On Friday, July 27, 2012, Judge John L. Kane of the U.S. District Court for the District of Colorado granted a preliminary injunction against the enforcement of the Patient Protection and Affordable Care Act (popularly called “Obamacare”) against the plaintiffs in that action, various members of the Newland family who comprise the officers and Board of Directors of Hercules Industries, Inc., and the corporate plaintiff, Hercules Industries, Inc.
A copy of the decision has been made available by the Becket Fund for Liberty, here.
What does this preliminary injunction mean for this case, and potentially for the many other challenges to the “mandate” provisions of the Affordable Care Act?
The Newland action differs from many of the other legal challenges to the mandate that health insurance include coverage for women’s reproductive health care. The plaintiff Hercules Industries, Inc., is a Colorado “s-corp” or closely held corporation, owned by the members of the Newland family. While other actions have been brought by religiously affiliated colleges, individuals, and not-for-profits, Newland v. Sebelius is brought not only on behalf of the individual plaintiffs but also an incorporated, for-profit employer, engaged in a secular business. Because the employer in this case is a private business corporation, not a church or church-affiliated organization, the proposed accommodations which are being debated for the benefit of religious employers and religiously affiliated organizations would not be offered to Hercules Industries, Inc.
In granting the preliminary injunction, Judge Kane noted that he must be mindful of “the fundamental purpose of preliminary injunctive relief under our Rules of Civil Procedure, which is ‘to preserve the relative positions of the parties until a trial on the merits can be held.’” If the preliminary injunction was not granted, Hercules Industries, Inc., would be required to begin providing health insurance for women’s reproductive health care to its employees effective November 1, 2012. The preliminary injunction serves the purpose of maintaining the status quo: keeping the parties in the same position as they were at the beginning of the action, until the issues can be resolved.
The preliminary injunction was granted under the provisions of the Religious Freedom Restoration Act, not on a constitutional basis. The Court writes:
Because Plaintiffs’ RFRA challenge provides adequate grounds for the requested injunctive relief, I decline to address their challenges under the Free Exercise, Establishment and Freedom of Speech Clauses of the First Amendment. (Order, page 10)
Judge Kane raises, but does not yet decide, a point which may be crucial to the ultimate determination of this case: Can a corporation exercise religion? He writes:
These arguments pose difficult questions of first impression. Can a corporation exercise religion? Should a closely-held subchapter-s corporation owned and operated by a small group of individuals professing adherence to uniform religious beliefs be treated differently than a publicly held corporation owned and operated by a group of stakeholders with diverse religious beliefs? Is it possible to “pierce the veil” and disregard the corporate form in this context? What is the significance of the pass-through taxation applicable to subchapter-s corporations as it pertains to this analysis? These questions merit more deliberate investigation. (Order, page 12)
In granting the preliminary injunction, Judge Kane relied heavily on the fact that previously existing health insurance plans are “grandfathered” under the Affordable Care Act, and that as many as 191 million Americans belong to plans which predate the Act and are therefore not affected by it. Judge Kane reasoned that if so large an exception could be made to the requirement that women’s reproductive health care be covered by health insurance, then the Government’s interest in assuring universal coverage of women’s health care could not be so compelling that an exception could not also be made for the employees of Hercules Industries, Inc.
However, Judge Kane warned that the preliminary injunction does not enjoin enforcement of the preventive care coverage mandate against any other party, and applies only to the plaintiffs in this case.
The Court gave favorable note to some of the arguments made by plaintiff’s counsel which might surprise some of plaintiff’s supporters. Plaintiff’s counsel argued that the Government could simply pay directly (through tax funds) for contraceptives and other women’s health care, so that these services would be provided to women “for free,” rather than requiring the plaintiff and other employers to provide health insurance coverage which includes such care. While this argument is legally valid, since part of the issue in this case is whether the same public policy goal could be accomplished by other means, it is politically awkward. After all, many opponents of the mandate have been howling in indignation that women who seek to be insured for their reproductive health care actually want their birth control “for free.”
Plaintiffs propose one alternative, government provision of free birth control, that could be achieved by a variety of methods: creation of a contraception insurance plan with free enrollment, direct compensation of contraception and sterilization providers, creation of a tax credit or deduction for contraceptive purchases, or imposition of a mandate on the contraception manufacturing industry to give its items away for free. (Order, page 15)
While all except the last of these options might, indeed, be possible, they would not be likely to be politically acceptable to those who object to the mere existence of Planned Parenthood.
In Part Two of this article, I hope to bring you comments from some of the “Alliance Defending Freedom” attorneys and others interested in the issues raised, and only temporarily resolved, by this interesting case.