Eric wrote the other day about Attorney General Mike DeWine joining six other states in a lawsuit challenging the Obama Administration’s rules on contraceptive coverage in health insurance plans.

Eric noted:  “The compromise is a good one and seems to be pretty air tight in terms of any Constitutional requirements, but I’ll leave that to the lawyers to discuss.”

So . . .  let me put on my lawyer hat and discuss.

The lawsuit is available from the Nebraska Attorney General here.  The Complaint (¶ 77) alleges that the Obama Administration’s Rule “represents an unprecedented encroachment on the liberty of religious organization employers . . . by mandating that [they] subsidize coverage for contraceptives, sterilization, and related patient education and counseling.”  This, according to the attorneys general, constitutes a violation of the free speech, free exercise of religion, and free assembly rights of the organizations.

My conclusion:  these lawsuits have very little likelihood of success.

Initially, the states have a couple of procedural barriers to overcome.  The first barrier is standing.  According to the Supreme Court, a party cannot bring a federal lawsuit challenging a rule unless they have suffered some sort of past or imminent material injury as a result of the rule.

The interests of the states allegedly kicks in because of the claim (¶ 85) that “[i]f religious organization employers were to cease provision of health insurance in order to avoid the requirements of the Rule,  an immediate and substantial spike in the number of enrollments in Plaintiff States’ Medicaid programs would result, as many impacted employees would invariably shift to Medicaid to remain in compliance with the ACA’s individual coverage mandate.”

In addition, the states claim (¶ 87) that “religious organization employers operating in Plaintiffs States will cease providing charitable services to persons who do not share their religious tenets, in an effort to qualify under the Religious Employer Exemption.  Those people no longer served by such charitable services will place further pressure on Plaintiff States’ Medicaid programs as they inevitably increase reliance on public resources for support.”

Individual organizations likely have standing, as whatever injury they may suffer a result of the rule.  (Whether they have a good claim is a different question.)  But, I think a judge is likely to conclude that DeWine and the other attorneys general do not have standing to challenge the rule.  This is because the rule imposes obligations on the organizations and their insurers, not the states.  The injury to the states is purely financial and is the result of a couple of actions by third parties and insurance companies – actions that are purely speculative.

The Supreme Court generally does not like indirect injury of the type alleged by the states.  For example, in antitrust cases customers are not permitted to bring cases based on the claim that the customer of a customer of a monopolist suffers an injury due to passed on higher prices.   This is the reason that one Court of Appeals threw out the claim against the Affordable Care Act brought by Virginia.

Another procedural hurdle facing the lawsuits is ripeness.  A lawsuit is not ripe, and should be dismissed, if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all.  The problem facing the state is that the rule will not take immediate effect.  In the interim, the religious organizations may choose to continue to buy health insurance, the rules might be modified, or the Medicare and Medicaid rules that the states rely upon might be altered.

If the states even get to the substance, there is not much more of a likelihood of success.  The key case is the famous “Peyote Case”, Employment Division, Department of Human Resources of Oregon v. Smith, 494 U.S. 872 (1990).  In Smith, the plaintiffs were fired from their jobs because they used peyote during a Native American religious ceremony.  The Supreme Court, in reviewing the plaintiffs’ unemployment claims, addressed whether a law prohibiting the consumption of illegal drugs for religious uses violated the free exercise clause.

Justice Scalia wrote the opinion.  He concluded that the drug law prohibiting the use of peyote – even for religious ceremonies – was constitutional.  Because the drug law was a “neutral law of general applicability,” the First Amendment’s guarantee of religious freedom does not allow a person to use a religious motivation as a reason not to obey the laws.  The key point is that the government could choose to accommodate religious beliefs when it wrote the law, but is not required by the constitution to do so.

Applied to this case, Smith suggests that the religious organizations have no claim because the Obama Administration rule is a neutral law applied to all employers.  The Administration is not required to craft any broader exceptions for religious organizations.

(Congress later passed the Religious Freedom Restoration Act in an effort to over-rule Justice Scalia’s opinion in Smith.  The states have alleged that the Rules violate RFRA, but at a quick glance this seems unlikely to be successful because the rules adopted by the Obama Administration were pursuant to a later Congressional action, the Affordable Care Act.)

The bottom line:  DeWine and the other attorneys general are wasting a lot of taxpayer money pursuing this lawsuit.  The lawsuit is likely to be thrown out on procedural grounds.  But even if they survive that hurdle, they run into a brick wall of constitutional law thanks to Justice Scalia.