Ninth Circuit Court of Appeals Finds Standing in Skyline Wesleyan Church’s Claims Against Department of Managed Health Care, Remands Case to District Court

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By Alex Ruf

On May 13, 2020, the U.S. Court of Appeals for the Ninth Circuit issued its opinion in Skyline Wesleyan Church v. California Department of Managed Health Care, 959 F.3d 341, 344 (2020), reversing the U.S. District Court for the Southern District of California’s ruling that it lacked jurisdiction over Skyline Wesleyan Church’s (“Skyline”) federal free exercise of religion claim against the Department of Managed Healthcare (“DMHC”). The Ninth Circuit also vacated the district court’s ruling that it lacked jurisdiction over Skyline’s other claims and remanded the case to the district court for further proceedings.

On March 9, 2018, in Skyline Wesleyan Church v. California Department of Managed Healthcare, No. 3:16-cv-0501-CAB (DHB), (S.D. Cal. Mar. 9, 2018), the district court dismissed Skyline’s complaint against DMHC as (1) not ripe for adjudication because DMHC had not received a request for exemption from Skyline and (2) not redressable because any remedy the court could provide would only be against DMHC. Noting that DMHC is not a health plan and is “simply a regulatory body that does not have the authority to mandate that a provider give [Skyline] the plan it seeks,” the district court found that Skyline lacked standing to pursue its claims. On April 9, 2018, Skyline appealed the District Court’s dismissal of its complaint. [see 23:2 CRLR 38–40; 24:1 CRLR 47–48]

The source of the litigation was DMHC’s August 22, 2014, letter to seven group health insurers who had limited or excluded coverage for abortions in their health plans. In its letter, DMHC stated that its prior practice of allowing insurers to offer health plans with some abortion-related restrictions was inconsistent with the Knox-Keene Health Care Service Plan Act of 1975, and the California Constitution. DMHC concluded that “all health plans must treat maternity services and legal abortion neutrally.” DMHC later told health plans that it would allow for certain exemptions from the requirements it had explained in its 2014 letter. The DMHC’s letter had caused Skyline’s insurer to amend Skyline’s plan so that it covered abortion, which did not comport with Skyline’s religious beliefs. Skyline, a Christian church that does not support abortion except in specific circumstances, did not request an exemption from DMHC for its health plan and filed suit against DMHC in February 2016, alleging that its right to free exercise of religion required the Department to approve a health insurance plan that accommodated Skyline’s religious beliefs regarding abortion.

The Ninth Circuit’s opinion explained that Skyline had successfully established all three elements of standing regarding its federal free exercise claim and thus the claim was justiciable, but the Court declined to reach the merits of the claim. The Ninth Circuit stated that its findings regarding the justiciability of Skyline’s federal free exercise claim could apply to Skyline’s other claims, but that it would not address this issue, as only the merits of the federal free exercise claim had been briefed on appeal. It remanded the case to the district court to determine, after deciding whether Skyline’s other claims were justiciable, when it would be appropriate to address the merits of Skyline’s claims. At this writing, the district court has not yet addressed the issues on remand.

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