By Jonathan Stempel
(Reuters) - A divided federal appeals court has temporarily barred the U.S. government from requiring an Illinois company to obtain insurance coverage for contraceptives, as mandated under the 2010 healthcare overhaul, after the owners objected on religious grounds.
More than 40 lawsuits are challenging a requirement in the Patient Protection and Affordable Care Act that requires most for-profit companies to offer workers insurance coverage for contraceptive drugs and devices and other birth control methods.
Friday's 2-1 order by a panel of the 7th U.S. Circuit Court of Appeals in Chicago in favor of Cyril and Jane Korte was the second by a federal appeals court to temporarily halt enforcement against people who said it violated their faith, said Edward White, a lawyer for the Roman Catholic couple.
The 7th Circuit suggested that the couple's legal challenge might eventually prevail.
Its order came two days after U.S. Supreme Court Justice Sonia Sotomayor declined to block the provision's enforcement against companies controlled by the family of Oklahoma City billionaire David Green.
The U.S. Department of Justice, which had defended the contraceptives provision, did not immediately respond on Saturday to a request for comment.
The Kortes, who own the construction firm Korte & Luitjohan Contractors, had sought to drop a health insurance plan for 20 non-unionized workers that included coverage for contraception, and substitute a different plan consistent with their faith.
But the Obama administration's healthcare law did not allow the change, and the Kortes said that violated the First Amendment to the U.S. Constitution and the federal Religious Freedom Restoration Act, or RFRA.
In issuing an injunction, the 7th Circuit majority said the Kortes had established a reasonable likelihood of success on the merits of their RFRA claim, and that the government had not yet justified the apparent "substantial burden" on their religious exercise.
The court also said the couple had established irreparable harm, because absent an injunction they would have to choose between maintaining insurance coverage they considered inappropriate or facing substantial financial penalties.
"Business owners who are objecting to the mandate are not objecting to people using contraceptives, but that they have to arrange for and pay for it," White, a lawyer with the American Center for Law and Justice, said in a phone interview. "The federal government shouldn't tell business owners they have to contract to buy what they see as immoral services and goods."
Judges Joel Flaum and Diane Sykes comprised the 7th Circuit majority.
Judge Ilana Rovner dissented. She said the Kortes were "multiple steps" removed from the contraceptives services because it was their company paying for the coverage, and because it would be a worker, her doctor and the insurer involved in the decisions about the services and their funding.
The Kortes' case is expected to continue in the 7th Circuit.
Neither the 7th Circuit nor Sotomayor ruled on the merits of their respective cases. The legal standard for obtaining an injunction from the Supreme Court is much higher.
The case is Korte et al v. Sebelius, 7th U.S. Circuit Court of Appeals, No. 12-3841.
(This story is corrected in paragraph 3 to make clear that injunction is second by a federal appeals court, not first)
(Reporting by Jonathan Stempel in New York; Editing by Peter Cooney)