Hobby Lobby to defy Obamacare contraception mandate, face millions in fines

Published: Monday, Dec. 31 2012 4:35 p.m. MST

Customers walk into a Hobby Lobby Thursday, Nov. 1, 2012, in Dallas. The arts and crafts chain faces a fine of $1.3 million per day.

Tony Gutierrez, Associated Press

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A daily fine of $1.3 million will begin Tuesday for the owners of national craft store chain Hobby Lobby, who have said they would rather defy a federal mandate to provide employees health insurance coverage certain contraceptive medications than violate their religious beliefs.

"The company will continue to provide health insurance to all qualified employees. To remain true to their faith, it is not their intention, as a company, to pay for abortion-inducing drugs,” said Kyle Duncan, general counsel at The Becket Fund for Religious Liberty, which is representing Hobby Lobby in its legal battle with the government over the mandate.

The statement came after U.S. Supreme Court Justice Sonia Sotomayor rejected Hobby Lobby's appeal to block enforcement of a Affordable Care Act provision that mandates companies offer insurance coverage for contraceptive drugs.

Hobby Lobby, a craft story chain based in Oklahoma City that also operates Christian bookseller Mardel Inc., sued the government in September seeking a narrow exemption from the health care law so it would not have to provide the so-called morning-after or week-after pills. The company's owners contend the pills induce abortion, which violates their religious beliefs.

A federal judge in Oklahoma denied Hobby Lobby's request in November. The 10th Circuit Court of Appeals upheld that ruling. Sotomayor wrote that if Hobby Lobby loses its case in the lower courts, it can then appeal to the Supreme Court. She also said if Hobby Lobby wins its case it could quash the fines as well.

Hobby Lobby is among more than 40 lawsuits filed against the government over the contraception mandate, alleging it violates their right to religious freedom under the First Amendment and the Religious Freedom Restoration Act.

Schools, hospitals and other nonprofit institutions have been granted "safe harbor" from the mandate, while the government works an accommodation. But for-profit firms like Hobby Lobby and Mardel face fines beginning this week if they don't comply. Of the 12 for-profit companies that have filed lawsuits, nine have been granted injunctions against enforcement of the mandate.

Justin Ackerman wrote for Policymic that Hobby Lobby's public defiance may embolden other companies to do that same.

"Hobby Lobby may very well re-kindle civil disobedience in a way that would inspire the participation of millions, of which, if to see fruition ... could serve as the new shot heard 'round the world — a sound the world so desperately needs to hear."

One of the key issues in the for-profit cases is whether the mandate imposes a substantial burden. Federal courts have ruled both ways, saying the law did impose such a burden on Tyndale House Publishers, but not in Hobby Lobby's case.

Oklahoma federal Judge Joe Heaton said the burden of the mandate was on the company and not its individual owners, who contend their self-funded insurance plan could "pay for an activity that is condemned by plaintiff’s religion."

"Such an indirect and attenuated relationship appears unlikely to establish the necessary 'substantial burden,'" Heaton ruled.

Hobby Lobby says it's a "biblically founded business" and is closed on Sundays. The company operates more than 500 stores in 41 states and employs more than 13,000 full-time employees who are eligible for health insurance coverage.

"It is by God's grace and provision that Hobby Lobby has endured," said Hobby Lobby CEO David Green, who founded the company in 1970 in his garage. "Therefore we seek to honor God by operating the company in a manner consistent with biblical principles."

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