Analysis Law and Policy

Latest Seventh Circuit Decision on Birth Control Benefit Paves Another Path to SCOTUS

Jessica Mason Pieklo

Another appellate court weighs in on the birth control benefit, and in doing so makes clearer the issues the Supreme Court will be asked to resolve. But a powerful dissenting opinion underscores the real issues.

Just days before the Obama administration announced new rules concerning the birth control benefit, a split 7th Circuit Court of Appeals granted an injunction allowing another for-profit business to opt out, putting to rest any lingering doubts that the issue will eventually land before the Supreme Court.

The Grote Family owns and operates Grote Industries, a for-profit business located in Madison, Indiana. Grote manufactures vehicle safety and lighting systems. The business employs 1,148 workers over a variety of locations. It’s a privately-held business with a self-funded insurance plan. The Grote’s are Catholic and claim to operate their business according to the “precepts of their faith.” This includes adhering to the Catholic Church’s teachings regarding “the moral wrongfulness of abortifacient drugs, contraception, and sterilization” and denying their employees contraception coverage in the company’s plan. When faced with complying with the birth control benefit the Grotes sued to block the mandate and enjoin the Obama administration from enforcing its penalty provisions. The district court denied their request, but in a 2-1 decision the Seventh Circuit Court of Appeals reversed the district court pending appeal, which means for now, the Grotes do not have to comply.

What’s noteworthy about the decision in this case is not the outcome, but the detailed and well-reasoned dissent crafted by Circuit Judge Ilana Rovner. In examining the question of what it means for the Grotes to run a for-profit business to run according to the precepts of their faith, Rovner first points out that the business itself has “stated no religious goals as part of its mission, it does not elect 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.” Because, Circuit Judge Rovner reasons, there is simply nothing from the perspective of the company that demonstrates any religious beliefs, let alone sincerely-held ones that belong to the company, it is impossible to imagine the company, as distinct from its owners the Grotes, has any religious interests or rights to assert at all.

Breaking down the distinction between the owners and the company even more, Circuit Judge Rovner states what should be obvious: the owners do not provide the contraception coverage, the company does. Even in self-funded health plans like the ones offered by Grote Industries, those premium payments come out of the company’s bank account and not the owners. The Grotes are simply not at liberty to “treat the company’s bank accounts as their own” unless they are also comfortable waiving the personal liability protections afforded to them under corporate law as well. The Grotes, Circuit Judge Rovner points out, are not in any way personally compelled to engage in any activity they disapprove of, they do not have to approve or endorse contraceptive use, and can even actively discourage the use of contraception by others.

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If we accept the Grotes’ argument then we must also consider whether their religious interests are burdened anytime an employee uses his or her Grotes Industries paycheck, or money from a health-care reimbursement account, to pay for contraception outright. That’s because the Grotes’ argument ignores completely that health insurance is an element of employee compensation. How an employee independently chooses to use that insurance is then arguably no different, from the law’s perspective, from the ways in which that employee decides to spend her take-home pay and that analysis does not change regardless if a health plan is self-funded or not.

This argument will be at the heart of any case the Supreme Court chooses to review on the birth control mandate: to what extent does an individual get to use their individual religious belief as a shield from obeying the law. In almost any other context the courts have been unanimous in holding business can’t use religion as a shield like this. Landlords have had to rent housing to unmarried couples despite personal religious objections to co-habtitation for example. This was, until the political controversy surrounding Obamacare, considered well-settled law. Clearly conservatives believe they have a political opening with the birth control mandate, and a sympathetic Supreme Court, but it’s worth remembering they thought the same thing with Obamacare generally and ultimately lost.

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