scales of justice


By Michael Peabody –

On March 25, the U.S. Supreme Court heard oral arguments in Sebelius v. Hobby Lobby Stores (transcript and audio). According to a number of pundits, the Court is expected to split with four justices on each side and the deciding vote is predicted to fall to Anthony Kennedy.  Perfectly projecting the Court's decision is not much easier than predicting a perfect NCAA March Madness bracket, but here are some potential outcomes for the case.

Both employers had refused to pay for insurance, required by the Affordable Care Act (ACA), that would cover four forms of "emergency contraception" that the religious owners of the privately held for-profit companies believe could induce abortions. The companies were not required to pay for abortions, and there is some medical debate as to whether the pills actually cause abortions.

According to the Kaiser Family Foundation issue brief (August 2013):

"[A]bortion coverage is specifically banned from being required as part of the essential benefits package offered by plans in the exchange and all of the exchanges must offer consumers the choice of at least one plan that does not provide abortion coverage. States may also enact legislation to ban any plan from offering abortion coverage, either in the exchange or more broadly in the private market and many states either have laws or are pressing forward with new laws to do that.

The "Plan B" drug does not prevent an egg from being fertilized, but does prevent the fertilized egg from being implanted in the uterus. (See reports on the studies in Daily Beast, March 22, 2014.) Under legal and medical terms, an abortion only occurs once a fertilized egg is implanted in the uterus and therefore it escapes the definition of abortion for purposes of the ACA.

So Hobby Lobby's argument is based not only on a pro-life religious angle, but on an interpretation of the science behind how emergency contraceptives work.

Eugene Volokh (law professor at UCLA) posted some notes from Michael McConnell (law professor at Stanford) on his Washington Post blog site and identified four of the legal issues that were discussed during the legal argument, and provided his own thoughts.

In brief, and I acknowledge that it is difficult to summarize a summary, Volokh points out that Hobby Lobby could not have avoided a substantial burden on its religious exercise by dropping the health insurance and paying the $2,000 annual fine per employee because it would violate the right of the employer to provide health insurance coverage for its employees and this option would severely impact the employees who depend on the insurance that the employer provides.

Secondly, although the government raised a compelling interest argument in preserving its statutory scheme, Congress did not pass a specific law on the contraceptive mandate but rather left it to HHS to decide what "preventive services" needed to be covered. Further, HHS had the authority to grant religious exemptions to whomever it chooses. The government still has to take into account the burden that it places upon the conscience of the employer by forcing it to do something for someone else. Justice Kennedy pointed out that the statutory rights of third parties do not always trump the rights of conscience of employers.

Thirdly, Volokh does not believe that a finding for Hobby Lobby would cause unintended negative consequences since he believes they have failed to materialize in the 24 years since Employment Division v. Smith (1990) potentially damaged free exercise rights.

Fourthly, Volokh argues that the government failed to demonstrate that it passed the "least restrictive means" test, since the government argued that either the employer needs to provide contraceptive coverage, or drop insurance altogether. The government believes that there is a need to make this contraception available, but has not proven that it must be provided directly through insurance provided by Hobby Lobby.  According to Volokh, the government has essentially reduced its "least restrictive means" test to a question of who pays for it.

If it is simply a matter of payment, the government is already demonstrating with exemptions for religious organizations that there are other ways that to achieve its goal without requiring Hobby Lobby to write the check for the insurance coverage.

I doubt that the Court will dive into the scientific issue of whether "emergency contraceptive" coverage really causes abortions based on the fertilization versus implantation legal and medical definition, although it would more more defensible than the arbitrary trimester system in Roe v. Wade (1973).

But even if the Court is sympathetic toward Hobby Lobby, it still runs headlong into the issue  of whether a corporation can really have a religion. Corporations are typically designed to protect owners and shareholders from personal liability, and in this case the owners have argued that while they are distinct from their companies, their companies should be allowed to reflect the religious values of the employees.  If a corporation is an alter ego of the owner all the way down to religion, then it would seem much easier for plaintiffs to "pierce the corporate veil" and sue the owners directly.  There are over 20 factors that can be considered in piercing the corporate veil, such as commingling of funds or other assets, the use of the same office or business locations, use of the corporation as a mere shell, etc., and one could conceivably argue that sharing the same religion would have to factor in there as well. It is noteworthy that no major corporations submitted amicus briefs on this case in favor of Hobby Lobby.

Unlike Volokh, Douglas Kmiec (law professor at Pepperdine) believes that Hobby Lobby will lose, or possibly be dismissed. As Kmiec points out in a  Huffington Post article (March 26, 2014), it is an "extraordinary claim" for a for-profit corporation to insist that it be exempted from generally applicable laws like a religious organization. Kmiec argues that "no one can figure out how corporations actually manifest religious intent," and predicts that it "should be a simple matter for the great new Chief Justice John Roberts to proclaim a lack of standing on the part of Hobby Lobby."

The arguments in favor of Hobby Lobby still do not address the law of corporations, which has essentially been ignored by those who argue that the religious liberty of company owners is compromised when their corporations are held to generally applicable standards.  If the Court decides to find for Hobby Lobby, it may enter a minefield where corporations are exempted from generally applicable regulations, not simply because of the religion of the corporate owners, but rather because of a hybrid of subjective interpretations of scientific data merged with religion. On the other hand, the government has already shown that it can exempt religious organizations from the mandate, and that would rather that Hobby Lobby not provide any insurance at all, and pay a small fine rather than provide insurance that provides for all required care aside from four controversial contraceptives. Thus, putting the "corporation law" discussion aside, the Court could side with Hobby Lobby.

If I were to guess, based on the recent history of Court decisions and the arguments raised in this case, my prediction is that the Court will punt the ball and dismiss the matter due to lack of standing.


Photo Credit: iStockPhoto




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