In Burwell v. Hobby Lobby Stores, Inc.
, the Supreme Court ruled that closely held companies can refuse to include contraceptive coverage under their group health plans without facing fines for noncompliance with the Patient Protection and Affordable Care Act (PPACA). The case was brought before the Court by two Christian families: the Greens, who own Hobby Lobby and a chain of Christian bookstores, and the Hahns, who own the cabinet company Conestoga Wood Specialties.
Under the women’s preventive care requirements of PPACA, non-grandfathered group health plans are currently required to offer a wide variety of contraceptive coverage to participants with no cost sharing. The Greens and Hahns argued that some of those contraceptives (two forms of intrauterine devices and two “morning after pills”) may keep a fertilized egg from implanting in the uterine wall, tantamount in their opinion to abortion.
Federal law defines pregnancy as beginning at the moment of implantation in the uterus, not fertilization. However, the Supreme Court was not tasked with deciding the scientific or legal validity of the owner’s personal beliefs, but whether a company’s owners’ religious objections can exempt the company from certain provisions of PPACA.
The First Amendment protects the right to the “free exercise” of religion. The 1993 Religious Freedom Restoration Act (“RFRA”) requires that the government “shall not substantially burden a person’s exercise of religion” unless doing so is the least restrictive way to advance a compelling government interest. The Hobby Lobby
plaintiffs argued that PPACA’s contraceptive mandate violated their rights under RFRA and a failure to comply with the mandate would subject the company to fines of nearly $475 million a year. The court held that those penalties were significant enough to meet the substantial burden on the exercise of religion test.
Previously, the Obama Administration had given certain religious groups such as churches exemptions from the mandate and allowed non-profit religious universities who objected to the mandate to obtain an accommodation. Thus, the Greens argued, the government already recognizes that non-profit corporations engage in religious exercise, and that based on the exemptions already provided, the government had already shown the contraceptive mandate was not the least restrictive way to advance the government’s interest in providing contraception to women.
The government conceded that while the Greens may sincerely hold their religious beliefs, that there was a critical separation between the Greens and the corporation they have elected to create. The government argued that the corporation has rights and obligations that differ from their owners, such as a requirement to comply with PPACA. The Supreme Court disagreed, finding in a 5-4 decision that the mandate to cover contraception violated RFRA. The majority specifically clarified that the decision only applied to “closely held corporations” and was specifically limited to the contraceptive mandate under PPACA, not to other facts not presented before the court.
It’s possible that HHS may assume the cost of providing the contraceptives for women whose health plans do not cover the contraceptives due to their employers’ religious beliefs. Practically, this may be difficult to do as Congress has prohibited the use of federal funds for abortion-related procedures in federal health care programs since 1977 and that provision was incorporated into PPACA. The more likely alternative is that HHS will extend the same accommodation currently available to religious non-profit organizations to closely held for-profit corporations who object to the mandate. Under this method, the insurer or TPA would provide coverage for contraceptives but would not pass the cost on to the sponsoring employer.
We are hopeful that HHS will move quickly in providing the necessary guidance on this issue.
If you have any questions about the impact this decision may have on your group health plan, or any other Health Care Reform issues, please contact April A. Goff (email@example.com
or 616.752.2154), Norbert F. Kugele (firstname.lastname@example.org
or 616.752.2186), or any other member of Warner Norcross & Judd’s Employee Benefits Practice Group.