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Federal Appeals Court Blocks Enforcement of Contraceptive Coverage Rules for Two Businesses

Federal Appeals Court Blocks Enforcement of Contraceptive Coverage Rules for Two Businesses

November 12, 2013 — A divided three-judge panel of the 7th U.S. Circuit Court of Appeals on Thursday blocked the federal government from requiring two private businesses to offer contraceptive coverage in their group health plans, Bloomberg Businessweek reports (Harris/Rosenblatt, Bloomberg Businessweek, 11/9).

The federal contraceptive coverage rules, which are being implemented under the Affordable Care Act (PL 111-148), require most employers to offer contraceptive 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, 10/31).

First Federal Appeals Court To Block Rules

The 2-1 decision by the 7th Circuit in Chicago marks the first time a federal appeals court has issued a ruling preventing the federal government from enforcing the rules. Although federal appeals courts in Washington, D.C., and Denver have sided with plaintiffs who are challenging the rules on religious grounds, they stopped short of issuing injunctions to block the requirement.

Federal appeals courts in Philadelphia and Cincinnati have upheld the rules. The Supreme Court could decide as early as this month whether to review some of the cases (Palazzolo, Wall Street Journal, 11/8).

The 7th Circuit is also the first federal appeals court to rule in favor of both a company and its owners, concluding that either entity may sue over the mandate, according to Bloomberg Businessweek (Bloomberg Businessweek, 11/9).

In the case, the owners of Illinois-based Korte & Luitjohan Contractors and Indiana-based Grote Industries argued that complying with the contraceptive coverage rules would violate their free-speech and free-exercise rights, as well as the federal Religious Freedom Restoration Act (PL 103-141). The Department of Justice countered that for-profit businesses do not have religious rights (Wall Street Journal, 11/8).

Judges' Opinions

In the majority opinion, Judge Diane Sykes wrote, "These cases -- two among many currently pending in courts around the country -- raise important questions about whether business owners and their closely held corporations may assert a religious objection to the contraception mandate and whether forcing them to provide this coverage substantially burdens their religious-exercise rights" (Bloomberg Businessweek, 11/9).

Although the ruling did not address whether the contraceptive coverage rules violate constitutional protections of religious freedom or the RFRA, Sykes noted, "The government draws the line at religiously affiliated nonprofit corporations. That line is nowhere to be found in the text of RFRA or any related act of Congress."

In the dissent, Judge Ilana Rovner wrote, "Religious beliefs have to do with such fundamental questions as the nature of mankind, where we came from, our place in the world, what happens when we die, and our relationships with and obligations to other people." However, Rovner added, "A corporation is a legal construct which does not have the sentience and conscience to entertain such ultimate questions" (Wall Street Journal, 11/8).

She added that while an employee's choice to use birth control might be inconsistent with a business owners' religious beliefs, "it is not the owners' choice."

Reaction

Louise Melling, deputy legal director of the American Civil Liberties Union, called the decision a "disappointment." She said, "Your boss shouldn't be able to discriminate against you because of what he or she believes, plain and simple. People are entitled to their own religious beliefs, but they don't have the right to impose those views on others" (Bloomberg Businessweek, 11/9).