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Religious employer wins big — temporarily

In the most significant federal appeals court ruling so far on the new federal health care law’s contraceptives mandate, the Seventh Circuit Court on Friday night temporarily barred the federal government from enforcing that requirement against an Illinois construction company whose Roman Catholic owners see it as a threat to their religious freedom.  In a two-to-one ruling, the panel of the Chicago-based court acted two days after Supreme Court Justice Sonia Sotomayor had refused– for different reasons — to block enforcement of the mandate against an Oklahoma family and its businesses.

The Seventh Circuit decision was of potentially major significance, because it marked the first time that a federal court at that level had accepted — at least temporarily — the argument that a profit-making company owned and run by people of strong religious faith fully shares their right to protection of their religious principles.  Justice Sotomayor, in her ruling on Wednesday, noted that the Supreme Court has never ruled on that claim.  However, the Obama Administration, in defending the mandate, has argued that the federal Religious Freedom Restoration Act does not protect a secular, profit-making enterprise from regulation of its employment practices.

Another federal appeals court, the Eighth Circuit, based in St. Louis, recently issued an order that temporarily halted the mandate’s enforcement in another test case, but that court issued no explanation for its action.   A third appeals court, the Tenth Circuit, based in Denver, has refused to issue such an order.  Other appeals courts are pondering the question as more than forty lawsuits challenging the mandate go forward.  The Seventh Circuit’s Friday night order will remain in effect while the challenge in that case goes ahead in a pending appeal to the Circuit Court.

Under the new health care law, employers who do not qualify for exemptions must provide their women workers of child-bearing age — without cost — with insurance coverage for the full range of contraceptive drugs and other birth control and pregnancy prevention measures.  For non-exempt employers, the mandate is to become effect next Tuesday, January 1.  Religious institutions, such as churches, are exempt from it, while other religious-affiliated entities — such as schools, colleges and hospitals — are temporarily exempted from it until the federal government writes a new final rule on implementation of the mandate.  What will be in the final rule is expected to be known between now and the end of March.

The majority of the lawsuits challenging the mandate around the country have been filed by religious institutions, but a significant number have been filed by profit-making companies run by people who have religious objections to birth control drugs and devices that they believe will lead to abortion, which they oppose as a matter of their faith.

The Illinois case involves a construction company, Korte & Luitjohan Contractors, Inc., of Highland, Illinois.   A Roman Catholic couple, Cyril and Jane Korte, own about eighty-eight percent of the company, which employs ninety full-time workers.  About seventy of those are members of a labor union, which provides them with health insurance.  The Kortes provide health insurance for the other twenty employees.  The Kortes have told the courts that they did not realize until recently that their health plan for those twenty workers did provide for coverage of contraceptives.   They want to drop that plan as of January 1, and set up a new one without that coverage, and they sued to get the right to do so free of the new law’s mandate.

The Kortes’ main challenge is under the Religious Freedom Restoration Act, and it was that challenge that the Seventh Circuit majority concluded is likely to succeed when their appeal is decided.  The new mandate, it concluded, probably will be shown to impose a “substantial burden” on the couple’s religious faith and on the religious principles on which they run their company.   The panel majority also concluded that the federal government has not yet shown a compelling interest, in assuring contraceptive coverage, that was significant enough to justify the burden on the family’s faith.

In a key passage in the panel majority’s ruling, it remarked that the fact that the Kortes “operate their business in the corporate form is not dispositive of their claim…The contraception mandate applies to K&L Contractors as an employer of more than 50 employees, and the Kortes would have to violate their religious beliefs to operate their company in compliance with it.”  The passage suggesting that the corporation itself has rights relied upon a citation to the Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission, finding that corporations have full First Amendment rights (at least in the campaign spending context).

While other courts that have refused pleas to block enforcement of the mandate have relied upon the argument that the mandate does not impose a direct obligation on employers to provide actual access to birth control and other contraceptives measures, but only to provide insurance in the event women workers chose to use it for that purpose, the Seventh Circuit majority concluded that the mandate involves “coerced coverage of contraceptives, abortifacients, sterilization and related services” and not the later purchase or use of those services.  That, it said, is the potential violation of religious freedom.

The panel majority did note Justice Sotomayor’s ruling on Wednesday against blocking the mandate, in an Oklahoma case. But it said the standard for obtaining an injunction from the Supreme Court is a more demanding one than to obtain one at a federal appeals court.

The Circuit Court’s majority opinion was unsigned, but it had the support of Circuit Judges Joel M. Flaum and Diane S. Sykes.   Circuit Judge Ilana Diamond Rovner dissented, arguing that the Kortes had not made a case for an order blocking enforcement.  Judge Rovner relied partly on her view of the potential merits of the challenge, but also upon the fact that the Kortes waited too long to pursue their claim after discovering that the health plan they had for the twenty workers did cover contraceptives.

Recommended Citation: Lyle Denniston, Religious employer wins big — temporarily, SCOTUSblog (Dec. 29, 2012, 12:24 AM),