Revisiting Hobby Lobby: Where Does the SCOTUS Decision Stand Now?

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As many of our readers are fully aware, when the Affordable Care Act was passed into law back in 2010, the effects have and continue to be far-reaching. Of the numerous challenges made to the Act over the years, one of the most interesting involved a question of whether the government can enforce legislation that is contrary to the religious beliefs of companies subject to the overall terms of the legislation. When the Supreme Court took up the Hobby Lobby case (Burwell et al. v. Hobby Lobby Stores, Inc. et al.) and issued its opinion on June 30, 2014, it struck one of the first blows to ACA in terms of just how much the federal government can impose on its citizens by ruling that the government could not require Hobby Lobby, in violation of its religious beliefs, to provide abortion-inducing contraceptives in its health care plan (one of the cleverest leads I read on this was “A Pill Not Even the Affordable Care Act Can Force Employers to Swallow”).

An important point to note is that there is a substantial burden, which must be proven whenever a law requires an organization to act in violation of its religious beliefs, and that government officials must defer to an organization’s own determination as to what actions violate its beliefs. This gives the organization fairly wide latitude in refusing to accept government imposed regulations on passage alone. Also, the Court found that the test to use here must focus on the marginal interests of the religious objectors rather than on any broader interests. Finally, the Court held that the government can be required to set up other programs to serve its interests and that alternative means to further these interests can be required even if they adversely impact third parties (such as employees, as was the case in Hobby Lobby.)

However, in terms of the ACA, this basically only applies to grandfathered group healthcare plans. If a non-grandfathered group health plan is subject to the contraceptive requirement and does not offer the required coverage, the plan must pay an excise tax of $100 per day per affected individual. Some very limited exemptions to the requirement include plans sponsored by religious employers, which are churches, their integrated auxiliaries, conventions or association of churches, and the exclusively religious activities of any religious order. And, of course, due to Hobby Lobby, group health plans of closely held corporations (even for-profits) cannot be required to comply with the contraceptive coverage requirement to the extent that doing so would violate the owners’ sincerely held religious beliefs.

Publicly traded companies would not be impacted by the Hobby Lobby decision, because these are typically controlled by unrelated investors who would likely not agree to run the company under the same religious beliefs.

Employers considering dropping contraceptive coverage from their plans should exercise caution as this was a narrow decision with four judges dissenting, and always consult with legal counsel prior to eliminating this coverage.

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Posted In: Legal