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The Hobby Lobby Decision: The Sky is Not (Yet) Falling

July 7, 2014
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Hobby_LobbyOn June 30, 2014, the United States Supreme Court issued its decision in Burwell v. Hobby Lobby Stores, Inc. By a vote of 5 to 4, the Court held that regulations issued under the Affordable Care Act cannot require a for-profit corporation to provide health insurance covering contraceptives violating the religious beliefs of the corporation’s owners. The response has been prompt, predictable and polemical. Conservatives claim the decision proves that “President Obama’s pen is not mightier than the Constitution.”  Liberals characterize the decision as part of a conservative “war on women.” Both sides are overstating their cases.

In the first place, the Court expressly did not decide that the First Amendment gives protection to parties seeking to be free of their insurance obligations. As the Hobby Lobby Court explained, “under the First Amendment, ‘neutral, generally applicable laws may be applied to religious practices even when not supported by a compelling governmental inter­est.’” Because the regulations at issue are neutral with respect to religion, the Liberty Lobby majority based its decision solely on the Religious Freedom Restoration Act (“RFRA”), enacted by Congress in 1993 to provide rights beyond those guaranteed by the First Amendment. So people claiming that the case was “Obamacare versus the First Amendment and the First Amendment won” are either disingenuous or ignorant of the Court’s rationale. Since the decision is not based on the Constitution, Congress is free to change it.

By its terms, the RFRA applies to laws and regulations that “substantially burden a person’s exercise of religion.” The government’s efforts to avoid applying the RFRA to for-profit corporations centered on the idea that such corporations cannot be “persons” protected by the RFRA. Because the RFRA does not define “person,” its meaning must be determined by the Dictionary Act, which defines “person” as including “corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals” “unless the context indicates otherwise.” The government argued that the context of the RFRA precluded its application to for-profit corporations because such corporations cannot “exercise religion.” But the Court has previously held that not-for-profit corporations can exercise religious beliefs, so the fact that a business is organized as a corporation cannot be dispositive. Similarly, the Court has previously held that for-profit businesses organized as sole proprietorships or partnerships can exercise religious beliefs, so the profit motive cannot be dispositive.

In light of the earlier decisions, there is no logical basis for holding that a corporation is not protected if it is organized for profit and a for-profit business is not protected if it is organized as a corporation.   Even Justices Breyer and Kagan, who voted with the dissenters on the merits, refused to say that for-profit corporations are not covered by the RFRA. More important, the Court’s majority reached the correct result. Surely most people would believe a for-profit corporation’s right to religious freedom had been violated if an act of Congress made its contributions to Christian charities no longer tax deductible or required that it open for business on Yom Kippur even though its only shareholder was Jewish.

Once the plaintiffs’ for-profit corporations were held to be protected by the RFRA, as was probably inevitable, the burden was on the government to demonstrate that any impact on religious interests was “in furtherance of a compelling governmental interest.”   Justice Alito, writing for the majority, “assume[d] that the interest in guaranteeing cost-free access to the four challenged contraceptive methods is compelling within the meaning of RFRA.” Justice Kennedy, separately concurring, made clear that his vote depended on the “assumption that the HHS regulation here at issue furthers a legitimate and compelling interest in the health of female employees.” Consequently, there is no basis for the claim that the Court’s decision “takes us closer to a time in history when women had no choice and no voice.”

If a majority of the Court expressly held that providing contraception to female employees is a compelling governmental interest, why did the government lose? The answer is in the language of the RFRA, which also requires that interference with religious beliefs is “the least restrictive means of furthering that compelling governmental interest.” Regulations under the Affordable Care Act already provide a method for the employees of religious organizations to obtain contraception coverage if their employer objects to providing such coverage. If the employer certifies its objection, the employer’s insurance carrier is ordered to provide contraception coverage directly to the employee, without additional charge and without cost sharing. The insurance companies are happy to comply because contraception coverage costs less than the costs of pregnancy. As Justice Kennedy said, in explaining his deciding vote, “[t]hat accommodation equally furthers the Government’s interest but does not impinge on the plaintiffs’ religious beliefs.” It is hard to argue with that logic given the requirements of the RFRA. It is impossible to argue that the result of the Court’s decision is to deprive women of contraception coverage when it is premised on doing exactly the opposite.

The Hobby Lobby decision does not support the claims being made about it, at least not yet. The key to the decision, in which the government itself recognizes a way to accommodate religious objections, may not surface in later claims of religious interference. Hold the rhetoric for a time the sky is really falling.

Knebel_Don_ppDonald E. Knebel is a partner in Barnes & Thornburg LLP, resident in the Indianapolis, Indiana office. He is a member of the firm’s Intellectual Property Law Department. Mr. Knebel serves as adjunct professor and senior advisor to the Center for Intellectual Property Research at the Indiana University Maurer School of Law. He frequently posts his observations here at Civic Blog. The views expressed do not necessarily reflect the views of Barnes & Thornburg LLP or the IU Maurer School of Law. Image from Michael Rivera and made available through Wikimedia Commons.

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