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Media Alerts - Conestoga Wood Specialties Corporation v. Secretary of the United States Department of Health and Human Services - Thi
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August 5, 2013
  Conestoga Wood Specialties Corporation v. Secretary of the United States Department of Health and Human Services - Thi
Headline: Do Religious Freedom Laws Free a Corporation from Complying with the Affordable Care Act?

Area of Law: Health Care Law and Constitutional Law

Issue(s) Presented:
(1) Must a corporation fully comply with the Affordable Care Act (ACA) even if certain requirements of the Act are at odds with the religious beliefs of all of the corporation's voting shareholders?

(2) Can a for-profit, secular corporation exercise religion as covered by the Free Exercise Clause of the First Amendment?

(3) Can a for-profit, secular corporation assert a claim under the Religious Freedom Restoration Act (RFRA)?

Brief Summary:
The Hahns, a Mennonite family, own one hundred percent of the voting shares in Conestoga Wood Specialties Corporation (Conestoga) - a cabinet-making corporation that employs 950 people. Since Conestoga has more than 50 employees, under the Affordable Care Act (ACA), it is required to provide its employees with "[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity." The Hahns' Mennonite faith condemns the destruction of a fertilized embryo. The Hahns alleged that by being required to provide health coverage that is at odds with their faith, they were being deprived of rights protected by the Free Exercise Clause of the First Amendment and the RFRA. The Hahns sought a preliminary injunction, which was denied by the district court.

The Third Circuit affirmed the district court's refusal to issue a preliminary injunction. The Court noted that when the Hahns formed the corporation Conestoga, they formed a separate legal entity apart from themselves. The Court explained that it was the corporation, and not the Hahns, that was forced to comply with the requirements of the ACA. Since the corporation was not a member of the Mennonite faith, protections accorded under the Free Exercise Clause and RFRA were not triggered.

Extended Summary:
In 2010, Congress passed the Patient Protection and Affordable Care Act. Among its requirements, the ACA provides that, as of August 1, 2012, employers with fifty or more employees must provide their staff with "[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity" unless the employer or health plan was exempt. Employers who did not comply with the mandate would incur a penalty of $100 per day per offending employee and would be open to suit by the plan participant or the Department of Labor.

Norman Hahn, Elizabeth Hahn, Norman Lemar Hahn, Anthony Hahn, and Kevin Hahn own 100 percent of the voting shares of Conestoga Wood Specialties Corporation - a Pennsylvania for-profit cabinet-maker that has 950 employees. The Hahns are practicing Mennonites. Their faith teaches that the termination of a fertilized embryo is sinful. As a result, they objected to the group health plan's provision of emergency contraception drugs (the "morning after pill") and ella (the "week after pill"). According to the complaint, the Hahns believe that intentionally participating in, paying for, facilitating, or otherwise supporting the taking of these drugs is immoral and sinful.

On January 1, 2013, Conestoga's group health plan came up for renewal, and since then, it has been subject to the mandate. Both Conestoga and the Hahns sought a preliminary injunction, relieving them from the burden of complying with the ACA's mandate. In the district court, Conestoga and the Hahns argued that the mandate infringed upon rights accorded by the RFRA and the Free Exercise Clause of the First Amendment of the United States Constitution.

To obtain a preliminary objection, the party seeking the injunction must show (among other things) that her claim has "a likelihood of success on the merits." Both the district court and the Third Circuit found that the Hahns' claim lacked merit. Therefore, their request for a preliminary injunction was properly denied.

In affirming the decision of the district court, the Third Circuit explained that it was unable to find a basis for concluding that the nature, history, and purpose of the Free Exercise Clause was to protect a for-profit, secular corporation. The court also noted that even if a company's religious exercise was an extension of its owners' religious exercise - the "passed through theory" - the Hahns' claim still lacked merit because by forming a corporation, they formed a separate legal entity from themselves. Since Conestoga was a separate legal entity from the Hahns, Conestoga - not the Hahns - was required to comply with the ACA.


For the full length opinion go to: http://www2.ca3.uscourts.gov/opinarch/131144p.pdf.

Panel: Circuit Judges Jordan, Vanaskie and Cowen

Argument Date: May 30, 2013

Argument Location:

Date of Issued Opinion: July 26, 2013

Docket No: 13-1144

Decided: Denial of Motion for Preliminary Injunction Affirmed


Counsel:

Counsel for Appellants- Charles W. Proctor, III, Esq. (Argued), Randall L. Wenger, Esq.

Counsel for Appellees- Michelle Renee Bennett, Esq., Alisa B. Klein, Esq. (Argued).

Counsel for Amicus on Behalf of Appellants- Angela C. Thompson, Esq., Travis S. Weber, Esq., Mailee R. Smith, Esq., Kimberlee W. Colby, Esq., Brendan M. Walsh, Esq., Deborah J. Dewart, Esq., Jason P. Gosselin, Esq., Richard M. Haggerty, Jr., Esq., Emily M. Bell, Esq.,

Counsel for Amici on Behalf of Appellees- Ayesha N. Khan, Esq., Gregory M. Lipper, Esq., Bruce H. Schneider, Esq., Lisa S. Blatt, Esq., Steven W. Fitschen, Esq., Charles E. Davidow, Esq., Daniel Mach, Esq., Thomas W. Ude, Esq.

Author of Opinion: Judge Cowen

Circuit: Third Circuit

Case Alert Author: Rosanne Breakenridge

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 08/05/2013 12:33 PM     3rd Circuit  

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