News media outlets, talk-show pundits, social media, and the blogosphere have exploded since the United States Supreme Court issued a closely divided written opinion June 30 regarding the applicability of the Patient Protection and Affordable Care Act (“ACA”) to certain corporations. The ruling carves out an exception to the contraceptive mandate of the ACA by allowing closely held corporations, like Hobby Lobby and Conestoga Wood Specialties—two of the plaintiffs in the case—to refuse to pay for contraceptives that work in a way that violates the religious beliefs of the corporations’ owners.
Opportunists on both sides of the political spectrum have used this ruling as a rallying point for their constituents and followers, arguing that this decision is either a great blow to women or a great win for religion.
For example, former secretary of state and possible presidential hopeful Hillary Clinton made the following statements to a crowd in Colorado shortly after the Supreme Court issued its decision:
It’s the first time that our court has said that a closely held corporation has the rights of a person when it comes to religious freedom, which means the corporation’s … [‘closely held’] employers can impose their religious beliefs on their employees, and, of course, denying women the right to contraceptives as part of a health care plan is exactly that. … I find it deeply disturbing that we are going in that direction.
It’s very troubling that a sales clerk at Hobby Lobby who needs contraception, which is pretty expensive, is not going to get that service through her employer’s health care plan because her employer doesn’t think she should be using contraception.
Speaker of the House, John Boehner, issued the following statement:
Today’s decision is a victory for religious freedom and another defeat for an administration that has repeatedly crossed constitutional lines in pursuit of its Big Government objectives. The mandate overturned today would have required for-profit companies to choose between violating their constitutionally protected faith or paying crippling fines, which would have forced them to lay off employees or close their doors.
If we disregard the ideologies and political spin, what does the decision really say? The actual Supreme Court Opinion is available here. What follows is a summary and analysis of the opinion and its foreseeable impact.
The Affordable Care Act’s Contraceptive Mandate
In general, employers with 50 or more full-time employees must, under the ACA, offer health insurance that includes “minimum essential coverage.” In some circumstances, religious employers, nonprofits, and employers with grandfathered insurance plans may be exempted. An employer subject to these requirements that is not in compliance faces harsh penalties, including a $100 daily “tax” for each affected employee.
Part of the “minimum essential coverage” is that women employees receive “preventative care and screenings” without having to pay out of pocket. The Department of Health and Human Services (“HHS”), tasked with defining the required “preventative care and screenings,” decided that “women with reproductive capacity” should have access to “[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling ….“
The FDA, in turn, has approved twenty contraceptive methods. The FDA publishes its list on its website, which list is reproduced as follows (categories are the FDA’s; irregular and inconsistent punctuation and capitalization are also the FDA’s):
BARRIER METHODS: Block sperm from reaching the egg
- Male Condom
- Female Condom
- Diaphragm with Spermicide
- Sponge with spermide [sic]
- Cervical Cap with Spermicide
- Spermicide Alone
HORMONAL METHODS: Prevent Pregnancy by interfering with ovulation and possibly fertilization of the egg
- Oral Contraceptives (Combined Pill) “The Pill”
- Oral Contraceptives (Progestin-only) “The Mini Pill”
- Oral Contraceptives (Extended/Continuous Use) “Pill”
- Vaginal Contraceptive Ring
EMERGENCY CONTRACEPTION: May be used if you did not use birth control or if your regular birth control fails. It should not be used as a regular form of birth control
- Plan B, Plan B One- Step and Next Choice (Levonorgestrel)
- Ella (ulipristal acetate)
IMPLANTED DEVICES: Inserted/implanted into the body and can be kept in place for several years
- Copper IUD
- IUD with progestin
- Implantable Rod
PERMANENT METHODS: For people who are sure they never want to have a child or do not want any more children.
- Sterilization Surgery for Men (Vasectomy)
- Sterilization Surgery for Women Surgical Implant (also called trans-abdominal surgical sterilization)
- Sterilization Implant for Women (Transcervical Surgical Sterilization Implant)
The contraceptive methods listed in red are those that have the potential for ending the progress of pregnancy after fertilization1 and are the methods specifically objected to by Hobby Lobby and Conestoga. Neither Hobby Lobby nor Conestoga offered any objection to paying for healthcare that covers the other sixteen contraceptive methods.
The Facts of Burwell v. Hobby Lobby
David and Barbara Green and their three children are Christians who started the Hobby Lobby chain forty-five years ago.2 The for-profit corporation has more than 13,000 employees. The Greens have long run their business consistent with their religious beliefs, including closing on Sundays, refusing to promote alcohol use, and contributing to Christian missionaries and ministries.
The Greens believe that life begins at conception, and to provide or facilitate the use of contraception that operates after conception is a violation of their religion. Responding to the contraceptive mandate in the ACA, they sued the Department of Health and Human Services (“HHS”), challenging the ACA’s requirement that they provide any contraception that operates to prevent the development of a fetus after conception, which they believe occurs when the female egg is fertilized. The United States District Court for the Western District of Oklahoma denied the sought-after relief, refusing to provide an injunction to prevent application of the ACA to Hobby Lobby.
Hobby Lobby appealed, and the Tenth Circuit reversed, holding that Hobby Lobby, as a for-profit business, was a “person” under the Religious Freedom Restoration Act of 1993 (“RFRA”), a Clinton-era statute that prohibits, with certain exceptions, the “Government from substantially burdening a person’s exercise of religion.” The Tenth Circuit concluded that the contraceptive mandate operated as a substantial burden to the exercise of religion because it would require Hobby Lobby to either compromise their religious beliefs or pay millions of dollars per year in ACA-imposed fines (“taxes”).
Conestoga Wood Specialties
Norman Hahn is a Mennonite businessman who started a for-profit woodworking company, Conestoga Wood Specialties, fifty years ago. He now has 950 employees. As a Mennonite, Hahn opposes abortion and believes that “[t]he fetus, in its earliest stages … shares humanity with those who conceived it.” Mr. Hahn believes he must operate his business consistent with his “religious beliefs and moral principles.” Because Hahn believes that human life begins at conception, he believes it is a sin against God to “intentionally participate in, pay for, facilitate, or otherwise support” abortifacients (which he believes include any contraceptive methods that interfere with pregnancy after fertilization).
Conestoga brought suit against the HHS and sought an injunction to prevent the government from forcing it to follow the ACA’s contraceptive mandate insofar as it applied to the four contraceptives that operated after a human egg is fertilized. The district court deniedConestoga an injunction. Conestoga appealed to the Third Circuit court, which affirmed the district court’s decision. The Third Circuit, in a divided opinion, held that “for-profit, secular corporations cannot engage in religious exercise” within the meaning of RFRA or the First Amendment of the United States Constitution.
Appeal to the United States Supreme Court
The Tenth Circuit agreed with Hobby Lobby that the RFRA applied to for-profit businesses. The HHS appealed to the U.S. Supreme Court. The Third Circuit disagreed with Conestoga, holding that the RFRA did not apply to for-profit businesses. Conestoga likewise appealed. The United States Supreme Court, acknowledging the importance of this issue and the split among circuits, agreed to hear and decide the case.
Writing for the majority, Justice Alito reiterated that under RFRA, the Government “shall not substantially burden a person’s exercise of religion” unless the burden “(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.”
The Court spent little time discussing the first prong and “assume[d] that the interest in guaranteeing cost-free access to the four challenged contraceptive methods is compelling within the meaning of RFRA ….”
To reach its ultimate conclusion, the Supreme Court considered three questions: (1) Are closely held for-profit corporations “persons” entitled to protection under RFRA? (2) If so, is the contraceptive mandate a substantial burden on the Greens’ and Hahns’ free exercise of religion? (3) If so, is there a less-restrictive means than the contraceptive mandate to accomplish HHS’ stated goal of providing free access to the four objectionable methods of contraception?
The answer to each of these questions had to be “yes” for the plaintiffs to prevail. Conversely, a negative finding on any one of these questions would have meant a win for the HHS.
Are Closely Held, For-profit Corporations “Persons” Entitled to Protection Under RFRA?
The short answer: yes, closely held for-profit corporations are “persons” afforded protection under RFRA.
Because RFRA does not define “person,” the Court turned to theDictionary Act, which sets forth the meanings of any Act of Congress, “unless the context indicates otherwise.” It defines “person” to include “corporations.” The Court saw nothing in RFRA that suggested that Congress did not intend the act to fall within the Dictionary Act definition of “person,” and “HHS ma[de] little effort to argue otherwise.”
To bolster its conclusion, the High Court cited a number of cases going back over twenty years where nonprofit corporations were afforded protection under RFRA. It noted, “HHS concedes that a nonprofit corporation can be a ‘person’ within the meaning of RFRA.” The Court then completed its one-two punch:
This concession effectively dispatches any argument that the term “person” as used in RFRA does not reach the closely held corporations involved in these cases. No known understanding of the term “person” includes some but not all corporations. The term “person” sometimes encompasses artificial persons (as the Dictionary Act instructs), and it sometimes is limited to natural persons. But no conceivable definition of the term includes natural persons and nonprofit corporations, but not for-profit corporations.
But what about the exercise of religion? Even if a for-profit corporation may be a “person,” can it be said that it is entitled to protection for the exercise of religion? To address this issue raised by the HHS, the Court emphasized the HHS’ inability to articulate a reason nonprofit corporations should be entitled to religious protection, but for-profit corporations should not. The HHS did attempt to “draw a sharp line between nonprofit corporations … and for-profit corporations” by distinguishing their objectives: for-profit corporations exist solely to make a profit, and nonprofit corporations, in furthering their religious “autonomy … often further individual religious freedom as well.”
The majority opinion had a reasoned response to this argument, explaining that (1) allowing Hobby Lobby and Conestoga to assert claims under RFRA protects the religious liberty of their owners, just like it would if they were nonprofit corporations; (2) there is a long history of judicial application of the “exercise of religion” to for-profit business organizations in non corporate form; and finally (3) for-profit corporations, at least under the laws of Oklahoma (Hobby Lobby) and Pennsylvania (Conestoga) are organized “to pursue any lawful business or purposes” or “act,” “including the pursuit of profit in conformity with the owners’ religious principles.” The fact that closely held for-profit corporations, including Hobby Lobby and Conestoga, “with ownership approval, support a wide variety of charitable causes” lent further support to the Court’s holding.
The HHS further argued that RFRA could not have been meant to apply to for-profit corporations because of the difficulty in ascertaining a corporation’s sincere beliefs. Using the extreme as the example, the HHS hypothesized that identifying the religious identity “of large, publicly traded corporations such as IBM or General Electric” would result in “divisive, polarizing proxy battles.”
The Court quickly dispensed with this position, questioning how often a large publicly traded company would be making RFRA claims given the unlikelihood that diverse shareholders would operate a company under the same set of religious beliefs. It also noted that the HHS could not cite to a single example of such a company ever bringing RFRA claims in the 21 years since the law’s inception.
Furthermore, the Court noted, no one in this case, including the HHS, had questioned the sincerity of the religious beliefs held by the Greens or the Hahns. The Court concluded, “if, as HHS seems to concede, Congress wanted RFRA to apply to nonprofit corporations, … what reason is there to think that Congress believed that spotting insincere claims would be tougher in cases involving for-profits?”
The Court articulated its holding on this issue in simple terms: “a federal regulation’s restriction on the activities of a for-profit closely held corporation must comply with RFRA.”
Is the Contraceptive Mandate a Substantial Burden on the Greens’ and Hahns’ Free Exercise of Religion?
The short answer: yes, requiring Hobby Lobby and Conestoga to provide health insurance that covers methods of birth control that may result in the destruction of an embryo “demands that they engage in conduct that seriously violates their religious beliefs.”
The Court did some simple math to conclude that the contraceptive mandate would impose a substantial burden on the Greens’ and Hahns’ free exercise of religion. If they exercised their religion and refused to provide the required coverage under ACA, they would be subjected to a $100 daily tax for each affected employee, which for Hobby Lobby would amount to $1.3 million per day ($475 million annually) and $90,000 per day ($33 million annually) for Conestoga. “These sums are surely substantial,” the decision reads.
Even if Hobby Lobby and Conestoga dropped insurance coverage completely, compelling their employees to purchase insurance through one of the ACA exchanges, they would be subjected to penalties of $26 million and $1.8 million per year, respectively, if even one of their full-time employees qualified for “a premium tax credit or cost-sharing reduction” on one of the government-run exchanges.
The HHS proposed just this result—arguing that the burden of free exercise is not substantial because Hobby Lobby and Conestoga “could readily eliminate any substantial burden by forcing their employees to obtain insurance in the government exchanges.” Besides the procedural impropriety of raising an issue for the first time on the appeal, the Court also dismissed this argument for substantive reasons:
We doubt that the Congress that enacted RFRA—or, for that matter, ACA—would have believed it a tolerable result to put family-run businesses to the choice of violating their sincerely held religious beliefs or making all of their employees lose their existing healthcare plans.
The HHS’ principal argument against a finding of substantial burden was that the relationship between the contraceptive mandate and the religious beliefs held by the plaintiffs was too attenuated. The HHS argued that providing healthcare coverage does not itself destroy embryos, but requires an employee to first (1) take advantage of the coverage, and (2) use one of the four objectionable contraceptive methods.
The Court’s opinion implied hypocrisy in the HHS’ calling into question the relationship between the requirement (purchase healthcare that includes objectionable contraceptives) and the wrong (destruction of an embryo) in this case because on prior occasions the HHS had endorsed exceptions to the contraceptive mandate for religious organizations and nonprofit organizations where the connection between the statutory mandate and the religious wrong is no different than it is in this case.
The Court responded to the HHS’ position as though affronted, recasting the HHS’ argument as presenting a challenge to the reasonableness of the plaintiffs’ religious beliefs—long recognized as outside the purview of the judicial branch—rather than focusing on the actual issue: whether the contraceptive mandate imposed a substantial burden on the exercise of religion.
The majority opinion concluded succinctly, citing a case from 1981:
the Hahns and Greens and their companies sincerely believe that providing the insurance coverage demanded by the HHS regulations lies on the forbidden side of the line, and it is not for us to say that their religious beliefs are mistaken or insubstantial. Instead, our “narrow function … in this context is to determine” whether the line drawn reflects “an honest conviction,” and there is no dispute that it does.
The Court held, “[b]ecause the contraceptive mandate forces [plaintiffs] to pay an enormous sum of money if they insist on providing insurance coverage in accordance with their religious beliefs, the mandate clearly imposes a substantial burden on those beliefs.”
Is the Contraceptive Mandate the Least Restrictive Means to Accomplish the HHS’ Stated Goal of Providing Free Access to the Four Objectionable Contraceptive Methods?
The short answer: “[t]he least-restrictive-means standard is exceptionally demanding, and it is not satisfied here.”
The High Court offered what it considered a simple yet less-restrictive way to promote the government’s interest in providing these four objectionable contraceptives to women: have “the Government assume the cost of providing the four contraceptives at issue to any women who are unable to obtain them under their health-insurance policies due to their employers’ religious objections.”
Using a comparison between the overall cost of the ACA—estimated at $1.3 trillion over the next ten years—and the cost of providing four types of contraceptives to a limited cross-section of the population (women who want them, but “are unable to obtain them under their health-insurance policies due to their employers’ religious objections”), the Court concluded that the impact would be minimal. It quoted the 2000 amendment to RFRA in support (and to dispose of the HHS’s argument that the “RFRA cannot be used to require creation of entirely new programs”): “this chapter may require a government to incur expenses in its own operations to avoid imposing a substantial burden on religious exercise.”
To bring its point home, the Court again referred to the HHS’ admission that nonprofit organizations are an acceptable exception to the contraceptive mandate. It reminded the HHS that on prior occasions the HHS had proposed and employed less restrictive means of achieving the Government’s goal to provide contraception to women employed by nonprofit organizations that were exempted from the coverage requirements of the ACA, and there was no reason to believe the HHS could not use the same methods when for-profit corporations are exempted.
Furthermore, women without contraceptive coverage have found accommodation through a statutory requirement that insurance companies provide separate coverage—at their own expense. In its efforts to pass this accommodation, the HHS concluded with empirical support, prior to this case, that such a requirement would not impose any additional cost to insurers because the relatively low cost of providing contraceptive coverage would result in overall “lower costs from improvements in women’s health, healthier timing and spacing of pregnancies, and fewer unplanned pregnancies.“
Justice Kennedy in a concurring opinion summarized the Court’s position: “the record in these cases shows that there is an existing, recognized, workable, and already-implemented framework to provide coverage. That framework is one that HHS has itself devised….”
Taking a shot at Justice Ginsberg’s dissent, the majority stated: “[t]he principal dissent identifies no reason why this accommodation would fail to protect the asserted needs of women as effectively as the contraceptive mandate, and there is none.”
Thus, either through Government funding (as contemplated and allowed by RFRA) or a requirement that insurance companies pick up the tab (the HHS’ least-restrictive-means solution for nonprofit organizations that are exempted from RFRA), the Government can achieve its objective without imposing a substantial burden on the free exercise of religion.
The final conclusion of the United States Supreme Court was, simply, “[t]he contraceptive mandate, as applied to closely held corporations, violates RFRA.”
What the Hobby Lobby Decision Did Not Do
As mentioned at the outset, political opportunists have used this decision to polarize their constituents and followers in furtherance of their own agendas. And although we can’t be certain how this decision might be used in the future by organizations claiming religious exemptions, there are a few things we do know.
This Decision Will Not Prevent Women from Getting Contraception
Although Hillary Clinton plays on the sympathies (and perhaps ignorance) of the public by creating a sad hypothetical (“a sales clerk at Hobby Lobby who needs contraception, which is pretty expensive, is not going to get that service through her employer’s health care plan”), there is no truth to her statement.
First, if a sales clerk at Hobby Lobby wants contraception, her employers will pay, through her healthcare plan, for any of sixteen different forms of contraception that were never at issue in the Hobby Lobby case. If she takes advantage of those forms available to her, she presumably will have little need for the morning-after pill (referred to on the FDA’s site as “Plan B” or “Ella”), which is recommended, as per the FDA, “after having unprotected sex.”
Second, if a sales clerk happens to want one of the four kinds of contraception that her employer isn’t paying for, she will still have access to them, either through Government funding or through a requirement that the insurer pay for them. She probably will not ever even know—or care—who foots the bill.
Justice Alito makes this point at the beginning of the opinion:
The effect of the HHS-created accommodation on the women employed by Hobby Lobby and the other companies involved in these cases would be precisely zero. Under that accommodation, these women would still be entitled to all FDA-approved contraceptives without cost sharing.
Because employees will still have access to every form of contraception they would otherwise, there is no basis for concluding, as Hillary Clinton does, that as a consequence of this decision, employers may now “impose their religious beliefs on their employees.”
Third, the starting salary for a full time employee at Hobby Lobby, including clerks, is $14—almost double the federal minimum wage ($7.25), and has historically been generous, so the sales clerks who needed contraception were well able to purchase it long before ACA was enacted.
In response to Justice Ginsberg’s naysaying in the dissent, the majority opinion remarked as follows:
Ironically, it is the dissent’s approach that would “[i]mped[e] women’s receipt of benefits by ‘requiring them to take steps to learn about, and to sign up for, a new government funded and administered health benefit,’“ because the dissent would effectively compel religious employers to drop health-insurance coverage altogether, leaving their employees to find individual plans on government-run exchanges or elsewhere. This is indeed “scarcely what Congress contemplated.”
Thus, not only will no employee eligible for benefits under the ACA be deprived of contraception that her employer approves, she will have access to—at no cost to her—all of the FDA-approved forms of contraception. The only change effectuated in this respect by the Supreme Court is that her employer will not have to pay for the objectionable contraceptives.
This Decision Does Not Give Large Corporations License to Disregard Federal Law
Justice Ginsberg, echoing the position of the HHS, expressed concerns that the opinion will allow commercial enterprises to “opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.”
This position, contained in the dissenting opinion (i.e. the part of the opinion without authoritative effect), is summarily dismissed by the majority opinion (i.e. the binding part of the opinion) when it says, quoting Justice Ginsberg, that it does not so hold.
In fact, the holding is limited in scope and only applies to
- closely held corporations (i.e. those corporations with at least 50% stock owned by five or fewer individuals)
- with sincere religious beliefs
- that, if adhered to, would result in a substantial burden imposed by a law
- for which a compelling government interest exists
- for which there is not a less restrictive means of achieving.
And since this same rule already applied to corporations and other business organizations that were either nonprofit or religious organizations—which exception was endorsed by the HHS—the Hobby Lobby decision really only extends RFRA’s application to closely held corporations that are run for profit.
This Is Not a Slippery Slope that Will Lead to Immunizations, Antidepressants, or Transfusions Becoming Exempted
In her dissent, Justice Ginsberg also foretells an over-expansive application of the majority holding, predicting that the majority opinion, as applied to future cases, could exclude exceptions for blood transfusions, antidepressants, vaccinations, and other medical practices objectionable to certain religions. However, the majority crafted its opinion in such a way as to limit the application of its holding, and to base its decision on a careful analysis of the least-restrictive-means standard, a standard which, by the majority’s admission, would not necessarily be met in other cases:
In any event, our decision in these cases is concerned solely with the contraceptive mandate. Our decision should not be understood to hold that an insurance-coverage mandate must necessarily fall if it conflicts with an employer’s religious beliefs. Other coverage requirements, such as immunizations, may be supported by different interests (for example, the need to combat the spread of infectious diseases) and may involve different arguments about the least restrictive means of providing them.
Although abortion and contraception are controversial issues that are not going away, ignorance has prevailed over reason in the public reactions to the Supreme Court’s decision in Hobby Lobby. Politicians, journalists, and vocal citizens alike do the public a disservice by misstating the Court’s conclusions or propagating the misstatements of others—whether intentionally or through indolent ignorance.
In the final analysis, I agree with the majority opinion:
Congress, in enacting RFRA, took the position that “the compelling interest test as set forth in prior Federal court rulings is a workable test for striking sensible balances between religious liberty and competing prior governmental interests.” The wisdom of Congress’s judgment on this matter is not our concern. Our responsibility is to enforce RFRA as written, and under the standard that RFRA prescribes, the HHS contraceptive mandate is unlawful.
Zachariah B. Parry is an attorney and founding partner at the law firm Parry & Pfau and is an adjunct professor who teaches torts, contracts, and Nevada practice and procedure for UNLV’s paralegal program. He can be reached at 702-912-4451 or email@example.com.
1 There is considerable debate as to when conception actually occurs, a question that neither science nor religion answers with any accord. The Greens and the Hahns believe that conception occurs at fertilization—a belief shared by at least some religions. According to the Code of Federal Regulations, conception is not complete until the fertilized egg is implanted on the wall of the uterus: “[p]regnancy encompasses the period of time from implantation until delivery.” However, it was not necessary for the Court to define what is and what is not an abortifacient for it to render its decision. The decision reads, “[i]t is not for the Court to say that the religious beliefs of the plaintiffs are mistaken or unreasonable.”
2 One of the Greens also owns and operates a company called Mardel, which is a chain of 35 Christian bookstores with about 400 employees. Mardel was also a plaintiff in the Hobby Lobby case.
- 1 U.S.C. § 1
- 77 Fed.Reg. 8725
- 78 Fed. Reg. 39877
- 26 U.S.C. § 4980D
- 26 U.S.C. § 4980H
- 26 U.S.C. § 5000A
- 42 U.S.C. § 300gg–13
- 42 U.S.C. § 2000bb
- 42 U.S.C. § 2000cc
- 15 Pa. Cons.Stat. § 1301
- Okla. Stat., Tit. 18, §§ 1002, 1005
- Conestoga Wood Specialties Corp. v. Sebelius, 917 F. Supp. 2d 394 (E.D. Pa. 2013)
- Conestoga Wood Specialties Corp. v. Sec’y of U.S. Dep’t of Health & Human Servs., 724 F.3d 377 (3d Cir. 2013)
- Hobby Lobby Stores, Inc. v. Sebelius, 870 F. Supp. 2d 1278, 1283 (W.D. Okla. 2012)
- Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114, 1122 (10th Cir. 2013)
- Burwell v. Hobby Lobby Stores, Inc., 13-354, 2014 WL 2921709 (U.S. June 30, 2014)
- Health Resources and Services Administration Adoption of FDA Approved Contraceptives
- FDA List of Approved Contraceptives