10th Circuit Doesn’t Agree with ACA Rule on For-Profit Religious Organization Exemptions

Hobby Lobby Stores Inc. et al. v. Sebelius et al.June 27, 2013

The plaintiff in Hobby Lobby Stores Inc. et al. v. Sebelius et al. operates 525 retail stores across the country and employs more than 13,000 full-time workers. The family which owns the Oklahoma-based company says having to provide coverage for the morning-after pill and similar contraceptives, which they regard as tantamount to abortion, violates their Christian beliefs.

The 10th Circuit found that the for-profit employer may be entitled to an exemption from a requirement in the healthcare overhaul to include free contraception coverage in its employee health insurance plans.

In rejecting the Obama administration’s contention that the Religious Freedom Restoration Act does not apply to for-profits, the appeals court noted that many other federal laws clearly exempt religious corporations, while RFRA does not.

The court cited the U.S. Supreme Court’s landmark Citizens United decision, which lifted restrictions on corporate political spending, stating “[w]e see no reason the Supreme Court would recognize constitutional protection for a corporation’s political expression but not its religious expression.”

The court was critical of the ACA rules: “The problem for the government, it appears, is when individuals incorporate [as for-profits]. At that point, free exercise rights somehow disappear.” The court further rejected the notion that Hobby Lobby is incapable of reflecting its owners’ faith, saying that while businesses do not literally pray, “this is equally true of churches,” which are exempt from the mandate.

The appeals court sent the case back to the district court in Oklahoma to consider several additional factors that Hobby Lobby must prove to obtain temporary shelter from the mandate, including whether an exemption would serve the public interest.