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The aftermath of Hobby Lobby, behind the scenes


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Ogilvy

By Patrick Ogilvy

As a reminder, one way to describe the Hobby Lobby ruling is to say that the Supreme Court gave a family-owned, for-profit corporation the right to be exempt from a federal law if its owners can show such a law goes against their closely-held religious beliefs.  This ruling allows corporations to challenge the Affordable Care Act’s (ACA) mandates, and if successful, to be able to escape the fines for not adhering to the ACA.
ACA contraceptive mandates and Hobby Lobby

Under the ACA, employers must provide non-cost-sharing health care to their enrolled female employees for “all Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling.”  Prior to Hobby Lobby, the federal agencies enforcing the contraceptive provisions offered exemptions to certain religious employers like churches, but not to employers like non-profit hospitals or for-profit craft stores with similar religious beliefs.  Not long after these exemptions were issued, the same federal agencies approved certain accommodations whereby the non-profit religious employer would not be involved in making the contraceptive coverage available to the employees, but the coverage would be provided with no extra cost to the employer or the employee.  Still, however, the agencies refused to consider for-profit corporations.

The Supreme Court changed this in Hobby Lobby, allowing a closely-held for-profit corporation, with closely-held religious beliefs, to avoid the contraceptive mandate provisions of the ACA because the government failed to meet the least-restrictive-means standard imposed under the Religious Freedom Restoration Act (RFRA).  Now the aftermath of this controversial ruling is already playing out, with several cases now up for review to be remanded for further proceedings consistent with the Hobby Lobby decision.

The Sixth Circuit’s interpretation before Hobby Lobby

One of these cases mirrored the Hobby Lobby argument, but in September of 2013, the U.S. Court of Appeals for the Sixth Circuit dismissed a complaint by a privately-held, secular company against the US Department of Health and Human Services (HHS) and other government entities claiming the ACA violated the  RFRA.  The court’s decision was based on a finding that the company lacked standing as individuals to bring RFRA claims.  As it stands, this ruling is in direct contradiction to the Supreme Court’s decision.

Like the Hobby Lobby case, in this case the majority shareholders who owned and controlled the for-profit company were a family of practicing Roman Catholics, who claimed their closely held religious beliefs would be violated by adhering to this mandate. The Sixth Circuit, relying on previous Supreme Court cases, found the company did not have standing to bring a lawsuit under the RFRA because a corporation is not a person. The Sixth Circuit explained the purpose of incorporating an entity was “to create a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs.”  Based on these interpretations, the Sixth Circuit dismissed the company’s RFRA claims.

What happens now
This case was decided in September 2013.  Since that time, the Supreme Court entered the Hobby Lobby ruling, which contradicts the Sixth Circuit’s interpretation of the Supreme Court’s previous cases.  On July 1, 2014, the Sixth Circuit’s decision was vacated and remanded for further consideration in light of the Hobby Lobby ruling, and on August 4, 2014, judgment was issued in favor of the company.  This is not the only past case-ruling that is up for re-interpretation.  Many disagree over whether the Supreme Court ruling was appropriate and whether the federal statutes at issue were properly interpreted, but one commonly held opinion is the Hobby Lobby ruling affects much more than just the ACA.  The foundation of the ruling now opens the door for privately held corporations to individual and specific exceptions and exemptions to complying with federally enacted law.



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