Court Blocks Health Law's Contraception Requirement - Wall Street Journal

Updated Nov. 8, 2013 7:59 p.m. ET

A federal appeals court on Friday blocked a provision of the Obama administration's health-care law requiring employers to provide birth-control coverage in employee insurance, ruling that it imposed a "substantial burden" on religious rights of two Midwestern companies.

The move by the Seventh U.S. Circuit Court of Appeals in Chicago marked the first time a federal appeals court has issued a ruling preventing the federal government from enforcing the provision. Federal appeals courts in Washington, D.C., and Denver have sided with plaintiffs challenging the provision on religious grounds but stopped short of issuing injunctions. Federal appeals courts in Philadelphia and Cincinnati, meanwhile, have sided with the Obama administration.

The Supreme Court could decide as soon as this month whether to review some of the cases.

A Justice Department spokeswoman declined to comment on the latest ruling.

"Things are lining up very well as the cases head to the Supreme Court," said Edward White, who represents one of the companies, Illinois-based Korte & Luitjohan Contractors Inc., and its owners Cyril and Jane Korte, who are Roman Catholic and oppose contraception. The other plaintiffs were Grote Industries LLC and Grote Industries Inc., based in Madison, Ind., which make vehicle safety systems.

The plaintiffs sued the federal government over the so-called contraceptive mandate in 2012, arguing that it placed a burden on their practice of religion in violation of the federal Religious Freedom Restoration Act and the free-exercise and free-speech clauses of the First Amendment. The Justice Department, which is charged with defending the mandate in court, has argued that for-profit companies have no religious rights.

"The government draws the line at religiously affiliated nonprofit corporations. That line is nowhere to be found in the text of RFRA or any related act of Congress," wrote Judge Diane S. Sykes for a 2-1 majority.

She gave the example of a Jewish deli, in support of the notion that for-profit companies also enjoy religious rights. If the restaurant had no religious rights, it could be denied the ability to observe Kosher dietary restrictions, wrote Judge Sykes, who was appointed by President George W. Bush.

The Seventh Circuit's ruling contrasts with the decision last week by the U.S. Court of Appeals for the D.C. Circuit, which held there was "no basis for concluding a secular organization can exercise religion." Still, the D.C. court said the owners of produce-distribution companies in Ohio could challenge the mandate as a burden on their own beliefs.

Judge Ilana Rovner, writing in dissent, said her colleagues had ascribed a right to corporations that was uniquely human.

"Religious beliefs have to do with such fundamental questions as the nature of mankind, where we came from, our place in the world, what happens when we die, and our relationships with and obligations to other people," she wrote. "A corporation is a legal construct which does not have the sentience and conscience to entertain such ultimate questions."

Write to Joe Palazzolo at joe.palazzolo@wsj.com