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D.C. Circuit Skeptical of Contraceptive Coverage Rules; Nuns' Group Files Latest Lawsuit

D.C. Circuit Skeptical of Contraceptive Coverage Rules; Nuns' Group Files Latest Lawsuit

September 25, 2013 — In a hearing on Tuesday, judges on the U.S. Court of Appeals for the District of Columbia Circuit "expressed skepticism" that the Obama administration could require employers to provide contraceptive coverage, Politico reports.

The court is hearing arguments in a lawsuit filed by Freshway Foods, a produce company whose owners -- Francis and Philip Gilardi -- seek an injunction against the federal contraceptive coverage rules. The Gilardis argue that requiring their company to offer contraceptive coverage to its workers violates their Catholic faith.

According to Politico, the court might not rule on the issue until the Supreme Court decides whether to review any appeals in similar cases (Haberkorn, Politico, 9/25).

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. Private companies are not eligible for an exemption or accommodation (Women's Health Policy Report, 9/20).

A lower court judge rejected the Gilardis' argument that requiring their company to provide contraceptive coverage is the equivalent of requiring them to personally do so. The family contended that corporations routinely engage in "quintessentially religious acts such as tithing, donating money to charities, and committing to act in accordance with the teachings of a religious faith." However, the judge ruled that the company is "engaged in purely commercial conduct and ... do[es] not exercise religion."

An appeals court later barred the government from enforcing the requirement against the company while the appeal proceeds (Frommer, AP/Bloomberg Businessweek, 9/25).

Federal Appeals Case

In filings for their case before the D.C. Circuit, the Gilardis argue that the company is closely held, meaning that "any penalties paid by the companies for non-compliance with the mandate ... will not only harm the companies but will also have a direct, negative financial impact on the Gilardis solely because of their refusal to compromise their Catholic beliefs" (Politico, 9/25). According to the filings, they would face more than $14.4 million in annual fines for noncompliance (AP/Bloomberg Businessweek, 9/25).

They also contend that the government has already granted so many exceptions to the rules that it has undermined its argument that they are necessary. "It's Swiss cheese policy," said Francis Manion, an attorney who represents the family (Politico, 9/25).

Judge Harry Edwards critiqued the Gilardis' arguments, noting that the greater good sometimes trumps religious freedom. "I don't know see how the government doesn't prevail," he stated (Bloomberg Businessweek, 9/25).

Department of Justice attorney Alisa Klein in her arguments stated that the rules are a valid exercise of government authority and that the burden on the plaintiffs' religious beliefs is insubstantial (Politico, 9/25).

Judge Janice Rogers Brown asked Klein whether religiously observant business owners have a right to exercise religion. Klein said, "There is no substantial burden on shareholders" because it is the company -- not the owners -- who are responsible for providing coverage (AP/Bloomberg Businessweek, 9/25). When Judge Raymond Randolph asked Klein a similar question, Klein reiterated that the coverage is "not the personal responsibility of the Gilardis" (Politico, 9/25).

Nuns File Suit Against Contraceptive Rules

In related news, the Becket Fund for Religious Liberty on Tuesday filed suit against the contraceptive coverage rules on behalf of the Little Sisters of the Poor, a Catholic religious order that operates elderly care homes. The Becket Fund is bringing the suit as part of a class action on behalf of hundreds of Catholic not-for-profits that consider their work to be an extension of their religious beliefs.

The suit contends that the religious order does not meet the rules' exemption for houses of worship, meaning that the nuns will have to begin providing contraceptive coverage in their employee health plans.

Mark Rienzi, senior counsel for the Becket Fund, said, "These women just want to take care of the elderly poor without being forced to violate the faith that animates their work" (Radnofsky, Wall Street Journal, 9/24).