WASHINGTON — The Supreme Court heard oral arguments Tuesday for the explosive Hobby Lobby case, often covered as a case only about whether employers must provide their employees with contraception coverage.
But the case — which has prompted heated arguments about religious liberty, women's rights, and more from all sides — is actually a complex case about how the Affordable Care Act and federal health care regulation interact with a 1993 religious freedom law. And depending on how the court decides to rule, it could have major ramifications for corporations looking for exemptions from laws on religious grounds.
The 1993 law, called the Religious Freedom Restoration Act (RFRA), states government "shall not substantially burden a person's exercise of religion" unless that burden is the "least restrictive means" to further a "compelling governmental interest."
When the Department of Health and Human Services issued regulations, as part of the Affordable Care Act, mandating that employer-provided health insurance must include contraceptive coverage, for-profit companies had three options:
1. Providing health care coverage that includes contraceptive coverage.
2. Providing health care coverage without contraceptive coverage and paying a steep fine.
3. Not providing health care coverage, sending employees to the health care exchanges created by the Affordable Care Act, and paying a tax.
After issuing those regulations, two companies — Hobby Lobby and Conestoga Wood — sued, seeking protections under RFRA.
Based on the questioning Tuesday, the Supreme Court appeared split on the case: The justices seemed inclined to give corporations the ability to seek religious exemptions from certain laws, but they also — in a closer question — seemed inclined against finding that the government's plan to ensure contraception coverage merited such an exemption.
On Tuesday, Paul Clement argued for the companies and Solicitor General Donald Verrilli Jr. argued for the government.
Here are the four questions the justices are considering:
1. Under RFRA, can for-profit corporations express religious beliefs like individuals can?
Individuals can seek religious exemptions from laws under RFRA. Whether for-profit corporations can do so is not established.
The government argues there can be an across-the-board rule: If your company has for-profit corporation status, the company automatically cannot claim such a religious exemption under RFRA — even if the exemptions would be otherwise valid. This issue of whether companies could even bring their claims to court seemed to be one that most justices, including Justice Stephen Breyer, were open to considering.
At one point, Chief Justice John Roberts noted that this issue in these cases could be decided narrowly, as only applying to a kind of corporation — in this case, closely held, Chapter S corporations. "Whether it applies in the other situations is," Roberts went on, "is a question that we'll have to await another case when a large publicly traded corporation comes in and says, 'We have religious principles,' the sort of situation I don't think is going to happen."
Even if the court were to decide the broader issue — whether any for-profit corporation can seek RFRA's protections — it would not solve the follow-up question of whether those corporations would receive the protections for any given claim.
Justice Elena Kagan repeatedly raised concerns about that expansion on Tuesday, though. Allowing such claims would mean "you would see religious objectors come out of the woodwork with respect to all of these laws," she said, including religious-based challenges to sex discrimination bans, minimum wage, family leave, and child labor laws.
Referencing an opinion by retired Justice Sandra Day O'Connor, the lawyer for the companies, Clement, responded, "Just because free exercise claims are being brought doesn't mean that the courts can't separate the sheep from the goats."
2. Let’s say Hobby Lobby and Conestoga Wood can raise a RFRA claim, though. The next question is whether the so-called “contraception mandate” places a “substantial burden” on the rights of those two corporations.
The main issue here is whether the mandate is actually a mandate.
Justice Anthony Kennedy joined with Justices Kagan and Sonia Sotomayor on Tuesday in questioning whether the provision is actually a mandate, since the employer is given the option of paying a tax instead of providing health insurance coverage. As Kagan put it, "It's not saying you must do something that violates your religion. It's giving you a choice."
Although Clement pressed that the choice was a "penalty," even the chief justice — who joined with the court's four more liberal members in 2012 in upholding the Affordable Care Act's employer mandate — interjected that it was not a "penalty."
Kennedy then asked Clement this: What would your case be if paying the tax cost the same as providing health insurance with the required contraception coverage? Clement responded that "by not providing health insurance it would have a huge burden on my client and their ability to attract workers."
If the court decides that the law does not place a substantial burden on the companies' religious exercise, however, then the case ends there.
3. Let’s say the court finds the provision places a “substantial burden” on the companies. Does that provision advance a compelling state interest?
If a substantial burden is found to have been placed on the companies, the government must show that the burden is justified because it advances a "compelling state interest" — the highest sort of governmental aims.
Each side raised one primary issue here.
Clement argued that because the government has already provided exceptions for nonprofit corporations with religious-based objections and for grandfathering in currently existing plans without such coverage, the idea that this is a "compelling state interest" can't be taken seriously.
The government, in contrast, argued that part of the compelling state interest consideration had to be the impact on third-party individuals. As Verrilli argued in conclusion, "it w[ould] be the first time under the Free Exercise Clause or under RFRA in which this Court or any court has held that an employer ... may be granted an exemption that extinguishes statutorily-guaranteed benefits of fundamental importance."
4. Finally, let’s say the contraceptive coverage provision is considered to advance a compelling state interest. Is the provision the least restrictive option for meeting that interest?
One potentially less restrictive means came up at the arguments: how nonprofit corporations handle religious objections — the signing of a certification that the company will not be providing the coverage due to a religious objection.
Verrilli argued, however, that such a certification option likely would be challenged — just as nonprofit corporations have done with the accommodation.