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ACA’s return taxes the High Court

It felt a bit like 2012 in the Supreme Court chamber on Tuesday as spectators and reporters filed in for the arguments in a case involving the Affordable Care Act.

Of course, unlike the multiple days of arguments two years ago in National Federation of Independent Business v. Sebelius, over the very constitutionality of the federal health care reform law’s individual mandate, the only issue before the Justices today was the “contraceptive mandate,” which requires some organizations offering health insurance to their employees to cover specified reproductive services.

The courtroom is quite crowded, as those seeking seats in the public section, for one of the few times this Term, began lining up over the weekend. They were rewarded with having to wait outside through an unseasonably cold day Monday, followed by a Tuesday morning snowstorm that had a bit more to it that forecasters had predicted.

Still, there will be no retired Justices today, and no members of President Obama’s Cabinet.  (Secretary of Health and Human Services Kathleen Sebelius, whose agency is at the heart of carrying out the law, sat through all three days of arguments in 2012, but she isn’t here today.) There is some bipartisanship evident today, though, at least in seating proximity. In the spectators’ row usually reserved for members of Congress, Sen. Patty Murray, a Democrat from Washington, chats with Sen. Roy Blunt, a Republican from Missouri. Murray’s Web site today highlights a recent speech in which she lauded the success of the Affordable Care Act, while Blunt’s site trumpets the idea that “With Each Obamacare Delay, President Acknowledges Obamacare Is Fundamentally Flawed.”

Seated prominently in the second row of the middle section of the public gallery (with the front row of that section kept empty as usual) are members of the two families who control the companies in Sebelius v. Hobby Lobby Stores and Conestega Wood Specialties v. Sebelius.

Among them is David Green, the patriarch of the evangelical Christian family that owns Hobby Lobby, the Oklahoma City-based chain of crafts stores known for following a set of Christian principles that, besides the piping in of religious music and its refusal to sell shot glasses, means the company does not wish to cover certain contraceptives in its health insurance plan.

Next to the Greens in the row are several members of the Hahn family of Lancaster County, Pennsylvania,  Mennonite Christians who own furniture concern Conestega Wood Specialties. Likely because Hobby Lobby is a national chain and because of the complexity of the issues, Conestega Wood has gotten short shrift in most of the national press previews of the consolidated cases. But the two families are on equal footing, or equal seating, today.

As Richard Wolf put it in his USA Today preview last week, the case is full of hot-button issues such as religious freedom, corporate rights, federal regulation, abortion and contraception. “Put another way,” he wrote, “it’s a case about God, money, power, sex—and Obamacare.”

At 9:37 a.m., Paul Clement and his legal team enter the courtroom.  Solicitor General Donald B. Verrilli and his associates enter a few minutes later, and as is customary, the lawyers exchange handshakes and small talk. This is the latest head-to-head battle between Clement and Verrilli, after the 2012 ACA case (when Verrilli won the main enchilada but Clement prevailed on the idea that the states could not be forced to accept the expansion of Medicaid), and last year’s same-sex-marriage ruling in United States v. Windsor, which was a victory for Verrilli as well.

As recently as last Thursday, it was not clear who would be arguing first today. The government is the petitioner in the Hobby Lobby case, but the respondent in the Conestoga Wood case. Going first is considered a tactical advantage, given that an opportunity for rebuttal comes with it. For whatever reason, the Justices decided by Friday that Clement would go first.

The Justices take the bench, and there are some opinions to announce. (It seems that when the Court has a big, rapt audience like today, it usually likes to release some opinions, if any are available.)

First up is Justice Anthony M. Kennedy with the decision in United States v. Quality Stores Inc., which is an eight-to-zero ruling (with Justice Elena Kagan not participating) that certain severance payments are taxable wages for purposes of the Federal Income Contribution Act. The decision is a reversal for the U.S. Court of Appeals for the Sixth Circuit, based in Cincinnati, which in recent terms has challenged the Ninth Circuit (and emerged victorious) as the most reversed circuit by the Supreme Court.

Justice Antonin Scalia announces the second decision of the day, a unanimous ruling in Lexmark International v. Static Control Components that the respondent has adequately pleaded the elements of a Lanham Act case for false advertising. This is an affirmance for the beleaguered Sixth Circuit, and Scalia can’t resist a quip: “One for two ain’t bad.”

Now the Court is ready for the ninety-minute argument in the case. SCOTUSBlog’s Lyle Denniston has the main account of that, but there are a few notable moments he didn’t have space to cover.

The shadow of the 2012 NFIB v. Sebelius decision could not be escaped when Justice Sonia Sotomayor and others pressed Clement about his assertion that Hobby Lobby faced a choice between a $475 million per year penalty if it kept its insurance plan but refused to cover the contraceptives at issue, or a $26 million “penalty” if it dropped its insurance coverage altogether.

“It’s not called a penalty,” Justice Sotomayor told him, alluding to the key holding of the 2012 decision. “It’s called a tax.”

Chief Justice John G. Roberts Jr., who wrote the NFIB opinion which reached that conclusion and received barbs from conservatives for it, quickly chimed in with a broad smile on his face, “She’s right about that.”

Most of the courtroom erupted in laughter at that, though the four Justices who wrote the joint dissent on that issue – Scalia, Anthony M. Kennedy, Clarence Thomas, and Samuel A. Alito Jr., did not appear to find it amusing.

Verrilli, as he had in his brief, went out of his way to recognize the “sincere beliefs” of the Green and Hahn families, though he took issue with their sincerely held views that the contraceptives at issue were “abortifacients,” because “that is not the judgment that federal law or state law reflects.”

Justice Kagan said the families in the case “seem like good employers.”

“And I’m sure they want to be good employers,” she added, but “that’s a different thing than saying that their religious beliefs mandate them to provide health insurance, because here Congress has said that the health insurance that they’re providing is not adequate, it’s not the full package.”

Justice Sotomayor told Clement, “You picked great plaintiffs.” That prompted smiles among the Green and Hahn family members.

But Sotomayor expressed concerns about for-profit companies that might raise insincere religious objections, or those that might object to coverage of vaccinations or blood transfusions.

While the argument largely revolves around the Religious Freedom Restoration Act of 1993, there were diversions to the Citizens United undertones of the case and to the neighborhood kosher deli and to slaughterhouses.

“How does a corporation exercise religion?” Justice Sotomayor wanted to know. Chief Justice Roberts suggested it was part of the “religious commitment” of the Hobby Lobby owners “to provide health care for its employees.”

Justice Alito worries about the implications if no for-profit company could raise a free exercise of religion claim.

“According to the media, Denmark recently prohibited kosher and halal slaughter methods because they believe that they are inhumane,” Alito said. “Now, suppose Congress enacted something like that here. What would a corporation that is a kosher or halal slaughterhouse do? They would simply­­ they would have no recourse whatsoever.”

Though he was in the minority on the main issue in NFIB v. Sebelius two years ago, Justice Kennedy appears to be the key vote in this case. His comments hardly tipped his hand, as he expressed concerns to Clement about the effect on employees when a religious employer denied contraceptive coverage, but also told Verrilli that “under your view, a profit corporation could be forced … in principle to pay for abortions.”

By the time it concluded around 11:45 a.m., the argument had pretty much touched on God, money, power, sex, and Obamacare.

Recommended Citation: Mark Walsh, ACA’s return taxes the High Court, SCOTUSblog (Mar. 25, 2014, 11:32 PM),