Health Care Law s Contraception Mandate Reaches the Supreme Court

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1 Intro to Law Background Reading on Burwell v. Hobby Lobby Free Exercise Case Key Terms: Strict Scrutiny, Substantial Burden, Compelling Government Interest, Religious Freedom Restoration Act of 1993 Health Care Law s Contraception Mandate Reaches the Supreme Court MARCH 20, 2014 PEW RESEARCH RELIGION & PUBLIC LIFE PROJECT On March 25, the Supreme Court will hear oral arguments in two cases challenging regulations arising from the Affordable Care Act (ACA) of 2010 (sometimes referred to as Obamacare ), which requires many employers to include free coverage of contraceptive services in their employees health insurance plans. Both cases Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Sebelius involve challenges by for-profit businesses whose owners object to the mandate on religious grounds. A separate series of cases involving challenges to the contraception mandate by religiously affiliated nonprofits also is working its way through the federal court system. While one or more of those lawsuits may soon reach the high court, they are different from the Hobby Lobby and Conestoga cases, which concern only for-profit businesses. How did these cases arise, and how did they reach the Supreme Court? Regulations arising from the ACA require many employers to include free coverage for contraceptive services in their employees health insurance plans. The regulations entirely exempt churches and provide religiously affiliated nonprofits, such as hospitals and charities, an alternative mechanism for ensuring that their employees are covered. But those accommodations do not extend to for-profit employers who may also object, for religious reasons, to providing their workers with some or all kinds of artificial birth control.

2 The owners of a number of these businesses including arts-and-crafts retail chain Hobby Lobby and cabinet-maker Conestoga sued the federal government, claiming that the 1993 Religious Freedom Restoration Act (RFRA) entitles them to some form of relief from the mandate based on their religious objections. In the case of Hobby Lobby, a federal district court ruled in 2010 that the company is not entitled to an exemption from the mandate. But that decision was later reversed by the 10th U.S. Circuit Court of Appeals, which ruled in favor of Hobby Lobby. Conestoga also filed suit in federal district court and was denied relief. Unlike Hobby Lobby, Conestoga then lost its appeal (in a decision by the 3rd Circuit). Both losing parties petitioned the Supreme Court for review, and on Nov. 26, 2013, the high court agreed to hear the two cases at the same time. What is the Religious Freedom Restoration Act, and why is it so important in these cases? The Religious Freedom Restoration Act was enacted by the U.S. Congress in 1993 in response to a 1990 Supreme Court decision, Employment Division v. Smith. In Smith, the court dramatically changed the way it assesses laws and government actions that may impose a burden on religious practice. Prior to the decision, an individual or group would be entitled to an exemption from a law that burdened a religious practice unless the government could show that enforcement of the law furthered a compelling government interest, such as protecting public safety, and that this interest could not be advanced without imposing the burden. Smith dispensed with the compelling interest test and, in its place, required the government to show only that the law in question did not discriminate against religion and that it advanced a legitimate government interest, a much less rigorous standard that could include virtually any public policy goal. The 6-3 Smith decision prompted an outcry from religious groups and others, who claimed that the ruling would essentially gut religious liberty protections contained in the First Amendment to the U.S. Constitution. Congress responded by passing RFRA, which attempted to restore the pre- Smith, compelling interest standard. The statute directs courts to exempt any party who can show that the challenged law or government action substantially burdens his or her religious practice, unless the government shows that the law advances a compelling interest that cannot be achieved without imposing the burden on the person s free exercise of religion. In 1997, a lawsuit challenging RFRA (City of Boerne v. Flores) reached the Supreme Court, which struck down the law as applied to state and local governments. The decision rests on the principle

3 of federalism: Congress does not have the power to impose the standard on state and local governments but is free to impose it on the federal government. Because most religious accommodation cases involve state law, the court s decision in City of Boerne has resulted in relatively few subsequent cases involving RFRA claims. However, the Hobby Lobby and Conestoga cases involve the contraception mandate, which arises from a federal law. Before RFRA can be used to test the constitutionality of the mandate, the high court must first determine whether the 1993 law protects for-profit businesses. What arguments do the Hobby Lobby and Conestoga companies make? The owners of both companies say they are devout Christians who oppose abortion. These owners do not want to provide their employees with emergency contraception because they believe such methods not only prevent pregnancy but also can work after conception, destroying embryos. The arguments put to the Supreme Court by Hobby Lobby and Conestoga largely rest on the claim that RFRA protects the religious liberty of for-profit businesses. To begin with, they say, Congress did not explicitly exclude businesses from coverage when it passed the statute in Indeed, the statute claims to cover persons, a word courts usually interpret to include nonprofit and forprofit entities as well as individuals. Furthermore, the two companies contend, there is no reason to exclude for-profit businesses from RFRA s coverage. No one disputes that RFRA covers nonprofit entities, such as a religiously affiliated private school, so why, they ask, should such coverage disappear for a for-profit organization simply because it operates under a different tax structure? Hobby Lobby and Conestoga next argue that the situation at hand easily meets both major parts of RFRA s test required for an exemption to the challenged law or government action. First, they say, the ACA s contraception mandate imposes a substantial burden on their free exercise of religion. Traditionally, courts have left it to the parties bringing suit to determine when a government action burdens their right to freely exercise their religion. In this case, both companies say, the substantial burden arises from the health law s requirement to provide a number of drugs and devices that the owners of both Hobby Lobby and Conestoga believe can end life after conception. As a result, they say, the requirement directly conflicts with their religiously based opposition to abortion. In addition, they say, the government will impose ruinous financial and other penalties on them if they do not comply. Moreover, Hobby Lobby and Conestoga say, the companies are burdened even though they are not directly paying for their employees

4 contraception because by purchasing their employees insurance, they are still the ultimate source of the contraceptives. Having argued that the government s action imposes a substantial burden on the free exercise of their religious beliefs, the two companies next reject the idea that the contraception mandate advances a compelling public policy interest. Hobby Lobby and Conestoga point out that the government has already exempted thousands of religious groups and others from the mandate. How, the companies ask, can the government assert that it has a compelling interest in enforcing the contraception mandate when it leaves so many employees uncovered? In addition, Hobby Lobby and Conestoga argue, even if the government is advancing a compelling interest, it clearly is not doing so in the way that imposes the least restrictions on the companies free exercise of religion, as RFRA requires. In this case, they say, the government could advance its interest in a less restrictive way by directly paying for contraception coverage. Or it could extend to for-profit businesses owned by religious individuals the same exemption offered to religious nonprofits. What arguments does the government make? Like Hobby Lobby and Conestoga, the government rests its case on its understanding of RFRA. But the government argues that the statute does not protect for-profit corporations such as Hobby Lobby and Conestoga or even individuals acting in their capacity as owners or managers of these businesses. To begin with, the government says, there is no tradition of courts extending religious liberty protections to businesses or their owners, as courts have done with other protections, for example, speech rights. Nor, the government asserts, is there any indication that Congress intended RFRA to cover for-profit businesses, and there are significant prudential reasons to exclude businesses from this kind of coverage. Specifically, the government says, granting religious liberty rights to a business would inevitably impose burdens on its employees, who may not share the owner s beliefs. In addition, courts would be forced to determine which companies are sufficiently religious to qualify for such protections, a task not well-suited to judges who generally are not theologians or religion experts. Even if RFRA does apply, the government contends, the contraception mandate does not rise to the level of being a substantial religious burden (which is required if the law is to apply) because the companies are significantly removed from an employee s decision to use contraception. After all, they point out, Hobby Lobby and Conestoga do not directly provide contraception services to their workers. Instead, they offer their employees health insurance that covers a huge array of

5 medical services, including birth control. In addition, any decision to use birth control rests with the employees, not the insurance providers or the companies. Finally, the government argues, the mandate advances a compelling government interest because it is part of a comprehensive reform of the nation s health care system, and granting the companies an exemption would deprive some Americans of important benefits provided by that reform. In this case, many women would not receive free contraceptive services, thwarting an important public health goal for the government that all women have adequate access to effective birth control. As for RFRA s requirement that the mandate be enforced in the least restrictive way possible, the government argues that any alternative to the insurance mandate would mean upending the ACA s health care model (which revolves around employment-based health insurance) and replacing it with something different, a highly impractical option, according to the government. What might be the broad significance of this case? If the government prevails and the Supreme Court holds that RFRA does not cover for-profit entities or their owners or managers, the decision would immediately end all religious-libertybased challenges to the contraception mandate by for-profit businesses. It also would bar businesses from invoking RFRA in lawsuits challenging other laws. Such a ruling would not, however, have any impact on the pending challenges to the contraception mandate by religious nonprofit organizations. If, however, the high court holds RFRA does apply to for-profit businesses but rules in favor of the government either because it decides the contraception mandate does not impose a substantial burden on the businesses religious exercise, or that the mandate furthers a compelling governmental interest, the decision would almost certainly impact those challenges to the mandate filed by religiously affiliated nonprofits. Indeed, a ruling by the court that the mandate does not impose a substantial burden on these businesses could make it difficult for religious nonprofits to show that the mandate substantially burdens them. And a decision by the court that the government has a compelling interest in furthering the contraception mandate would insulate it from future RFRA challenges to the mandate from both for-profit and nonprofit entities. In addition, such a ruling also might indicate that the court has

6 adopted a more relaxed standard in applying the compelling interest test. This, in turn, could lead to more decisions for the government in future religious accommodation cases. If the court rules in favor of Hobby Lobby and Conestoga, the decision would likely open the door for businesses to invoke RFRA in a wide range of challenges to federal statutes and regulations. For instance, one bill now pending in Congress that would almost certainly invite such challenges is the Employment Non-Discrimination Act, which would include sexual orientation among the protected characteristics in workplace discrimination cases. A decision in favor of Hobby Lobby and Conestoga might give for-profit employers a strong foundation to raise religious objections to hiring gays and lesbians or to providing the same-sex spouses of employees with the same benefits extended to opposite-sex spouses. This report was written by David Masci, Senior Researcher at the Pew Research Center, and Robert W. Tuttle, David R. and Sherry Kirschner Berz Research Professor of Law & Religion at George Washington University Law School. 3 Questions Facing the Supreme Court in Contraception Case By Ariane de Vogue Mar 20, :56am Lawyers for two closely held for-profit corporations will seek an exemption from the Affordable Care Act s contraception provision next week before the Supreme Court. Regulations implementing the law require most group health plans to cover FDA approved contraceptives at no cost. Paul D. Clement, a lawyer for Hobby Lobby, an arts and crafts chain, and Conestoga Wood, a maker of cabinets, will tell the justices that the contraceptive mandate forces his clients to either violate their faith or pay crippling fines. At the core of the challenge is a federal law designed to protect religious liberty. It s called the Religious Freedom Restoration Act (RFRA) and it prohibits the government from burdening a person s exercise of religion unless the burden represents the least restrictive means of advancing a compelling interest. That legalese translates into three main questions before the Court:

7 1. WHO IS ALLOWED TO BRING SUIT? Or is a corporation a person exercising religion? GOVERNMENT SIDE: Solicitor General Donald B. Verrilli Jr. argues that for-profit corporations like Hobby Lobby (owned and operated by the Green family) cannot be considered a person exercising religion under RFRA. He says the Greens beliefs although deeply held do not justify an exemption for Hobby Lobby to comply with a generally applicable law that regulates the corporation and not the individual owner. Caroline Mala Corbin, a law professor at University of Miami School of Law, agrees and adamantly states that for-profit corporations cannot exercise religion. They are not sentient, they have no soul, and they certainly don t have a relationship with God, she says. Could the Green family challenge the contraceptive-coverage provision in their individual capacity as shareholders of a closely-held company? Verrilli says no. He says the contraception mandate imposes no personal obligations on the Greens, it only regulates the corporations they own and the group health plan the corporations sponsor. Aaron M. Katz, a litigation partner at Ropes & Gray LLP, sides with the government on this point. The Supreme Court should not allow a for-profit, secular corporation to avoid an important health care regulation simply because the corporation s shareholders believe that the regulation contradicts their personal religious beliefs, he says. CHALLENGERS: Not surprisingly, Clement disagrees. He says the word person is designed to include both natural persons (like the Greens) and corporations. The fact remains that the Greens exercise their faith through Hobby Lobby, he writes, and those beliefs are entitled to protection under a statute that draws no distinction between natural or corporate persons. Douglas Laycock, a law professor at the University of Virginia Law School, filed a brief in support of Hobby Lobby. He says that the drafting history of RFRA and related legislation makes clear that Congress understood RFRA to protect all persons, including for-profit corporations and their owners, when the owners can show a substantial burden on their exercise of religion.

8 2. DOES THE MANDATE SUBSTANTIALLY BURDEN THE FOR-PROFIT CORPORATION? CHALLENGERS: Hobby Lobby and Conestoga Wood object to 4 of the 20 contraceptives required by the law because they say the drugs and devices risk destroying a human embryo. They argue that if they choose not to offer the contraceptives, or not to offer any health plan at all, they will be faced with draconian penalties. A fine imposed for adherence to religious beliefs is as direct an obvious burden as one could imagine, Clement writes. GOVERNMENT SIDE: Verrilli argues that the relationship between the corporations claimed burden and the challenged governmental action is too attenuated. He says that it is the plan participants and their dependents who decide which services to use, often in consultation with their doctors. Those decisions by independent third parties are not attributable to the employer that finances the plan or to the individuals who own the company, and the connection is too indirect as a matter of law to impose a substantial burden, Verrilli says. 3. DOES THE GOVERNMENT HAVE A COMPELLING INTEREST? And is the mandate the least restrictive means to further the interest? GOVERNMENT SIDE: Verrilli says the mandate is part of a comprehensive insurance scheme and serves the government s interest in public health and gender equality. Those interests are supported by a wealth of empirical data demonstrating that providing women access to contraceptives without cost-sharing has significant health benefits for them, and their children, and conversely, that financial barriers to such access can result in significant health problems, says Verrilli. Elizabeth Wydra, of the Constitutional Accountability Center, has filed a brief in support of the government. Based on their personal religious beliefs, the individual owners of Hobby Lobby are trying to prevent the corporation s employees from obtaining an important health benefit to which they are entitled under the Affordable Care Act, she says. This would be a radical departure from well-established precedent, as the Supreme Court has never granted a religious accommodation to a secular business that comes at the expense of its employees.

9 The government acknowledges that it has offered certain exemptions to houses for worship because, there is a long tradition of protecting the autonomy of a church through exemptions of this kind. CHALLENGERS: Clement seizes on the exemptions for houses of worship and others for grandfathered plans and says there is no way that the government can argue that the mandate is narrowly tailored because already so many Americans are exempted. The contraceptive coverage requirement presently does not apply to tens of millions of people, he writes. Richard W. Garnett, a professor of Law at Notre Dame Law School, said it would be a mistake to view the challenges through a political lens or in a partisan frame. In an essay for Scotusblog, he writes: We know that some employers not many, but some; mostly religiously affiliated, but not all have religion based objections to providing coverage that includes some of these services to their employees. Is there any good reason not to revise or implement the regulations in such a way that employees would receive the services in question via a mechanism or route that avoids the objection and accommodates the objectors?