Press-Enterprise - August 10, 2014

How can the controversial decision in the Hobby Lobby contraception coverage case impact employers?

The U.S. Supreme Court in June decided the controversial case of Burwell v. Hobby Lobby Stores Inc. The court ruled that Hobby Lobby, as a privately owned corporation, has the right to refuse to comply with federal regulations that mandate that health insurance offered to employees by employers covered by the Affordable Care Act – also known as Obamacare – make specified contraceptives available.

The technical basis for the decision is the Religious Freedom Restoration Act of 1993 (RFRA), which prohibits the “Government (from) substantially burden(ing) a person’s exercise of religion …” unless the Government “demonstrates that application of the burden to the person — (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.”

The Supreme Court found that the owners of Hobby Lobby and two other corporations, which also sued, have sincere Christian beliefs that life begins at conception, and that it would violate their religion to facilitate access to contraceptive drugs or devices that operate after that point.

Obamacare regulations mandate that nonexempt employers are generally required to provide coverage for 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 court ruled that these regulations violate the owner’s religious beliefs, and, therefore, cannot be enforced under RFRA.

The court’s decision is very narrow in scope, but opens the door to arguments that other regulatory mandates, such as requirements for insurance coverage for blood transfusions or vaccinations, may also be unenforceable if the private legitimate religious beliefs of the owners of a private corporation lead them to object.

The decision is also important in finding that private corporations have personal rights to religious freedom that must be honored by the government.

The majority of businesses already offered comprehensive contraception coverage before the Affordable Care Act passed and continue to do so.

Employers hoping to qualify for the exemption afforded by this Supreme Court decision must consider the following:

• The ruling does not apply to publicly traded companies.
• It is limited to “closely held” corporations, but the court did not define what that meant for this purpose.
• The business owners must have “sincere” religious beliefs that life begins at conception.
• Applicants are required to sign and deliver a federal form that certifies their objection.
• This ruling concerns four methods of contraception. Employers may face an uphill battle if they attempt to restrict other items or services on the basis of religious objection.
• The decision does not necessarily impact state laws, including mandates concerning contraception coverage, although California does have its own religious exemption regarding contraceptives.
• Employers cannot illegally discriminate against employees on the ground of religious freedom.

It remains to be seen how insurance companies will respond to requests to carve out parts of the health coverage they provide.

The impacts from this case will continue to cause ripples, but the immediate result is that some privately owned corporations do have the right to refuse to comply with federal regulations mandating that insurance provided by employers covered by Obamacare make certain contraceptives available to employees.

* This article first appeared in The Press-Enterprise on Aug. 10, 2014. Republished with permission.