Hopkins 490 U.S. 228 (1998)) the Supreme Court extended that concept to discrimination on the basis of gender—considering the social differences rather than just the biological differences between men and women. The case involved a successful woman at Price Waterhouse who had been passed over for partnership on several occasions, because the partners found her behavior to be aggressive and loud, which they considered “un-ladylike.” The court found that kind of discrimination based on gender stereotyping was discrimination on the basis of sex and a violation of Title VII.

Thereafter most courts continued to hold that under Title VII or Title IX, sex was a reference to biology or gender but did not implicitly include sexual orientation or transgender status. Courts would allow claims, if they conformed to the gender stereotyping framework outlined in Price Waterhouse. In October 2017, Attorney General Sessions issued a memorandum to that effect, stating that as far as the Department of Justice (DOJ) is concerned, that is where the law stands.

There have been a number of proposals in Congress to include sexual orientation or gender identity in the definition of sex in federal laws. None of them have passed. A number of states, however, have passed anti-discrimination laws that are broader than the language in the federal laws. In 21 states, sexual orientation is expressly included in the anti-discrimination laws—and 18 of those states include discrimination on the basis of gender identity.

The tide has turned recently in the federal courts, as well. In the last year, the 7th Circuit, the 2nd Circuit and the 6th Circuit all have issued detailed decisions overruling existing circuit precedent. The 7th and 2nd Circuits have found that sexual orientation is included as a form of sex discrimination under Title VII. In addition, earlier this month, the 6th Circuit held that discrimination on the basis of transgender status and transitioning violates Title VII.

Federal Regulations: Section 1557 and the 2008, 2011, 2016 and Proposed 2018 Final Rules

The 2016 final rule implementing Section 1557 for nondiscrimination in health programs and activities was both overinclusive and underinclusive. The rule was overinclusive in its effort to include gender identity as a form of discrimination on the basis of sex. Congress has attempted and failed to do that in terms of amending Title VII or Title IX of the Education Act. At the same time, the rule was underinclusive in refusing to recognize the exemption for religious organizations present in Title IX. The failure to incorporate the exemption turned out to be a fatal flaw in the rule. It is why, after three years in the making, the rule was enjoined nationwide after just six months—and the Trump administration has announced its intent to rewrite the rule altogether.

In December 2008, in the last month of the Bush administration, a final rule was announced ensuring that federal funds would not support coercive or discriminatory policies or practices. The rule went into effect the day of President Obama’s inauguration. Its primary purpose was to create a secure environment for religious healthcare facilities and providers, protecting them from being forced to engage in practices that violate their religious beliefs. The rule included an enforcement mechanism for federal conscience protection laws; a written certification requirement for facilities seeking federal funds that they were complying with the rule; and a formal complaint procedure, with the Office of Civil Rights (OCR) named as the enforcement agency.

The 2008 final rule was not without its detractors. However, court challenges did not progress, because the Obama administration immediately announced its intention to reconsider the 2008 final rule. Three years later, the 2011 final rule was introduced. The 2011 final rule rescinded everything in the 2008 final rule, except for the designation of the Office of Civil Rights (OCR) as the agency to receive complaints based on violations of the healthcare provider conscience protection statutes.

Between 2011 and 2016, OCR received and addressed ten complaints. Since President Trump’s election in November 2016, however, OCR has received 34 complaints. The administration took this spate of complaints as a sign that the 2011 rule created confusion around which rights were protected and how. As a result, it announced the 2018 proposed rule.

The 2018 proposed rule signals the Trump administration’s dissatisfaction with how the Obama administration resolved complaints, as well as with interpretations under the rule that allowed states to require health plans to cover abortions. The purpose of the 2018 proposed rule is to return to the concepts first announced in the 2008 rule—providing a private right of action under the Church Amendment and other federal statutes, granting OCR the authority to initiate compliance reviews and conduct investigations, requiring facilities to adopt compliance protocols and internal grievance procedures, and mandating facilities to post notices of conscience rights.

The 2018 proposed rule, however, may well fall prey to the same problems of over-breadth that affected the 2016 Section 1557 final rule. For example, there are concerns that its definitions of healthcare programs and referrals are so broad that they will limit patient access to information and care. The 2018 proposed rule may further restrict access to care for LGBTQ patients if it is interpreted to permit healthcare providers to refuse a broad array of care based upon assertions of conscience rights. There are also concerns that the proposed rule abandons the Title VII requirement that employers must accommodate religious practices that are not an undue hardship.

Free Exercise vs. Civil Rights

What happens when free exercise comes into conflict with the anti-discrimination statutes? We’ve seen a return of lawsuits against religious hospitals.

In Means (Means v. U.S. Conference of Catholic Bishops, 2015 WL 3970046 (W.D. Mich. 2015), aff’d 836 F. 3d 643 (6th Cir. 2016)), a pregnant woman with complications made a series of visits to the emergency room of a Catholic hospital. She was not counseled about the option of abortion. She later sued the U.S. Conference of Catholic Bishops, which promulgates the ethical and religious health directives (ERDs) for Catholic healthcare that all Catholic hospitals must follow. The ERDs are very clear that Catholic hospitals should not provide services that conflict with Catholic religious beliefs, including abortion, in vitro fertilization (IVF), sterilization, euthanasia and gender reassignment surgery.

The federal court refused to rule on the woman’s claim against the Conference of Catholic Bishops, finding that there were excessive entanglement issues. The court noted, however, that physicians have a legal duty to provide adequate medical care and that Ms. Means could have a viable cause of action for medical malpractice without needing to sue the church or the religious hospital.

Patients also have brought lawsuits under state laws. In North Coast Women’s Care v. Sup.Ct. (44 Cal. 4th 1145 (2008)), a fertility clinic refused to provide an IVF procedure for a lesbian patient that it would have provided to a heterosexual woman. The court found that the refusal violated California’s Unruh Act, the state anti-discrimination law. It held that to avoid liability, physicians had to provide the procedure either to everyone or to no one. In Chamorro v. Dignity Health (No. 15-549626), the petitioners are suing a Catholic hospital alleging that its adherence to the ERDs and refusal to provide requested post-partum tubal ligations violate the California Sterilization Law.

Nurses also have filed suit against hospitals for being forced to participate in abortions or other procedures that are against their religious beliefs. In one case (Danquah v. Univ. of Med. and Dentistry of New Jersey, No. 2:11-cv-6377 (D.N.J. Oct. 31, 2011), an injunction was issued against the hospital, which agreed to stop requiring nurses to participate in abortions. In other cases, the courts held that there was no private right of action under the Church Amendment—something that perhaps the 2018 proposed rule will cure—although those courts permitted claims under relevant anti-discrimination laws.

In addition, there have been a number of transgender cases in the courts, primarily involving health benefits, the provision of services or the exclusion of services. In Tovar v. Essential Health (857 F. 3d 771 (8th Cir. 2017)) and Enstad v. PeaceHealth (No. 2:17-cv-01496-RSM (W.D. Wash.), employees sued religious hospitals whose self-funded plans categorically excluded gender transition surgery coverage. The cases were brought because coverage was not provided to dependents. The Tovar case was dismissed for lack of standing. In the Enstad case—which was brought by both the employee and her transgender son—a motion to dismiss has been filed.

A particularly sad set of facts is presented in Prescott v. Rady Children’s Hospital-San Diego (265 F. Supp. 3d 1090 (S.D. Cal. 2017)). The case involves a transgender boy who was seeking services at Children’s Hospital in San Diego. Despite being clearly told that the use of the correct pronoun was important to the boy, the records revealed, for example, a nurse telling the boy, “I would have been happy to call you a boy, but you’re such a cute girl.” Sadly, the boy ended up committing suicide. In the subsequent lawsuit, the court found that the ACA covers discrimination claims against the hospital on the basis of transgender status.

Compelled speech is another area where we are seeing an increasing number of cases filed. Compelled speech pits the rights of pro-life family planning clinics that do not provide abortion or contraceptive counselling against city and state ordinances intended to protect the rights of patients to access information. Several of these cases have been resolved in favor of the clinics.

In the National Institute of Family and Life Advocates case (Nat’l Inst. of Family and Life Advocates v. Becerra, 839 F. 3d 823 (9th Cir. 2016), cert. granted (oral argument Mar. 20, 2018)) that was recently argued in the Supreme Court, it was very clear that the Court had concerns about the way California enacted and implemented its Reproductive Freedom, Accountability, Comprehensive Care and Transparency Act that requires licensed, pregnancy-related clinics to post a notice regarding publicly available, full-service family planning services—and unlicensed clinics to post a notice that they are not licensed. It appears likely, however, that while the Supreme Court is going to find problems with the California statute because it targeted specific facilities (i.e., gerrymandering) and due to onerous disclosure requirements, it won’t completely eliminate the state’s ability to require facilities to post certain information.

The Uncertain Legal Landscape

There are still a number of unresolved questions on the legal landscape. Courts have never dealt with the question of whether individuals and religious institutions share the same free exercise rights. Cases such as Sherbert and Masterpiece Cakeshop don’t involve churches or church-controlled entities. Therefore, even if the Masterpiece Cakeshop decision comes out in favor of the State of Colorado, it’s unclear what that would mean in terms of a church-controlled hospital’s limits to decide which procedures it will provide. In reality, healthcare is unique. Both the assurance of access and the protection of conscience rights are particularly crucial in the healthcare arena.

Regulations Are a Poor Substitute for Lawmaking

When we look at Section 1557 and the 2008, 2011 and proposed 2018 rules, it is clear that regulations are a poor substitute for congressional lawmaking. Regulations are highly ideological, allowing the administration to advance a “wish list” of rules that Congress can’t or won’t pass. As a result, these rules have a long gestation period and short shelf life.

To the extent that the conscience rights vs. civil rights battle has pitted two sides against one another with each seeking to defeat its opponent, there really has been no progress. Attempts to make healthcare secular through lawsuits or rule-making have failed. All we’ve seen happen is that both sides have become even more entrenched in their own viewpoints. Both sides have heightened anxiety and believe the other side to be an existential threat.

Religious healthcare in America is strongly protected by the First Amendment. There is clearly a range of prohibited conduct that must be enforced—but a hospital’s decisions about which services to offer is an expression of religious values protected by the First Amendment. At the same time, protections of religious freedom have not hampered progressivism. Today, abortion and same-sex marriage are legal—and the majority of Americans support anti-discrimination protections for transgender and gay individuals.

Overall, it may serve both sides to expand both the protections and the exemptions. It’s time to end the rhetorical battle over “sex.” On one hand, the law should ensure that patients have access to the information they need to make informed healthcare decisions. On the other hand, it must also safeguard First Amendment rights that ensure that providers and facilities are able to exercise their conscience rights and abstain from performing procedures that violate their religious beliefs.