7th Circuit Enjoins Contraceptive Coverage Mandate

-Submitted by David Drumm (Nal), Guest Blogger

In Grote v. Sebelius, (7th Cir., Jan. 30, 2013), a 2-1 decision by the U.S. 7th Circuit Court of Appeals granted an an injunction, pending appeal, where the defendants are enjoined from enforcing the contraception mandate against the Grote Family and Grote Industries. Grote Industries is a privately held, family‐run business headquartered in Madison, Indiana. Members of the Grote Family are Catholic and operate their business according to the “precepts of their faith, including the Catholic Church’s teachings regarding the moral wrongfulness of abortifacient drugs, contraception, and sterilization.”

It is the well-reasoned dissent by Circuit Judge Ilana Rovner that I find most compelling.

Grote Industries is a for-profit business that manufactures vehicle safety and lighting systems and employs 1148 people at various locations. Circuit Judge Rovner notes that Grote Industries has “stated no religious goals as part of its mission, it does not select its employees, vendors, or customers on the basis of their religious beliefs, and it does not require its employees to conform their behavior to any particular religious precepts.” Circuit Judge Rovner “cannot imagine that the company, as distinct from the Grotes, has any religious interests or rights to assert here.”

Circuit Judge Rovner points out that it is the company, rather than the owners, that is obligated to provide the contraceptive coverage. The company has a legal identity that is different from the owners. Although the Grote Industries’ health plan is self-funded, lacking the buffer of an insurance company, the money that funds the health plan come from the company’s bank account, not the owners. Circuit Judge Rovner writes that the “Grotes are not at liberty to treat the company’s bank accounts as their own.”

Circuit Judge Rovner also cites the Supreme Court’s 9-0 decision in United States v. Lee (1982), that states:

When followers of a particular sect enter into commercial activity as a matter of choice, the limits they accept on their own conduct as a matter of conscience and faith are not to be superimposed on the statutory schemes that are binding on others in that activity.

Lee involved a member of the Old Order Amish who failed to withhold social security taxes from his employees or to pay the employer’s share of such taxes because he believed that payment of the taxes and receipt of benefits would violate the Amish faith. Chief Justice Burger wrote:

Granting an exemption from social security taxes to an employer operates to impose the employer’s religious faith on the employees. The tax imposed on employers to support the social security system must be uniformly applicable to all, except as Congress explicitly provides otherwise.

Circuit Judge Rovner lists other business activities, and their court precedence, that may conflict with the owners personal beliefs, including a landlord required to rent housing to an unmarried couple, a church‐affiliated school required to retain a schoolteacher after she gives birth to a child, and the obligation to provide fertility services to a lesbian couple.

The Grotes are not compelled to personally engaged in any activity they disapprove of, are not compelled to approve of contraceptive use, and are not refrained from discouraging the use of of contraception by others.

When an employee uses funds from their paycheck (or money from a healthcare reimbursement account) to purchase contraceptives, does this burden the Grotes’ religious rights? Some argue that once the money is transferred to the employee, any connection to the employer is severed. Circuit Judge Rovner asks us to consider that health insurance is an element of employee compensation.

H/T: Howard Friedman.