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Appeals Court Rejects Company's Plea for Exemption From Contraceptive Coverage Rules

Appeals Court Rejects Company's Plea for Exemption From Contraceptive Coverage Rules

September 18, 2013 — A federal appeals court on Tuesday said the Catholic owners of a Michigan company do not have legal standing to challenge the federal contraception coverage rules, which the owners argue violate their religious beliefs, the Washington Times reports.

The decision marks the third time a federal appeals court has weighed in on the issue and the second time such a court has rejected a private business' request for an exemption based on its owners' religious beliefs. The split rulings suggest that the Supreme Court will ultimately decide the issue, according to the Times (Howell, Washington Times, 9/17).

Background

The contraceptive coverage rules, which are being implemented under the Affordable Care Act (PL 111-148), require most employers to offer the coverage to their workers. Houses of worship are exempt from the requirement, and religiously affiliated not-for-profits are eligible for an accommodation that ensures they do not have to pay for or directly provide the coverage to their employees.

In July, U.S. District Court Judge Joe Heaton granted retail chain Hobby Lobby a preliminary injunction against the rules, arguing that the stay was justified because of "substantial" public policy issues involved in the case, the number of similar lawsuits and the size of the penalties Hobby Lobby would incur for failing to comply with the rules (Women's Health Policy Report, 7/22).

That ruling counters a separate decision that month by the 3rd U.S. Circuit Court of Appeals, which found that a Mennonite-owned, secular business called Conestoga Wood Specialties could not challenge the rules because "for-profit, secular corporations cannot engage in religious exercise" (Women's Health Policy Report, 7/29).

Latest Ruling

In the latest case, the Kennedy family argued that the rules would force it to choose between its Catholic beliefs and substantial financial penalties. The Kennedys own a controlling interest in two Michigan manufacturing companies -- Autocam and Autocam Medical -- that employ about 661 workers in the U.S. (Provance, Toledo Blade, 9/18).

Specifically, the Kennedys said they would have to offer insurance coverage for contraceptive methods that are incompatible with their faith or risk annual fines of $19 million. Attorneys representing the family said the Supreme Court in the 2010 case Citizens United v. Federal Election Commission extended First Amendment free speech protections to corporations, so corporations should similarly be able to use the amendment's protections of the free exercise of religion.

However, a three-judge panel from the 6th Circuit ruled that the Kennedys could not challenge the contraceptive coverage rules because the "decision to comply with the mandate falls on Autocam, not the Kennedys." The judges said this distinction means that the "Kennedys cannot bring their claims in their individual capacities under the [Religious Freedom Restoration Act (RFRA)], nor can Autocam assert the Kennedys' claims on their behalf."

The judges said that the RFRA grants a right to sue to any "person" whose religious exercise has been burdened but that the law does not similarly extend that right to corporations, adding, "Autocam is not a 'person' capable of 'religious exercise' as intended by RFRA." They noted that granting Autocam an exemption would "lead to a significant expansion of the scope of the rights the Free Exercise Clause protected."

The judges also noted that although the Supreme Court has recognized that sole proprietors have a right to the free exercise of religion, it has "never recognized similar rights on behalf of corporations pursuing secular ends for profit" (Richey, Christian Science Monitor, 9/17).

Reactions

Kyle Duncan -- general counsel for the Becket Fund for Religious Liberty, which is representing some of the employers who are challenging the rules -- said the latest decision "just sets it up for Supreme Court review" (Washington Times, 9/17).

Brigitte Amiri -- senior staff attorney with the American Civil Liberties Union Reproductive Freedom Project -- said that while "[r]eligious liberty is a fundamental right ... companies cannot break the law by withholding coverage for health services just because they have a religious objection." She added, "Nearly every woman uses contraception at some point in her life. This law ensures that employers do not discriminate against their workers by making it difficult for them to obtain the care they need" (Goldberg, Newark Star-Ledger, 9/17).

Contraceptive Coverage Lawsuit Guide

In related news, Kaiser Health News on Tuesday published a guide to the various legal challenges that "could ultimately bring the contraception coverage requirement to the Supreme Court." The guide includes brief summaries of the Hobby Lobby and Conestoga Wood Specialties cases, among others (Miller, Kaiser Health News, 9/17).