The Contraceptive Coverage Mandate and the “War on Religion” – Part II

February 14, 2013

Insurance LawMore than 40 lawsuits have been filed across the country challenging the contraceptive mandate discussed in our last post. All but one of the cases brought by religious organizations have been dismissed as premature pending the Administration’s issuance of final rules governing the exemptions for religious employers and non-profit religious organizations. As of this writing, it is highly unlikely that these cases will be held to be “premature” for too much longer.

The cases brought by secular businesses owned by people who have religious objections to paying for contraceptives stand even firmer ground as presenting justiciable controversies because they must comply with the contraceptive mandate beginning with plan years that start on or after August 1, 2012.

The Religious Rights of Corporations

A threshold question in secular employer cases is whether a private corporation can have religious beliefs and thus standing to object to the contraceptive mandate. Corporations are creatures of law that exist separate and independent from their owners. The health plans subject to the contraceptive mandate are offered by the corporate employer, not the corporation’s owners, and the corporation’s owners presumably will not face personal liability for the financial penalties imposed if the corporation fails to comply with the contraceptive mandate.

Although the Supreme Court held that corporations have First Amendment free speech rights in Citizens United v. Fed. Election Com’n, nothing in the Court’s reasoning suggests that corporations also have religious rights. The cause of religious freedom is not advanced by pretending that corporations are “persons” with the intellectual or emotional capacity for religious belief. See, e.g., Hobby Lobby Stores, Inc. v. Sebelius,

Nobody seriously argues that publicly held corporations with a secular purpose and a large number of shareholders can exercise religious freedom. However, closely-held or subchapter S corporations whose owners aspire to do business in a manner consistent with their own deeply held religious beliefs have obtained preliminary injunctions against enforcement of the contraceptive mandate. In Tyndale House Publishers, Inc. v. Sebelius, * 5-8 ,for example, a federal district court held that a corporation has standing to assert the free exercise rights of its owners when the corporation is closely held and “merely the instrument through and by which [its owner’s] exercise their religious beliefs.”

Tyndale is distinguishable from most of the secular employer cases based on the nature of Tyndale’s business—its sole business was publishing “Christian and faith-enhancing books.”  If corporations are people with constitutional rights, a corporation organized expressly to pursue religious ends may have religious liberties separate from its owners. But most for-profit corporations are organized to make money in the secular sphere, and the only religious freedoms at stake are those of their owners. See, e.g., Hobby Lobby Stores, Inc. v. Sebelius.

Our next post will examine the key substantive legal arguments raised by secular employers. We will discuss the issues raised in our posts on the contraceptive mandate in a Webinar sponsored by West Legal Ed Center on March 18, 2013.