01 Jul High court nullifies contraceptive mandate for family-owned businesses

Originally posted June 30, 2014 by Jerry Geisel on www.businessinsurance.com.

Family-owned for-profit employers cannot be forced by the federal health care reform law to provide coverage for prescription contraceptives, the U.S. Supreme Court ruled 5-4 on Monday.

The decision, written by Justice Samuel Alito for the majority, came in a challenge to the prescription contraceptive mandate filed by three companies owned by Christian families — Oklahoma City-based Hobby Lobby Stores Inc. and Mardel Inc. and East Earl, Pennsylvania-based Conestoga Wood Specialties Corp. — which argued they should be exempt because of their religious objections to a Patient Protection and Affordable Care Act provision that requires employers with 50 or more full-time employees to provide group health plan enrollees with cost-free coverage of contraceptive prescriptions and services as part of the ACA preventive care mandate.

The mandate as it applies to privately held corporations violates the 1993 federal Religious Freedom Restoration Act, which bars the federal government from actions that substantially burden the exercise of religion, the court ruled.

“We hold that the regulations that impose the obligation violate RFRA, which prohibits the federal government from taking any action that substantially burdens the exercise of religion,” the majority ruled. “The plain terms of RFRA make it perfectly clear that Congress did not discriminate this way against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs.”

“Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them,” the court ruled.

The high court noted, however, that that the ruling applies only to family-owned businesses, not to publicly traded corporations, which the justices said would be unlikely to assert religious rights.

“The idea that unrelated shareholders — including institutional investors with their own set of stakeholders — would agree to run a corporations under the same religious beliefs seems improbable,” the high court ruled.

The court also said there could be alternative ways to provide contraceptives to people who work for family-owned organizations with religious objections to contraceptives — ones that would not violate corporate owners’ religious rights.

“The most straightforward way” of accomplishing this, the court said, would have the government provide contraceptive coverage to women who work for employers with religious objections to prescription contraceptives.

Another alternative approach, the justices said, could be businesses’ third-party administrators obtaining contraceptive coverage without payment from the employer. The government already extends that option to nonprofit organizations with religious objections to prescription contraceptives.

Several organizations, though, are challenging that approach.

While the justices struck down the contraceptive mandate for companies whose family owners have religious objections to contraceptives, they said it does not negate all insurance-related mandates, such as vaccinations or blood transfusions.