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Big Win for Religious, Closely-Held Corporations Under Obamacare

The U.S. Supreme Court released one of its biggest decisions since it struck down the Defense of Marriage Act one year ago, captioned Burwell v. Hobby Lobby Stores, Inc., 189 L. Ed. 2d 675 (U.S. 2014). In the first decision of its kind, the Court held closely-held corporations can exercise religion, are afforded religious freedom under the law, and are therefore not required to pay for employees’ birth control in the face of religious objections. To understand this, we need to turn back over 200 years.

Federal Courts Issue Conflicting Decisions on Affordable Care Act Subsidies

Executive Summary: On July 22, 2014, two different federal appeals courts issued conflicting decisions on the availability of subsidies for health insurance purchased by individuals on Exchanges established by the federal government under the Affordable Care Act (ACA). A three-member panel of the D.C. Circuit Court of Appeals held that the subsidy is only available for insurance purchased on an Exchange established by one of the 50 states. Accordingly, that court invalidated an IRS regulation that authorizes the subsidy also for insurance purchased on a federal Exchange. Halbig v. Burwell, (D.C. Cir. July 22, 2014). However, Fourth Circuit Court of Appeals reached the opposite conclusion, finding the language of the ACA ambiguous and deferring to the IRS interpretation. Thus the Fourth Circuit upheld the IRS regulation. King v. Burwell (4th Cir. July 22, 2014).

Health Plans That Intend to Drop Contraceptive Coverage Must Notify Plan Participants

In response to the recent U.S. Supreme Court holding in Burwell v. Hobby Lobby that closely held, for-profit entities with religious objections to certain aspects of the Affordable Care Act's (ACA) birth control requirements could avoid the mandate by invoking the Religious Freedom Restoration Act, the Department of Labor has released guidance to address this eventuality. In the latest set of Frequently Asked Questions (FAQs) on the ACA's implementation, the DOL explains that group health plans offered by closely held, for-profit businesses that intend to cease providing all or some contraceptive coverage must notify plan participants within 60 days after the adoption of a modification or change to the plan's coverage.

Supreme Court Returns to ERISA Statutory Basics, Rejects Moench Presumption: Implications for ESOP Trusts Holding Non-Publicly Traded Securities

The U.S. Supreme Court has unanimously decided that the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), does not contain a presumption of prudence for employee stock ownership plan (“ESOP”) fiduciary actions, rejecting the presumption adopted by many U.S. Courts of Appeals and returning to the plain terms of ERISA. Fifth Third Bancorp v. Dudenhoefer, No. 12-751 (June 25, 2014).

Democratic Lawmakers Introduce Measure to Counter Hobby Lobby Decision

As expected, Democratic members of the House and Senate have introduced legislation in response to the U.S. Supreme Court’s recent ruling in Burwell v. Hobby Lobby. The Court in this contentious decision held that closely-held for-profit entities with religious objections to certain aspects of the birth control mandate imposed by the Affordable Care Act could avoid the mandate by invoking the Religious Freedom Restoration Act (RFRA). As discussed in a press release on the new measure, the Protect Women’s Health from Corporate Interference Act of 2014 (H.R. 5051, S. 2578) would:

Supreme Court Axes "Presumption of Prudence" in ESOP Stock-Drop Cases

On June 25, 2014, the U.S. Supreme Court issued a decision that gives comfort to "stock-drop" plaintiffs and may cause shockwaves among employee stock ownership plan (ESOP) fiduciary committees. In Fifth Third Bancorp v. Dudenhoeffer,1 the Court held that ESOP fiduciaries are not entitled to any "presumption of prudence" in lawsuits challenging their decision to invest plan assets in company stock. Instead, ESOP fiduciaries "are subject to the same duty of prudence that applies to ERISA fiduciaries in general, except that they need not diversify the fund's assets."

Supreme Court Rules in Favor of Hobby Lobby, Opens Door to Religious Objections to Statutes Covering Employers

On June 30, 2014, the U.S. Supreme Court ruled that closely held, for-profit entities with religious objections to certain aspects of the birth control mandate imposed by the Patient Protection and Affordable Care Act ("the ACA") could avoid the mandate by invoking the Religious Freedom Restoration Act (RFRA).1 While the majority expressed intent to limit its holding to the facts of the cases before it, the decision's language may open the door for a variety of religious objections to generally applicable federal laws. Whether employers should actually raise those objections is discussed later in this article.

Impact of Hobby Lobby: Closely Held Corporations May Object to ACA’s Contraceptive Mandate

In a highly anticipated decision in Burwell v. Hobby Lobby, 573 U.S. ___ (June 30, 2014), the United States Supreme Court ruled that the contraceptive mandate of the Patient Protection and Affordable Care Act (ACA) as applied by the Department of Health and Human Services (HHS) to closely held corporations violates the Religious Freedom and Restoration Act.

Six reasons why Hobby Lobby does not spell “doom” for women

I was interviewed yesterday by Colin O’Keefe of LXBN-TV on the impact of the Supreme Court’s Hobby Lobby decision, and I did a “quick and dirty” post on the decision the day it was issued. Since that time, the decision has been sharply criticized in the traditional media and on social media.

Monthly Benefits Update - July 2, 2014

In Burwell v. Hobby Lobby, the Supreme Court held that regulations under the Affordable Care Act that require employer group health plans to provide contraceptive coverage violate the Religious Freedom Restoration Act (RFRA). The case came to the Court through a challenge to the requirement that employer group health plans provide certain preventive services, including contraception. RFRA generally provides that the government may not substantially burden a person’s right to exercise his or her religion. In the opinion, the Court reasoned that a “person” under RFRA includes closely held, for-profit corporations. Accordingly, the decision means that a privately held company no longer needs to provide contraceptive coverage as part of its group health plan in order to comply with the ACA’s preventive services coverage mandate, provided that the employer’s owner(s) have a religious objection to offering contraceptive coverage under the plan.