Two brothers-turned-business-partners, Philip and Francis Gilardi, never imagined that their self-built company would present them with an unfortunate Hobson’s choice that would garner national attention. The two Ohioans, who started a fruit and vegetable distribution company from the ground up in 1988, have recently been troubled by the intermingling of the laws that govern them—namely the Affordable Care Act (née: Obamacare)—and the religion that guides them—Roman Catholicism. The Gilardis have to make a decision: provide health coverage that includes copay-free birth contraceptives to their employees—as mandated by the 2010 health care reform—or stand firm in their faith, which condemns birth control and practices, and face a $14 million fine.
The Gilardis are not the only religious business owners troubled by the implications that the healthcare mandate will have on either their livelihood or their moral grounding. According to The National Women’s Law Center, eighty-eight lawsuits have already been filed regarding the issue.
The Gilardis have to make a decision: provide health coverage that includes co-pay free birth contraceptives to their employees—as mandated by the 2010 health care reform—or stand firm in their faith, which condemns birth control and practices, and face a $14 million fine.
Of the cases filed, the results have been somewhat unpredictable, with lower courts ruling on both sides of the issue. The Supreme Court has recently granted certiorari to two very similar cases: one stemming from the U.S. Court of Appeals for the Tenth Circuit, which ruled that religious beliefs can be exercised by profit-making businesses, and can thus be shielded from the healthcare obligations; and a case from the U.S. Courts of Appeal for the Third Circuit, which decided in favor of exposing the companies to the mandate.
The Gilardis’ case reached the U.S. Court of Appeals for the D.C. Circuit this fall and divided the three-judge bench when its ruling was handed down. In the majority opinion, Judge Janice Rogers Brown touched on the common reasoning (pdf) given by the government for its refusal to exempt incorporated businesses from the troublesome provision of the mandate when she wrote, “A parade of horribles will descend upon us, the government exclaims, if religious beliefs could serve as a private veto for the contraceptive mandate.” With support taken from the 2006 Supreme Court decision in Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, the opinion goes on to denounce and discredit this government mentality of “[i]f I make an exception for you, I’ll have to make an exception for everybody, so no exceptions.”
While this discussion is indeed central to the issue, and while Judge Brown may have rooted her narration of this topic with ample legal precedent and well-established Constitutional principles, this analysis was not the central focus of the court’s opinion. The major focus of the D.C. court’s opinion was also the one that so uniquely split the bench: the difference in rights held by incorporated and unincorporated businesses, and whether it was justified in this situation.
“If I make an exception for you, I’ll have to make an exception for everybody, so no exceptions.”
It is not in dispute that individual citizens of the United States may exercise a right to religious freedom. It follows, then, that any individual who chooses to run his or her company as a sole proprietorship would also carry this right, and would therefore have a valid challenge to the healthcare mandate as a free-exercise claim.
But should business owners such as the Gilardis lose that right by taking advantage of state incorporation law? Judge Brown’s opinion criticizes this view, stating that it provides individuals with “no corporate analogue” and it simply allows the right to disappear into thin air. Summing up the issue that lay before her and the rest of the bench, Judge Brown wrote:
The query is simple: do corporations enjoy the shelter of the Free Exercise Clause? Or is the free-exercise right a “purely personal” one, such that it is “unavailable to corporations and other organizations because the ‘historic function’ of the particular guarantee has been limited to the protection of individuals?”
In her analysis of the matter, the judge looked to the “nature, history, and purpose” of the Constitution’s Free Exercise Clause. Judge Brown’s interpretation of the clause, as well as the Religious Freedom Restoration Act of 1993—which prohibits the government from “substantially burden[ing] a person’s exercise of religion”—led the issue to turn on the definition of the term “person.” The court eventually determined that the Gilardis’ company was not a “person” and therefore could not exercise a religious belief. In turn, it could not challenge the mandate on grounds that it goes against the business’s religion.
Senior Judge Harry Edwards agreed with this part of the Judge’s opinion, but Senior Judge Raymond Randolph put forth a dissent, stating that it was this analysis was not necessary in the case.
“[T]he mandate is unquestionably underinclusive.”
The outcome of the case, however, was dependent upon the latter half of Judge Brown’s opinion. It was decided that strict scrutiny was the appropriate level of judicial review for the government’s actions, and that the mandate’s under-inclusiveness implied that the regulation was not narrowly tailored. This failure to meet the Constitutional burden, Judge Brown wrote, “raises serious questions about the efficacy and asserted interests served by the regulation. In this case, small businesses…and an array of other employers are exempt either from the mandate itself or from the entire scheme of the Affordable Care Act. Therefore, the mandate is unquestionably underinclusive.”
Because the healthcare mandate was determined to be so egregiously underinclusive with its carve-outs as to ignore the millions of people whose employers narrowly escape the dimensions of the mandate, it could not be said to further the necessary compelling governmental interest. And the Gilardi’s companies, it was determined, should very well be one of those employers.
All three judges unanimously ruled that because the Gilardi brothers own small, closely held corporations, they have the right to challenge the mandate on religious exercise grounds in that professional capacity. With the right-to-sue issue decided in their favor, the brothers can mark this one down as a “win”… for now. The judges were ultimately split as to the probability of the Gilardis’ challenge winning in the end, but with two of the three judges declaring the likelihood of a decision in the brothers’ favor, they will be temporarily shielded from the mandate.
The two recently granted cases awaiting oral argument in the Supreme Court will likely be heard in the spring, and many employers and employees alike will be waiting to see how the outcome of this constitutional issue will affect these intensely personal aspects of their lives.