Can a For-Profit Corporation Exercise Religion?

By: Katerina Souliopoulos, 2014 Summer Intern, Health Law & Policy Clinic

This week, the Supreme Court ruled that closely held for-profit corporations, those corporations in which five or fewer individuals control the corporation, could exercise religion and bring successful claims under the Religious Freedom Restoration Act of 1993 (RFRA). Consequently, the Supreme Court held that closely held corporations might opt out of the contraceptive mandate of the Patient Protection and Affordable Care Act (ACA) if it violates their religious beliefs.

Some judges disagree with the ruling and rightly characterize it as one of “startling breadth.” In past cases, the Supreme Court has ruled that exceptions for religious beliefs must not significantly impinge on the interests of third parties, however, this week’s ruling allows the religious beliefs of five or fewer individuals to essentially override the health interests of about 14,000 female employees and their respective dependents working for Hobby Lobby Stores and Conestoga Wood who do not necessarily hold the same beliefs.

Under the ACA, health insurance plans are required to cover twenty FDA-approved contraceptives free of cost to beneficiaries as a component of comprehensive preventive health services for women. In mandating contraceptive coverage, the Government extended an Equal Employment Opportunity Commission (EEOC) ruling issued in 2000 stating that employer health plans failing to cover contraceptives violated the 1978 Pregnancy Discrimination Act.

Plaintiffs in this particular case—the owners of two for-profit corporations called Hobby Lobby Stores Inc. and Conestoga Wood Specialties Corp.—specifically objected to the ACA requirement to cover contraceptive methods that prevent the implantation of a fertilized egg into the uterus. According to the religious beliefs of the plaintiffs, four of the twenty FDA-approved contraceptives that function in this way are tantamount to abortion.

This week’s ruling allows closely held corporations such as Hobby Lobby Stores and Conestoga Wood to enforce their religious objections upon others, even when the scientific and medical community opines to the contrary. Ten medical groups led by the American College of Obstetricians and Gynecologists filed an amicus brief and noted that, “there is a scientific distinction between a contraceptive and an abortifacient and the scientific record demonstrates that none of the FDA-approved contraceptives covered by the Mandate are abortifacients.”

When the ACA worked its way through Congress, the Senate voted against a “conscience amendment” to the contraceptive mandate, which would have allowed any employer or insurance provider to deny these services based on its religious beliefs. By voting against the “conscience amendment,” Congress placed scientific consensus as well as the medical decisions women make with the guidance of their healthcare providers above the variable beliefs of insurance providers or employers.

Chief Justice Roberts attempted to narrow the ruling by specifically reserving it for closely held for-profit corporations; closely held corporations, with only five or fewer individuals in control of the business, would make it easy for future judges to ascertain precisely whose beliefs were at stake. Conversely, publicly held corporations (e.g., WalMart) are unlikely to bring successful religious exercise objections to laws because publicly held companies are controlled by large numbers of individuals. Thus, in a case brought by a large publicly held business, judges would not be able to ascertain whose religious beliefs were truly at stake.

However, the ruling does not limit the religious exercise claims that other closely held corporations could bring. For example, closely held corporations, which account for about nine out of ten businesses within the United States, could claim religious objections to covering a wide array of health services, such as blood transfusions, vaccines, or mental health services.

The ruling attempts to ease this concern by stating that its decision to allow the religious beliefs of a few trump the health interests of many deals solely with contraception; other health services, such as vaccinations, will be supported by “different interests.”

In the case of vaccinations, preventing the spread of widespread disease is indeed a compelling governmental interest. But what about the Government’s compelling interest to address the medical and social consequences of unintended pregnancy? What about the Government’s compelling interest to ensure the availability of medically appropriate contraception for all women, regardless of their financial status and ability to pay? Contraception helps to prevent unintended pregnancy and protects the health and well-being of women and their children. What this week’s decision truly says when it juxtaposes “different interests” with the health interests of women and their dependents, is that women’s interests are not compelling, in their opinion.

Moreover, the ruling leaves open the opportunity for other closely held corporations to bring suit claiming religious objections to eight, fifteen, or all twenty contraceptives under the ACA. In fact, this has already begun; after rendering this week’s decision, the Supreme Court ordered four lower court decisions each involving small, closely held businesses claiming religious objections to all forms of contraception under the ACA to be reviewed anew according to its decision in the Hobby Lobby case. Further, the Supreme Court has denied review of three cases involving closely held businesses objecting to all preventive health services under the ACA.

RFRA provides that the Government may not “substantially burden 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 ruling assumes that providing access to contraceptives—even the four contraceptive methods that the plaintiffs in this particular case object to—is a compelling governmental interest, but, concludes that the contraceptive mandate is not the least restrictive means of enforcing this compelling interest. Specifically, the majority opinion points to the exception the Government has already fashioned for religious organizations and religiously affiliated nonprofits, such as churches and hospitals. Under the ACA, these religious entities do not have to provide their employees coverage for contraceptives; however, a third-party insurance provider must fill this gap in care by providing contraceptive services at no additional cost to the employees or the business. The majority opinion states that the Government can easily create the same exception for closely held for-profit corporations such as Hobby Lobby Stores and Conestoga Wood, ensuring that the mandate does not require them to violate their religious beliefs.

Another least restrictive option that the majority opinion poses is that the Government pick up the tab. Justice Ruth Bader Ginsburg criticized the majority’s suggested coverage solution asking, “Where is the stopping point to the ‘let the government pay’ solution,” thus passing the cost of coverage to taxpayers?

To date, this is the first time that the Supreme Court has ruled that a for-profit corporation may exercise asserted religious beliefs and receive an exemption from federal laws for those beliefs. It will be interesting to see how many companies will actually take advantage of this landmark decision and assert religious exercise exemptions, however, it is certain that the decision has opened a door for corporations across the United States to significantly impact their employees’ access to comprehensive health care.

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The views reflected in this blog are those of the individual authors and do not necessarily represent those of the Center for Health Law & Policy Innovation or Harvard Law School. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.