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From Health Law Daily, March 15, 2013

Court grants preliminary injunction against contraceptive mandate to a secular corporation that is an “instrument” of the owner’s religious beliefs

By Sarah E. Baumann, JD

A Michigan district court granted a preliminary injunction enjoining the government from enforcing the preventive services provision of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) against a secular, for-profit property management company and its owner and sole shareholder (Monaghan v Sebelius, March 14, 2013, Zatkoff, L). The court determined that the owner and his company raised serious questions going to the merits of the claim that the contraception mandate violated the Religious Freedom Restoration Act (RFRA) (P.L. 103-141) because it required them to violate their religious beliefs against the provision of contraception and related services. Although the court did not rule as to whether a corporation has a right to exercise religion, it found that the corporation was an instrument through which the owner expressed his religious beliefs.

Contraception mandate. PPACA requires employers with at least 50 employees to offer insurance coverage that includes preventive care services for women, including contraception. Although various regulations provide exceptions for religious employers, non-grandfathered secular employers are not exempt from the requirement. Employers who do not comply face financial penalties ranging from $100 per day per employee for failure to offer preventive services coverage to $2,000 per year per employee above a 30-employee threshold for failure to offer any health insurance coverage.

Monaghan and Domino’s. Thomas Monaghan was the owner and sole shareholder of Domino’s Farms Corporation (Domino’s), a secular, for-profit management company. Monaghan was a member of the Catholic Church who provided his tenants with a Catholic chapel offering daily mass services, a Catholic bookstore, a Catholic credit union, and food service providing Catholic menu options. Monaghan believed that the provision of contraception in all forms was immoral and violative of Catholic teachings. Monaghan and Domino’s estimated that if the corporation did not provide the required coverage, it would face penalties of approximately $200,000 per year. Monaghan and Domino’s did not wish to forgo offering coverage because it would limit their ability to compete with other companies and require employees to obtain expensive policies elsewhere.

Monaghan and Domino’s filed suit seeking a temporary restraining order (TRO), a preliminary injunction, and declarative relief from the contraception mandate. They alleged that the mandate violated the RFRA, the Free Exercise, Free Association, Establishment, and Free Speech Clauses of the First Amendment, and the Administrative Procedures Act (APA) (P.L. 79-404). A Michigan district court granted the TRO on December 30, 2013.

Grant of injunction. In ruling on the preliminary injunction, the court addressed only the RFRA claim. It refrained from ruling as to whether Domino’s, as a secular, for-profit corporation, could “exercise” religion within the meaning of the RFRA. However, it determined that Domino’s was a closely-held corporation that was an instrument through which Monaghan expressed his religious beliefs. It emphasized that Monaghan was the “sole shareholder, director, and decision-maker,” and provided examples as to how he incorporated his Catholic beliefs into the corporation’s daily operations. The court then determined that the mandate was a substantial burden on both Monaghan and Domino’s. In rejecting the government’s argument that any burden on Monaghan was attenuated and insubstantial, the court stressed that Monaghan did not argue that the eventual use of contraception violated his religious beliefs; instead, he argued, and provided religious support for the proposition, that the mere provision of contraception was immoral. The pressure to modify his behavior to violate his religious beliefs, coupled with serious financial penalties, created a substantial burden on Monaghan and Dominos’s. The court therefore determined that Monaghan and Domino’s claims, if not substantially likely to succeed on the merits, at least raised serious questions going to the merits.

The court then addressed other issues related to the preliminary injunction and determined that Monaghan and Domino’s would suffer irreparable harm, that the grant of an injunction would not cause substantial harm to others, and that the public had an interest in ensuring that Monaghan’s and Domino’s rights weren’t violated.

The case number is 12-15488.

Attorneys: Richard Thompson (Thomas More Law Center) for Domino's Farms Corporation; Bradley P. Humphreys, U.S. Department of Justice, for Kathleen Sebelius, U.S. Department of Health and Human Services, Secretary of Labor Hilda L. Solis, U.S. Department of Labor, Timothy Geithner, U.S. Department of Treasury.

Companies: Domino's Farms Corporation

MainStory: TopStory HealthReformNews MichiganNews

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