Obama Contraceptive Mandate Upheld by U.S. Appeals Court

The Obama administration won an appeals court victory in a challenge to its 2010 health-care law by a for-profit company seeking a religious exemption to a mandate that employers provide insurance coverage for contraceptives.

In a 2-1 decision, the U.S. Court of Appeals in Philadelphia yesterday rejected a challenge to the Affordable Care Act requirement brought by Conestoga Wood Specialties Corp., a cabinet maker owned by Mennonite Christians who argued the mandate violates their religious beliefs.

“We simply conclude that the law has long recognized the distinction between the owners of a corporation and the corporation itself,” U.S. Circuit Judge Robert Cowen wrote in the majority decision. “A holding to the contrary -- that a for-profit corporation can engage in religious exercise -- would eviscerate the fundamental principle that a corporation is a legally distinct entity from its owners.”

The ruling sets up a split between federal appeals courts that makes it more likely the U.S. Supreme Court will eventually consider the dispute. On June 27, a federal appeals court in Denver ruled that Hobby Lobby Stores Inc. was likely to win on the merits of its argument that the mandate violates the rights of the company and its owners under the Religious Freedom Restoration Act and the First Amendment of the Constitution.

Hobby Lobby

A federal judge on July 19 issued a ruling blocking enforcement of the mandate against Hobby Lobby and put the case on hold until October.

Conestoga and other companies challenged the government over the provision of the 2010 U.S. health law requiring employers and insurers to provide preventive health services without charge to their workers, a category of service the administration said includes birth control.

Thirty-six lawsuits have been filed by for-profit companies challenging the Affordable Care Act’s contraceptive coverage mandate, according to the National Women’s Law Center. In at least 24 cases the plaintiffs have won rulings allowing them not to provide the coverage while the litigation is pending. In seven cases, the court has ruled against the companies’ request, according to the group.

“Most courts agree that all Americans have religious freedom even when trying to earn a living and we think this decision will eventually be reviewed and that religious freedom will be vindicated,” Matt Bowman, a lawyer for Conestoga at the Washington-based Alliance for Defending Freedom, said in an interview.

‘Grievous Harm’

In a 66-page dissent, Circuit Judge Kent Jordan said the majority’s ruling “guarantees grievous harm” as Conestoga’s owners are forced to pay for the “offending contraceptives, including abortifacients,” in violation of their religious convictions or face “ruinous fines.”

“It should not be hard for us to join the many courts across the country that have looked at the mandate and its implementation and concluded that the government should be enjoined from telling sincere believers in the sanctity of life to put their consciences aside and support other people’s reproductive choices,” Jordan said.

The case is Conestoga Wood Specialties Corp. v. Secretary of the Department of Health and Human Services, 13-1144, U.S. Court of Appeals for the Third Circuit (Philadelphia).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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