United States District Court, E.D. California
FOOTHILL CHURCH; CALVARY CHAPEL CHINO HILLS; and SHEPHERD OF THE HILLS CHURCH, Plaintiffs,
MICHELLE ROUILLARD, in her official capacity as Director of the California Department of Managed Health Care, Defendant.
action arises from letters the California Department of
Managed Health Care (“DMHC”) issued to seven
private health insurers, which required them to remove any
limitations on or exclusions of abortion services from the
health care coverage they offer. First Am. Compl.
(“FAC”), Ex. 1, ECF No. 42-1. Plaintiffs Foothill
Church, Calvary Chapel Chino Hills and Shepherd of the Hills
Church (“plaintiffs” or the
“Churches”), three churches who allegedly offer
their employees DMHC-regulated health coverage through these
insurers, filed this action against defendant Michelle
Rouillard (“defendant” or
“Director”), Director of the DMHC, alleging the
letters violate the Churches' constitutional rights under
the First and Fourteenth Amendments. This matter is before
the court on defendant's motion to dismiss the FAC. ECF
No. 47. Plaintiffs oppose the motion. ECF No. 54. The motion
was submitted without argument and, as explained below, the
court now GRANTS the motion.
California, the DMHC and the California Department of
Insurance (“CDI”) oversee regulation of the
health care industry. The DMHC regulates “health care
service plans” under the Knox-Keene Health Care Service
Plan Act of 1975 (“Knox-Keene Act” or
“Act”), Cal. Health & Safety Code
§§ 1340-1399.864, including by approving or
disapproving language submitted in evidence of coverage
(“EOC”) filings. The Knox-Keene Act defines
“health care service plans” as “[a]ny
person who undertakes to arrange for the provision of health
care services to subscribers or enrollees, or to pay for or
to reimburse any part of the cost for those services, in
return for a prepaid or periodic charge paid by or on behalf
of the subscribers or enrollees.” Id. §
1345(f)(1). Health maintenance organizations
(“HMOs”) and other structured managed care
organizations (“MCOs”) are “health care
service plans” under this definition. Rea v. Blue
Shield of Cal., 226 Cal.App.4th 1209, 1215 (2014).
Knox-Keene Act requires health care service plans secure a
license from the Director of the DMHC. Cal. Health &
Safety Code § 1349. One requirement for licensure is
that “[a] health care service plan contract [must]
provide to subscribers and enrollees all the basic health
care services” specified in the statute. Id.
§ 1367(i). Relevant to this action, the Director has
promulgated regulations defining the scope of this
requirement to include “a variety of voluntary family
planning services.” Cal. Code Regs. tit. 28, §
1300.67(f)(2). The letters assert that, in conjunction with
“the California Reproductive Privacy Act and multiple
California judicial decisions that have unambiguously
established under the California Constitution that every
pregnant woman has the fundamental right to choose to either
bear a child or to have a legal abortion, ” the
Knox-Keene Act requires health care service plans to cover
elective abortions. FAC, Ex. 1.
Knox-Keene Act also provides for a number of categorical and
individualized exemptions. For example, the Act offers
religious employers exemptions from providing coverage for
“FDA-approved contraceptive methods that are contrary
to [their] religious tenets, ” Cal. Health & Safety
Code § 1367.25(c), or coverage for “forms of
treatment of infertility in a manner inconsistent with
[their] religious and ethical principles, ”
id. § 1374.55(e).
FACTUAL AND PROCEDURAL BACKGROUND
August 1, 2016, plaintiffs filed an amended complaint, ECF
No. 42, which contains the following allegations that largely
parallel the allegations of their original complaint. On
August 22, 2014, the Director of the DMHC sent letters to
seven private health insurers stating the DMHC had reviewed
their contracts and the relevant legal authorities and
“concluded that it erroneously approved or did not
object to” language in some previous EOC filings that
may discriminate against women by limiting or excluding
coverage for terminations of pregnancies. FAC ¶¶ 1,
47 & Ex. 1. Some private insurers had previously
submitted EOC filings to the DMHC notifying the defendant of
benefit plan options that excluded coverage for voluntary and
elective abortions, and defendant and the DMHC had not
objected. FAC ¶¶ 54-55.
are three non-profit Christian churches located in Southern
California. Id. ¶¶ 20-22. Each plaintiff
has more than fifty full-time employees and must, therefore,
provide health coverage for its employees under the federal
Patient Protection and Affordable Care Act of 2010.
Id. ¶¶ 77-78. The Churches offer health
insurance plans to their employees through various insurers,
each of which received a letter from the DMHC as described
above. Id. ¶¶ 20- 22; FAC, Ex. 1.
Plaintiffs all hold what they describe as “historic and
orthodox” Christian teachings on the sanctity of human
life. FAC ¶ 25. They “believe and teach that
abortion destroys an innocent human life” and that
“participation in, facilitation of, or payment for an
elective abortion is a grave sin.” Id.
¶¶ 27-28. In furtherance of these beliefs and
principles, plaintiffs consulted with their insurance brokers
and/or insurers in an effort to provide employee group health
plans that do not pay for abortions. Id.
¶¶ 36-37. However, plaintiffs' insurance
brokers and/or insurers have informed them that the
DMHC's letters prevent their group health insurance plans
from excluding or limiting coverage for abortions.
Id. ¶ 38.
action followed. The original complaint alleged that the
DMHC's letters violate plaintiffs' rights under the
Free Exercise, Establishment, Free Speech and Equal
Protection clauses of the U.S. Constitution. See
Compl. ¶¶ 104, 114, 119, 126, ECF No. 1. The court
previously dismissed the Establishment and Free Speech claims
with prejudice, but allowed the plaintiffs to file an amended
complaint to cure defects in their Free Exercise and Equal
Protection claims. Order 22. In support of their Free
Exercise claim, plaintiffs allege “[t]he Knox-Keene
Act, as interpreted and applied by Defendant, is neither
neutral nor generally applicable.” FAC ¶ 117.
Specifically, plaintiffs allege the Director has used her
discretion to provide exemptions to some religious employers,
but refuses to give an exemption to them. Id. ¶
121. Thus, they allege, “Defendant has interpreted and
selectively applied the Knox-Keene Act and its ‘basic
health care services' requirement against the Churches to
suppress specific religious beliefs about when it is morally
permissible to provide health insurance coverage for elective
abortions.” Id. ¶ 130. Plaintiff's
Equal Protection claim is similarly based on alleged
disparate treatment of different religious employers. See
Id. ¶¶ 135-37.
motion to dismiss under Federal Rule of Civil Procedure
12(b)(1) tests the court's subject matter jurisdiction.
See, e.g., Savage v. Glendale Union High
Sch., 343 F.3d 1036, 1039-40 (9th Cir. 2003). When a
party moves to dismiss for lack of subject matter
jurisdiction, “the plaintiff bears the burden of
demonstrating that the court has jurisdiction.”
Boardman v. Shulman, No. 2:12-cv-00639-MCE-GGH, 2012
WL 6088309, at *2 (E.D. Cal. Dec. 6, 2012), aff'd sub
nom. Boardman v. Comm'r, 597 F. App'x 413 (9th
Cir. 2015). If a plaintiff lacks standing, the court lacks
subject matter jurisdiction under Article III of the U.S.
Constitution. Cetacean Cmty. v. Bush, 386 F.3d 1169,
1174 (9th Cir. 2004).
Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
party may move to dismiss a complaint for “failure to
state a claim upon which relief can be granted.”
Fed.R.Civ.P. 12(b)(6). The motion may be granted only if the
complaint “lacks a cognizable legal theory or
sufficient facts to support a cognizable legal theory.”
Hartmann v. Cal. Dep't of Corr. & Rehab.,
707 F.3d 1114, 1122 (9th Cir. 2013) (citation omitted).
a complaint need contain only “a short and plain
statement of the claim showing that the pleader is entitled
to relief, ” Fed.R.Civ.P. 8(a)(2), in order to survive
a motion to dismiss, this short and plain statement
“must contain sufficient factual matter . . . to
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A complaint must include more than
“an unadorned, the-defendant-unlawfully-harmed-me
accusation” or “‘labels and
conclusions' or ‘a formulaic recitation of the
elements of a cause of action.'” Id.
(quoting Twombly, 550 U.S. at 555). Determining
whether a complaint will survive a motion to dismiss for
failure to state a claim is a “context-specific task
that requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S.
at 679. Ultimately, the inquiry focuses on the interplay
between the factual allegations of the complaint and the
dispositive issues of law in the action. See Hishon v.
King & Spalding, 467 U.S. 69, 73 (1984).
making this context-specific evaluation, this court must
construe the complaint in the light most favorable to the
plaintiff and accept its factual allegations as true.
Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). This
rule, however, does not apply to “a legal conclusion
couched as a factual allegation, ” Twombly,
550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S.
265, 286 (1986)), “allegations that contradict matters
properly subject to judicial notice, ” Sprewell v.
Golden State Warriors, 266 F.3d 979, 988-89 (9th Cir.
2001), or material attached to or incorporated by reference
into the complaint, see Id. A court's
consideration of documents attached to a complaint, documents
incorporated by reference in the complaint, or matters of
judicial notice will not convert a motion to dismiss into a
motion for summary judgment. United States v.
Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003); Parks
Sch. of Bus. v. Symington, 51 F.3d 1480, ...