Can Religion-Affiliated Organizations Opt Out of Laws Mandating that If Their Employee Health Insurance Covers Prescription Drugs, It Must Also Cover Contraception?
New York's Highest Court Says No

Recently, New York's highest court, the Court of Appeals, rejected the claim that organizations affiliated with religious entities have a constitutional right to be exempt from a generally-applicable New York law - the Women's Health and Wellness Act (WHWA).

The particular WHWA provision the organizations challenged stated that if an employer health insurance plan "provides coverage for prescription drugs," it must "include coverage for the cost of contraceptive drugs or devices."

Eight organizations affiliated with the Catholic Church; and two affiliated with the Baptist Bible Fellowship International argued that because their precepts forbid contraception, following the law would infringe their right to the free exercise of religion. (While the law does have a religious exemption, it does not apply to them.) But the court disagreed.

In this column, I'll explain why the court's holding in Catholic Charities of the Diocese of Albany v. Gregory Serio is correct and comment on the Court's clarification of state free exercise law.

The Basis For, and Purpose of, the Women's Health and Wellness Act

Often, state legislatures do not preserve meaningful legislative history. But fortunately, in the case of the Women's Health and Wellness Act, the New York legislature did so.

In particular, the legislature documented that women pay 68% more than men for out-of-pocket health care costs, largely because of the cost of reproductive health services. And it relied on evidence from the American College of Obstetricians and Gynecologists showing that access to contraception reduces the number of abortions and unplanned pregnancies, with their attendant risks of low birth weights and developmental problems.

The purpose of the law, accordingly, was to improve women's and children's health, and to achieve more parity between men and women when it comes to paying the tab for necessary health care.

The WHWA's Religious Exemption: Carefully Debated, and Reasonably Drawn

The legislature did not ignore the interests of religious organizations when it was debating the law. Indeed, religious employers successfully sought an exemption from the law, under which the employers that provide prescription benefits need not provide the otherwise required insurance coverage for contraceptives. Instead, the cost is paid by employees, who must purchase them on their own, though "at the prevailing small group community rate."

In sketching the bounds of the exemption, the legislature opted for a reasonable definition of "religious employer" to mean a nonprofit religious organization whose primary purpose is to inculcate religious values; whose employees for the most part share the religious tenets of the organization; and that serves primarily those of its own faith. This definition was reasonably drawn to encompass religious organizations.

The legislature further debated whether the definition of "religious organization" should be expanded to include any organization with some connection to a religious organization. But it decided not to expand the definition. Thus, the exemption would plainly cover a Roman Catholic church, but it would not cover its affiliated social services entity, Catholic Charities. To do so, would have left tens of thousands of women working for organizations connected to some religious entity without contraceptive protection. (Moreover, the exemption - which saves qualifying employers money - would, if broadened, have been ripe for abuse.)

The Relevant U.S. Supreme Court Precedents

To understand why the New York Court of Appeals got this case right, it's necessary to understand a few key U.S. Supreme Court precedents. The WHWA-case plaintiffs sued under both the U.S. and New York Constitutions, so these precedents were directly applicable.

First, there is Employment Division v. Smith. There, the Court made clear that when neutral, generally applicable laws are challenged as violations of the right to the free exercise of religion, they are subject only to "rational basis" review.

The law at issue in Smith itself is a good example. As a general matter, it forbade workmen's compensation for employees who violated state law. In that case, the plaintiffs (who were drug counselors) violated the state drug laws by using peyote, an illegal drug. Both the workmen's compensation and the drug laws are neutral and generally applicable, and the reasons for them obviously rational. Accordingly, the Court upheld the states' denial of workmen's compensation to the plaintiffs, even though they had used the drug in a Native American Church service.

Second, there is Church of Lukumi Babalu Aye v. City of Hialeah. The case arose because Hialeah lawmakers objected to the presence of Santerians and passed ordinances intended to prevent the Santerian practice of animal sacrifice, and the succeeding disposal of the carcasses in public. The ordinances were designed to apply only to the Santerians, and left in place various other practices involving animal slaughter, including kosher butchering laws. The Court did not apply Smith's "rational basis" test, because it found that the ordinances were not neutral.

The Court announced in Lukumi that such a non-neutral law is subject to strict scrutiny - and thus, the Court applied strict scrutiny and struck down the ordinances targeting the Santerians.

Why the New York Court of Appeals Properly Deemed the WHWA Provision Neutral, and Applied Smith

The plaintiffs in the Serio case tried out an illogical argument. They could not plausibly argue that the law, as a whole, discriminated against religion; to the contrary, it contained an express religion exemption. The plaintiffs argued, instead, that the way the religious exemption was drawn was itself not neutral. In other words, the legislature had to craft an exemption as expansive as possible for the law to be considered neutral. In turn, that purported lack of neutrality mandated strict scrutiny of the provisions at issue.

The New York Court of Appeals rightly rejected this argument. It pointed out, among other reasons for its holding, that "[t]o hold any religious exemption that is not all-inclusive renders a statute non-neutral [as plaintiffs contended] would be to discourage the enactment of any such exemptions - and thus to restrict, rather than promote, freedom of religion."

To see why the court was right, consider the same law, without a religious exemption: It would simply have said that all employers that cover prescription drugs, must cover contraception, too. Such a law would be neutral and generally applicable as it covered all qualifying employers without respect to religion. That means "rational basis" scrutiny would have applied - with the rational basis plain from the legislative history.

It would be deeply ironic, not to mention wrongheaded, if adding a religious exemption could suddenly trigger a far higher level of constitutional scrutiny - as the court well understood.

The plaintiffs offered a few other arguments, which were equally weak. They tried to invoke what is misleadingly called "the doctrine of church autonomy." But the Court of Appeals made short work of such an argument -- WHWA did not tell religious entities what to believe. There is no right to immunity from general regulations affecting religious entities, but rather only the negative right not to have the government tell a religious entity what to believe.

In addition, they tried to invoke the so-called "ministerial exception." But the Court made quite clear that "[t]he existence of a limited exemption for ministers from anti-discrimination laws does not translate into an absolute right for a religiously-affiliated employer to structure all aspects of its relationship with its employees in conformity with church teaching."

The Court's Analysis of the New York Constitutional Question

The Court then turned to its own state constitution's free exercise clause - and offered an analysis somewhat different from the one it conducted as to the plaintiff's claims under the federal constitution's Free Exercise Clause.

For the purposes of the state constitutional analysis, the Court deemed the Smith approach too "inflexible." In so doing, it seems to have been influenced by now-Judge (and then-Professor) Michael McConnell's 1990 Harvard Law Review article, which introduced a parade of (highly unlikely) horribles if rationality review were applied to neutral, generally applicable laws.

According to McConnell, Smith's reasoning would open the door to legislative bans on wine that include wine for communion; regulation that would effectively shut down kosher slaughterhouses; and sex equality laws that would end the male, celibate priesthood.

McConnell was wrong as a factual matter, for reasons I discuss at some length in my recent book, God vs. the Gavel. In the United States, it is simply a fact that legislatures typically welcome requests from religious entities for exemption, and would sacrifice their first born before they would ever make illegal the entrenched religious practices of the Catholic Church. Moreover, the receptivity to exemption requests extends well beyond powerful churches to those like the tiny Native American Church, which now enjoys the benefit of exemptions for peyote use from the drug laws of the federal government and over 30 states.

Even during actual Prohibition, when Catholics were not a particularly popular or powerful group, they obtained an exemption for communion wine. And the facts relating to the Catholic Church clergy sex abuse scandal render laughable the notion that the Church lacks the political muscle to retain the practices McConnell spotlights. In my recent article, What the Clergy Abuse Crisis Has Taught Us, which appeared in America, I extend my work in God vs. the Gavel to document the recent capacity of the Church to affect legislative outcomes.

The problem with McConnell's approach is that it rests on faulty factual premises, aggrandizes the courts' role, and fails to take into account the reality of what happens in the legislatures.

Luckily, even as it rejected Smith's approach, the New York Court of Appeals also rejected the application of strict scrutiny. In defending its choice to do so, the New York court was correct to note that the U.S. Supreme Court never really applied strict scrutiny, in this context, in the way it is applied in other constitutional arenas. To the contrary, as the Court itself noted in Smith, it had applied low-level scrutiny in the "vast majority of cases" in this area.

(That is why, as the New York Court of Appeals rightly points out, that following Wisconsin v. Yoder in 1973, which was the case where the Court carved out an exemption for the Amish from Wisconsin's compulsory school attendance laws, the Court did not grant another exemption. That is also why claims that laws like RFRA and RLUIPA - which I have discussed in earlier columns such as this one on RFRA and this one on RLUIPA - merely revive a long legacy of strict scrutiny in Free Exercise cases, are sheer poppycock.)

Applying a standard as rigorous as strict scrutiny, the New York court reasoned, "would give too little respect to legislative prerogatives, and would create too great an obstacle to efficient government."

New York's Balancing Test - and Why, When It Was Applied, the Plaintiffs Lost

So what was the standard New York settled on? It opted to balance the interests on both sides, but with "substantial deference" to the legislature. And it put the burden on the plaintiff to show that the state had unreasonably interfered with religious freedom.

This standard is really not too far afield from the Smith standard. But the Court reserved to itself the power the intervene in accommodation cases involving neutral and generally applicable laws, apparently was taken in by the scare tactics in McConnell's work and thought it needed to position itself to preempt his "parade of horribles."

In the end, the Supreme Court's standards remain clearer and better. Especially in light of the reality that legislatures typically bend over backwards to accommodate religious interests, they provide more than enough protection. And Smith's clarity has the beneficial effect of making sure that legislators focus on creating neutral and generally applicable legislation in all circumstances, and never target religious institutions. Such bright lines are very useful in the typically murky legislative process.

Even if the New York court's balancing test is not optimal, however, it applied the test sensibly in this case. Rightly, the court saw the legislature's interests as weighty ones. And while it also saw WHWA as imposing a "serious burden" upon institutions whose precepts opposed the use of contraception, it pointed out accurately that the law did not "compel" such institutions, when acting as employers, to provide contraceptive coverage. Instead, the law said that they had to do so if, and only if, they provided prescription drug coverage in the first instance.

Moreover, the court reasoned that because many of the plaintiffs' employees did not share their respective organization's religious beliefs, the employers must "be prepared to accept neutral regulations imposed to protect those employees' legitimate interests in doing what their own beliefs permit."

In the end, the result here was just. There was already a healthy religious exemption, designed precisely to protect the free exercise of religion. The Court of Appeals wisely and properly declined to re-define the scope of the religious exemption.