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Who is Free to Exercise Religion?
Conestoga Wood, Hobby Lobby, and the HHS Mandate



September 3, 2013


The battle for religious freedom continues as two federal courts of appeal have come to opposite conclusions regarding whether for-profit companies can claim religious liberty protections. All for-profit and most non-profit organizations in the United States continue to be impacted by the legal requirement that was established by a provision of the Patient Protection and Affordable Care Act of 2010, and incrementally clarified by regulations from the Department of Health and Human Services, which has come to be known as the HHS Mandate. The HHS Mandate requires that employers who offer health insurance include, at no cost to employees, the full range of FDA-approved contraceptive drugs and devices, including surgical sterilizations as well as abortion-inducing drugs and devices such as ellaOne, Plan B, and IUDs. Providing this sort of insurance coverage is at odds with the moral values and religious convictions of many U.S. citizens and business owners, especially Catholics.


On July 26, 2013, a three-judge panel of the Third Circuit Court of Appeals based in Philadelphia ruled that Conestoga Wood Specialties, a for-profit cabinet-making enterprise owned by a Mennonite family in Pennsylvania, has no grounds to invoke the First Amendment’s protection of religious freedom or the Religious Freedom and Restoration Act of 1993 (RFRA) against the coercive demands of the HHS Mandate.


On June 27, 2013, in a separate case, the full (en banc) Tenth Circuit Court of Appeals based in Denver had overturned a lower court’s denial of injunctive relief from the Mandate, affirming the likelihood of success of the claim by for-profit Hobby Lobby Stores, Inc. The company continues to argue that the HHS Mandate constitutes a substantial burden on the free exercise of religion. This decision is at odds with the Third Circuit panel’s decision in the Conestoga case. The result is a potential opportunity to take the question to the Supreme Court if the full Third Circuit confirms the panel’s decision.


The conflicting decisions reflect differing interpretations of the identity, purpose, and scope of business entities and the relationship of those entities to their owners and to religious exercise. The Third Circuit’s decision concludes that “the law has long recognized the distinction between the owners of a corporation and the corporation itself. A holding to the contrary—that a for-profit corporation can engage in religious exercise—would eviscerate the fundamental principle that a corporation is a legally distinct entity from its owners.”[1] The two-judge majority held that “the Hahn family chose to incorporate and conduct business through Conestoga” and “the free exercise claims of a company’s owners cannot ‘pass through’ to the corporation.”[2] Simply put, your individual values, conscience, and religious convictions are irrelevant if you want to own and operate a business. If a conflict arises between your beliefs and legal regulations, check your religion at the door or get out of profit-making business.


The Tenth Circuit had affirmed the stark opposite in Hobby Lobby Stores, Inc. v. Sebelius: It determined that Hobby Lobby Stores, Inc. and co-plaintiff Mardel, Inc. are “entitled to bring claims under RFRA, have established a likelihood of success that their rights under this statute are substantially burdened by the contraceptive-coverage requirement, and have established an irreparable harm.”[3] The Third Circuit, though it came to the opposite conclusion, nonetheless acknowledged the weight of the Tenth Circuit’s opinion in a footnote: “the Court of Appeals for the Tenth Circuit, in an eight judge en banc panel, in six separate opinions, recently held that for-profit, secular corporations can assert RFRA and free exercise claims in some circumstances.”[4]


The Tenth Circuit addressed in great detail the question of whether for-profit businesses can invoke religious freedom protections. In short, any organization can invoke the RFRA and the First Amendment regardless of whether it is a nonprofit. Religious protections can extend to for-profits because religious exercise is not limited to tax status; it is afforded to all persons, including both individuals and corporate entities. This conclusion contrasts with the way the government has defined “religious employers” and “religious organizations” in the Final Rule governing the HHS Mandate, since either designation explicitly requires that the entity be “a nonprofit organization described in section 6033(a)(1) and (a)(3)(A)(i) or (iii) of the Code.”[5] The actual text of the Hobby Lobby decision conveys the inadequacy and injustice of the “nonprofit” definition of religious employer and religious organization in the HHS Mandate Final Rule:

 

We thus turn to the question of whether Hobby Lobby, as a family owned business furthering its religious mission, and Mardel, as a Christian bookstore, can take advantage of RFRA’s protections.

The government makes two arguments for why this is not the case. First, . . . [the government] argues that, as a matter of statutory interpretation, RFRA should be read to carry forward the supposedly preexisting distinction between non-profit, religious corporations and for-profit, secular corporations. Second, the government asserts that the for-profit/non-profit distinction is rooted in the Free Exercise Clause. It suggests Congress did not intend RFRA to expand the scope of the Free Exercise Clause. The government therefore concludes RFRA does not extend to for-profit corporations.

We reject both of these arguments. First, we hold as a matter of statutory interpretation that Congress did not exclude for-profit corporations from RFRA’s protections. Such corporations can be “persons” exercising religion for purposes of the statute. Second, as a matter of constitutional law, Free Exercise rights may extend to some for-profit organizations.

. . .

[T]he next question is whether Congress intended to exclude for-profit corporations, as opposed to non-profit corporations, from RFRA’s scope. Notably, neither the Dictionary Act nor RFRA explicitly distinguishes between for-profit and non-profit corporations; the Dictionary Act merely instructs that the term “persons” includes corporations.

. . .

In conclusion, the government has given us no persuasive reason to think that Congress meant “person” in RFRA to mean anything other than its default meaning in the Dictionary Act—which includes corporations regardless of their profit-making status.[6]

 

The government continues its attempt to create a division between religious “worship” and “practice” which is foreign to the very core of Christian faith: “For as the body apart from the spirit is dead, so faith apart from works is dead.”[7] The Third Circuit decision even seems to imply that emphasizing a legal distinction between individuals and corporations is more fundamental than protecting religious freedom. Yet if Conestoga Wood Specialties were allowed to exclude morally objectionable forms of insurance coverage from the policy it offers employees, the company would remain incorporated and clearly distinct in its legal and financial liabilities from the individuals of the Hahn family who own and run it. The legal distinction would remain unscathed. But forcing the Hahns to act in a manner contrary to their religious faith in how they run their company “would eviscerate the fundamental principle”—to use the Third Circuit’s terminology—of the free exercise of religion.


The HHS Mandate’s restrictive definition of “religious” remains an unjust infringement upon religious liberty. The Tenth Circuit’s 6-2 majority in Hobby Lobby v. Sebelius offers hope for lasting success; the Third Circuit’s 2-1 majority in Conestoga Wood v. Sebelius reminds us that the stakes are high and the battle must continue. Conestoga Wood Specialties has not given up: they have asked the Third Circuit Court to rehear the case as a full panel of judges. The National Catholic Bioethics Center has signed on to eleven amicus briefs in support of claims against the unjust provisions of the HHS Mandate.


John A. Di Camillo, Be.L



[1]
U.S. Third Circuit Court of Appeals, Conestoga Wood Specialties v. Sebelius, No. 13-1144 (3rd Cir., July 29, 2013), p. 30.

[2] Conestoga Wood Specialties v. Sebelius, p. 28.

[3] Hobby Lobby Stores, Inc. v. Sebelius, p. 7.

[4] Conestoga Wood Specialties v. Sebelius, p. 20.

[5] Department of Health and Human Services, “Coverage of Certain Preventive Services Under the Affordable Care Act,” Final Rules, 78 Fed. Reg. 39870 (July 2, 2013), http://www.gpo.gov/fdsys/pkg/FR-2013-07-02/pdf/2013-15866.pdf.

[6] Hobby Lobby Stores, Inc. v. Sebelius, p. 25-35.

[7] Jas 2:26.