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Your Religion or Your Business


On July 27, an American court for the first time offered a tentative ruling on whether Obamacare outranks the religious rights of business owners. At issue is the Obamacare provision that requires companies with more than 50 employees to provide insurance coverage that includes contraceptives, abortion-related drugs, and sterilization. These services would be provided without cost-sharing: that is, employees who use those services would not need to share their cost directly. (In the lawsuit and this article, that provision is called the “Mandate.”)

In Newland v. Sebelius, a Catholic-owned business in Colorado (the Plaintiff) is objecting to the Mandate on religious grounds. The case is still pending, but Denver Judge John L. Kane has already struck a blow for religious rights. Pending a full trial, he granted a preliminary injunction to prevent the imposition of Obamacare upon the Plaintiff’s business. The injunction benefits only this one plaintiff, but it now becomes probable that other companies will seek similar relief on religious grounds.

Preliminary injunctions are not headline grabbers, but the ruling is significant in several ways. Such a move means the judge believes the Plaintiff meets four criteria: the case is likely to succeed on its merits; without the injunction, irreparable damage could well occur; the Plaintiff bears the greater balance of harms; and the injunction serves a public interest. The injunction is an indicator of how sound the judge believes the lawsuit to be.

Moreover, Judge Kane did not merely find in favor of the Plaintiff but stated, “there is a strong public interest in the free exercise of religion even where that interest may conflict with” other law.

The preliminary injunction should be encouraging news to the approximately two dozen similar cases currently challenging Obamacare. But there is a crucial difference between them and the Colorado suit: the others were brought by big Catholic institutions like the Archdiocese of New York and the University of Notre Dame. In Colorado, a comparatively small businessman is fighting to defend his religious rights as an employer and to keep his factories open.

The controversial Mandate is a political cornerstone of Obamacare, which cemented Obama’s support within his voter base of liberal women. One of the few forces still legally powerful enough to kick the foundation out from under Obamacare, however, may well be the demand for freedom of religion.

The Charges against the Government

Newland v. Sebelius was filed on April 30 in the U.S. District Court of Colorado [PDF]. The Plaintiff is a heating and air-conditioning equipment manufacturer called Hercules Industries, which is owned by a Catholic family called the Newlands. The family objects to providing insurance coverage for contraception and abortion-related drugs on several legal grounds.

First, the Obamacare Mandate is accused of violating the Religious Freedom Restoration Act of 1993. Based on the Free Exercise Clause in the U.S. Constitution, this federal law prevents other laws from obstructing a person’s free exercise of religion. Anyone who believes a law is obstructive can sue the government on a federal or a more local level. In Newland, the defendants named include “Kathleen Sebelius, in her official capacity as Secretary of the United States Department of Health and Human Services” and “Timothy Geithner, in his official capacity as Secretary of the United States Department of the Treasury.” Once sued, the government must prove the law serves a compelling public interest that cannot be satisfied in a less invasive manner.

Newland alleges other violations of Constitutional rights. It states,

Defendants’ actions [in mandating the insurance coverage] … violate the Plaintiffs’ right to the freedom of speech, as secured by the Free Speech Clause of the First Amendment to the United States Constitution, and their due process rights secured by the Fifth Amendment to the United States Constitution.

The government is also accused of violating the Establishment Clause of the First Amendment, which, as the Newland suit puts it, prohibits the creation of “any religion and/or excessive government entanglement with religion.” Although Obamacare allows exemptions for some religious circumstances — for example, if the primary purpose of an organization is religious — Newland argues that such exemptions themselves constitute an abuse and not a disentanglement.

The lawsuit claims,

Obtaining sufficient information for the Defendants to analyze the content of Plaintiffs’ sincerely held religious beliefs requires ongoing, comprehensive government surveillance that impermissibly entangles Defendants with religion.

Moreover, the exemptions violate due process as well, because Obamacare

vests Defendants with unbridled discretion in deciding whether to allow exemptions to some, all, or no organizations meeting whatever definition of ‘religious employers’ it decides to craft.

Various other malfeasance is alleged by Newland; for example, Obamacare is decried for bypassing the Administrative Procedure Act by not providing sufficient time for public input. But the Constitutional arguments are the strongest by far.

A Fascinating Glimpse

In arguing for the irreparable harm that Obamacare would inflict upon Hercules Industries, the lawsuit offers a fascinating glimpse into some of the Mandate damage that awaits the workplace.

By all accounts, Hercules seems to be a stable, responsible company that was established in 1962. Employees appear to be well treated.

The lowest paid employee at Hercules that is enrolled in the self-insured plan earns $21,000 per year. Only four such employees earn $22,070 or less. The median wage of health plan participants is $38,500 and their average wage is $50,213 (these figures are calculated without including the wages of Hercules’ owners).

In 2010, the national average wage was $41,673.83. Hercules has 265 full-time employees for whom it maintains a self-insured group plan in which the company “acts as its own insurer.” From descriptions of the coverage, it appears to be generous, but it shares costs of procedures with employees; and contraceptives, abortifacient drugs, and sterilization are not included.

Obamacare would require Hercules to add surgical sterilizations and

implantable “contraceptive” methods … which cost hundreds or thousands of dollars, as well as all FDA-approved “contraceptives” including those that act to destroy early embryos, as well as patient education and counseling in facilitation of the aforementioned.

The “services” would be added on a no-cost-sharing basis. This means that to fund them, the company would have no choice but to remove other services from coverage or to increase employee contributions to them, thus causing employees “harm.”

Ultimately, Hercules can choose to not comply with the Mandate by dropping health insurance for employees. At that point, it faces monetary penalties. The penalties “vary according to the complicated provisions” of Obamacare “but the fine is approximately $2,000 per employee per year.” Moreover, without this important employee benefit, Hercules would function at an extreme disadvantage in recruiting and retaining personnel. Clearly, the company wishes to continue providing insurance coverage.

But if Hercules continues its own coverage without providing services such as sterilization, then the “fine is approximately $100 per day per employee, with minimum amounts applying in different circumstances.” Non-compliance also triggers “a range of enforcement mechanisms … including but not limited to civil actions.”

The company may well be driven out of business.

Businessmen Have No Religious Freedom?

In the motion to have the Newland lawsuit dismissed and the preliminary judgment denied, lawyers from the federal government relied heavily on one argument. In essence, they argued that the family had relinquished its right to exercise religious beliefs when it entered the marketplace to conduct business. [PDF]

There is no freedom of religion in the workplace. In short, the federal government views freedom of religion not as an inalienable right but as a conditional one depending on a person’s circumstance. The government’s responding motion states, “Plaintiffs’ free exercise claim fails at the outset because for-profit, secular employers generally do not engage in any exercise of religion protected by the First Amendment.… By definition, a secular employer does not engage in any ‘exercise of religion.’” [PDF]

Department of Health and Human Services Secretary Kathleen Sebelius reiterated the position,

“‘This lawsuit was not brought by a religious organization. Rather, it was brought by a for-profit commercial enterprise whose purpose is to sell HVAC equipment,’ she said, adding that healthcare decisions should be between women and their doctors, not their employers.”

Of course, to be consistent, Sebelius would have to remove the employer entirely from the medical equation; instead, she is adamant about legally cementing him into the process when it comes to payment for medical services.

Attorney Matt Bowman, from the civil-rights group Alliance Defending Freedom, represents the Newlands. He countered,

There is no business exception in … the Free Exercise Clause. Nothing in the Constitution, the Supreme Court’s decisions, or federal law requires — or even suggests — that families forfeit their religious liberty protection when they try to earn a living, such as by operating a corporate business.… The government’s exclusionary attitude would push religion out of every sphere of life except the four walls of church. This is not the legal meaning of “free exercise.”


Newland v. Sebelius is the next battleground for those who oppose the Mandate. So far, media attention has focused on the opposition from high-profile Catholic institutions. Now Catholic businesses and laypeople are asking whether the government will let them obey their consciences.

Freedom of speech has not fared well in the commercial world. Perhaps freedom of religion will do better.

As Bowman recently stated,

This lawsuit seeks to ensure that Washington bureaucrats cannot force families to abandon their faith just to earn a living. Americans don’t want politicians and bureaucrats deciding what faith is, who the faithful are, and where and how that faith may be lived out.

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    Wendy McElroy is an author for The Future of Freedom Foundation, a fellow of the Independent Institute, and the author of The Reasonable Woman: A Guide to Intellectual Survival (Prometheus Books, 1998).