Korte v. Sebelius, and Others: Religious Challenges to the Affordable Care Act

BY BRITTANY FORD — Ever since its passage, the Patient Protection and Affordable Care Act (“Affordable Care Act”) has been subject to scores of lawsuits challenging its validity. The recent problems with its initial rollout received scathing reviews and only served to make the Act more controversial. Many critics are still trying to find ways to invalidate portions of the Act. The original lawsuits sought to challenge the constitutionality of the individual mandate to purchase health insurance. Yet, these challenges failed in National Federation of Independent Business v. Sebelius, in which the individual mandate was upheld under Article I’s Taxing Power. Now, however, another mandate contained within the Act, the contraception mandate, has come under fire for violating religious exercise rights.

The contraception mandate requires employers of 50 or more full-time employees to comply with a regulatory scheme established by the Department of Health and Human Services in order to satisfy the provisions of the Affordable Care Act. The scheme calls for qualifying employers to provide no-cost coverage in their employee health plans for all Federal Drug Administration-approved contraception methods, sterilization procedures, and patient education. Failure to comply risks both heavy penalties—accruing at $100 per day, per employee—and the threat of enforcement action.

Recently, three federal circuits have entertained challenges to the contraception mandate by corporation owners on the grounds that the mandate violates their free exercise of religion. The corporate owners argue that the requirement to provide coverage for contraception and sterilization methods runs afoul of the Religious Freedom of Restoration Act of 1993 (“RFRA”). The RFRA prohibits the federal government from placing substantial burdens on a person’s exercise of religion unless it can demonstrate that it is advancing a compelling government interest and there are no less restrictive means available. These challenges have led to varying results among the federal circuits.

In Korte v. Sebelius, the Seventh Circuit heard the claims of two Catholic families and their closely held businesses. Though the businesses are secular in nature and for-profit, owners operate them in conformity with their faith-based convictions. They originally sought exemption from the contraception mandate on statutory grounds but were denied because the mandate’s exemption provision only applies to houses of worship, their integrated affiliated organizations, and religious orders. The owners and corporations then moved for a preliminary injunction on the grounds that the mandate violated their rights under RFRA by burdening their free exercise of religion. The Seventh Circuit held that both individuals and corporations can exercise religion and seek free-exercise protections. The court then held that the mandate constituted a severe burden on the right of free exercise and that the government failed to demonstrate that there were no less restrictive means available. Therefore, the owners and corporations were entitled to a preliminary injunction.

In Eden Foods, Inc. v. Sebelius, the Sixth Circuit also considered the claims of a Catholic business owner and his for-profit corporation. Following the owner’s religious beliefs, Eden Foods had negotiated health coverage for years with Blue Cross Blue Shield, which specifically excluded contraception and exempted Eden Foods from providing this under its coverage. On March 15, 2013, Eden Foods was informed that Blue Cross Blue Shield would no longer be offering this policy in order to comply with the contraception mandate of the Affordable Care Act. Eden Foods, like the corporations in Korte, does not meet the exemption contained within the mandate and sought a preliminary injunction. The Sixth Circuit, however, held that “individual shareholders and owners have no standing to challenge provisions of laws that the corporation must obey under risk of legal penalty.” The court further held that a corporation was not a person capable of the free exercise of religion under RFRA. As a result, neither Eden Foods nor its owner was entitled to a preliminary injunction.

In Gilardi v. Department of Health & Human Services, the D.C. Circuit faced similar facts to Eden Foods. Two Catholic brothers and their closely held businesses had previously excluded contraceptives from the insurance coverage offered by their corporations until the implementation of the Affordable Care Act.  Also denied the exemption, they moved for a preliminary injunction. The D.C. Circuit held that while corporations were not persons capable of exercising religion under RFRA, the individual owners did have standing to assert their claims. The court went on to state that the government interest, while significant, was not sufficient to outweigh the burden placed on the exercise of religion by the mandate, especially when a wide array of alternatives are available. The brothers were therefore entitled to their injunction.

In total, five federal circuits have received religious challenges to the contraception mandate, and the varying results have brought about a circuit split. In addition to the cases above, three other circuit courts decisions have addressed this issue.  The parties in these three decisions have filed Petitions for Certiorari with the United States Supreme Court. At the November 26, 2013 conference, the Supreme Court granted certiorari, consolidating the cases of Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialty Corp. v. Sebelius. The Court will hear oral arguments on the constitutionality of the mandate sometime next term.

Free exercise of religion is a deeply held right in the United States, and these Catholic employers make strong arguments for the mandate placing a high burden on their rights. For a burden on such a fundamental ideal to be upheld, the Court would have to find that the government interest is truly compelling and that the government lacks other options. In this case, the Supreme Court should likely rule in favor of the employers, as there are less restrictive means available to the government to insure contraceptive coverage and education. However, the Court has shown marked favoritism to the mandates of the Affordable Care Act by upholding the individual mandate in National Federation and by declining to entertain other challenges to the employer mandate to provide health care coverage. It is possible that the Court may continue this trend and uphold the contraception mandate as essential to the government’s overall plan.