Supreme Court Rules ACA Contraception Mandate Violates Religious Freedom Restoration Act in Hobby Lobby Case

In an opinion delivered by Justice Alito, the Supreme Court of the United States ruled on June 30, 2014, that closely held for-profit corporations can deny contraceptive coverage when citing religious beliefs. The owners of Conestoga, Hobby Lobby and Mardel, challenged the Department of Health and Human Services (“HHS”) regulations under the Patient Protection and Affordable Care Act (“ACA”) imposing the contraceptive mandate. In a narrowly tailored decision, the Court held that the contraceptive mandate violates The Religious Freedom Restoration Act (“RFRA”) and enforcement of the mandate against the objecting parties in this case is unlawful.

The issue in the Hobby Lobby case related to the business owners opposition to providing health insurance coverage for four particular contraceptive methods. Under the ACA, nonexempt employers are generally required to provide coverage for the 20 contraceptive methods approved by the Food and Drug Administration, including four that may have the effect of preventing an already fertilized egg from developing any further by inhibiting its attachment to the uterus. The owners of the three businesses objected to these four contraceptive methods stating that they have Christian beliefs that life begins at conception. The owners believed that if they complied with the HHS mandate with respect to the four objectionable methods, they would be facilitating abortions in violation of their religious beliefs.

RFRA prohibits the federal government from taking any action that substantially burdens the exercise of religion unless that action constitutes the least restrictive means of serving a compelling government interest. The Court concluded that RFRA applies to regulations that govern the activities of closely held for-profit corporations like Conestoga, Hobby Lobby and Mardel. The Court further concluded that the challenged HHS regulations substantially burden the exercise of religion as it requires the business owners “to engage in conduct that seriously violates their sincere religious belief that life begins at conception. If they and their companies refuse to provide contraceptive coverage, they face severe economic consequences.” The estimated penalties under the ACA for failing to provide such coverage would be about $475 million per year for Hobby Lobby, $33 million per year for Conestoga, and $15 million per year for Mardel. The Court also noted that HHS failed to show evidence of meeting the least restrictive means test.

The Court’s opinion is limited in scope. The decision concerns solely the contraceptive mandate and does not apply to any other insurance-coverage mandates. A copy of the Supreme Court’s decision can be found here.

About Bose McKinney & Evans LLP

Bose McKinney & Evans LLP is a business law firm, headquartered in Indianapolis, Indiana, serving both publicly held and privately held businesses, governmental entities and high-growth industries. Our clients include Fortune 100 companies, international manufacturers, national and regional financial institutions, agribusinesses, sports teams, university-incubated start-ups, media, utilities, cities and schools, to name a few. We strive to build strong relationships with our clients as key business advisors, to exceed expectations in the quality of our work, to be knowledgeable about our clients’ businesses and sectors, to be responsive to service needs and to continually seek to improve the delivery of client services. Our ultimate focus is on our clients.
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