SUPREME COURT UPDATE:

ACA Contraceptive Mandate:
Burwell v. Hobby Lobby Stores, Inc. and
Conestoga Wood Specialties Corp. v. Burwell

In a 5-4 decision this morning, the United States Supreme Court ruled that closely-held, for profit corporations, may be exempt from the Affordable Care Act’s (“ACA”) contraceptive mandate, if complying with the mandate violates the sincerely held religious beliefs of the corporation’s owners.  In delivering the opinion of the Court, Justice Alito cautioned that the ruling was a narrow one; applicable only to closely-held corporations and concerning only the ACA contraceptive mandate.

By way of background, at issue in these cases was the ACA mandate requiring that an employer’s group health plan or group-health-insurance coverage furnish “preventative care and screenings” for women without “any cost sharing requirements.”  42 U.S.C. §300gg-13(a) (4).  Regulations promulgated by the Department of Health and Human Services (“HHS”) defined “preventative care and screenings” as “all Food and Drug Administration approved contraceptive methods, sterilization procedures and patient education and counseling.”  77 Fed. Reg. 8725.  The owners of Hobby Lobby and Conestoga Wood Specialties, the employers in these cases,argued that the HHS regulations conflicted with their sincerely held religious beliefs, because among the included contraceptive methods were certain IUDs and emergency oral contraceptives, considered to be abortifacients by the owners’ religion.

The owners of Hobby Lobby and Conestoga Wood Specialties challenged the ACA mandate under the Religious Freedom Restoration Act of 1993 (“RFRA”).  The RFRA prohibits the “Government [from] substantially burden[ing] a person’s exercise of religion, even if the burden results from a rule of general applicability” unless the Government “demonstrates that application of the burden to the person – (1) is in furtherance of a compelling government interest; and (2) is the least restrictive means of furthering that compelling government interest.”  42 U.S.C. §§200bb-1(a), (b).  In analyzing the case under the RFRA, the Supreme Court was required to answer four questions:

1.    Whether a closely-held, for profit, corporation was a “person” under the RFRA;
2.    Whether the contraceptive mandate furthers a compelling government interest;
3.    Whether the contraceptive mandate substantially burdens the exercise of religion; and
4.    Whether the contraceptive mandate was the least restrictive means to furthering such compelling government interest?

In addressing the first question, the Court noted that “person” was not defined by the RFRA.  Accordingly, the Court turned to the Dictionary Act, which is used “in determining the meaning of any Act of Congress, unless the context indicates otherwise.”  1 U.S.C. §1.  Because the Dictionary Act includes corporations, companies, associations, firms, societies and joint stock companies in the definition of “person,” the Court concluded that a corporation could be “a person.”  For purposes of these cases, however, the Court narrowed its ruling and held that a closely-held, for profit corporation, like Hobby Lobby and Conestoga Wood Specialties, which are owned and controlled by members of a single family, may be considered persons under the RFRA.  The Court did not extend its holding to include publicly traded corporations.

In addressing the second question, the Court summarily concluded that the ACA mandate does, in fact, serve a compelling government interest.  Likewise, in answering the third question, the Court just as quickly concluded that the ACA mandate substantially burdens the exercise of religion.  The Court noted that requiring Hobby Lobby and Conestoga Wood Specialties to provide employees with health care coverage that includes the four challenged contraceptive methods, violates the sincerely held religious beliefs of the companies’ owners.  Because the alternative to providing such coverage is to pay a substantial financial penalty, the Court concluded that the ACA mandate substantially burdened the corporations’ exercise of their religious beliefs.

Having answered the first three questions in the affirmative, the Court was then left to decide whether the government had employed the least restrictive means possible to achieve its compelling interest.  In light of exceptions to the contraceptive mandate already recognized by HSS for religious institutions and not-for-profit religious corporations, the Court had little trouble concluding that such exceptions could also be applied to closely-held, for profit corporations with sincere religious objections to the mandate.  Accordingly, the government was not using the least restrictive means possible.

Finally, the Court addressed the dissenting Justices’ argument that the decision is one of “startling breadth.”  In support of her claim that the holding is too broad, Justice Ginsburg, who wrote the Dissent in the case, argued that the Court’s rationale leaves open the possibility that other healthcare practices could come under fire based on religious objection.  She cited by way of example, objections to coverage of blood transfusions by Jehovah’s Witnesses, prescriptions for anti-depressants by Scientologists, medications derived from pigs by certain Muslims, Jews and Hindus and vaccinations by Christian Scientists.  According to Justice Ginsburg, because the lower courts will be charged with ruling on any such objections by applying the Supreme Court’s decision, which in her opinion rests on a weak rationale, the ultimate result and breadth of the holding cannot be known.

In response to the dissent, Justice Alito reiterated the narrow scope of the decision.  Justice Alito’s statements regarding the scope of the decision can be summarized as follows: today’s ruling applies only to closely-held, for profit corporations with sincerely held religious beliefs; today’s ruling applies only to the four contraceptives at issue – two types of IUDs and two types of emergency oral contraceptive drugs; today’s ruling should not be understood to hold that an insurance coverage mandate (i.e. for immunizations and blood transfusions) must necessarily fail if it conflicts with an employer’s religious beliefs; and finally, today’s holding does not provide a shield for employers to use religious beliefs to discriminate in the workplace.  The holding of the Court, according to Justice Alito, is simply that “the contraceptive mandate, as applied to closely-held corporations, violates the RFRA.”

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We hope you find this issue of KKAL’s Labor and Employment Law Watch helpful and informative.  Please understand that the Law Watch is designed to provide information about current developments and required actions. If you have any questions regarding any labor and employment law matter, including the issues discussed in this newsletter, please do not hesitate to contact us at 717-392-1100, or email us at the following addresses:

KEGEL KELIN ALMY & LORD LLP

Labor & Employment Practice Group

(717) 392-1100

Denise E. Elliott, Chair                            elliott@kkallaw.com

Amy G. Macinanti                            macinanti@kkallaw.com

Paul D. Clouser                                     clouser@kkallaw.com

Jeffrey D. Litts                                           litts@kkallaw.com

Howard L. Kelin                                       kelin@kkallaw.com

Judith A. Griffith                                  griffith@kkallaw.com

Stephen S. Russell                                russell@kkallaw.com

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