Judge Rules Hobby Lobby Must Comply With Contraceptive Coverage Rules

November 20, 2012 — A federal judge on Monday rejected retail chain Hobby Lobby's legal challenge to the federal contraceptive coverage rules, ruling that the company's Christian owners are not exempt from offering employees coverage because they operate a secular business, Reuters reports (Olafson, Reuters, 11/19).

The suit argued that providing contraceptive coverage for Hobby Lobby's workers would violate the freedom of speech and religious beliefs of founder and CEO David Green and his family. The suit also claimed that certain contraceptives -- including emergency contraception and intrauterine devices -- can prevent the implantation of a fertilized egg in the uterus, which the Green family considers to be an abortion.

The suit sought to block enforcement of the contraceptive rules for the Green family's businesses and "other individuals and organizations that object on religious grounds." The rules, which are being implemented under the Affordable Care Act (PL 111-148), require most health plans issued or renewed after Aug. 1 to cover contraceptive services without copayments or deductibles. HHS has given religious not-for-profits, such as colleges and hospitals, a one-year delay period to come into compliance, and religious institutions, such as churches and synagogues, are exempt altogether (Women's Health Policy Report, 9/13).

Plaintiffs' attorney Kyle Duncan -- general counsel for the Becket Fund for Religious Liberty -- said the owners will "immediately appeal" (Monies, The Oklahoman, 11/19). The lawsuit also involved Mardel, Hobby Lobby's sister company.

Details of Ruling

In a 28-page ruling, U.S. District Judge Joe Heaton said that while churches and other religious institutions qualify for constitutional protections related to the requirement, "Hobby Lobby and Mardel are not religious organizations." He added, "Plaintiffs have not cited, and the court has not found, any case concluding that secular, for-profit corporations such as Hobby Lobby and Mardel have a constitutional right to the free exercise of religion."

However, Heaton wrote that "the court is not unsympathetic" to the plaintiffs' complaints. He said the ACA "results in concerns and issues not previously confronted by companies or their owners," adding, "The question of whether the Greens can establish a free exercise constitutional violation by reason of restrictions or requirements imposed on general business corporations they own or control involves largely uncharted waters" (Talley, AP/San Francisco Chronicle, 11/19).

The Greens said they will continue to offer employees coverage of other contraceptives that they do not oppose (The Oklahoman, 11/19). They face a Jan. 1 deadline to comply with the contraceptive coverage rules. Failure to offer the coverage for their more than 13,000 full-time employees who are eligible for health insurance would entail a fine of $1.3 million per day, according to the company (AP/San Francisco Chronicle, 11/19).