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Legal Briefing: For-Profit Corporation Rights Under the ACA

One company was unable to escape the Affordable Care Act’s mandated coverage for contraception.

December 13, 2013

Eden Foods Inc. and its chairman, president and sole shareholder, Michael Potter, asserted that the U.S. federal government forced them to offer Eden Foods employees coverage for contraception and abortifacients, which are substances that induce abortions, in violation of their rights under the First Amendment Free Exercise Clause and Religious Freedom Restoration Act.

They alleged that the mandates of the Affordable Care Act force them and other Roman Catholic business owners to choose between the secular corporation incurring substantial financial penalties for noncompliance and ignoring the shareholders’ sincerely held religious beliefs concerning the use of contraception.

Affirming the dismissal of the lawsuit, the U.S. Court of Appeals for the 6th Circuit held that claims under the Religious Freedom Restoration Act are “fundamentally personal” and may not be brought by for-profit secular corporations that are not “persons” covered by the act. A corporation cannot establish that it exercises religion and an individual cannot establish standing to challenge obligations placed solely on the corporation but not the individual. Eden Foods Inc. v. Sebelius, 6th Cir. No. 13-1677 (Oct. 24, 2013).

Impact: Eden Foods was unable to escape the Affordable Care Act’s mandated coverage for contraception and abortifacients, which the company previously excluded from its health insurance to its employees. 

James E. Hall, Mark T. Kobata and Marty Denis are partners in the law firm Barlow, Kobata and Denis, which has offices in Los Angeles and Chicago. To comment, email editors@workforce.com. FollowWorkforce on Twitter at @workforcenews.