7th Circuit grants injunction in Affordable Care Act lawsuit

By Bethany Krajelis | Jan 2, 2013

A split panel of the U.S. Court of Appeals for the Seventh Circuit on Friday handed a couple of Highland business owners a victory in their religious challenge to the Affordable Care Act (ACA).

The federal appellate court granted the emergency motion for an injunction that Cyril and Jane Korte and their company, Korte & Luitjohan Contractors (K&L), filed on Dec. 18, four days after a district court judge denied their previous request.

The court’s 2-1 decision will temporarily prevent the federal government from enforcing the ACA’s “final rule,” which requires employers to provide employee health benefits that include coverage for contraceptives.

This rule applies to health plans that started after August 1. The Kortes sought an emergency motion because the renewal date for K&L’s health plan is Jan. 1.

The couple in October sued three federal agencies, as well as their respective heads, claiming that the mandate violates the Religious Freedom Restoration Act (RFRA) and the Free Exercise, Establishment and Free Speech clauses of the First Amendment.

They allege that the mandate puts them in the position of having to choose between complying with something that goes against their religious beliefs as devout Catholics or paying fines they assert would have a crippling impact on K&L.

In response to the Kortes’ emergency motion, the federal government emphasized the fact that the company’s current health plan includes coverage for contraceptives and that an emergency injunction, would essentially allow the plaintiffs to terminate current coverage.

The Kortes alleged in earlier court filings that providing this coverage was an error they didn’t discover until late this summer.

On Friday, a 2-1 panel of the federal appeals court sided with the Kortes. U.S. Judges Joel Flaum and Diane Sykes made up the majority and Judge Ilana Diamond Rovner dissented.

“We conclude that the Kortes have established both a reasonable likelihood of success on the merits and irreparable harm, and that the balance of harms tips in their favor,” the majority held.

Rovner, however, disagreed, and wrote in her dissent that she would have denied the injunction request.

“I do not believe that the appellants have demonstrated either a reasonable likelihood of success on the merits of their appeal or irreparable harm in the absence of an injunction pending the resolution of the appeal, “she wrote.

In addition to other factors, Rovner wrote in her dissent that she is “dubious of the notion that the Kortes will be irreparably harmed” without a temporary injunction.

“[T]he fact that the Kortes’ company is already voluntarily (if inadvertently) paying for the type of insurance coverage to which they object … suggests that they will not be irreparably harmed by continuing to pay for the same coverage in compliance with the Affordable Care Act while this appeal is being resolved,” she wrote.

In regards to this argument, the majority noted in its order that “it is well-established that a religious believer does not, by inadvertent  nonobservance, forfeit or diminish his free exercise rights.”

The majority went on to explain that because the Kortes have established a reasonable likelihood of success on their RFRA claim, the “burden will be on the government to demonstrate that the contraception mandate is the least restrictive means of furthering a compelling governmental interest.”

The government has previously argued that the ACA intends to ensure that employees and their families have access to health services and that decisions over contraception are made by women and their doctors, not their employers.

“Whether these interests qualify as 'compelling' remains for later in this interlocutory appeal; the government has not advanced an argument that the contraception mandate is the least restrictive means of furthering these interests," the majority held.

“Reserving judgment for our plenary consideration of the appeal,” the majority of the federal court determined that the Kortes not only established a reasonable likelihood of success on their religious claim, but also established irreparable harm.

The majority added, “Without an injunction pending appeal, the Kortes will be forced to choose between violating their religious beliefs by maintaining coverage for contraception and sterilization services contrary to the teaching of their faith and subjecting their company to substantial financial penalties.”

According to the order, K&L has estimated that penalties for not complying with the ACA could be as much as $730,000 per year.

Edward White, senior counsel at the American Center for Law & Justice (ACLJ) in Michigan, represents the Kortes.

He said in a written statement that the ACLJ is “extremely pleased” with Friday’s 7th Circuit ruling.

“This mandate violates the conscience rights of our clients, and we’re now looking forward to proceeding with our legal challenge,” White said.

The ACLJ has filed three legal challenges to the ACA mandate and more than a dozen amicus briefs supporting similar lawsuits.

Mark Stern and Alisa Klein, attorneys in the civil division of the U.S. Department of Justice, represent the defendants.

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