Dueling Contraceptive Mandate Petitions Filed by Secular Company, HHS in High Court

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By Peyton M. Sturges  

Sept. 20 --Two petitions filed Sept. 19 with the U.S. Supreme Court seek review of conflicting federal appeals court rulings on challenges to the Affordable Care Act's preventive services mandate for women, all but ensuring the high court will decide whether for-profit, secular companies can avoid the mandate under the Religious Freedom Restoration Act.

A federal government petition said the Supreme Court should review a June decision by the U.S. Court of Appeals for the Tenth Circuit that found two secular companies were likely to succeed on their claim that the ACA's mandate violates their religious rights under RFRA, 42 U.S.C. 2000bb (Sebelius v. Hobby Lobby Stores, Inc., U.S., No. 13-354, petition filed 9/19/13).

The second petition challenges a decision by the U.S. Court of Appeals for the Third Circuit, which ruled in July that RFRA doesn't provide for-profit, secular companies with a vehicle to resist compliance with the mandate, also known as the contraceptive mandate (Conestoga Wood Specialties Corp. v. Sebelius , U.S., No. 13-356, petition filed 9/19/13).

The two opposing petitions challenge the ACA mandate under RFRA, which provides that the government “shall not substantially burden a person's exercise of religion” unless the government has a compelling interest and the challenged action is the least restrictive means for achieving that interest.

The Tenth Circuit ruled that two secular companies have RFRA rights while the Third Circuit ruled a secular company didn't. The stark conflict between the two appellate decisions on the issue of whether secular companies have RFRA rights supports the widely held expectation that the conflict will be resolved during the next Supreme Court term, which commences Oct. 7.

Tenth Circuit Rules First

The government's petition seeks reversal of the Tenth Circuit decision that held two companies could qualify as “persons” under RFRA and were entitled to challenge the ACA requirement that employers provide health plans that cover certain contraceptives at no cost to their employees.

The Tenth Circuit, sitting en banc and in a ruling by a majority of five judges, reversed a decision by the U.S. District Court for the Western District of Oklahoma, which found that two companies, Hobby Lobby Stores Inc. and Mardel Inc., along with their owners, David, Barbara, Mart and Steve Green and Darsee Lett, weren't entitled to a preliminary injunction precluding the federal government from enforcing the preventive services mandate for women against them .

The Tenth Circuit, in reaching its decision, asked whether for-profit corporations, such as Hobby Lobby and Mardel, were “persons” exercising religion for RFRA purposes. The court answered that question in the affirmative.

The court found that RFRA could apply to for-profit corporations even if they “do not pray, worship, observe sacraments or take other religiously-motivated actions separate and apart from the intention and direction of their individual actors.” The court also rejected the government's argument that extending religious rights to closely held corporations, such as Hobby Lobby and Mardel, would lead to the expansion of those rights to large, publicly traded businesses.

Two opposing petitions filed with the Supreme Court all but ensure the high court will decide whether for-profit, secular companies can avoid the ACA's preventive services mandate for women under the Religious Freedom Restoration Act.

The Tenth Circuit also found that the contraceptive mandate placed a substantial burden on the corporations' religious exercise. It noted that no one questioned the sincerity of the corporations' owners' religious beliefs or that they objected to furthering or supporting efforts that terminate human life.

It also found the prospective harm would be substantial if the companies offered noncomplying health plans or if the companies instead elected not to provide health insurance for their employees at all. “It is difficult to characterize the pressure as anything but substantial,” the appeals court said.

The court went on to find that the government hadn't shown a compelling need to burden the plaintiffs' religious exercise rights in this fashion. Although recognizing the importance of the government's interests in protecting public health and promoting gender equality, the court said both interests were insufficient because they were too “broadly formulated” to justify the government's mandates.

Third Circuit Disagrees

The Third Circuit, in its contrary decision, found the company challenging the mandate in that case, Conestoga Wood Specialties Corp., wasn't covered by RFRA. Conestoga, which is owned by members of the Hahn family who are Mennonite Christians, was properly denied a preliminary injunction that would have barred federal agencies from enforcing the contraceptive coverage mandate against the company, the Third Circuit ruled (22 HLR 1175, 8/1/13).

The appeals court rejected their arguments that the contraceptive mandate presents a substantial obstacle to their exercise of religion, in violation of RFRA, and the First Amendment of the U.S. Constitution, because it requires most employers to provide employee health plans that cover, without cost to the employee, contraceptives, abortifacient contraceptives, abortion and sterilization.

Rather, the Third Circuit concluded that religious exercise “is one of the more uniquely 'human' rights provided by the Constitution,” and that it couldn't “see how a for-profit, 'artificial being, invisible, intangible, and existing only in contemplation of law' that was created to make money could exercise such an inherently 'human' right.”

The Third Circuit declined in August to grant panel, or en banc, rehearing in the case .

Since those rulings, the U.S. Court of Appeals for the Sixth Circuit added its take on the issue, deciding Sept. 17 to align itself with the Third Circuit in rejecting claims challenging the mandate brought by affiliated Michigan companies and their owners .

Review Warranted

The government's petition challenging the Tenth Circuit's decision argued that the appeals court reached the wrong conclusion for a number of reasons. “Respondents' challenge to the contraceptive-coverage requirement fails to satisfy this statutory standard in multiple respects,” it said.

“First, the for-profit corporate respondents are not 'person(s) exercis(ing) religion' within the meaning of RFRA, 42 U.S.C. §2000BB-1(A),” the petition argued. “Second, there is no indication that Congress, in enacting RFRA, intended to disregard fundamental tenets of corporate law that distinguish between the rights and responsibilities of a corporation and those of its owners.”

“Third, the particular burden of which respondents complain is too attenuated to be 'substantial,'” the petition continued. “Finally, even if respondents could surmount those threshold obstacles, their claim would fail because the contraceptive-coverage requirement is the least restrictive means of advancing compelling governmental interests.”

The petition also said high court review is warranted because the underlying question “is one of exceptional importance.” By reviewing the district court's decision en banc, the Tenth Circuit signaled the importance of the underlying issue, it argued.

Since then, the two appellate decisions by the Third and Sixth circuits, expressly disagreeing with the one issued by the Tenth, have created a conflict “that is likely to deepen soon as more circuits address the question in the many pending cases presenting it,” the petition said.

“Finally, the court of appeals' decision is incorrect and would transform RFRA from a shield for individuals and religious institutions into a sword used to deny employees of for-profit commercial enterprises the benefits and protections of generally applicable laws,” the petition added.

No Religious Rights

The Conestoga petition claims the Third Circuit ruling is at odds with the high court's free exercise cases involving corporations and should be reviewed because it pits “freedom of conscience against purported nationwide uniformity” in needed health-care coverage.

The petition argued that the Third Circuit erred in holding that neither the company's nor the Hahns' free exercise rights were impaired by the mandate. In addition, the petition said, the Third Circuit's decision is particularly well-suited for high court review because it conflicts with the Tenth Circuit's en banc ruling.

In arguing that the case was an appropriate vehicle for review, the petition also noted that the Hahn family “and their close identification with Conestoga exemplify the case for allowing for-profit businesses and their family owners to live their faith as they participate in the marketplace.”

“If anyone subject to the contraceptive-coverage Mandate can claim free exercise rights, they can,” it concluded.

The government's petition was filed by Donald B. Verrilli Jr., Stuart F. Delery, Edwin S. Kneedler, Joseph R. Palmore, Mark B. Stern, and Alisa B. Klein, all with the Department of Justice, Washington.

The Conestoga petition was filed by Jordan W. Lorence, Steven H. Aden, Gregory S. Baylor and Matthew S. Bowman, with Alliance Defending Freedom, Washington, and David A. Cortman, Kevin H. Theriot and Rory T. Gray, with Alliance Defending Freedom in Lawrenceville, Ga.