Washington (CNN) - In a ruling likely to set the stage for a battle in the U.S. Supreme Court, a federal appeals court has struck down an Obamacare mandate requiring some businesses to provide insurance coverage for birth control.
A key provision of Affordable Care Act championed by President Obama requires employers with 50 or more workers to provide medical insurance and coverage for contraceptives and pregnancy-related care. The companies must provide the coverage or pay a substantial financial penalty.
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The U.S. Court of Appeals for the District of Columbia Circuit overturned a lower court's ruling Friday and said the individual owners of Freshway Foods and Freshway Logistics of Sidney, Ohio, should not be forced to provide coverage for contraceptives to their employees.
But the divided court said lawsuits could not be filed under the names of the corporations themselves, since they were not "persons" under federal law and could not express religious beliefs. The difference is significant in terms of which parties may bring challenges to the Affordable Care Act.
The companies are owned solely by brothers Francis and Philip Gilardi, Catholics who are opposed to access to birth control. The ruling allows their lawsuit to proceed and bars enforcement of the employer mandate, at least as applied to the Gilardis.
In the 2-1 decision, the judges said forcing those owners to provide the coverage would violate their individual First Amendment rights allowing for the protection of their religion.
"The contraceptive mandate demands that owners like the Gilardis meaningfully approve and endorse the inclusion of contraceptive coverage in their companies' employer- provided plans, over whatever objections they may have," Judge Janice Rogers Brown wrote in the court opinion.
"The burden becomes substantial because the government commands compliance by giving the Gilardis a Hobson's choice," added Brown, a President George W. Bush appointee. "They can either abide by the sacred tenets of their faith, pay a penalty of over $14 million, and cripple the companies they have spent a lifetime building, or they become complicit in a grave moral wrong. If that is not substantial pressure on an adherent to modify his behavior and to violate his beliefs, we fail to see how the standard could be met."
The Obama administration has already created rules exempting certain nonprofits and religiously affiliated organizations from the contraceptives requirements. In those cases, women would receive coverage from another company at no cost.
The administration issued those rules after multiple states and dozens of religious organizations sued the government over the requirement.
At least 75 separate lawsuits have been filed in federal court by for-profit corporations, like Freshway, whose owners oppose the requirement on religious grounds. Some courts have ruled for the mandates, and others have struck them down. Three of those appeals are pending at the Supreme Court, but the justices have not yet indicated when they would consider them for review.
The high court in 2012 narrowly upheld the law's key funding provision - the so-called individual mandate requiring nearly all Americans to have health insurance. That provision is not at issue in the current fight over the employer mandates.
The case decided Friday is Gilardi v. U-S Department of Health & Human Services (13-5069).
–CNN's Kevin Bohn, Tom Cohen, Bill Mears and Dan Merica contributed to this report.