Friday, July 25, 2014

Hobby Lobby decision

Everyone is talking about the Supreme Court’s decision in Burwell v. Hobby Lobby.  Most of this discussion centers on broad issues such as whether for-profit corporations can engage in legally protected religious exercise and the importance of providing women access to preventive care and contraception, but listening to the debate it isn’t easy to garner what the actual effect of the Court’s ruling is or what the Justices stated in their opinions.  Thus I decided to read it myself (so you don’t have to) and see if I could find the answers.  Here’s my understanding of the decision.

The Patient Protection and Affordable Care Act, aka Obamacare (“ACA”),  requires employers with more than 50 full-time employees to provide workers with group health insurance.  These insurance plans must meet the standard of “minimum essential coverage” as defined by the Act which includes preventative care and screenings with no cost-sharing by the individual (i.e. no co-pay).  The reasoning behind this is that cost-barriers can deter or prevent individuals from getting the preventative care they need.  This is bad for the individual and also bad for the healthcare system given that prevention is less costly than treatment down the road.  This coverage is especially important for women given that women paid significantly more than men for preventative care.

Congress left it to the Dept. of Health and Human Services (“HHS”) to specify which types of preventive care and screenings were required.  Among other things, the HHS regulations require insurance plans to pay for all FDA approved forms of contraception.  The HHS noted that, of these, 4 types of contraception (IUDs and two “morning after” pills) raised ethical issues for people of certain religions as they can prevent a fertilized egg from implanting in the uterus and thus might be considered abortifacients.  Thus, the HHS created an exception by which churches and religious non-profits who registered objections on religious grounds could pay for insurance plans which did not include these forms of birth control.  In these cases, the insurance company would provide employees with separate coverage for this contraception bearing the cost itself (the government determined the cost for insurers is nil as they would still save money in the end) and thus women would still receive this treatment at no additional cost.  

The petitioners in this case are Conestoga Wood (a comapny owned by a Mennonite family) and Hobby Lobby (owned by a Christian family and whose stated purpose includes “honoring the Lord in all [it does] by operating the company in a manner consistent with Biblical principles.”)  Both companies are closely-held, for-profit corporations.  They object to paying for health insurance which includes coverage for the controversial contraception on religious grounds. 

The Court held that requiring plaintiffs to pay for health insurance that covered said forms of contraception constituted a substantial burden on their religious free exercise, that the fact that they chose to organize themselves as for-profit corporations did not preclude them from asserting legally protected religious beliefs and that the government could have adopted a less restrictive method to serve the state interest at issue here.  The Court suggests that for-profit corporations like Hobby Lobby that object to the controversial contraception could be accommodated by the same exception that the HHS has already carved out for churches and religious non-profits.  As noted  above, the cost is born by the insurance company and female employees would still receive the contraception at no additional charge.

Justice Alito wrote the majority decision in which Chief Justice Roberts, Justices Scalia, Kennedy and Thomas joined.  Kennedy also wrote a concurring opinion.  Justice Ginsburg wrote a dissenting opinion in which Sotomayor joined.  Justices Breyer and Kagan joined in all but one part of Ginsburg’s dissent and wrote their own dissenting opinion.


It’s interesting to note that this case was not decided on First Amendment freedom of worship grounds; rather the ruling is based on the Religious Freedom Restoration Act of 1995 (“RFRA”) which extends broad protection to religious exercise.  Congress passed the RFRA in the wake of the Court’s decision in Employment Div. Dept. of Human Resources of Ore. v. Smith (1990).  In Smith, two Native Americans were fired and denied unemployment benefits because they ingested peyote as part of a religious ceremony.  The Court held that “neutrally, generally applicable laws” (like drug laws) which interfered with citizens’ free exercise of their religion do not normally violate the First Amendment.  In response to this, the RFRA provides that “Government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability.”  If there is a substantial burden, the RFRA states that the person is entitled to an exemption unless the Government can demonstrate that the rule as it applies to the person (a) furthers a compelling government interest and (b) is the least restrictive means of furthering said interest.  This language echoes the strict scrutiny standard the Court applies to Equal Protection cases where the law adversely affects a suspect class (e.g. where the law results in racial discrimination) and which sets the bar so high that the State is almost never able to satisfy these requirements.


The first and probably most important question is whether a for-profit corporation is a person protected under the RFRA.  In the Conestoga Wood case, the lower court (3rd Cir Ct. App.) held that “for-profit, secular corporations cannot engage in religious exercise” within the meaning of the RFRA or the First Amendment.  The Court does not agree:  Alito notes that “person” is not specifically defined in the RFRA, and thus the Court should look to the Dictionary Act (1 USC §1) which states that the word person “includes corporations, companies, associations, firms, partnerships, societies and joint stock company, as well as individuals.”  Congress’ purpose in passing the RFRA was to extend broad protection for religious exercise, and—the Court argues—Congress knows how to use restrictive language when it wants to.

Alito points to past cases where the Court heard the petitions of sole proprietors engaged in for-profit commercial activity who claimed that the law inhibited their religious free exercise—for example, a case where Orthodox Jewish merchants from Philadelphia challenged the blue light law, arguing that because religious observance required them to close their businesses on Saturday being forced to stay closed on Sunday presented an undue hardship.  In those suits no one questioned plaintiffs’ standing, and the Hobby Lobby Court argues that the fact that plaintiffs in the present case chose to organize themselves as a corporation should not prevent them from filing suit.

Alito also notes that courts long ago abandoned the idea that the sole purpose of a corporation is to create profit for its shareholders.  Today, corporations can be formed with the stated purpose of “engaging in any legal activity”: thus many corporations participate in charitable or environmental activities in order to “give back to the community” (note also Hobby Lobby’s stated purpose of running its business in accord with Biblical principles).  Alito even suggests that some organizations whose primary purpose is not to generate profit nevertheless choose to form a for-profit corporation or a “hybrid” for various reasons (e.g. participating in lobbying); this would further blur the distinction between the religious non-profits exempted by the HHS and corporations like Hobby Lobby and Conestoga.

The majority opinion also contains what is essentially an apology for extending protection to legal persons such as corporations.  I imagine this was written in anticipation of public objection (as occurred after the Citizens United decision) as much as it was written in response to the dissent.  Alito admits that treating corporations, etc. as persons is a legal fiction, but he suggests that ultimately the Court is protecting the rights of the natural persons behind the corporation (e.g. the families that own Hobby Lobby and Conestoga Wood).

If we accept that plaintiff corporations are persons protected by the RFRA, we must go on to see whether the ACA’s contraceptive mandate imposes an impermissible burden on their rights:


The majority notes that no one questions that plaintiffs’ objections stem from “sincerely held beliefs.”  Alito states that Congress trusted that the judiciary could determine whether an action brought under the RFRA was motivated by sincerely held beliefs as opposed to something else (like an attempt to avoid paying a tax).

Plaintiffs see the 4 controversial methods of birth control as abortifacients and believe that, by paying for a health plan which covers them, they are facilitating abortion.  Significantly, Alito points to case law where the Court stated that it was not for the judiciary to question the validity of persons’ religious beliefs (cf. Smith “we have warned that courts must not presume to determine… the plausibility of a religious claim”).  In one case, a Jehovah’s Witness who was fired from his job was initially employed making sheet metal (some or all of which would be used in manufacturing weapons), but when he was transferred to a position where he was making turrets for tanks he claimed this went against his religious beliefs.  The Court held “it is not for us to say that the line he drew was an unreasonable one.”           

So the plaintiffs assert that paying for health plans covering the contraception would violate their religious beliefs.  And if they refuse to do so this would result in a hefty fine under the ACA.  Thus the Court finds that the law as applied to plaintiffs constitutes a substantial burden.


The majority states that while the HHS and the dissent assert that the law serves big picture government interests such as “public health” and “gender equality,” the inquiry under the RFRA must be more focused.  Rather than looking at the ACA as a whole, the Court should ask whether the contraceptive mandate as applied to the plaintiffs supports a compelling state interest.

In a nasty bit of dictum, Alito states that he’s not so sure.  Consider for example the exemptions that already exist, not only for churches and religious institutions but also for companies with less than 50 full-time employees and those with grandfathered insurance plans in place for their employees (N.B. grandfathered plans are exempt from several ACA provisions; in her dissenting opinion J Ginsburg notes how these plans are gradually disappearing because whenever a change is made to an insurance policy it loses its grandfathered status.  This also explains why the plaintiffs cannot avail themselves of this exception).  In the end, Alito leaves the question as to whether the contraceptive mandate serves a compelling government interest unanswered, assuming arguendo that it does.  This allows us to proceed to the final question:

Is this the least restrictive means the government could have adopted to serve this interest?

Of course not.  As Alito writes, this is an “extremely demanding standard.”  In another troubling bit of dictum, Alito asks whether the solution in cases like this might be to have the government foot the bill
 the most straightforward way of doing this would be for the Government to assume the cost of providing the four contraceptives at issue to any women who are unable to obtain them under their health-insurance policies due to their employers’ religious objections.  This would certainly be less restrictive of the plaintiffs’ religious liberty, and the HHS has not shown… that this is not a viable alternative.
This is an important point.  Alito quotes language from the RLUIPA (the Religious Land Use and Institutionalized Persons Act of 2000—related to the RFRA), “this chapter may require a government to incur expenses in its own operations to avoid imposing a substantial burden on religious exercise,” and he states that “HHS’s view that RFRA can never require the Government to spend even a small amount reflects a judgment about the importance of religious liberty that was not shared by the Congress that enacted that law.”

At any rate, the majority opinion goes on to state that Government expenditure is not the only option here as the HHS has already created an exemption for religious non-profits, under which insurance companies bear the cost of covering these forms of contraceptives, which could be easily extended to corporations like the plaintiffs.  Alito follows this up by stating, “We do not decide today whether an approach of this type complies with RFRA for purposes of all religious claims.  At a minimum, however, it does not impinge on the plaintiffs’ religious belief[s]… and it serves HHS’s stated interests equally well.”


Justice Kennedy filed a brief concurring opinion in which he emphasizes that the decision is not as broad as the dissent suggests.  He discusses the importance placed on religious liberty in our nation and that the RFRA imposes a stringent test.  Kennedy also states that in this case “accommodation may be made to the employers without imposition of a whole new program or burden to the Government” as a mechanism is already in place.


Justice Ginsburg begins by noting the importance of women’s healthcare (Kennedy supra noted that there are a number of medical conditions for which pregnancy is contraindicated; thus the issue of contraception is not just about family planning, for some women an unplanned pregnancy would be dangerous).  She characterizes the majority ruling thusly:
In a decision of startling breadth, the Court holds that commercial enterprises, including corporations, along with partnerships and sole proprietorships, can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs…. Compelling governmental interests in uniform compliance with the law, and disadvantages that religion-based opt-outs impose on others, hold no sway, the Court decides, at least when there is a ‘less restrictive alternative.’  And such an alternative… there always will be whenever, in lieu of tolling an enterprise claiming a religion-based exemption, the government, i.e. the general public, can pick up the tab.
The contraceptive mandate was included in the ACA as part of the Women’s Health Amendment; Ginsburg notes that a further “conscience amendment” had been introduced which would have allowed any employer or insurance provider to deny coverage based on asserted “religious beliefs or moral convictions” and that this amendment was voted down by the Senate. 

Regarding the RFRA, Ginsburg notes that the Act itself states that it is meant “to restore the compelling interest test as set forth in Sherbet v. Verner.”  Thus, Ginsburg argues, the Congress’ purpose in passing the law was (basically) to do away with the Smith ruling that laws of general applicability do not normally violate a person’s right to religious free exercise and return to previous case law.  She points to United States v. Lee, a pre-Smith case in which an Amish employer sincerely believed that fulfilling the obligations imposed on employers by the Social Security tax system violated his faith.  The Court held that despite the fact that the law conflicted with his religious beliefs the burden was not unconstitutional.  It recognized that the government had an important interest in managing the “nationwide… comprehensive insurance system.”  Ginsburg likens the ACA’s comprehensive healthcare system to Social Security.  She also quotes language in the Lee decision that “when followers of a particular sect enter into commercial activity as a matter of choice… the limits they accept on their conduct as a matter of conscience and faith are not to be superimposed on statutory schemes which are binding on others in that activity.”  For the majority, this quote is irrelevant: it was discussing First Amendment constitutional rights and not rights granted by the RFRA.  They see that RFRA as creating new protections for religious exercise whereas Ginsburg argues that its purpose was merely to restore the field to its condition prior to Smith.
On the issue of extending religious protection to for-profit corporations, Ginsburg notes that this is wholly unprecedented in the Court’s case law and that this lack of precedent “is just what one would expect, for the exercise of religion is characteristic of natural persons, not artificial legal entities.”  She rejects the majority’s reasoning that the absence of restrictive language in the RFRA means the Court should turn to the Dictionary Act (Congress knows how to use restrictive language when it wants to); she asserts the opinion that it’s very unlikely Congress was contemplating protection of religious freedoms being extended (for the first time) to corporations when they passed the RFRA.

Ginsburg notes that the government has long accorded “special solicitude” to religious-based non-profits and that laws often contain an exception for such institutions.  Those are groups where members of the same faith join together in pursuit of a common goal.  Ginsburg distinguishes for-profit commercial enterprises like Hobby Lobby and Conestoga Wood by pointing out that they employ workers of diverse faiths who do not necessarily share in the shareholders’ beliefs.  This is not a group of co-religionists and they share no united goal beyond generating profit.  It would be particularly egregious to allow corporations to claim an exemption based on religious convictions in this case given that it concerns benefits the corporation would normally have to provide to third-parties (its employees) who may not share these religious qualms regarding birth control.

Ginsburg also questions whether the contraceptive mandate constitutes a substantial burden.  When the majority ends their inquiry by noting that it is not for the Court to evaluate the plausibility or validity of sincerely held religious beliefs, Ginsburg argues that they are begging the question.  Beyond accepting the validity of stated religious beliefs, the Court can make a fact-based determination as to whether the government action substantially burdens those beliefs—it should not be enough that the plaintiff believes it does.  Ginsburg notes the tenuous connection here between employers’ contributions to employees’ group health insurance policy and the possible use of the controversial contraceptives to abort a fertilized egg.  The money paid by the employer flows into a large pool thus distancing the contributions from the use of contraceptives; moreover its uncertain whether any employees will actually avail themselves of these contraceptives let alone whether they will do so in a way that terminates a possible pregnancy after conception. 

Returning to Lee, in that decision the Court likened the Social Security program to the one established for income tax and noted that “the tax system could not function if denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates their religious belief.”  Ginsburg likens the comprehensive system established by the ACA to Social Security or income tax and notes that the majority decision leaves the door open for further challenges to the law based on religious objections (Scientologists object to antidepressants, Christian Scientists to vaccinations, etc.).  Thus, allowing exemptions to the ACA based on religious beliefs could lead to the same sort of clusterfuck as entertaining religious-based objections to income tax.  Moreover, Ginsburg argues, it would put the Court in the position of deciding which religious objections were valid—something the majority states must be avoided.  Alito, meanwhile, answers that religious exemptions from income tax are still disallowed under the RFRA because no viable less restrictive means exists for serving the government’s compelling interest in collecting income tax; meanwhile, in this case, the Court has identified less restrictive means of accomplishing the state interest served by the contraception mandate.

Ginsburg also questions whether the majority’s decision is limited to closely-held corporations or whether it would allow all corporations to claim religious beliefs.  Alito’s opinion does not answer this question, but it notes that it is highly unlikely the shareholders of a publically traded corporation could agree upon shared sincerely held religious beliefs.

Finally, as one can see from the above quote, Ginsburg strongly objects to the Court’s suggestion that the RFRA should compel the government to adopt a “less restrictive alternative” where taxpayers would end up paying the cost created by an exemption afforded to members of a particular religious sect.


In their separate dissent, Justices Kagan and Breyer state that they join in all portions of Ginsburg’s opinion save the part in which she argues that corporations are not “persons” for purposes of the RFRA.  They would reject plaintiffs’ petition for a religious exemption on the other grounds laid out by Ginsburg without addressing that particular issue.


If the only practical effect of this ruling is that closely-held corporations whose shareholders assert sincerely held religious objections to the contraceptive mandate are allowed to avail themselves of the same exemption the HHS already affords to churches and religious non-profits (where insurance companies pay and women still receive contraception at no cost), I don’t think that is too tragic.  I do, however, agree with the broad principle, articulated by Ginsburg, that for-profit corporations do not engage in “religious exercise” that should be granted legal protection.  Furthermore, I agree that, in general, taxpayers should not have to pay the cost for exemptions created for members of a particular religious group, especially when they concern commercial activities.  I also find Ginsburg’s argument that this outcome is unjust in that it allows a corporation an exemption from providing benefits to employees who do not share in the owners’ religious beliefs persuasive.  

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