Korte v. U.S. Dep't of Health & Human Servs.

Decision Date14 December 2012
Docket NumberCase No. 3:12-CV-01072-MJR
CourtUnited States District Courts. 7th Circuit. Southern District of Illinois
PartiesCYRIL B. KORTE, JANE E. KORTE, and KORTE & LUITJOHAN CONTRACTORS, INC., Plaintiffs, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, KATHLEEN SEBELIUS, UNITED STATES DEPARTMENT OF THE TREASURY, TIMOTHY F. GEITHNER, UNITED STATES DEPARTMENT OF LABOR, and HILDA L. SOLIS, Defendants.

CYRIL B. KORTE, JANE E. KORTE,
and KORTE & LUITJOHAN CONTRACTORS, INC., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES,
KATHLEEN SEBELIUS, UNITED STATES DEPARTMENT OF THE TREASURY,
TIMOTHY F. GEITHNER, UNITED STATES DEPARTMENT
OF LABOR, and HILDA L. SOLIS, Defendants.

Case No. 3:12-CV-01072-MJR

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS

DATED: December 14, 2012


MEMORANDUM AND ORDER

REAGAN, District Judge:

Plaintiffs Cyril B. Korte and Jane E. Korte (husband and wife) are equal shareholders who together own a controlling interest in Plaintiff Korte & Luitjohan Contractors, Inc., a secular, for-profit construction business.1 On October 9, 2012, the three Plaintiffs filed a complaint for declaratory judgment and injunctive relief regarding whether they have to comply with the Preventive Health Services coverage provision in the Women's Health Amendment (42 U.S.C. § 300gg-13(a)(4) (Mar. 23, 2010)) to the Patient Protection and Affordable Care Act of 2010, ("the ACA"), Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010), as amended by the Heath Care and Education Reconciliation Act, Publ. L. No. 111-152, 124 Stat. 1029 (Mar. 30

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2010). Plaintiffs name as defendants the three agencies charged with implementing and administering the mandate, and their respective heads: the Department of Health and Human Services and Secretary Kathleen Sebelius; the Department of the Treasury and Secretary Timothy F. Geithner; and the Department of Labor and Secretary Hilda L. Solis.

As a general matter, the ACA "aims to increase the number of Americans covered by health insurance and decrease the cost of health care." National Federation of Independent Business v. Sebelius, __U.S.__, 132 S.Ct. 2566, 2580 (Jun. 28, 2012). In deciding to include a contraception coverage mandate, Congress found that: (1) the use of preventive services, including contraception, results in a healthier population and reduces health care costs (for reasons related and unrelated to pregnancy); and (2) access to contraception improves the social and economic status of women. See 77 Fed. Reg. 8725, 8727-8728 (Feb. 15, 2012).

According to the contraception coverage mandate, unless grandfathered or otherwise exempt (which Korte & Luitjohan is not), commencing in plan years after August 1, 2012, employee group health benefit plans and health insurance issuers2 must include coverage, without cost sharing, for "[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures and patient education and counseling for all women with reproductive capacity," "[a]s prescribed."3 See Health Resources and Services Administration ("the HRSA"), Women's Preventive Services: Required Health Plan Coverage Guidelines (available at

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http://www.hrsa.gov/womensguidelines/).4 FDA-approved contraceptive medicines and devices include barrier methods, implanted devices, hormonal methods, and emergency contraceptive "abortifacients," such as "Plan B" (which prevents fertilization of the egg) and "Ella" (which stops or delays release of the egg). See FDA, Birth Control Guide (Aug. 2012) (available at http://www.fda.gov/ForConsumers/ByAudience/ForWomen/ucm18465). Employers with at least 50 employees that do not comply with the mandate face "fines, penalties [in the form of a tax], and enforcement actions for non-compliance. See 29 U.S.C. § 1132(a) (civil enforcement actions by the Department of Labor and insurance plan participants); 26 U.S.C. § 4980D(a), (b) (penalty of $100 per day per employee for noncompliance with coverage provisions of the ACA); 26 U.S.C. § 4980H (annual tax assessment for noncompliance with requirement to provide health insurance)." Tyndale House Publishers, Inc. v. Sebelius, __F.Supp.2d__, 2012 WL 5817323, *2 (D.D.C., Nov. 16, 2012). See also 77 Fed. Reg. 8725, 8729 (Fed. 15, 2012).

Plaintiffs Cyril B. Korte and Jane E. Korte ("the Kortes") are Catholic and have concluded that complying with the contraception coverage mandate would require them to violate their religious beliefs because the mandate requires them, and/or the corporation they control, to arrange for, pay for, provide, facilitate, or otherwise support not only contraception and sterilization, but also abortion. By "abortion," the Kortes are referring to the fact that the "Food and Drug Administration approved contraceptive methods" include drugs and devices that are abortifacients, such as the "morning-after pill," "Plan B," and "Ella." According to the Kortes, they personally adhere to the Catholic Church's teachings that artificial means of

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contraception, sterilization and actions intended to terminate human life are immoral and gravely sinful.5 Also, the Kortes seek to manage and operate Korte & Luitjohan Contractors, Inc. ("K & L") in a way that reflects the teachings, mission and values of their Catholic faith.6 As of September 27, 2012 (13 days before this action was filed), K&L established written "Ethical Guidelines" to that effect, but an exception is made when a physician certifies that certain sterilization procedures or drugs commonly used as contraception are prescribed with the intent to treat certain medical conditions, not with the intent to prevent or terminate pregnancy (Doc. 7-2, p. 6).7 However, Plaintiffs acknowledge that in August 2012 they learned that their current group health plan covers contraception. The Kortes investigated ways to obtain coverage that would comply with their beliefs and corporate policy, but they have yet to find an insurer that will issue a policy that does not cover contraception.8 Plaintiffs acknowledge that they could self-insure, but that does not relieve them of their legal obligation to comply with the ACA mandate.

K&L currently has approximately 90 full-time employees; about 70 of those employees belong to unions and about 20 employees are nonunion. As a "noncash benefit," K&L provides group health insurance for its nonunion employees. Union employees are covered by

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separate health insurance through their respective unions, over which Plaintiffs have no control.9 If K&L does not provide the mandated contraceptive coverage, it estimates that it will be required to pay approximately $730,000 per year as a tax and/or penalty, which it considers "ruinous." K&L does not want to abandon providing health coverage because it would severely impact K&L's ability to compete with other companies that offer such coverage, and K&L employees would have to obtain expensive individual policies in the private marketplace.10

Plaintiffs have brought suit contending that the ACA mandate violates the Religious Freedom Restoration Act ("RFRA"), 42 U.S.C. § 2000bb-1 (2006), the Free Exercise, Establishment, and Free Speech Clauses of the First Amendment, the Due Process Clause of the Fifth Amendment, and the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 553(b)-(c), 706(2)(A), 706(2)(D) (2006).

Plaintiffs now move for a preliminary injunction relative to Counts I and II of the complaint, their RFRA and Free Exercise Clause claims (Docs. 6 and 7). Defendants filed a memorandum in opposition (Doc. 22), to which Plaintiffs replied (Doc. 26). The Court has also received briefs amicus curiae from: the American Civil Liberties Union and American Civil Liberties Union of Illinois, in support of Defendants (Doc. 32); the Liberty, Life and Law Foundation, in support of Plaintiffs (Doc. 39); and Women Speak for Themselves, Bioethics Defense Fund and Life Legal Defense Foundation, in support of Plaintiffs (Doc. 48). Plaintiffs filed a reply to the American Civil Liberties' brief (Doc. 43). In addition, oral argument was heard on December 7, 2012.

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Defendants assert that K&L, a secular, for-profit corporation, is not a "person" and cannot exercise religion; therefore, the ACA mandate does not violate the Free Exercise Clause or RFRA. From Defendants' perspective, K&L is attempting to eliminate the legal separation provided by the corporate form in order to impose the personal religious beliefs of its directors upon K&L's employees. Defendants further fear opening the door to for-profit corporations claiming a variety of exemptions from untold general commercial laws, obviating the government's ability to tackle national problems by way of rules of general applicability.

I. Applicable Legal Standards

A. Injunctive Relief

To obtain a preliminary injunction, the moving party must demonstrate: (1) a reasonable likelihood of success on the merits; (2) no adequate remedy at law; and (3) irreparable harm absent the injunction. Planned Parenthood of Indiana, Inc. v. Commissioner of Indiana State Department of Health, 699 F.3d 962, 972 (7th Cir. 2012). See also American Civil Liberties Union of Illinois v. Alvarez, 679 F.3d 583, 589-590 (7th Cir. 2012); Christian Legal Society v. Walker, 453 F.3d 853, 859 (7th Cir. 2006); Joelner v. Village of Washington Park, Illinois, 378 F.3d 613, 619 (7th Cir. 2004). If this threshold showing is made, the Court balances the harm to the parties if the injunction is granted or denied, as well as the effect of an injunction on the public interest. See Alvarez, 679 F.3d at 589-590; Christian Legal Society, 453 F.3d at 859. "The more likely it is that [the moving party] will win its case on the merits, the less the balance of harms need weigh in its favor." Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the United States, Inc., 549 F.3d 1079, 1100 (7th Cir. 2008).

The Court of Appeals for the Seventh Circuit has advised that, relative to preliminary injunctions in First Amendment cases:

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"[T]he likelihood of success on the merits will often be the determinative factor." Joelner v. Village of Washington Park, Ill., 378 F.3d 613, 620 (7th Cir.2004). This is because the "loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury," Elrod v. Burns, 427 U.S. 347, 373, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976)
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