The U.S. Supreme Court issued yet another precedent-setting decision this week for employers. In Burwell v. Hobby Lobby Stores, Inc., 573 U.S. _____ (June 30, 2104), the Supreme Court held in a 5-4 decision that regulations which require employers to provide health insurance coverage for certain types of contraceptive drugs violate the religious rights of company owners who oppose the drugs for religious reasons.
The case was brought by three closely held for-profit corporations, Hobby Lobby, Mardel, and Conestoga Wood Specialties, to challenge an Affordable Care Act (“ACA”) regulation that required non-exempt employers to provide health insurance plans that covered twenty forms of oral contraception. Four of the twenty drugs prevented development of a fetus post-conception. The owners of the companies, all of whom espouse a Christian ideology, believed that termination of pregnancy post-conception violated their religious beliefs.
The companies initially filed requests for injunctions against the U.S. Department of Health and Human Services (“HHS”) to prevent enforcement of the ACA regulations, claiming the regulations violated the Religious Freedom Restoration Act of 1993 (“RFRA”). RFRA prohibits the Federal Government from taking any action that substantially burdens the exercise of religion unless the action constitutes the least restrictive means of serving a compelling government interest.
The Supreme Court first acknowledged that the owners of the companies have sincerely held religious objections to abortion, and the four contraceptive methods at issue are considered abortifacients. The Court next considered whether the regulations imposed a substantial burden on religious exercise. The Court held that they did because corporations were required to either comply or face penalties of up to $475 million per year. Finally, the Court concluded that while the regulations served a compelling government interest, they were not the least restrictive means by which the government could serve that interest. HHS had already created an alternative system that enabled religious nonprofits to exclude the contraceptives from employee health insurance cost-sharing benefits. Women who are covered by the system can still access the drugs, but their employers do not share the cost. The Court reasoned that for-profit corporations should also be able to participate in the alternative system.
The majority rejected the argument that corporations were not defined as “persons” under law, but instead expanded RFRA and potentially other federal protections to corporations now and in the future. They also disagreed with the claim that the plaintiffs could reduce the burden by electing to drop insurance coverage and thus reduce the penalties, citing the fact that employers would be a significant competitive disadvantage if they stopped offering health insurance to employees.
Justice Ginsberg, writing for the dissent, criticized the majority opinion and argued that the decision forced women who do not necessarily share the religious views of their employers to absorb the cost of contraception. Ginsberg cited a national study that concluded out of pocket expenses for women were as much as 68% higher than for men. Ginsberg also summarily disagreed with the majority’s conclusion that a for-profit corporation was a “person” covered by RFRA.
Ultimately, the Supreme Court decision in Burwell will force courts to reexamine the rights of corporations across the nation, and could have a potentially far-reaching impact on all employers in the near future.