The Supreme Court Narrows Affordable Care Act Contraception Mandate

In Business Law, Employee Benefits, General, Healthcare Reform by Coolidge Wall

The Affordable Care Act requires health plans to cover “preventive services” at no cost to participants. The federal government has identified 20 forms of contraception that are required to be included as part of preventive services. Various “for-profit” companies have challenged ACA’s birth control coverage requirement in about 50 lawsuits now pending across the country. Many of these employers are family owned, closely held or controlled companies whose owners object to the provision of contraceptive coverage on faith-based grounds.

On June 30th, the last day of its 2013-2014 term, the Supreme Court issued a 5-4 decision in Burwell v. Hobby Lobby Stores, Inc. ruling that closely held companies may decline to include or pay for forms of birth control that the owners find objectionable on religious grounds.

According to the Court’s majority, family owned closely held companies are “persons” that are entitled to protection under the 1993 Religious Freedom Restoration Act. The RFRA prohibits the federal government from actions that “substantially burden a person’s exercise of religion” unless that burden is the least restrictive means to further a compelling governmental interest. Assuming the government’s inclusion of contraception coverage as part of preventive services serves legitimate compelling interests (i.e., promoting public health and gender equality), the majority nevertheless concluded there are less restrictive alternatives available to the government to make birth control available to women. For example, the federal government could pay for the coverage or the costs could be paid by the insurers or third party administrators.

The owners in Hobby Lobby had sincere faith-based objections to four of the 20 FDA-approved birth control methods included within preventive services (the Plan B “morning after pill,” the Ella “morning after pill,” and hormonal and copper intrauterine devices (IUDs)) because these may have the effect of preventing a fertilized egg from developing. Significantly, these “abortifacients” are the only birth control methods challenged by the owners of Hobby Lobby Stores. However, on July 1 in declining to review lower court rulings in favor of closely held companies that objected to covering all 20 methods of government-approved contraception, the Supreme Court effectively extended the Hobby Lobby religious rights position beyond the four methods considered in that case.

The Court also ordered the lower courts that had previously ruled in favor of the federal government in cases similar to Hobby Lobby to reconsider their decisions. This includes two Sixth Circuit Court of Appeals cases decided against closely held companies on the religious freedom issue.

The Hobby Lobby decision is the first time the Court has granted religious freedom to for-profit companies under the RFRA. The dissenting Justices expressed concern that the majority’s ruling could open the door to closely held companies seeking additional exemptions from ACA’s preventive services requirements on religious freedom grounds. To address these concerns, the majority opinion expressly limits its scope to contraceptive coverage and specifically excludes vaccines and blood transfusions.

Justice Ginsburg in her dissent also addressed the fear that some may try to extend the Hobby Lobby ruling to corporations other than closely held companies. “Although the court attempts to cabin its language to closely held corporations, its logic extends to corporations of any size, public or private.” Only time will determine the ultimate breadth of the Hobby Lobby decision.

We will continue to follow the ripples created by Hobby Lobby and other Affordable Care Act developments.

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