Third Circuit Denies Pennsylvania Business's Challenge To Contraception Mandate


As readers of this blog are surely aware, the Patient Protection and Affordable Care Act (PPACA) imposes a number of new obligations on employers and private health insurance plans. Effective January 1, 2013, most private employers with 50 or more employees must provide health insurance coverage for women’s preventative services, including reproductive health screenings and contraception, without charging a co-pay, deductible, or co-insurance. Failure to provide such coverage can lead to financial penalties of up to one hundred dollars per day per employee who is not provided with the required coverage. A limited exception is available for religious institutions, giving such employers the option of whether to cover contraception services. Over 60 lawsuits are pending around the country by for-profit companies and non-profits alike, challenging the constitutionality of the contraception requirement on religious grounds and seeking to block its enforcement.

Late last week, the Third Circuit Court of Appeals issued a ruling on one such challenge brought by a private family-owned business in Pennsylvania. The court, ruling in the case of Conestoga Wood Specialties Corp. v. Health and Human Services (pdf), held that a private employer cannot challenge on religious grounds PPACA’s contraception mandate, even if the business is owned and operated by a religiously devout individual. Specifically, the court rejected the business’s claim that the contraception rule violated its rights to the free exercise of religion under the First Amendment. In doing so, the Third Circuit concluded that the free exercise right is a “personal rights” that exists only for the benefit of human beings and not secular, profit-making business entities. Moreover, the court held that, because a corporation is legally recognized as having its own independent identity, the owners of a corporation cannot use the corporation as a vehicle for imposing their own personal religious beliefs on others.

The Third Circuit’s decision is in direct conflict with a recent ruling by the Tenth Circuit Court of Appeals on the same issue. The conflicting decisions among the circuit courts increase the likelihood that the U.S. Supreme Court will consider the constitutionality of the contraception mandate. We will keep you apprised of developments on this issue through this blog. In the interim, employers subject to PPACA should continue to provide insurance coverage for contraception without cost-sharing.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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