Nov. 9 (Bloomberg) -- A requirement of President Barack Obama’s health-care law that group insurance plans cover contraceptives was ordered blocked by a federal appeals court, the first such ban on enforcement of the mandate.
The 2-1 decision by a U.S. Court of Appeals panel in Chicago increases the probability the U.S. Supreme Court may seek to resolve conflicting lower-court rulings, though no appeals court has made a definitive decision to throw out the law.
The three-judge panel yesterday reversed lower-court judges in Illinois and Indiana, telling them to stay the contraception coverage requirement contained in the 2010 Patient Protection and Affordable Care Act while the challenges proceed. The cases were filed separately by two Catholic families and the businesses they run.
“These cases -- two among many currently pending in courts around the country -- raise important questions about whether business owners and their closely held corporations may assert a religious objection to the contraception mandate and whether forcing them to provide this coverage substantially burdens their religious-exercise rights,” U.S. Circuit Judge Diane Sykes wrote in the majority opinion.
Last week, an appeals panel in Washington ruled the contraceptives mandate may violate religious freedom, as did an appeals court in Denver previously. Federal appeals courts in Philadelphia and Cincinnati have upheld the law.
The Obama administration has asked the Supreme Court to review the Denver decision. Losing plaintiffs in the Philadelphia and Cincinnati appeals also petitioned the high court for review.
While the Chicago appellate panel didn’t render a final decision on whether the requirement violates U.S. Constitutional guarantees of religious freedom or the federal Religious Freedom Restoration Act, it ruled that compelling the companies to comply with the requirement “substantially burdens their religious exercise rights.”
Joining Sykes, who was appointed to the court by Republican President George W. Bush in 2004, was U.S. Circuit Judge Joel Flaum, a 1983 appointee of Republican Ronald Reagan.
Ilana Diamond Rovner, the dissenting judge, was named to the court by President George H.W. Bush in 1992.
“The court’s holding in these cases is as remarkable for its reasoning as for its result,” Rovner wrote. “In the name free exercise of religion, the court has relieved two secular corporations from a statutory obligation to provide health insurance to their employees that includes coverage of contraceptive care for the companies’ female employees.”
Employees’ choice to use contraceptives may be inconsistent with the owners’ religious beliefs, Rovner said, “but it is not the owners’ choice.” She concluded the requirement doesn’t burden their religious freedom.
Adora Jenkins, a spokeswoman for the U.S. Justice Department, didn’t immediately respond to a call after regular business hours yesterday seeking comment on the order.
“This decision is a disappointment,” Louise Melling, deputy legal director of the American Civil Liberties Union, said in an e-mailed statement. The organization said it filed a friend-of-the-court brief in the case. “Your boss shouldn’t be able to discriminate against you because of what he or she believes, plain and simple. People are entitled to their own religious beliefs, but they don’t have the right to impose those views on others.”
The decision is the first appeals court ruling in favor of both a company and its owners, said Edward L. White III, a lawyer who represented Highland, Illinois-based Korte & Luitjohan Contractors Inc. and its principals, Cyril and Jane Korte. That’s important because it makes clear that either the owners or the company can sue over the mandate, he said.
“This is an important issue to people who run these small companies and are dictated by their faith in how they should run the company,” White said in a phone interview.
The Supreme Court will take up the case because “you have a conflict on an important national issue,” White said. “We’re overjoyed.”
During arguments before the appeals court on May 22, White said his clients owned 88 percent of their 50-year-old business and set its policies. Most of their decisions are made at the kitchen table, he said.
“The company is an extension of their beliefs,” White said. “The company is them.”
Justice Department attorney Alisa Klein challenged that assertion, telling the panel that the Religion Freedom Restoration Act didn’t alter the basic legal principle that corporations are distinct from their owners, a distinction she said the plaintiffs sought to blur.
“I understand the temptation to do it, but it’s wrong,” Klein said.
Matthew Bowman, a lawyer for Madison, Indiana-based Grote Industries Inc. and its family owners, told the panel that “separation between corporations and their owners for some purposes doesn’t mean separation for all purposes.”
The cases are Korte v. Sebelius, 12-3841, and Grote v. Sebelius, 13-1077, U.S. Court of Appeals for the Seventh Circuit (Chicago).
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