Sorting Through the Hobby Lobby Decision

Jul 3, 2014

In a five-to-four decision Monday, the U.S. Supreme Court ruled that requiring so-called closely-held, for-profit corporations to pay for contraception coverage under the Affordable Care Act, violates a federal law that protects religious freedom. 

John Thomas is a professor at both Quinnipiac University Law and Medical Schools. WNPR’s Diane Orson spoke with Thomas and asked him to explain, in this context, what “closely-held” means.

John Thomas: “Closely-held,” by the IRS definition, is a corporation in which five or fewer owners, own at least 50 percent of the corporation. In addition, those owners cannot sell to outside owners. If they were to sell their portion of the corporation, they would have to sell to one of the current owners. So typically we’re talking about family corporations. Most of us think of these as small corporations. But we know, for instance, in this case, the Hobby Lobby Corporation owns near 500 stores, has about 13,000 or 14,000 employees. Indeed, about 90 percent of the corporations in this country are closely-held corporations.

Diane Orson: It covers a large swath.

It covers a large swath, and in addition, there is really no theoretical reason why this only applies to closely-held corporations. We'll have to watch for later decisions on that.

What does the decision mean for, say, a secretary at a local church, or a maintenance worker at a local synagogue?

"Small private corporations, for-profit corporations, don't have to provide services they find religiously objectionable."
John Thomas

Those folks are already under an exemption. Those corporations are non-profit corporations with religious affiliations, and by regulatory act, the Affordable Care Act does not apply its mandate to those institutions. So those employees in churches and mosques and synagogues are already subject to this exemption that their employers do not have to provide services that they find religiously objectionable. 

Can you give me some examples of the kinds of companies that might fall into this category?

Just drive and up down your local town and look at any business held on most street corners and along the path. It’s just about every company you’re going to see. In addition, lots of giant corporations: Koch Brothers Corporation, there’s a family owned, closely held corporation that has huge holdings. So roughly, you look out and there’s a 9 in 10 chance  any business you imagine or see is a closely held corporation.

Does this decision open the door for companies to say things, for example, "We disagree with the idea of paying health insurance for same sex spouses based on religious grounds"? Does it pave the way for other areas that these closely-held corporations could be troubled by?

I think it does. If you read the decision, there is explicit disagreement on exactly that point. The dissent by Justice Ginsburg -- she says this is a wide, wide decision that cuts a swath across the entire U.S. culture and economy. There will be an argument after this case about the boundaries, exactly what kind of objections these closely held corporations can make with respect to religion.

You teach in both a law school and a medical school. Why is this an important case?

Credit Mark Wilson / Getty Images

It covers just about everything I teach and just about everything I’m interested in, in society. It has social implications -- women’s reproductive health. It has economic implications [including] exactly what corporations and other kinds of businesses have to do. And it’s got great legal implications because now we’re going to follow this decision to see its ripples. Does it apply to other kinds of services in healthcare? Does it apply to vaccines to which other people have religious objections? Does it apply to blood transfusions to which some people have religious objections? Does it apply to other kinds of entities? Does it apply to larger corporations? There’s really no theoretical reason to limit it. So it has great legal consequences as well. So it actually reaches that perfect intersection of law, public policy and health which is the area in which I teach.