Friday, October 25, 2013

Sixth Circuit Court of Appeals Again Rejects Challenge to Contraceptive Mandate of the Affordable Care Act

Sixth Circuit Court of Appeals Again Rejects Challenge
to Contraceptive Mandate of the Affordable Care Act


      Yesterday, a unanimous panel of the Sixth Circuit Court of Appeals issued its decision in Eden Foods, Inc. v. Sebelius, No. 13-1677, 2013 WL 5745558 (6th Cir. Oct. 24, 2013), therein rejecting claims that the Contraceptive Mandate of the Affordable Care Act violates the religious rights of either the employer or of the shareholders of the corporate employer.  This decision follows upon the earlier holding of the Sixth Circuit in Autocam Corp. v. Sebelius, ___ F.3d ____, 2013 WL 5182544 (6th Cir. Sept. 17, 2013). 
     Michael Potter, identified as the Chairman, President and sole shareholder of Eden Foods, and Eden Foods itself sought exemption from the Contraceptive Mandate of the Affordable Care Act.  He and the corporation were denied a temporary injunction precluding enforcement of the obligations under the Mandate, and this appeal to the Sixth Circuit sought a reversal of that determination.  The Sixth Circuit held that order denying the issuance of a temporary injunction was correct.
      Rejecting the assertion that the obligation of compliance with the Mandate as imposed upon the corporation somehow imposes as well an obligation on Potter as the sole shareholder thereof, the Court wrote:
The Affordable Care Act’s contraceptive mandate imposes duties and potential penalties upon Eden Foods only, not upon Potter, despite his status as the sole shareholder of the corporation.  By incorporating his business, Potter voluntary forfeited his rights to bring individual actions for alleged corporate injuries in exchange for the liability and financial protections otherwise afforded him by utilization of the corporate form.  Adoption of Potter’s argument that he should not be liable individually for corporate debts and wrongs but still should be allowed to challenge, as an individual, duties and restrictions placed upon the corporation would undermine completely the principles upon which our nation’s corporate laws and structures are based.  Slip op. at 9
      With respect to a claim that the Mandate violates the Free Exercise rights of Eden Foods, a corporation, that may be addressed under the Religious Freedom Restoration Act, the Court noted that “[s]uch an assertion necessarily raises a threshold issue: ‘whether a for-profit secular corporation is able to engage in religious exercise under the Free Exercise Clause of the First Amendment and the RFRA,’” citing Conestoga Woods, 724 F.3d 377, 381 (3rd Cir. 2013).  Noting that Autocam had already held that a for-profit corporation “‘is not “person” capable of “religious exercise” as intended by RFRA,’” the Eden Foods court had no problem determining that the corporation of itself has no protected religious rights.

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