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Courts Split on Affordable Care Act Contraceptives Mandate

Within the last month, two federal courts of appeals have split on the legality of the mandate for plans to provide contraceptives under the Patient Protection and Affordable Care Act ("ACA").

ACA regulations require employer-offered health insurance plans to provide coverage for all-FDA approved contraceptive drugs and devices without any additional costs to employees.

Employers across the country have challenged this mandate on religious freedom grounds.  Under the Constitution and the Religious Freedom Restoration Act, the government may not interfere with the free exercise of religion.  Various corporate leaders argue that their respective religions prohibit them from providing access to certain contraceptive methods, including abortion and sterilization drugs.  The mandate forces these business owners to go against their own sincerely-held religious beliefs.

On Friday, July 26, 2013, the U.S. Court of Appeals for the Third Circuit upheld the mandate.  The Court, which covers Pennsylvania, New Jersey, Delaware, and the Virgin Islands, found that "for-profit, secular corporations cannot engage in religious exercise."  The Third Circuit also refused to attribute any of the owners' religious beliefs to the corporation itself, noting that incorporation creates "a distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created the corporation."  Based on these principles, the Court found the mandate to be constitutional.

In contrast, a June 27, 2013 decision from the U.S. Court of Appeals for the Tenth Circuit held that corporations could exercise religion freedoms.  The Tenth Circuit covers Oklahoma, Kansas, New Mexico, Colorado, Wyoming, and Utah.  In its opinion, the Court noted that Congress had not excluded corporations from the definition of "persons," with regards to religious freedom claims.  The Court also stated that the corporations involved in its case had demonstrated a likely violation of their religious freedoms.

Pennsylvania employers are required to follow the Third Circuit's opinion and, as a result, must provide health insurance coverage for contraceptives.  However, the split in opinions between the two courts suggests that this issue may ultimately be decided by the Supreme Court.  We will keep you posted on any updates regarding the contraceptives mandate.  Should you have any questions about this issue or any other ACA issue, please consult a member of the Firm's Labor & Employment Department.