Supreme Court Considers ACA Contraceptive Coverage Exemption

Author: David B. Weisenfeld, XpertHR Legal Editor

March 27, 2014

May employers deny contraceptive coverage to their employees on religious grounds under the Affordable Care Act (ACA)? The Supreme Court heard arguments on that question Tuesday in an especially lively 90-minute session that evoked the 2010 Citizens United case, which recognized free speech rights for corporations.

The Obama administration has granted a religious exemption to the ACA's mandatory health insurance coverage provision for contraceptives, but has said for-profit corporations may not similarly opt out of providing such coverage.

A pair of companies, Hobby Lobby Stores and Conestoga Wood Specialties, objected to the provision in the cases before the Court. Their owners believe human life begins at conception and say they should not have to provide coverage for any FDA-approved contraceptives that would prevent implantation of a fertilized egg.

A Slippery Slope?

Paul Clement, who served as Solicitor General under President Bush, argued the case for the employers and contended that the Religious Freedom Restoration Act (RFRA) covers for-profit secular corporations. But he faced tough questioning from the Supreme Court's three female justices.

Justice Elena Kagan asked Clement pointedly, "Suppose an employer refuses to fund vaccinations for her employees, what happens then?" And later, Justice Kagan asked about blood transfusions.

In both instances, the employer's attorney responded that the government may have a stronger compelling interest in those contexts than in compelling that contraceptive coverage be provided.

But Kagan feared that if for-profit corporations are covered by RFRA it could then enable an employer to come in and say they have a religious objection to sex discrimination laws, family leave or even child labor laws.

Justice Ruth Bader Ginsburg noted, "It seems strange to allow secular employers to deny coverage." Meanwhile, Justice Sonia Sotomayor wondered how these employers had a claim at all. "How does a corporation exercise religion?" she asked Clement. "Where are the cases that show that? We've never considered a for-profit corporation as exercising religion."

The justices also noted these employers had the option of simply not offering health benefits to their employees. A failure to comply with the ACA's mandate would have left these companies with the choice of facing possible fines of $1.3 million per day or dropping employee health insurance at a cost of $26 million per year.

Clement called that "no option at all," and suggested that choosing not to provide health insurance would compel an employer with conscientious religious objections to offer higher wages.

Religious Relief for Corporations

Arguing for the Obama administration, Solicitor General Donald Verrilli, Jr. said the third-party rights of the employees had to be taken into account in any discussion of RFRA. "Otherwise you'd be skating on very thin Constitutional ice," he told the Court. But Verrilli faced tough questioning as well, including from Chief Justice John Roberts, who provided the crucial fifth vote upholding the ACA two years ago.

Roberts noted that eight different appellate courts have held that corporations may bring racial discrimination claims and that those cases involved the construction of the term "person." To that Verrilli responded that this situation was different, saying Congress wanted to ensure this contraceptive coverage was protected.

Another possible decisive voter, Justice Anthony Kennedy, also expressed concerns with the government's position that RFRA did not cover these employers. "Under your view, a for-profit corporation could be forced to pay for abortions. Your reasoning would permit that."

When Verrilli countered that there is no law on the books requiring for-profit corporations to provide abortions, Chief Justice Roberts replied, "Isn't that what we have before us?"

Verrilli repeatedly cited the significance of the case. He told the justices that if they were to rule for the employers, they would be extinguishing employee rights of fundamental importance. "When you go into the commercial sphere," Verrilli said, "you agree to be governed by those rules."

A ruling is expected in these consolidated cases, Sebelius v. Hobby Lobby Stores and Conestoga Wood Specialties v. Sebelius, by the end of the Supreme Court's term in late June.