Today, the Court issued an unexpected order in Zubik v. Burwell, which was argued last Wednesday. The 354-word order asks the parties to file briefs on whether “contraceptive coverage may be obtained by petitioners’ employees through petitioners’ insurance companies, but in a way that does not require any involvement of petitioners beyond their own decision to provide health insurance without contraceptive coverage to their employees.” I emphasized the word “through,” because the theme of the oral arguments was that the federal government was “hijacking” the petitioners’ plans in order to provide women with “seamless” coverage.
During oral argument, in an exchange with Justice Alito, Paul Clement told the Court that for purposes of self-insured plans the notification provided by the objecting employer becomes a plan instrument for purposes of ERISA. Without that plan instrument, the insurer would be unable to then seek reimbursement from the government for providing the contraceptives to female employees. I am not an ERISA expert, but I think this is the general gist. Here is the exchange from arguments:
Samuel A. Alito, Jr.: You started to talk about — you started to talk about self-insured plans. Is it the case that the form or the notice to HHS in that instance becomes a plan instrument?
Paul D. Clement: In both cases, Your Honor, it becomes a plan instrument, and I think — you know, the government thinks that our notification in this case is the functional equivalent of the EBSA 700 Form, and the reason they required a form — and this shows you it’s not really an opt out, because the way the regulations were originally designed, you didn’t raise your hand and tell the government, I object. You sent a form directly to the insurer or directly to the TPA that they then treated as the permission slip to provide the coverage.
Ruth Bader Ginsburg: And that’s out now.
Paul D. Clement: Well, no, it’s not out. That’s actually still one of the ways that you can apply —
Ruth Bader Ginsburg: Yes, but you don’t have to do that. You can notify the government.
Paul D. Clement: Well, the alternative, thanks to this Court in its interim relief, is that we now can file an objection that the government treats exactly the same way. All they do that’s different is they essentially — it’s a mailing rule. They take our objection and then they provide that objection to the third-party administrator, and at least with the self-insured plans, that becomes every bit as much a plan document as the EBSA Form 700. And with all due respect, it’s a little rich for the government to say, This isn’t your plan, don’t worry about this, when their whole interest is put in terms of seamless coverage. If it’s seamless to the enduser, then I don’t think the Little Sisters perception that it’s seamless to them, and they are, in fact, complicit is an irrational belief by any stretch.
In effect, the objection the plaintiffs give the government–whether it is on Form EBSA Form 700 or anything else–is ultimately provided to the third-party administrator. That document then becomes an ERISA plan document, which enables the third-party administrator to seek reimbursements. As I understand the underlying regime, the government determined that without this notification, HHS lacked the statutory authority under ERISA to facilitate the accommodation. (I may be wrong about this).
So in effect, the Court is seeking answers from the party about how, within the legal bounds of ERISA, the government can pay the insurers for providing contraceptives without the plaintiffs submitting documents that become plan instruments.
With that understanding, you can see why Solicitor General Verrilli refused Alito’s characterization of the self-insured plan during this lengthy back-and-forth.
Samuel A. Alito, Jr. Well, you say in your brief, you admit in your brief that, at least in the case of the self-insured plan, the — the notice or the — the form or the notice becomes part of the plan. This is their health insurance plan established under ERISA, and you are putting a new objectionable element into the plan. Isn’t that correct?
Donald B. Verrilli, Jr. I don’t think that’s quite right, Justice Alito. I think there’s been some confusion on that on the Petitioner’s side. There are two separate notices that operate here on the self-insured plan. The first is the notice that the employer provides to the government. That’s an ERISA plan document, but what that — what — the legal effect of that document is to exempt the employer from any obligation to provide contraceptive coverage. There is a second document, a different document, that the government then sends to the third-party administrator. That document is the document that has a legal effect that creates the obligation on the part of the third-party administrator to provide the coverage. So it is not the case that the document that comes to us is an authorizing document. That’s an exempting document.
Samuel A. Alito, Jr.: But it — it is — it’s their plan, and you admit that you are putting something into their plan that they object to on religious grounds.
Donald B. Verrilli, Jr. So I —
Samuel A. Alito, Jr. So the difference between that and Mr. Clement’s hypothetical is that one involves something tangible, physical property, and the other involves something that’s intangible.
Donald B. Verrilli, Jr. Well, I think —
Samuel A. Alito, Jr. That’s the distinction.
The discussion then turns to whether it would be a substantial burden under RFRA for an employer to switch from a self-insured third-party administrator plan to a regular church plan, which does not have this problem. In effect, if the plaintiffs did not use the self-insured plans–which most of them do not–this particular problem of amending the ERISA plan with the new instrument would vanish.
Donald B. Verrilli, Jr. Well, it’s not just that it’s like intangible property. The — the plaintiffs really have a set of rules, and the third-party administrator becomes — for purpose of administering this, it becomes the plan administrator, the sole plan administrator, for this portion of the plan. But even if one thought that there was — that — that this did create a legally sufficient reason to find a substantial burden for — for third-party administrators, it’s not true about the situation with insurance companies. It’s not true about church plans. And so then it seems to me the question is whether switching from having a self-insured third-party administrator situation to an insurance company situation would — whether this would be a substantial burden.
Alito rejects the notion that switching plans would cure the burden.
Samuel A. Alito, Jr. Well, in the case of an insurance plan, isn’t the insurance policy part of the plan? Isn’t the insurance policy the way in which the — the employer provides the benefits that are available under the plan?
Donald B. Verrilli, Jr. Yes. And then — and then the government makes an arrangement with the insurance company that operates in parallel to that plan. And so — but — but it isn’t through that plan. It’s in parallel to that plan. So I think there’s a significant difference there, but —
The the Chief chimes in:
John G. Roberts This is the dispute that the Court’s order seeks to resolve.
I hope these transcript dialogues bring the Court’s order today into focus. If the arguments are any indication, Petitioners and Respondents will not agree on this pivotal point.