The U.S. Supreme Court’s ruling that Hobby Lobby Stores Inc. can refuse to cover some contraceptives for its workers opens the door for other closely-held companies to deny health benefits for their own employees, experts said.
More lawsuits may follow, as companies whose shares aren’t publicly traded use the court’s 5-4 decision to challenge federal requirements under the Patient Protection and Affordable Care Act or other laws, such as the Civil Rights Act. Publicly traded companies, which have diverse shareholders and can’t plausibly claim to adopt the personal views of their owners, aren’t affected, the court said.
The Supreme Court’s decision undermines a long-standing principle that corporations are separate entities from their owners, said Aaron Katz, a partner at Ropes & Gray in Boston. For workers at closely held companies, the ruling may mean that some health insurance benefits besides contraception would be covered at the whim of their bosses, said Sara Rosenbaum, a professor of health policy at George Washington University, although the justices said that isn’t their intent.
“There’s nothing about contraceptives other than personal opinion, personal moral belief, that distinguishes them from other guaranteed health benefits around which people may have personal moral beliefs,” Rosenbaum said in a phone interview before the decision.
“Why couldn’t a company’s owner say they’re morally opposed to treating patients with HIV? Morally opposed to blood transfusions? To immunizations?” she said.
The suit was brought by Hobby Lobby, a nationwide chain of 600 craft stores with at least 15,000 full-time employees based in Oklahoma City, and Conestoga Wood Specialties Corp., an East Earl, Pennsylvania-based company owned by a Mennonite family. They sued the Obama administration over a requirement under the Affordable Care Act that company health plans cover all U.S.- approved contraceptive drugs and devices without requiring cost- sharing by workers.
While both companies’ employee health plans do cover most contraceptives, they exclude two drugs that the companies’ owners believe cause abortions, Teva Pharmaceutical Industries Ltd.’s Plan B One-Step and Actavis Plc’s Ella, and some intrauterine devices.
Justice Samuel Alito, in an opinion for the majority of the court, said that the government’s requirements to cover birth control violate a 1993 law, the Religious Freedom Restoration Act. The court ruled that the law applies to corporations as well as individual citizens.
“This decision concerns only the contraceptive mandate and should not be understood to hold that all insurance-coverage mandates, e.g., for vaccinations or blood transfusions, must necessarily fall if they conflict with an employer’s religious beliefs,” wrote Alito. “Nor does it provide a shield for employers who might cloak illegal discrimination as a religious practice.”
Despite those limits, other corporations may try to test the boundaries, either by denying benefits and services to their workers or customers and inviting a lawsuit, or more likely seeking further court decisions allowing them leeway, Ropes & Gray’s Katz said.
© Copyright 2015 Bloomberg News. All rights reserved.