Virginia Lawyers Weekly VA Lawyers Weekly
WASHINGTON — The justices of the U.S. Supreme Court appeared divided during Tuesday’s oral arguments in a case that pits the religious rights of business owners against the rights of employees to have access to affordable reproductive health care.
The Affordable Care Act’s requirement that employer-funded health care plans cover contraceptives is at the center of the consolidated cases of Sebelius v. Hobby Lobby Stores Inc., 13-354, and Conestoga Wood Specialties Corp. v. Sebelius, 13-356. The employers in those cases are religious owners of closely held businesses that provide health care coverage to their thousands of employees. They claim that the health care law’s mandate forces them to pay for certain contraception measures — specifically two types of intrauterine devices and two types of emergency contraception pills — that violate their rights under the Religious Freedom Restoration Act and the First Amendment’s Free Exercise Clause.
The government disagrees, arguing that the employers’ challenge must fail because for-profit companies cannot have religious rights. Further, the government argues that even if these employers have religious rights, the law does not substantially interfere with those rights and the contraception coverage mandate is narrowly tailored to meet the compelling interest of providing affordable reproductive health services to insured employees.
The justices have a number of options on the table when it comes to deciding these cases, and may be able to avoid reaching the constitutional question of whether corporations have religious rights or even the merits of whether the health care law provision at issue violates RFRA. Still, this is the second major high court challenge to the federal health care law, which survived a broader constitutional challenge in 2012, and the decision could have a far-reaching impact on employers and workers.
“This is not about a corporation, a nameless, faceless organization,” David Cortman, senior counsel with Alliance Defending Freedom in Atlanta who also serves as counsel for Conestoga, said outside the court after arguments. “This is about a family. [This] mandate is an unprecedented intrusion in a private family business, where the government dictates, at the cost of severe and crippling fines and penalties, that people should violate their sincerely held religious beliefs when they decide to make a living.”
But others say that a ruling in favor of the companies would force employees who may not share their employers’ beliefs to bear the burden of their religious choices.
“The critical fact here is that the burden being transferred [to employees] is not just an economic burden, it’s a moral burden,” said Walter Dellinger, a partner in the Washington office of O’Melveny & Myers LLP who authored an amicus brief on behalf of the Guttmacher Institute. “Consider an employee who might have moral concerns about abortions but may not object to these methods of contraception. … Denying her access to the most effective means of contraception could place her in a moral dilemma that she may not wish to be in.”
At the end of the day the case could turn on the language of RFRA, a statute passed over 20 years ago to ensure that individuals and groups be allowed exemptions from certain governmental practices that interfere with their religious beliefs.
“It’s important to remember that RFRA was passed by a bipartisan Congress, and signed into law by President [Bill] Clinton,” said Peter J. Marathas Jr., who was not involved in the case.
“Putting aside the argument over whether Congress should have done this, the fact is Congress spoke,” said Marathas, who heads both the Employee Benefits Practice in the Boston office of Proskauer Rose LLP and the firm’s Health Care Reform Task Force.
Weighing rights and burdens
During an extended 90-minute argument session at the court, the justices largely avoided the broader question of whether a company can have religious rights and instead focused on much narrower issues that could be dispositive.
Paul D. Clement, a partner in the Washington office of Bancroft PLLC, argued on the companies’ behalf that the law’s requirement that employers provide “something as religiously sensitive as contraception” violates RFRA.
Justice Elena Kagan aggressively questioned whether the employers met the requirements for a RFRA claim. The fact that the law allows employers to opt out of providing health care coverage altogether and instead use those funds to pay a penalty tax to the government cuts against the “substantial burden” element of a RFRA claim, she said.
“There is a choice here,” Kagan said. “So the question is whether there has been a substantial burden at all.”
Chief Justice John G. Roberts Jr. jumped in, pointing out that the burden may be more than financial if “the religious values of an employer [include] giving health insurance” to employees.
Kagan seemed unpersuaded.
“This is not the kind of thing that is going to drive a company out of business,” she said.
Justice Antonin Scalia disagreed, saying that the decision to drop health care coverage places companies at a competitive disadvantage.
“If they don’t provide health care, they will have to raise wages” to attract and retain employees, Scalia said. “It’s absurd to think that the costs” will be equal.
Clement pointed out that the health care law provides an exemption for nonprofit religiously-affiliated employers that allows employees to get coverage from a third-party insurer, and argued that the government could do the same for for-profit companies.
“Having the government pay for [contraception] is a less restrictive alternative,” Clement argued. “They just chose not to do that.”
U.S. Solicitor General Donald B. Verrilli Jr., argued that employees should not have to bear the burden of the religious choices of others.
“In any RFRA case, including this one, you have to consider the effect on third parties,” Verrilli said.
Justice Anthony M. Kennedy asked whether the nonprofit exemption, which was implemented via a Department of Health and Human Services regulation, undercuts the government’s claim.
“What kind of constitutional structure do we have when the decision of who can religiously object [to a legal provision] is made by an agency?” Kennedy asked.
Verrilli said it was Congress’ choice to “make a very narrow exception” to the mandate, and HHS had the authority to promulgate rules under the law.
Allowing employers to pick and choose what federal regulations they will comply with would “extinguish the federal protections” established by the health care law, Verrilli said.
“But it’s ok for nonprofit groups to do that?” Scalia asked.
A decision is expected later this term.
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