United States: Fourth Circuit Upholds Employer Mandate

On July 11, 2013, the U.S. Court of Appeals for the Fourth Circuit issued its decision in Liberty University, Inc. v. Lew, No. 10-2347, holding that the employer mandate in the Affordable Care Act (ACA) is constitutional under either the Commerce Clause or as a tax, and that it does not violate the University's free exercise of religion (the controversial contraception mandate was viewed as not properly before the court). This is the first Court of Appeals opinion that has addressed the employer mandate's constitutionality since the Supreme Court's opinion in National Federation of Independent Business v. Sibelius, 132 S. Ct. 2566 (2012) (NFIB), which upheld the individual mandate against a constitutional challenge.

The first question the court addressed was whether the suit was barred by the Anti-Injunction Act (AIA). In NFIB, the Supreme Court held that the AIA did not bar a challenge to the individual mandate because Congress had characterized the penalty imposed on individuals as a penalty rather than a tax. The United States in Liberty University argued that because some sections of the ACA do refer to the penalty on employers as a tax, the AIA barred the University's challenge at this time. The court dismissed this argument on the grounds that one of the two uses of "tax" is explainable as relating to the employer's inability to deduct the penalty on its tax returns, and the other, while unexplained, is overwhelmed by the far more frequent use of the term "assessable penalty." Furthermore, it would make no sense for Congress to intend challenges to the employer mandate to be barred by the AIA but not challenges to the individual mandate. Therefore, the court held, the same AIA analysis of NFIB applies here, and the suit is not barred or premature.

The next question was whether the University had standing, because the United States observed that the coverage the University currently provides would appear to satisfy the ACA's mandate, and in any event the requirement does not become effective until January 1, 2015. The University countered that it had adequately alleged that the mandate might increase its cost of coverage and might impose additional administrative burdens, and that it needed to address its compliance by modifying or evaluating its practices and plans before the effective date of the mandate. On a motion to dismiss, the court held that this satisfied the pleading standard for showing an injury in fact.1

The court then turned to the question of whether the employer mandate was a valid exercise of congressional power under the Commerce Clause, Unlike the individual mandate, where the Supreme Court held that the Commerce Clause did not empower Congress to require an individual to enter the insurance market if the individual chose not to purchase insurance, the court noted that Congress could certainly regulate an employer's terms of compensation paid to employees because the employers were already engaged in interstate commerce. The mandate does not require employers to purchase something in the private market because they are free to self-insure the benefits (and thereby the benefits would simply be another version of employer-paid compensation). It was not a great leap from these conclusions to a holding that insurance benefits were a reasonably-regulated element of that compensation, and therefore the mandate is no different (in a constitutional sense) from minimum wage laws. As an alternative holding, the court found that the employer mandate was a constitutional exercise of Congress's taxing authority, under the same rationale as the Supreme Court's holding in NFIB. And, of course, the claim by the two individual plaintiffs was similarly unavailing, because the NFIB holding essentially controlled that claim.

Finally, in addressing the religion-based challenges raised by both the University and the individual plaintiffs, the court noted that precedent under the Free Exercise Clause holds that laws of general applicability are constitutional even if they have an "incidental effect of burdening a particular religious practice" (citing Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 531 (1993)). Given the ACA allows individuals to purchase, and employers to offer, a plan that covers no abortion services, the court held that the ACA did not impose an undue burden on plaintiffs' religious practices. The plaintiffs then argued that two religious exemptions in the ACA violate the Establishment Clause and their Fifth Amendment equal protection rights because those exemptions were not available to the plaintiffs. The "religious conscience" exemption was upheld as identical to a similar exemption in the Social Security Act, even though it does not cover all potential religious exemptions, because the SSA's exemption has been repeatedly upheld as constitutional. The "health care sharing ministry" exemption was upheld even though it has a cutoff date for establishment of an exempt ministry, because the date was not selected to eliminate any particular group or sect and has a rational basis – it ensures that the exempt ministry has a track record, and that no new ministry can be established for the purpose of evading the ACA mandates.

The court refused to consider the plaintiffs' challenge to the contraception mandate, finding that it was outside the scope of the complaints filed in the case and because many other courts are considering the validity of the contraception mandate in properly-filed cases, there was no compelling reason for this court to address the issue. In a footnote, however, the court noted that the contraceptive devices and emergency contraception pills that the plaintiffs objected to are not classified as abortifacients under well-established federal law, because they act before implantation and federal law defines "pregnancy" as beginning at implantation and ending at delivery.


1 The court also found that two individual plaintiffs who were still challenging the ACA's individual mandate similarly had standing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions