United States Supreme Court Issues Decision in Burwell v. Hobby Lobby

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On June 30, 2014, the United States Supreme Court issued its opinion in Burwell v. Hobby Lobby.


In this much-anticipated decision, the Supreme Court determined that closely-held corporations are not required to provide contraceptive coverage without cost-sharing requirements as part of their group health plans, as is required by the Affordable Care Act (“ACA”) if doing so would violate the sincerely held religious beliefs of the owners of the corporation. This article provides background on the relevant requirements of the ACA, discusses the issues before the Supreme Court, and provides action items for employers and administrators of group health plans.


Under the ACA, employers with 50 or more full-time employees are required to provide group health insurance coverage. In order to fully comply with the ACA, the group health insurance must provide preventive care and screening to women without any cost-sharing requirements. The ACA does not specifically define what constitutes “preventive care.” The interpretation of this term has been left to the Health Resources and Services Administration (“HRSA”), which is a division of the Department of Health and Human Services (“HHS”). HRSA has issued regulations stating that preventive care includes all Food and Drug Administration (“FDA”) approved forms of contraception.

Certain employers are exempted from the requirement of providing contraceptives free of cost-sharing as part of their group health plans. Grandfathered plans are not required to comply with this requirement. Religious employers, such as churches, are exempted from the contraceptive mandate. HHS has also created an exemption through which certain “eligible organizations” may receive an accommodation which allows them to forgo providing contraceptives as part of their group health plans. However, in order to receive this eligible organization accommodation, an employer must establish that it is a non-profit entity which holds itself out as a religious organization and opposes providing contraceptives due to religious beliefs. Such employers are required to complete a self-certification process with HHS. If an employer receives this accommodation the group health plan must still provide contraceptives to women with no cost-sharing, but the cost for such services is shifted from the employer to the plan’s third-party administrator or insurer.

Burwell v. Hobby Lobby: The Issues and Opinion

In Burwell v. Hobby Lobby, owners of closely-held corporations with strong religious beliefs brought suit challenging the requirement that their group health plans provide coverage for specific FDA-approved contraceptives. These corporations are structured as for-profit entities with non-grandfather health insurance and, therefore, could not qualify for a previously established exemption to the contraceptive mandate. The employers did not object to providing a majority of the contraceptives; however, they did object to four particular contraceptives which contradicted with their religious beliefs.

The Supreme Court evaluated whether requiring these closely-held, for-profit corporations to provide health insurance coverage for these four methods of contraception violated the corporation’s rights under the Religious Freedom Restoration Act (“RFRA”). RFRA is a federal law which prevents the federal government from imposing a substantial burden on a person’s exercise of religion, even if that burden results from a law that is applied to all people regardless of their particular religious beliefs. Under RFRA, the federal government may only impose such a burden on a person’s exercise of religion if the law at issue relates to a compelling governmental interest and is the least restrictive means of advancing that interest.

The United States Supreme Court found that the protections of the RFRA extend to the for-profit, closely-held corporations. In reaching this determination, the Court stated that under current corporate law, corporations may be formed for any lawful purpose, which may include making money while also observing and advancing sincerely held religious beliefs. The Supreme Court determined that the requirement that closely-held corporations with religious beliefs provide contraceptive coverage as part of their group health plan imposes a substantial burden on those corporations because failure to comply with the ACA requirements can result in high-dollar penalties for employers.

Next, the court evaluated whether the contraceptive mandate was the least restrictive means of achieving the compelling interest of providing preventive care and screening to women. The Supreme Court concluded that other, less restrictive methods of advancing this goal exist. In reaching this decision, the Court placed a great amount of emphasis on the eligible organization accommodation established by HHS, as is discussed in detail above. Thus, the Supreme Court ultimately concluded that the closely-held, for-profit corporations are not required to provide any contraceptive coverage to which they object on the basis of their sincere religious beliefs as part of their group health plan coverage. The Supreme Court’s ruling went beyond the requested relief which related to only four specific contraceptives.

It is important to note that the Supreme Court’s decision in this case only applies to closely-held corporations with owners whose sincere religious beliefs are violated by the contraceptive mandate. Therefore, whether publicly held corporations may be exempted from providing contraceptives as part of their group health plans has not been directly addressed. Further, the Supreme Court limited its decision in Burwell v. Hobby Lobby to only apply to contraceptives and did not extend it to other medical treatments or services, such as vaccinations or blood transfusions, which may also be objected to as violating a person’s sincere religious beliefs.

Action Items

While the decision in Burwell v. Hobby Lobby appears to have somewhat of a limited impact, employers with sincere religious objections to the ACA contraceptive mandate who did not previously qualify for exemptions as a religious organization or an eligible organization should review their group health plans and corporate documents to determine if they will now be relieved of an obligation to provide contraceptives which violate their religious beliefs. Also, employers and plan administrators should continue to monitor court decisions and regulations issued by HHS regarding the contraceptive mandate. While not specifically decided in the case, the Supreme Court’s reliance on HHS’s eligible organization accommodation as an example of a less restrictive alternative may suggest that new regulations expanding this accommodation or creating a similar exemption for closely held, for-profit corporations may be issued in the future.

On July 17, 2014, the U. S. Department of Labor released an FAQ regarding required disclosures with respect to changes in overages for preventive services including reduction or elimination of contraceptive coverage in an ERISA-covered health plan. http://www.dol.gov/ebsa/faqs/faq-aca20.html. The FAQ specifies that the plan’s Summary Plan Description must describe the extent of the limitation or exclusion of coverage. For plans that reduce or eliminate coverage of contraceptive services after having provided such coverage, expedited disclosure requirements for material reductions in covered services or benefits apply which generally require disclosure not later than 60 days after the date of adoption of a modification or change to the plan.

Fraser Stryker is a leader in employee benefits and labor and employment law. Attorneys in the Firm’s Employee Benefits & ERISA Practice Group advise individuals, business entities, governments, and nonprofit/tax-exempt organizations on a wide variety of employee benefits matters and transactions. Fraser Stryker works with employers to implement and maintain employee benefit plans that help attract and retain top talent.

Attorneys in the Firm’s Labor & Employment Practice Group advise employers on current legal issues and provide practical solutions to avoid legal problems which may arise in the future. For more information, please contact an attorney in the Employee Benefits & ERISA Practice Group, or an attorney in the Labor & Employment Practice Group, Kate Dittrick, Sarah (Sally) McGill, or Rhianna Kittrell.

This article has been prepared for general information purposes and (1) does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney. Always seek professional counsel prior to taking action.

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