The U.S. Supreme Court has decided that closely-held,
for-profit entities with religious objections are exempt from certain
aspects of the contraceptive mandate contained in the Patient
Protection and Affordable Care Act ("PPACA"). In Burwell v. Hobby Lobby
Stores, Inc., the Court decided that HHS had overstepped
its bounds by requiring these employers to offer all forms of birth
The Court indicated that the scope of its opinion was
very limited in that publicly traded corporations would likely be
unable to claim the exemption. Moreover, the Court clarified that its
ruling does not apply to other medical procedures such as vaccinations
or blood transfusions.
Background. PPACA requires non-grandfathered health insurance
plans to cover "preventive services" at no cost to
participants. HHS has identified 20 contraceptives as being covered
under PPACA's preventive services mandate.
The plaintiff, a closely held, for-profit entity,
claimed that PPACA's contraceptive mandate, required it to pay for
drugs or procedures that terminate life (i.e.,
abortifacients), and therefore infringed upon its religious beliefs.
Accordingly, the plaintiff sued HHS, claiming that HHS' requirement
to provide abortifacients violated its First Amendment rights to
freedom of religion.
Decision. The Court held that private-as opposed to publicly
traded-corporations could be construed as persons for purposes of the
religious protections provided under federal law. In reaching this
holding, the Court noted that PPACA's contraceptive mandate imposed a
substantial burden on the plaintiff's religious beliefs by requiring
its owners to engage in conduct that violates their religious
beliefs, regardless of whether the contraceptives in question were,
in fact, abortifacients.
In determining Hobby
Lobby, the Court indicated that where the owners of a
closely held corporation have a sincerely held religious belief, the
federal government's implementation of laws must be done through the
least restrictive means. Accordingly, the Court ruled that the
plaintiff did not have to comply with the contraceptive mandate
because there were less restrictive means for the government to
achieve its public interest goals. For example, the government itself
could provide the contraceptive benefits to all individuals, without
Impact of Hobby
Lobby on Employers. The Hobby
Lobby decision will impact a very small number of employers,
as very few employers can be considered faith-based and, therefore,
eligible for the exemption. Nevertheless, the ruling should serve as
a reminder that despite differences of opinion on PPACA's rules and
requirements, the law is here to stay. Thus, employers need to
continue to implement strategies for complying with PPACA and remain
alert for new developments.