By Marcia Coyle

The U.S. Supreme Court on Tuesday appeared split along ideological lines as it struggled with whether for-profit corporations and their owners can claim a religious exemption from the federal requirement that employee health insurance policies cover contraceptive services.

The justices heard 90-minute arguments in two consolidated cases: Sebelius v. Hobby Lobby and Conestoga Wood Specialties v. Sebelius. The cases comprise the second challenge to the Affordable Care Act to come before the high court. The first produced the 2010 landmark decision in National Federation of Independent Business v. Sebelius, which upheld the individual insurance requirement and an expansion of Medicaid.

As is often the case with issues that deeply divide the justices, the outcome may depend on the views of Justice Anthony Kennedy—who, while asking skeptical questions of both sides on Tuesday, failed to tip his hand either way.

Not surprisingly then, the dozens of special interest groups taking sides in these two cases read into the arguments what they hoped the outcome would be.

“I am cautiously optimistic that a majority of the court understands that a family’s choice to make a living shouldn’t mean giving up your religious freedom,” said Cathy Ruse, senior fellow for legal studies at the Family Research Council, a supporter of the religious claim.

“The justices acknowledged that one terrible choice for family businesses is dropping health insurance for all of their employees,” she said. “However, should the [coverage requirement] be upheld, businesses would face significant fines and employees would lose the plans and doctors they have come to know and trust.”

But Elizabeth Wydra, chief counsel of the Constitutional Accountability Center, an opponent of the claim, said, “As made clear from the first question asked by Justice [Sonia] Sotomayor, this case is about more than contraception. If Hobby Lobby prevails, businesses could try to avoid paying for medical treatments like vaccines and blood transfusions, and avoid important legal protections for family leave and against sex discrimination. This clearly concerned the justices, and Hobby Lobby’s lawyer, Paul Clement, really had no answer for it.”
 

The owners of Hobby Lobby, an arts and crafts store chain, and Conestoga Wood, a wood cabinet producer, claim that the contraceptive insurance requirement substantially burdens their own and their corporations’ exercise of religion in violation of the federal Religious Freedom Restoration Act (RFRA) and the First Amendment free-exercise clause.

RFRA states: “Government may substantially burden a person’s exercise of religion only if it demonstrates that application of the burden to the person … is the least restrictive means of furthering a compelling governmental interest.”

Tuesday’s lightening-quick arguments—a rematch between the 2010 Affordable Care Act opponents, former Bush Solicitor General Paul Clement of Bancroft for the corporate owners and Solicitor General Donald Verrilli Jr. for the government—focused primarily on RFRA.

Clement spent a good part of his 45 minutes fending off questions from the court’s three female justices. Sotomayor pressed him almost immediately on whether his claim was limited to sensitive materials, such as contraceptives, or included items like transfusions, vaccines or, for some religions, products made of pork.

The primary concern, he said, is whether there exists a substantial burden on religious exercise. Assuming the answer is yes, he continued, the next step is whether the government has a compelling interest and has chosen the least restrictive alternative. “And every case would have to be analyzed on its own.”

“So one religious group could opt out of this and another religious group could opt out of that and everything would be piecemeal and nothing would be uniform,” Justice Elena Kagan said.

Kagan later suggested that Clement’s interpretation of RFRA would essentially subject “the entire U.S. Code to the highest test in constitutional law—to a compelling-interest standard. So another employer comes in and that employer says, ‘I have a religious objection to sex discrimination laws’; and then another employer comes in, ‘I have a religious objection to minimum wage laws’; and then another, family leave; and then another, child labor laws.”

Clement responded that the courts can “separate the sheep from the goats.” He received a boost from Justice Samuel Alito Jr., who asked him how many claims involving the minimum wage have been brought and succeeded since RFRA was enacted. Clement answered that very few RFRA claims have been brought and few have succeeded.

Kennedy at one point tried to refocus the argument away from the employers to the employees, asking what if they disagree with their employer’s religious beliefs. “Does religion just trump that?” he asked.

Sotomayor, turning to one of the key issues in the case, asked whether a corporation exercises religion and, if it does, how does it do that. Clement replied that courts “every day” deal with issues of corporate intent or motivation and could deal as well with a corporation’s religious beliefs. But she asked, “Who says the corporation has that belief? How much of the business has to be dedicated to the religion?”

Courts can take the same approach they do in determining corporate intent, Clement said: They can question the sincerity of the corporation’s religious beliefs.

That presents a dangerous aspect of the owners’ arguments, Verrilli said when he took his turn at the lectern: the entanglement of government and religion.

“The Court’s got to decide what a person’s exercise of religion means. And that, it seems to me, would be such a vast expansion of what Congress must, could have thought it was doing in 1993, when it enacted RFRA—to say that for-profit corporations can make claims for religious exemptions to any laws of general application that they want to challenge.”

Chief Justice John Roberts Jr. suggested that “excessive entanglement” problems could be avoided “if you simply say that it’s in this type of Chapter S corporation that is closely held. Whether it applies in the other situations 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.”

Roberts and the court’s other conservative members focused most of their questions on Verrilli’s arguments. They challenged his claim that for-profit corporations could not even bring RFRA claims because they are not “persons” under the law, and questioned whether the government’s interest in requiring contraceptive coverage was compelling when it has granted exemptions to churches and religious nonprofits.

Verrilli replied that the government has always been solicitous of churches and that religious nonprofits did not win exemptions but rather an accommodation: If they file an objection with the government, a third-party insurer would provide the coverage.

Verrilli, in response to another Roberts question, agreed that a corporation, as a “person,” could bring race discrimination claims—but not, he stressed, exercise of religion claims.

“The reason we make the argument we do at the threshold about why you ought not recognize claims under RFRA for for-profit corporations is that they are going to predictively give rise to the kinds of issues you have in this case, in which the exemption is going to impose a burden on third parties or extinguish rights of third parties, employees or others,” he said.

To say that corporations “can’t even get their day in court, you’re saying something pretty, pretty strong,” Alito responded.

In the end, Verrilli urged the court to focus on “one fundamental point” if it considers ruling for the corporate owners. “You would be extinguishing statutorily guaranteed health benefits of fundamental importance to these employees, and that is something that this court has never done. And I submit that Congress can’t have thought it was authorizing it when it enacted RFRA in 1993.”