Catholic Business Gets Obamacare Injunction

CHICAGO (CN) - A divided panel of the 7th Circuit enjoined a provision of health care reform that forces employers to cover contraception for workers.

Korte & Luitjohan Contractors, a construction business in southern Illinois that employs 90 people, filed suit on Oct. 9, 2012.

Its owners, Cyril and Jane Korte, are Roman Catholic took issue with the Patient Protection and Affordable Care Act because one of its provisions requires businesses to buy health insurance that covers contraceptives and sterilization at no cost to employees.

The Kortes claimed the mandate violates their rights under the Religious Freedom Restoration Act; the free exercise, establishment and free-speech clauses of the First Amendment; the due process clause of the Fifth Amendment; and the Administrative Procedure Act.

They took their case to the federal appeals court after a federal judge refused to grant them an injunction on Dec. 14.

A three-judge panel voted 2-1 to grant the injunction Friday.

"The Kortes contend that the contraception mandate substantially burdens their exercise of religion by requiring them, on pain of substantial financial penalties, to provide and pay for an employee health plan that includes no-cost-sharing coverage for contraception, sterilization, and related medical services that their Catholic religion teaches are gravely immoral," according to the unsigned order. "They further contend that the mandate fails RFRA's strict - scrutiny requirement because the government's interest in making contraception and sterilization accessible on a cost - free basis is not sufficiently strong to qualify as compelling, and that coercing religious objectors to provide this coverage is not the least restrictive means of achieving that objective. They point out that some health plans are either grandfathered or exempt from the mandate, illustrating that the interest served by the mandate is far from compelling. And they argue that the government has other methods of furthering its interest in free access to contraception without imposing this burden on their religious liberty - for example, by offering tax deductions or credits for the purchase of contraception or incentives to pharmaceutical companies or medical providers to offer the services.

"In response, the government's primary argument is that because K & L Contractors is a secular, for-profit enterprise, no rights under RFRA are implicated at all. This ignores that Cyril and Jane Korte are also plaintiffs. Together they own nearly 88% of K & L Contractors. It is a family-run business, and they manage the company in accordance with their religious beliefs. This includes the health plan that the company sponsors and funds for the benefit of its nonunion workforce. That the Kortes operate their business in the corporate form is not dispositive of their claim. See generally Citizens United v. Fed. Election Comm'n, 130 S. Ct. 876 (2010). The contraception mandate applies to K & L Contractors as an employer of more than 50 employees, and the Kortes would have to violate their religious beliefs to operate their company in compliance with it."

Judges Joel Flaum and Diane Sykes formed the majority, spurring a dissent from Judge Ilana Diamond Rovner.

Stating that the Kortes were unlikely to succeed on the case's merits, Rovner also said she was skeptical that the Kortes needed an injunction to avert actual harm.

"First, the insurance plan currently in effect for their company's non-union employees, which plan the company voluntarily entered into, already covers the relevant contraceptive services," Rovner wrote. "The Kortes aver that they were unaware of this fact until shortly before they filed this litigation. The limited record before us does not reveal how long this has been going on, nor does it tell us what steps, if any, the Kortes took in the past to determine what services would be covered by the insurance their firm acquired for its non-union employees. I accept that their prior, inadvertent failure to act in compliance with their professed religious beliefs does not necessarily defeat the claims that they are pursuing in this litigation. See Grayson v. Schuler, 666 F.3d 450, 454 (7th Cir. 2012) ("a sincere religious believer doesn't forfeit his religious rights merely because he is not scrupulous in his observance"). But the fact that the Kortes' company is already voluntarily (if inadvertently) paying for the type of insurance coverage to which they object - for at least the past year, and possibly longer - suggests that they will not be irreparably harmed by continuing to pay for the same coverage in compliance with the Affordable Care Act while this appeal is being resolved. Second, the regulations imposing the insurance mandate were issued in August 2011. As of that time, the Kortes knew that their company would be required to fund insurance coverage that included contraceptive services. Yet, they waited for more than a year to file this suit and seek a preliminary injunction relieving their firm of the duty to comply with the statute and the implementing regulations. If the insurance mandate poses as dire of a choice as the Kortes aver that it does (to act in violation of their religious beliefs, or pay a hefty fine for failing to comply with the statutory mandate), then they were obliged to take more prompt action than they did. Their belated discovery that their firm was already voluntarily providing to its employees coverage for services they claim they cannot countenance, coupled with their tardy decision to file suit seeking injunctive relief relieving their firm from the insurance mandate, suggests that they will not be irreparably harmed if they are denied preliminary relief while the merits of this appeal are being resolved."

The ruling prohibits the government from enforcing the health care mandate against the Kortes until the case has been decided.

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