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Justices Carve Out Religious Exemption From the ACA

In recent weeks the news has been dominated with stories on the significant United States Supreme Court case Burwell, Secretary of Health and Human Services, et al. v. Hobby Lobby Stores, Inc., et al which laid out, at least in part, how the Religious Freedom Restoration Act of 1993 (“RFRA”) interacts with the Affordable Care Act of 2010 (“ACA”, also known as “Obamacare”) in the context of the mandatory contraception coverage.

 

The terms of the RFRA prohibit the “[g]overnment [from] substantially burden[ing] a person’s exercise of religion even if the burden results from a rule of general applicability.” 42 U.S.C. Sections 2000bbb-1(a) and (b) The aforesaid prohibition only applies if it can be demonstrated that the law from which the exception is sought is not in furtherance of a compelling government interest and/or is the least restrictive means to accomplish that compelling government interest.

 

The ACA requires employers, such as those like Defendants Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. (“Defendants”), to provide health care plans which include “preventative care and screenings” for women without any cost sharing. Congress did not specifically define what “preventative care and screenings” precisely means; instead, Congress delegated to the Department of Health and Human Services (“HHS”), which was the Plaintiff in this matter, the power and authority to formulate the definition. The definition of “preventative care and screenings” formulated by HHS includes twenty (20) different methods of contraception.

 

The Defendants are closely held companies owned by families who are self-described as practicing Christians. The Defendants are large enough companies to fall within the above described requirements of the ACA, including the providing of twenty (20) different methods of contraception. The Defendants believe that four (4) of the twenty (20) forms of required methods contraception are abortifacients that offend their Christian beliefs which view abortion as inherently sinful. Accordingly, pursuant to the RFRA, the Defendants sought an exemption from the ACA’s requirement to provide the four (4) abortifacient methods of contraception.

 

The Court ruled that the RFRA applies to Defendants and, as a result, their Christian believes must be accommodated relative to the four (4) abortifacient methods of contraception; therefore Defendants are exempted from having to provide the aforesaid abortifacients under the ACA.

 

When rendering its decision, the Court had to leap the first hurdle of establishing Defendants as “persons” under the terms of RFRA. The argument was made that Defendants could not be persons as they are for-profit corporations. The Court observed that such a strict definition is not warranted by applicable law. Indeed, the Court noted that RFRA is specifically designed to help business owners avoid the difficult decision of having to choose the benefit of acting as a corporation on one hand and the benefit of judicial protection of their religious liberty on the other. The Court indicated that the protection offered by the RFRA is very broad and, in fact beyond the requirements of the U.S. Constitution and prior precedent. The RFRA does not define the term “person” so the Court looked to the dictionary for guidance. According to the Court, the dictionary’s definition of person includes corporations and, the Court noted, the terms of the RFRS do no suggest that the term “person” cannot refer to corporations.

 

Tellingly, as the HHS conceded that a non-profit corporation can be a “person” under the RFRA, the Court found no compelling reason to distinguish between non-profit and for-profit corporations. It was argued that a distinction between non-profit and for-profit corporations could be that non-profit corporations seek altruistic ends; however, the Court observed that for-profit corporation can as well. Arguments were raised suggesting that the RFRA ought not apply to a for-profit corporation due to the impracticality of discerning and assigning religious beliefs to an inanimate legal fiction. The Court rejected these arguments noting that ultimately corporations do not exist independently but can only act at the direction and control of human beings who can, in fact, hold religious beliefs and could be forced to act contrary to them if left unprotected by the RFRA. The Court specifically indicated that its ruling is only applicable to closely-held corporations which, by definition, are not publicly traded and its owners/directors, and their religious beliefs, are clearly identifiable. Indeed, the Court cited to precedent which ruled that a sole proprietorship, which makes a profit, can assert a religion claim, as a result it saw no justifiable reason why a business of a small number of people, also making a profit, could not do so as well. To that end, business practices compelled by the government, which may conflict with the limitations of one’s religion, are within the application of the RFRA. Arguments were raised that it would be burdensome to determine the religious sincerity of parties like Defendants but as the Court has been tasked with that under the RFRA generally, the Court did not think cases regarding the ACA would pose any additional or greater challenge.

 

Upon establishing that the owners of closely-held corporations can have protected religious beliefs under the terms of RFRA, the Court then engaged in an analysis of the application of RFRA to the Defendants. As noted above, the application of a law over a religious objection pursuant to RFRA requires that the law at issue advance a compelling government interest and provide for the least restrictive means to accomplish that compelling interest.

 

If Defendants do not comply with the terms of the ACA, specifically refusing to provide all twenty (20) of required methods of contraception, they would be taxed $100 per day for each applicable employee. For Defendant Hobby Lobby it could amount to $475 million dollars of penalties per year. If Hobby Lobby simply elected to not provide health insurance to its employees, it could be saddled with $26 million worth of penalties. Needless to say, the penalty for Hobby Lobby to comply with its religious beliefs and refuse to provide the four (4) required abortifacients is very steep and substantially burdens their practice of religion.

 

An argument was made that even if the Defendants did have a legitimate religious objection to the abortifacients, they would not be compelled to perform an abortion, merely to provide insurance coverage which just so happens to include the abortifacients which may never be purchased and/or used by the insured person. In response, the Court refused to engage in any sort of analysis into the above as it is not up to the Court to determine whether one’s religious beliefs are flawed or reasonable; especially because this may be an unconstitutional entanglement with religion. The Court was satisfied that Defendants believed that providing the insurance coverage for the abortifacients violated their religious beliefs. Instead, the analysis of the Court is merely to determine whether a religious belief can be accommodated using the two (2) prongs of compelling interest and least restrictive means now that it had been shown that the ACA substantially burdened Defendants’ religious beliefs.

 

When evaluating whether a compelling government interest was at issue, the Court simply assumed that ensuring that cost free access to contraception was a compelling government interest. Therefore, the main item at issue was, then, whether HHS can demonstrate that the terms of the ACA are the least restrictive means to achieve that government interest under the RFRA. The Court noted that the least-restrictive-means test is extremely demanding. Ultimately, the Court ruled that HHS did not prove that it lacks other less restrictive means to achieve its compelling interest under the ACA without substantially burdening the religious practice of the Defendants.

 

Specifically, the Court suggested that less restrictive means the government could employ would include simply providing the abortifacients directly to employees of corporations seeking protection under the RFRA. This is not outside the realm of possibility as the RFRA already requires government to expend additional funds to ensure protection of religious liberty, although the Court doubts the exemption sought by the Defendants would cost the government much money at all when all is told. Further, the Court pointed out that the government has already established similar accommodations to exempt coverage for contraception to non-profit corporations; it would be a rather simple, and similar, process to allow corporations like Defendants to seek and secure a similar but less expansive accommodated exemption (Defendants wanted an exemption from only four (4) contraception methods whilst the aforesaid non-profits received an exemption for all of them); indeed, the Court’s suggestion was prescient as, within days of the Court’s handing down the ruling in this case, President Obama announced this very exemption was to be established. Therefore, according to the Court, this accommodation satisfies all parties: it enables Defendants to enjoy religious liberty whilst ensuring the government interest in providing cost-free contraception is accomplished. It is also worth noting that even if the exemption is granted Defendants, the compelling interest to provide cost-free contraception is still met as the sixteen (16) other methods of contraception would still be provided, therefore, even on its face, Defendants’ requested exemption did not impair the government from achieving is compelling interest. Ironically, the Court pointed out, the arguments against Defendants’ position would likely lead to corporations simply dropping health care coverage for its employees instead of violate their religious beliefs, thereby undermining the goal of maximum contraception coverage.

 

Finally the Court emphasized the following: first, the application and interpretation of the RFRA is determined by its plain language; it was not persuaded by claims of legislative history to interpret it otherwise. Second, its decision ought not be understood to countenance just any religious claims seeking exemption from generally applicable laws. The Court drove home the point that any exemption under the RFRA must show the three factors noted above: (1) a given generally applicable law substantially burdens religious belief; (2) the aforesaid law advances a compelling government interest, and; (3) the same law is the least restrictive means to achieve that interest. Therefore, the Court gave no credence to the dire predictions that its ruling would open the flood gates to all manner of religious exemptions from laws ranging from other parts if the ACA (e.g.: vaccination or blood transfusion requirements) to discrimination laws to tax laws to anything in between. The Court simply did not think that most of the claimed potential exemptions had a likelihood of meeting the above three factors. This case, per the Court, addresses a religious exemption from the ACA’s contraception mandate by a closely-held corporation only.

 

As the months and years pass, and as the ACA continues to become part of the fabric of American law, it will be interesting to see how this case will influence its application. Although it was headline news when handed down, will it become a landmark case or just another case in long line of litigation under the ACA? Only time will tell.

Originally published on August 15, 2014 in The Legal Intelligencer and can be seen here.

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