United States: Religious Institutions Update: October 2016

Lex Est Sanctio Sancta

Nathan "Nate" A. Adams IV is a Partner in our Tallahassee office and Erica Gooden Bartimmo is an Associate in our Tampa office.

Timely Topics

The final rule implementing Section 1557 of the Patient Protection and Affordable Care Act (ACA) was issued by the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) on May 18, 2016, and became effective on July 18, 2016. Changes to health insurance or group health plan benefit designs will not be required until Jan. 1, 2017. For healthcare and health insurance entities that receive federal financial assistance, Section 1557 expands healthcare nondiscrimination rules. 42 U.S.C. §18116(a). Some commentators consider Section 1557 an advance, as it is among the first civil rights laws to extend race, gender (including protections for gender identity and sexual orientation discrimination), age and disability discrimination protection to healthcare services and the private health insurance market. But many religious institutions have expressed concern that Section 1557 infringes upon the religious and moral convictions of healthcare providers, insurers and other stakeholders.

Section 1557 expands the definition of "sex discrimination" by defining discrimination "on the basis of sex" to include "discrimination on the basis of pregnancy, false pregnancy, termination of pregnancy, or recovery therefrom, childbirth or related medical conditions, sex stereotyping, and gender identity." 42 C.F.R. §92.4. Sexual orientation is not specifically included in the definition, although it would be included to the extent the discrimination is based on gender stereotyping. Under Section 1557, "gender identity" is defined as "an individual's internal sense of gender, which may be male, female, neither, or a combination of male and female, and which may be different from an individual's sex assigned at birth." Id. Moreover, this prohibition against discrimination "on the basis of sex" also prohibits discrimination on the basis of gender expression and transgender status. Id.

During the rule-making process of Section 1557, faith-based healthcare providers contended that the expansive definition of sex discrimination lacked support in the language and legislative history of Title IX, after which Section 1557's definition of sex discrimination is modeled. Faith-based healthcare providers requested that a religious exemption be included in the rule, reasoning that, absent a religious exemption, the expansive definition of sex discrimination would infringe upon religious and moral convictions. 81 Fed. Reg. Pg. 31379. 

In response, HHS declined to include a religious exemption and opined as follows:

a blanket religious exemption could result in a denial or delay in the provision of health care to individuals and in discouraging individuals from seeking necessary care, with serious and, in some cases, life threatening results. Thus, it is appropriate to adopt a more nuanced approach in the health care context[.] 81 Fed. Reg. Pg. 31380.

HHS reasoned that certain legal protections for religious convictions already exist, notably the Religious Freedom Restoration Act (RFRA). See 81 Fed. Reg. Pg. 31376. Most recently, in Burwell v. Hobby Lobby Stores, 134 S. Ct. 2751 (2014), the Supreme Court used RFRA to invalidate certain ACA provisions, holding that forcing the religious plaintiffs to provide health benefits that include emergency contraceptives constitutes a substantial burden on their religious exercise and that the government had not established that such a requirement was the least restrictive means of achieving a compelling government interest. It remains to be seen what impact RFRA may have on the final rules implementing Section 1557. Holland & Knight can provide more information to faith-based healthcare and other organizations interested in how Section 1557 could affect their activities.

Key Cases

Challengers to Magistrate Same-Sex Marriage Recusal Statute Lack Standing

In Ansley v. Warren, No. 1:16-cv-00054-MOC-DLH, 2016 WL 5213937 (W.D. N.C. Sept. 20, 2016), the court ruled that the plaintiffs lacked taxpayer standing and special injury standing to challenge North Carolina's "An Act to Allow Magistrates and Registers of Deeds to Recuse Themselves From Performing Duties Related to Marriage Ceremonies Due to Sincerely Held Religious Objection"(the Act). Plaintiffs argued that the Act directs the defendant to spend tax dollars to support magistrates who claim personal religious objections to the marriages by requiring the substitution of another magistrate to perform the duties and paying into the retirement system to bridge the gap in service for those magistrates who resigned to avoid violating their beliefs but then were reappointed under the Act. The court ruled that taxpayer standing depends upon the plaintiff challenging a government appropriation by the legislature. Taxpayer standing is not available for 14th Amendment claims, and plaintiffs could not show any direct harm caused by the Act.

Challengers Claiming District Diverts Money to Orthodox-Hasidic Jews Lack Standing

In Montesa v. Schwartz, Nos. 14-3721-cv, 14-3771-cv, 14-3811-cv, 2016 WL 4728000 (2d Cir. Sept. 12, 2016), the plaintiffs-appellees are enrolled students who allege that a majority of East Ramapo School District Board members are of the Orthodox/Hasidic Jewish faith or are sympathetic to their interests and have allegedly diverted money from the public school system into yeshivas and other religious organizations for the benefit of the Hasidic children's religious education. They sued for violations of, inter alia, the Establishment Clause. Reversing the district court, the court of appeal dismissed their claims for lack of standing. The court ruled that the plaintiffs-appellees neither alleged that they are subject to a religiously infused law that prohibits them from learning, nor that they are confronted by a government-sponsored religious message. In addition, the court ruled that the plaintiffs-appellees have not been "directly affected" by any purported diversion of money and their injury is common to all individuals who are affected by the budget. The court observed, "The Student-Plaintiffs claim that their injury arises solely out of the District's lack of funds and is premised solely on their enrollment in the District's schools. This attenuated relationship among the alleged unconstitutional expenditure, the District's budget, and the Student-Plaintiffs' enrollment in the District's schools is insufficient to confer standing because the alleged unconstitutional expenditure has an effect on the Student-Plaintiffs' education that is only indirectly and incidentally related to the unconstitutionality of the expenditure."

Clergy-Penitent Privilege Protects Correspondence Containing Spiritual Guidance

In McFarland v. W. Congregation of Jehovah's Witnesses, No. 15CA010740, 2016 WL 4426412 (Ohio.App. Aug. 22, 2016), the court ruled in an alleged sex abuse case by a member against another member of a local congregation involving alleged negligence, ratification and fraud by the local and national bodies that correspondence of a secular nature between the local and national bodies was not protected by the clergy-penitent privilege, but correspondence containing spiritual guidance was protected. The court also questioned whether some of the correspondence were confidential communications or were for the purpose of soliciting religious counseling as required to assert the privilege. Lastly, the court rejected appellants' argument that the trial court violated the First Amendment when it ordered production of non-privileged communications. Appellants argued that merely exposing their internal discipline procedures and beliefs regarding repentance, mercy and redemption to external scrutiny violated the First Amendment. However, the court ruled otherwise, saying that the First Amendment does not protect religious institutions from disclosing relevant, non-privileged information.

Free Exercise Consistent with Law Prohibiting Licensed Mental Health Providers from Providing SOCE Therapy to Youth

In Welch v. Brown, No. 15-16598, 2016 WL 4437617 (9th Cir. Oct. 3, 2016) (en banc), the court ruled that a state law prohibiting licensed mental health providers from providing sexual orientation change efforts (SOCE) therapy to children under 18 does not violate the Free Exercise Clause, does not excessively entangle the state with religion, and does not have the principal or primary effect of advancing or inhibiting religion. The court rejected the plaintiffs' argument that the law would inhibit ministers' ability to counsel children or even preach on the subject based on the state's assurance that the law "does not actually apply to members of the clergy or religious counselors who are acting in their pastoral or religious capacity" as opposed to "within the confines of the counselor-client relationship." The court also found that its prior opinion foreclosed the plaintiffs from asserting that their clients have a substantive due process right to receive SOCE from licensed mental health providers.

Ministerial Exception Doctrine Bars Discrimination Claims of Minister of Music and Music Teacher

In Sterlinski v. Catholic Bishop of Chicago, No. 16 C 00596, 2016 WL 4439949 (N.D. Ill. Aug. 23, 2016), the court ruled that the ministerial exception doctrine precludes the former director of music from alleging national origin discrimination and retaliation in violation of Title VII or age discrimination and retaliation under the Age Discrimination in Employment Act (ADEA), arising out of his demotion from full-time to part-time employment and then his discharge following complaint. The plaintiff was 68 years old when demoted. The defendant asserted that it was due to a budgetary deficit, but the plaintiff alleged it was due to his Polish nationality not shared by the pastor and that the pastor said the plaintiff was "getting old." The court determined that the plaintiff played an important role conveying the church's message and had to regularly make "discretionary religious judgments." He was responsible for, inter alia, selecting and supervising all music at liturgical celebrations; furnishing suitable music and accompaniment at masses, weddings and funerals; helping with the selection, preparation and teaching of music for the congregation; and rehearsing with the choir. In defense, the plaintiff argued that he was fired for financial, not religious reasons; his musical selections could be overridden; and any ministerial duties he had were shed when he was demoted to part-time. The court rejected the first two arguments, finding that the fact that the defense's alleged reason for the firing is purely secular does not alter whether the ministerial exception applies. But the court permitted the plaintiff to try to amend his complaint to flesh out his third argument that the demotion impacted his job duties.

In Curl v. Beltsville Adventist Sch., No. GJH-15-3133, 2016 WL 4382686 (D. Md. Aug. 15, 2016), the court ruled that the ministerial exception doctrine precludes a former music teacher at a private religious school from alleging Americans with Disabilities Act (ADA), ADEA and Family and Medical Leave Act (FMLA) infringements, including failure-to-accommodate claims, against an Adventist school. The court observed:

Although a portion of the "plaintiff's responsibilities were secular in nature, Plaintiff acknowledges that she is personally a Seventh-day Adventist whose role at the School included teaching religious music and leading prayer services.... Plaintiff does not dispute that she agreed to abide by the Education Code, which "requires that schools employ only those who live in complete harmony with the beliefs and practices of the Church" and therefore required that all School teachers be "baptized Adventists committed to the Church's program of ministry."... Additionally, under the Education Code, School personnel were expected to "[p]ractice enthusiastically and consistently the ideals of the Church"; "[d]emonstrate a high sense of loyalty to Adventist educational philosophy"; and "[l]ook upon Christian educational service as a holy vocation." Plaintiff was also required to "maintain membership in ... constituent or academy churches and participate in church activities, programs, and finances, including the practice of tithing through the local employing organization."

Dispute Justiciable Over Property Held in Trust for Islamic Nonprofits

In United Islamic Soc'y v. Masjed Abubakr Al-Seddiq, Inc., No. A16-0140, 2016 WL 4497431 (Minn. App. Aug. 29, 2016), the court ruled that it is premature to decide that resolution of the case brought by one religious nonprofit against another claiming to be the rightful beneficiary of property held in trust will necessarily involve improper government entanglement with religion. Appellant Masjed Abubakr Al-Seddiq, Inc. (MAAS) and Appellee United Islamic Society (UIS) each claim to be the rightful beneficiary of property held in trust by the North American Islamic Trust Inc. (NAIT) for the benefit of the Rochester Muslim Community. The property at issue includes the mosque, cemetery plots and agricultural land. Reviewing the complaint, the court observed that it makes no mention of any religious doctrine and does not request relief for religious reasons. Instead, it requests a determination that it is the intended beneficiary of the trust based on the lease, warranty deeds, meeting minutes and MAAS resolution. Accordingly, the court disagreed with the appellants that determining which party is the trust beneficiary necessarily requires resolution of a dispute over the meaning of a religious term or a determination of which party fulfills the trust's purpose to serve Islamic objectives, but the court left open the possibility of revisiting the issue if UIS later relies on evidence regarding religious doctrine. Because appellants did not invoke arbitration until summary judgment, the court also ruled that they waived their right to do so.

EEOC Transgender Discrimination Claim Dismissed Against Funeral Home

In EEOC v. R.G. and G.R. Harris Funeral Homes, Inc., No. 14-13710, 2016 WL 4396083 (E.D. Mich. Aug. 18, 2016), the U.S. Equal Employment Opportunity Commission (EEOC) sued a funeral home for firing a funeral director allegedly because he is transgender, because of his transition from male to female and/or because he did not conform to the funeral home's sex- or gender-based preferences, expectations or stereotypes. On cross-motions for summary judgment, the court ruled that the EEOC failed to establish that requiring an employer to allow transgender employees to wear a skirt-suit to work was the least restrictive means of furthering a substantial governmental interest and, thus, the employer was entitled to a Title VII exemption under the RFRA. The court determined that allowing the employee to wear a skirt-suit to work imposed a substantial burden on the ability of the employer to conduct its funeral home business in accordance with its sincerely held religious beliefs, within the meaning of RFRA. It assumed without deciding that the EEOC has shown that protecting employees from gender stereotyping in the workplace is a compelling governmental interest, but it could not understand "why the EEOC couldn't propose a gender-neutral dress code as a reasonable accommodation that would be a less restrictive means of furthering that goal" than mandating that the employer allow the employee to wear a skirt-suit. Although ruling in general for the funeral home, the court rejected the funeral home's defense that dress codes are per se permissible under Title VII, noting that no circuit has squarely addressed whether a dress code requirement for males to wear pants-suit with a neck tie and for females to wear skirt-suits is consistent with any limitation on sex/gender stereotyping sex discrimination. The court also ruled that the EEOC could not bring a discriminatory clothing allowance claim that did not grow out of the employer's discrimination charge, but said the employer could not assert a sex-specific dress code as a defense to a Title VII wrongful termination charge.

Firefighter's Religious Speech in Nonpublic Forum Justified Adverse Action

In Sprague v. Spokane Valley Fire Dep't, No. 33352-3-III, 2016 WL 5239627 (Wash.App. Sept. 21, 2016), the court affirmed dismissal of a firefighter's claim that the Spokane Valley Fire Department (SVFD) violated his First Amendment rights when it took adverse action against him for distributing newsletters and meeting notices for his Spokane Christian Firefighters Fellowship containing Bible verses via the SVFD email system and posting flyers on SVFD's bulletin boards. SVFD warned him that its email system and bulletin boards were to be used exclusively for business purposes, but the plaintiff persisted, resulting in progressive discipline ultimately leading to his termination. The plaintiff appealed the termination, but the civil service commission upheld the department's action and found no evidence of discrimination. Instead of appealing this outcome, the plaintiff sued in federal court. The parties agreed that the SVFD email and bulletin board systems were nonpublic fora and that the SVFD policy is reasonable and viewpoint neutral. The court determined that the policy is also content neutral for lack of any evidence of uneven treatment and, thus, consistent with the First Amendment. Collateral estoppel arising from the unappealed findings by the civil service commission sunk the remainder of the plaintiff's claims.

RLUIPA Does Not Apply to Fire Safety Code Requirements

In Affordable Recovery Housing v. City of Blue Island, No. 12-cv-4241, 2016 WL 5171765 (N.D. Ill. Sept. 21, 2016), the court granted judgment in favor of the defendants against the plaintiff faith-based drug and alcohol recovery home for its failure to comply with the city's fire sprinkler regulations. Plaintiff argued that the imposition of those regulations violated Religious Land Use and Institutionalized Persons Act (RLUIPA), Illinois RFRA (IRFRA), Free Exercise, substantial Due Process and other provisions, but the court disagreed. The court determined that RLUIPA does not apply to a fire safety code, as opposed to a zoning requirement. Under IRFRA, the court ruled there is no evidence of a "substantial burden" on the plaintiff's religious exercise, defined as a "serious[] violat[ion] of the plaintiff's religious beliefs, and, in any event, the government had a compelling interest in fire safety pursued in the least restrictive manner. The court insisted that under the "least restrictive inquiry," the "relevant question here is whether Blue Island could have achieved, to the same degree, its compelling interest in reducing fires and protecting life and property by omitting altogether the fire sprinkler requirement in the Life Safety Code – a code that establishes the 'minimum requirements [to] provide a reasonable degree of safety from fire in existing buildings and structures.'" The court also determined that application of the fire safety code was consistent with free exercise because the code is neutral and generally applicable and any burden on the plaintiff's religious exercise is "only incidental to the City's enforcement of its safety provisions." The court observed, "the City's enforcement of its sprinkler regulations only prevented Plaintiff from housing overnight guests; all program participants were still entitled to associate and exercise their religious beliefs...." The court rejected an RLUIPA equal terms argument in light of evidence that the city required non-religious institutions to obtain special use permits, and an RLUIPA exclusion claim based on the requirement to obtain a special use permit because the city in fact approved plaintiff's proposed use of property. The plaintiff also sued under the Fair Housing Amendments Act due to the city rejecting its request for an accommodation allowing it three years to install fire sprinklers because the related requirement "does not hurt handicapped people by reason of their handicap."

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