A federal appeals court on Tuesday closely questioned whether the first Trump administration in 2017 went too far in expanding religious exemptions to the Affordable Care Act’s contraception mandate, hearing arguments in the latest chapter of the decadelong legal battle involving the Little Sisters of the Poor.
A three-judge panel of the U.S. Court of Appeals for the Third Circuit heard challenges brought by Pennsylvania and New Jersey, which argue the administration’s rules unlawfully allow religious employers to opt out of providing health insurance coverage for contraceptives.
The panel consisted of Judge Cheryl Ann Krause, an appointee of former President Barack Obama; Judge Jane Roth, an appointee of former President George H.W. Bush; and Judge Arianna Freeman, an appointee of former President Joe Biden.
The dispute stems from regulations issued during Trump’s first administration expanding religious and moral exemptions to the ACA’s contraceptive mandate. In 2020, the Supreme Court ruled the federal government had authority to create those exemptions, but it left open the question of whether the rules complied with the Administrative Procedure Act, allowing Pennsylvania and New Jersey’s challenge to continue.
During Tuesday’s arguments, Krause repeatedly questioned government attorneys and those for the Catholic ministry defending the rules, focusing on whether the exemptions swept too broadly and how federal officials could determine whether employers claiming religious objections were sincere.
“How would they be able to possibly determine what an exercise of religion would be?” Krause asked while questioning the government’s defense of extending exemptions to publicly traded companies.
Amy Thompson, the counsel representing Pennsylvania and New Jersey, argued the exemptions reach well beyond organizations such as the Little Sisters of the Poor and could deprive thousands of women of contraceptive coverage guaranteed under federal law.
She said the agencies estimated roughly 126,000 women could lose employer-sponsored contraceptive coverage if the expanded exemptions remain in place.
“The problem that they set out to solve didn’t exist,” Thompson argued, contending the agencies acted arbitrarily by creating exemptions broader than necessary to address existing religious objections.
Mark Rienzi, president of the Becket Fund for Religious Liberty and lead counsel for the Little Sisters, countered that the states were relying on speculative harms rather than real-world evidence after years of the rules being in effect.
“Religious accommodations are the best of our traditions,” Rienzi told the panel. “They allow live and let live solutions.”
Rienzi argued the exemptions simply protect ministries that object to providing contraceptive coverage while leaving the mandate in place for most employers. Notably, he pointed out that Pennsylvania “could have a contraceptive mandate for employers if they wanted.”
But “they have not, which is odd,” Rienzi said.
He also urged the court to dismiss the case, arguing Pennsylvania failed to establish legal standing because it could not identify employers that dropped coverage or demonstrate actual financial harm to the state.
A Justice Department attorney likewise defended the regulations, arguing federal agencies acted within the “virtually unbridled discretion” the Supreme Court recognized under the Affordable Care Act to craft religious exemptions.
The government maintained there was little evidence employers without sincere religious objections would invoke the exemptions.
The Little Sisters have spent more than a decade fighting the contraceptive mandate through multiple administrations. In 2016, the Supreme Court directed the federal government to seek a compromise that respected the ministry’s religious objections.
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Four years later, the justices upheld the Trump administration’s authority to expand religious and moral exemptions, but they did not resolve whether the rulemaking process itself complied with federal administrative law, which is why this matter is still percolating in court today.
The judges are likely to issue a decision in the coming months.