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ACA and Healthcare Reform

High Court Hears Arguments In Birth Control Mandate Cases

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court on March 25 heard arguments in two cases that will decide whether for-profit, secular businesses have to provide contraceptive services as part of their health insurance packages to employees even if they oppose such measures on religious grounds (Kathleen Sebelius, et al. v. Hobby Lobby Stores Inc., et al., No. 13-354, U.S. Sup.; Conestoga Woods Specialties Corp., et al. v. Kathleen Sebelius, et al., No. 13-356, U.S. Sup. [lexis.com subscribers may access Supreme Court briefs for these cases]). 

(Transcript available.  Document #31-140402-011T.

Questions Considered

Justices heard 90 minutes of arguments in Hobby Lobby Stores Inc., et al. v. Kathleen Sebelius, et al. and Conestoga Woods Specialties Corp., et al. v. Kathleen Sebelius, et al.  In both cases, the plaintiffs allege that the birth control mandate contained in the Patient Protection and Affordable Care Act (ACA) violates their rights to freedom of religion, speech and association as secured by the First and Fifth Amendments to the U.S. Constitution and the Religious Freedom Restoration Act (RFRA). 

Under the ACA, all group health plans and health insurance issuers that offer nongrandfathered group or individual health coverage are required to provide coverage for certain preventive services without cost-sharing, including for the full range of U.S. Food and Drug Administration-approved contraceptive methods, sterilization procedures and patient education and counseling for women with reproductive capacity.  Companies that don’t provide coverage face fines. 

The justices are considering “whether RFRA allows a for-profit corporation to deny its employees the health coverage of contraceptives to which the employees are otherwise entitled by federal law, based on the religious objections of the corporation’s owners” and “[w]hether the religious owners of a family business, or their closely-held, for-profit corporation, have free exercise rights that are violated by the application of the contraceptive-coverage Mandate of the ACA.”  

Cases 

In Hobby Lobby, Hobby Lobby Inc., Mardel Inc. and the companies’ owners David Green, Barbara Green, Steve Green, Mart Green and Darsee Lett sued the government in the U.S. District Court for the Western District of Oklahoma.  In July, the District Court reversed a previous decision and granted summary judgment in favor of the plaintiffs. 

The plaintiffs had appealed the District Court’s initial decision denying preliminary injunction, and in June, a majority of the 10th Circuit U.S. Court of Appeals held that Hobby Lobby and Mardel have standing to sue and that the Anti-Injunction Act (AIA) does not apply to the case.  As to the merits, the majority held that the District Court erred in concluding that Hobby Lobby and Mardel had not demonstrated a likelihood of success of their RFRA claim, while three other judges would have affirmed the District Court on the issue.  The majority also held that Hobby Lobby and Mardel satisfied the irreparable harm prong for the preliminary injunction standard.  The District Court, however, did not consider all the factors required for a preliminary injunction.  The court remanded the case with instructions for the District Court to address all required factors.  Upon remand, the District Court granted the injunction. 

In Conestoga Wood, Norman Hahn, Elizabeth Hahn, Norman Lemar Hahn, Anthony H. Hahn and Kevin Hahn and Conestoga Wood Specialties Corp. sued the government in the U.S. District Court for the Eastern District of Pennsylvania.  In January 2013, the District Court denied the plaintiffs’ request for a preliminary injunction, and the Third Circuit U.S. Court of Appeals affirmed. 

Corporations Arguments 

Attorney Paul D. Clement argued for Hobby Lobby and Conestoga Wood, but before he could get through two sentences of his opening arguments, Justice Sonia Sotomayor jumped in, asking whether the claim was limited to materials such as contraceptives or whether it would include items such as vaccinations or blood transfusions.  Many people have religious objections to vaccinations and various other medical treatments, Justice Elena Kagen noted.  

Clement responded that the first step would be to ask whether there was a substantial burden on religious exercise.  This case is “one where it’s so religiously sensitive, so fraught with religious controversy, that the agency itself provides a certain number of exemptions and accommodations.”  Once past the substantial burden step of the analysis, the next step would be the compelling interest and least restrictive alternatives analysis and every case would have to be analyzed on its own, Clement said. 

Justice Sotomayor later asked how courts were supposed to know whether a corporation holds a particular religious belief.  She also asked what would happen to minority members or shareholders of a corporation who did not share the majority’s religious beliefs and how much of a business has to be dedicated to religion. 

Clement responded, “I think the way to approach those cases would be the same basic way you approach other questions of corporate intent or corporate motivation.  You look to the governance doctrines, if any of this is put at issue.”  It’s a critical question that goes the level of sincerity, Clement said.  Justice Sotomayor interrupted him to say that that question was the “most dangerous piece” and one that courts have “resisted in all our exercise jurisprudence, to measure the depth of someone’s religious beliefs.” 

Justices Sotomayor and Kagan also noted that companies objecting to the contraception requirement could avoid the issue by deciding not to offer health care coverage and choosing to pay the penalty.  Because there’s a choice, Justice Kagan said the question is “why is there a substantial burden at all.”  Clement responded that Hobby Lobby would be hurt if it didn’t provide health insurance to its employees and that in order to compensate for that, it would have to increase wages.  In response to questioning from Chief Justice John G. Roberts Jr., Clement also agreed that providing health insurance to its employees was part of the religious commitment of the owners. 

Justice Anthony M. Kennedy asked Clement how the court should take into account the religious rights of employees who may have different religious views than their employer.  The employee may not agree with the religious beliefs of the employer, so Justice Kennedy asked whether religious beliefs of the employer just trump those of the employees.  Clement responded this is not about access to contraception, but about who will pay for the government’s preferred subsidy.  

Government Arguments 

Solicitor General Donald B. Verrilli Jr. argued for the government in both cases, quoting from Prince v. Massachusetts in saying, “Limitations which of necessity bound religious freedom begin to operate whenever activities begin to affect or collide with the liberties of others or of the public.  Adherence to that principle is what makes possible the harmonious functioning of a society like ours, in which people of every faith live and work side by side.” 

Chief Justice Roberts interrupted to say that in enacting the RFRA, Congress wanted to provide exceptions for the religious views of a particular group.  Verrilli responded that the court must take into account the way in which the requested accommodation will affect the rights and interests of third parties 

Justices Samuel A. Alito Jr. and Antonin Scalia directed questions as to why the government believed that for-profits corporations could not raise free-exercise of religion claims and whether there was something about the corporate form that was inconsistent with the free exercise claim.  Verrilli responded that churches can bring claims, but engaging in a for-profit activity is inconsistent with free exercise claims.

 Justice Kennedy pointed out that the government already has exempted many employers from the act’s requirement for no co-pay preventative services.  He asked “what kind of constitutional structure do we have if the Congress can give an agency the power to grant or not grant a religious exemption based on what the agency determined.”  Verrilli countered that it was appropriate for the agency to take into account the “special solicitude” that churches receive, but all the government has done is say that churches, because of that special solicitude, get an exemptions.  Nonprofit religious organizations don’t get an exemption, but they do get an accommodation, Verrilli said.  Also, there are no exemptions for small employers and should those companies choose to offer insurance to their employees, they must provide the minimum coverage specified by the regulations, including contraceptives, he added. 

Justice Kennedy said that under the government’s legal theory, a for-profit corporation could be forced to pay for abortions.  Verrilli said there is no such law on the books, but Justice Roberts said that Hobby Lobby and Conestoga Wood believe that emergency contraception is a form of abortion.  Emergency contraception is one of the required products under the mandate. 

Mark L. Rienzi and S. Kyle Duncan of The Beckett Fund for Religious Liberty in Washington and Clement of Bancroft in Washington represented the plaintiffs in Hobby Lobby.  David A. Cortman of Alliance Defending Freedom in Lawrenceville, Ga., and Clement represent Conestoga Wood.  Verrilli represented tahe government in both cases.

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