How Fares Religious Freedom?

Over two years ago, the federal Department of Health and Human Services unveiled the “HHS mandate,” a regulation requiring private health insurance to cover all FDA-approved contraceptive and sterilization methods, including the “emergency contraceptives” that cause early abortions by acting (as the FDA confirms) to prevent an embryo from implanting in the womb. The mandate co-opts the existing employer-insurance system to encourage greater use of contraception and sterilization. This, the government asserts, will improve the health of women and their children and put women on a more equal footing with men.

Certain religious employers, however, take a sharply different view of the morality (and the promised benefits) of contraception, sterilization, and abortion-inducing drugs, and they cannot in good conscience cover them in their insurance. Beginning in late 2011 with a lawsuit by Belmont Abbey College, some two hundred religious universities, dioceses, charities, businesses, and individuals have filed over sixty lawsuits seeking to enjoin the mandate and restore their religious freedom.

This is a watershed moment in American religious liberty. The litigation”relying on 1993’s Religious Freedom Restoration Act, which provides heightened conscience protection against federal law”tests believers’ ability to resist what they see as coerced complicity with immoral practices. And it does so against the politically explosive backdrop of a regulation issued under the authority of the Patient Protection and Affordable Care Act.

The ultimate resolution”likely by the Supreme Court”will guide future disputes sure to arise over future mandates that could encompass all manner of controversial practices from surgical abortion to euthanasia to sex-change surgery. Moreover, the first wave of appellate decisions on the current mandate adds yet more complexity by addressing whether conscience claims can be asserted by commercial business owners.

The struggle has now reached two inflection points. First, this June HHS produced its long-promised “accommodation,” an adjustment to the mandate designed to assuage the objections of nonprofit organizations. It remains to be seen whether courts will agree that it does: Numerous suits, postponed by courts while the accommodation gestated, will now continue.

Second, also in June, the first federal appellate ruling on the mandate emerged with the Tenth Circuit’s dramatic decision in Hobby Lobby Stores v. Sebelius (holding that a for-profit corporation can exercise religion), followed in July by the Third Circuit’s decision in Conestoga Wood Specialties v. Sebelius (reaching the opposite conclusion). Other circuits will soon follow. These decisions are doubly significant: They not only address whether the mandate can apply to religious objectors, but they do so in the special context of commercial businesses.

Although filed earlier than the business cases, lawsuits by more traditional religious plaintiffs”including Notre Dame, Wheaton College, Catholic Charities USA, and EWTN”were stalled by the delayed accommodation. Mid-litigation, HHS had promised not to enforce the mandate against nonprofits until the accommodation was finalized. Of course, the department could have exempted nonprofits altogether and promptly ended the litigation. It refused. Exemptions were for “religious” employers, which in its view means only churches and religious orders, not enterprises such as religious schools, charities, and hospitals.

Sticking with that approach, the now-released accommodation offers no exemption. Employees will still receive free contraception coverage, albeit through putatively separate payments from their employer’s insurer or third-party administrator. Thus, a self-insured organization like EWTN must “designate” its administrator to “make or arrange for” contraceptive payments. HHS assures employers that those payments are not benefits of their plans and thus that the scheme absolves them from complicity in the coverage.

How this will work is unclear. For instance, the administrator of a self-insured employer can simply refuse to participate. It is also uncertain where the government gets authority to order insurers to make unreimbursed contraceptive payments.

What is clear, however, is that the scheme fails in its stated goal of morally insulating employers. Despite the government’s theological assurances, several objecting employers have already concluded that they remain the principal cog in a system (albeit a complex and opaque one) for delivering free contraception, and have filed new lawsuits. After all, if the government really intended to sever any connection between objecting employers and contraception coverage, why didn’t it simply offer them an exemption like those given churches?

The lawsuits by religious owners of businesses are a different story. From the beginning, HHS deemed commercial businesses “secular”: As profit makers, they and their owners could have no religious claim against the mandate and would receive no accommodations or delays. The mandate took effect against them on August 1, 2012, enforced with an array of penalties including excise taxes of $100 per employee per day. Businesses began to sue in mid-2012.

And they began to win. By mid-2013, most of the federal trial courts”over twenty in all”had found business owners likely to prevail under RFRA, rejecting the argument that religion can never be exercised in a for-profit corporation.

Not all business owners, though. The most prominent early setback involved Hobby Lobby Stores and its founders, the Green family. Based in Oklahoma City, Hobby Lobby is a nationwide arts and crafts chain run according to the Greens’ Evangelical Christian faith. Hobby Lobby closes on Sundays, employs chaplains, offers employees spiritual counseling, and, every Christmas and Easter, takes out newspaper ads proclaiming “Jesus as Lord and Savior.”

While not against all contraception, the Greens object profoundly to covering “emergency contraceptives” that cause early abortions. In September 2012, represented by the Becket Fund for Religious Liberty, the Greens, Hobby Lobby, and Mardel (an affiliated chain of Christian bookstores) sued in Oklahoma City, seeking a preliminary injunction. The trial court denied it.

Hobby Lobby had no religious liberty claim, the court reasoned, because “general business corporations . . . do not pray, worship, observe sacraments or take other religiously motivated actions separate and apart from the intention and direction of their individual actors.” Nor did the Green family have a claim, because the mandate technically applied only to the company. At most, the Greens were merely being asked to “subsidize someone else’s participation in an activity that is condemned by [the Greens’] religion.”

Hobby Lobby appealed to the Tenth Circuit Court of Appeals and asked the entire court for an en banc hearing. This rare procedure, in which the whole court hears a case instead of the usual three-judge panel, is reserved for unusually difficult matters where there is likely to be disagreement internally or with other circuits. Remarkably, the Tenth Circuit granted Hobby Lobby’s request and heard lively arguments before eight judges. On June 27, a five-judge majority (including President Obama’s newest appointee) reversed the lower court.

Judge Timothy Tymkovich’s majority opinion held that neither RFRA nor the First Amendment excludes religious exercise by a for-profit corporation: “A religious individual may enter the for-profit realm intending to demonstrate to the marketplace that a corporation can succeed financially while adhering to religious values. As a court, we do not see how we can distinguish this form of evangelism from any other.” In a concurring opinion, Judge Harris Hartz made a similar point: “The Constitution does not require compartmentalization of the psyche, saying that one’s religious persona can participate only in non-profit activities.”

The majority also said the issue was not, as the lower court saw it, whether Hobby Lobby or the Greens had to contribute fungible dollars toward someone else’s contraceptive use. Properly framed, the issue was whether the government could, on pain of draconian fines in excess of $1 million per day, “demand that Hobby Lobby . . . enable access to contraceptives that Hobby Lobby . . . ?deem[s] morally problematic.” Following the Tenth Circuit’s ruling, the district court preliminarily enjoined the mandate on July 19.

The Tenth Circuit’s decision deftly weaves together several legal principles. It first notes that RFRA protects religious exercise by any “person,” a term which includes “corporations . . . as well as individuals.” Nonprofit corporations routinely exercise religion, but the court explains that there is nothing magical about “nonprofit” status. When addressing claims by Jewish furniture retailers ( Braunfeld v. Brown in 1961) and an Amish carpenter ( United States v. Lee in 1982), the Supreme Court did not question that religious exercise could occur in a commercial business.

And”although the principle has been obscured by recent controversies over corporate political speech”corporations have been exercising rights under the First, Fourth, Fifth, Sixth, Seventh, and Fourteenth Amendments for over a century. As the Supreme Court explained in 1978 in Monell v. Department of Social Services , “by 1871, it was well understood that corporations should be treated as natural persons for virtually all purposes of constitutional and statutory analysis.” Religion is practiced as naturally by groups as by individuals, and so it fits within the sweep of rights capable of exercise within the corporate form.

Yet, three weeks later, another circuit reached the opposite conclusion. In Conestoga , the Third Circuit “respectfully disagree[d]” with the Tenth in a case involving a cabinet manufacturer owned by the Hahns, a Mennonite family. Despite an “extensive list” of cases recognizing corporate speech rights, the majority found no “similar history of courts providing free exercise protection to corporations.” Citing the lower court’s (reversed) opinion in Hobby Lobby , the majority concluded that “we simply cannot understand how a for-profit, secular corporation”apart from its owners”can exercise religion.”

The owners’ claims fared no better: The majority held that the mandate falls on Conestoga only and “does not actually require the Hahns to do anything.” Judge Kent Jordan’s sixty-five-page dissent called the majority decision “genuinely tragic,” adding that the government’s position “appears to be itself a species of religion, based on the idea that seeking after filthy lucre is sin enough to deprive one of constitutional protection.”

These lengthy and fractured decisions appear to set the stage for Supreme Court review. The disagreement will quickly deepen: the Sixth and Seventh Circuits will weigh in soon. Moreover, the growing conflict concerns basic questions that will essentially determine the outcome of some thirty other business cases now in court. Indeed, following entry of the injunction in Hobby Lobby , the Department of Justice had the case stayed until October 1 to consider whether to seek Supreme Court review.

Hobby Lobby and the other business cases present fundamental religious freedom questions, triggered by a divisive, nationwide regulation of health insurance. The government itself has raised the stakes of these cases by taking a legal position that would deprive an entire class of Americans”business owners”of any conscience rights.

That is alarming. It is one thing to say that a business owner’s religious convictions must be weighed against a public interest in workplace regulation. That is all RFRA requires”admittedly with a presumption toward accommodating religion. But it is entirely another thing to say, as the government does, that the business owner has no religious claim at all . Surely a Kosher deli has a religious claim against a law forcing it to sell pork. Surely a pro-life physician’s practice has a religious claim against a law making it perform surgical abortions. Yet, if these businesses are for-profit, the government says they have forfeited any conscience claim. That cannot be the law.

Religious freedom is not extinguished when a business turns a profit. As the Tenth Circuit wrote in Hobby Lobby , the authors of the Free Exercise Clause deliberately “chose exercise , indicating that . . . the protections of the Religion Clauses extend beyond the walls of a church, synagogue, or mosque to religiously motivated conduct , as well as religious belief.”

The religious conduct at issue in these cases is familiar to any believer bound to avoid certain practices, whether Sabbath work, eating pork, or manufacturing the implements of war. The conviction that such practices must be avoided has precisely the same force whether the occasion for sin arises in a church, a charity, or a business. The believer’s conscience cries out for protection, even when he sells a product to make a living.

Kyle Duncan is general counsel of the Becket Fund for Religious Liberty and lead counsel for Hobby Lobby Stores and EWTN.