March 25 (Bloomberg) -- A divided U.S. Supreme Court debated whether companies can assert the same religious rights as individuals, hearing arguments in an ideological clash over Obamacare and rules promoting contraceptive coverage.
The 90-minute session marked the Supreme Court’s first look at the health law since the justices upheld its core provisions in 2012. At issue is whether two family-owned companies are entitled to a religious exemption from the requirement that employers cover birth control as part of worker-insurance plans.
Hobby Lobby Stores Inc. and Conestoga Wood Specialties Corp. are asking the court to give for-profit corporations religious freedoms, with potentially sweeping rights to opt out of laws they say are immoral. A victory for the companies would put a dent in a health-care law that remains under siege on multiple fronts four years after it was passed.
Justice Anthony Kennedy, often the court’s deciding vote, questioned whether the religious views of employers could trump the rights of employees to receive contraceptive coverage.
“The employee may not agree with these religious beliefs of the employer,” he said.
Kennedy asked questions of both sides and didn’t clearly indicate which way he will vote. He told an Obama administration lawyer that, under his argument, companies “could be forced in principle to pay for abortions.”
The court heard arguments as hundreds of demonstrators, representing both sides of the issue, gathered outside the building during a rare March snowstorm in the nation’s capital. The crowd included scores of women wearing pink hats and purple T-shirts saying, “not my boss’s business.”
The administration says contraceptive coverage is crucial to women’s health and economic well-being, arguing that almost half of all pregnancies are unintended. Women of childbearing age spend 68 percent more than men in out-of-pocket health-care costs, the government contends.
The Supreme Court four years ago expanded corporate speech rights under the First Amendment in the Citizens United campaign-finance case. The latest dispute focuses on the First Amendment’s separate guarantee of “free exercise” of religion, along with a 1993 federal religious-rights law.
A half-mile away, a federal appeals court weighed a case that may pose an even bigger threat to the Affordable Care Act, known as Obamacare. In that case, opponents of the health-care law contend that people who buy insurance on federally run exchanges aren’t eligible for tax credits to cut their premiums.
Today’s argument over the contraceptive requirement suggested the court might divide along ideological lines.
Justice Sonia Sotomayor said the companies’ argument might let employers object to providing coverage for immunizations and blood transfusions. Justice Elena Kagan said companies might also claim religious exemptions from federal laws requiring minimum wages and barring the use of child labor.
“You would see religious objectors come out of the woodwork with respect to all of these laws,” Kagan said.
The companies’ lawyer, Paul Clement, argued that the exemption he was seeking would apply only to a small set of corporations.
“We can talk about the extent and how you’d apply these principles to Exxon, but I think that’s just something that’s not going to happen in the real world,” he said.
Hobby Lobby, which had $3.3 billion in sales last year, has 600 craft stores around the country and at least 15,000 full-time employees. The Oklahoma City-based company’s five owners have all signed statements declaring their religious faith and committing to run the business accordingly.
The company closes all its stores on Sunday to ensure that employees can spend time at church and with their families.
“No American should lose their religious freedom just because they open a family business,” one of the company’s owners, Barbara Green, said in a statement today.
Conestoga is a Pennsylvania woodworking business owned by a Mennonite family. The two companies’ lawsuits are among at least 47 filed by for-profit businesses opposed to the contraception requirement, according to the Becket Fund for Religious Liberty, which represents Hobby Lobby.
Both companies cover most forms of contraception, excluding a handful that they say may induce abortions. The ones that aren’t included are Teva Pharmaceutical Industries Ltd.’s Plan B One-Step, Actavis Plc’s Ella and some types of intrauterine devices. The manufacturers and the U.S. Food and Drug Administration say Plan B and Ella work primarily by preventing the release of an egg from the ovary and don’t induce abortion.
The high court hasn’t acted on a third pending case involving a company that objects to all forms of birth control.
Justice Antonin Scalia today questioned the importance of the contraception requirement, saying the Obama administration had already made “a lot of exemptions” to it. The administration carved out an exemption for churches and separately let religiously affiliated nonprofit groups avoid paying for birth control directly.
U.S. Solicitor General Donald Verrilli, the administration’s top Supreme Court lawyer, said when a company incorporates, it agrees to comply with laws governing businesses.
“You are making a choice to live by the rules that govern you and your competitors in the commercial sphere,” he said.
Justice Samuel Alito questioned Verrilli’s contention that the contraceptive requirement didn’t impose a “substantial burden” on for-profit companies with religious objections.
“It’s a religious question and it’s a moral question, and you want us to provide a definitive secular answer to it?” Alito asked.
The high court case focuses on the 1993 Religious Freedom Restoration Act, a law enacted to nullify a 1990 Supreme Court decision that cut back constitutional protections for religious practices. The 1993 measure says that only in rare cases may the government “substantially burden a person’s exercise of religion.”
The Obama administration says that provision doesn’t cover for-profit corporations. It also contends the company owners can’t claim a violation of their rights because the birth-control requirement doesn’t impose obligations on them as individuals.
Several justices today pressed a different line of argument, saying employers could choose not to provide insurance at all. That would leave employees to buy insurance on the new exchanges set up by the health-care law. Employers taking that approach must pay a tax of as much as $3,000 per employee.
“Isn’t there another choice nobody talks about, which is paying the tax, which is a lot less than a penalty and a lot less than the cost of health insurance at all?” Sotomayor said.
Kagan seconded the point, saying, “this is not the kind of thing that’s going to drive a person out of business.”
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