Right-Wing Media Muddy Distinction Between Nonprofit And For-Profit Corporations

Fox's Dana Perino: “What Is The Difference Between The Nonprofit And The Profit?” On the March 26 edition of Fox News' Hannity, Fox News host Dana Perino discussed the Obama administration exemptions of religiously affiliated nonprofit organizations from the contraception mandate, and questioned the difference between nonprofit and for-profit companies, while host Sean Hannity argued that it was “impossible” for an individual to “stop being religious in their business practices”:

HANNITY: It's the corporate exercise of religion that they're looking into, and the substantial burden -- would this put a substantial burden on the company? And there's one other issue, but on those two issues, does one stop being religious in their business practices? I would argue that that's impossible. You can't separate the two.

[...]

PERINO: Just in terms of fairness, the Obama administration has exempted under this specific provision several other entities including --

HANNITY: And that came up as well.

PERINO: -- religious nonprofits, so the question is, what is the difference between the nonprofit and the profit? Why -- I don't that that will actually wash. [Fox News, Hannity, 3/25/14]

Jennifer Rubin: It “Should Bother All Of Us” That For-Profit Businesses Treated Differently Than Non-Profits For Exemption Purposes. In a March 26 Washington Post blog post, Jennifer Rubin called the Obama administration “government by whim” because it does not “accommodate” for-profit businesses by exempting them from the contraception mandate that currently only applies to religiously affiliated nonprofits:

Now it is government by whim (HHS does not accommodate for profit businesses but it will work with non-profit corporations.) This bothered several of the justices, and it should bother all of us who look to the law for predictability and fairness. [The Washington Post, 3/26/14]

Frequent Fox Guest Michael Graham Questioned “Distinction” Between Corporations And Nonprofits. On the March 26 edition of Fox News' America's Newsroom, during a discussion of the contraception mandate's exemption of nonprofits, conservative radio host and frequent Fox guest Michael Graham pushed the idea that there was no difference between for-profit corporations and nonprofit corporations:

GRAHAM: If Richard's right, that it's wrong to not force corporations to buy birth control, then why did the Obama administration itself exempt nonprofit corporations for doing the exact same thing? 

[...]

RICHARD FOWLER (radio host): It's not about morality at all. There's a distinction. A nonprofit organization, they espouse a particular belief --

GRAHAM: What's the distinction?

FOWLER: -- they espouse a particular belief and are allowed to express that belief because they are a nonprofit organization, i.e., a church, a synagogue, a Jehovah's Witness temple --

GRAHAM: But it's still birth control.

FOWLER: -- and on and on and on and non. The difference here is for a for-profit corporation, they don't have the right to express a religious view.  [Fox News, America's Newsroom, 3/26/14]

There's A Legal Meaningful Distinction: Nonprofits Serve Public Purpose, For-Profits Seek Profit

Cornell Law Review: Nonprofits Provide Community Services While Corporations Engage In Commerce. In the Cornell Law Review, Mark Tushnet explained how nonprofits use their “earnings to finance” the community services that they provide, therefore the “activities themselves are infused with a religious purpose,” while for-profit corporations simply engage in commerce to “generate revenue”:

The fact that an operation is not organized as a profit-making commercial enterprise makes colorable a claim that it is not purely secular in orientation. In contrast to a for-profit corporation, a nonprofit organization must utilize its earnings to finance the continued provision of the goods or services it furnishes and may not distribute any surplus to the owners. This makes plausible a church's contention that an entity is not operated simply in order to generate revenues for the church but that the activities themselves are infused with a religious purpose. Furthermore, unlike for-profit corporations, nonprofits historically have been organized specifically to provide certain community services, not simply to engage in commerce.

Churches often regard the provision of such services as a means of fulfilling religious duty and of providing an example of the way of life a church seeks to foster. [Cornell Law Review, 8/2013]

ACA Contraception Coverage Exemption Is Specifically Tied To The Nonprofit Mission Of Religious Values

Nonprofit “Religious Organizations” Qualify For Exemption To Contraception Mandate. Under a new rule issued last year, nonprofit religious organizations may qualify for an exemption to the contraception mandate if they are oppose providing coverage on account of religious objections. From the Centers for Medicare & Medicaid Services (CMS):

The final rules also provide accommodations for non-exempt, non-profit religious organizations that object to contraceptive coverage on religious grounds. An eligible organization is one that:

1.     on account of religious objections, opposes providing coverage for some or all of any contraceptive services otherwise required to be covered;

2.     is organized and operates as a nonprofit entity;

3.     holds itself out as a religious organization; and

4.     self-certifies that it meets these criteria in accordance with the provisions of the final regulations. [CMS, 2/1/13]

Constitutional Accountability Center: Religiously Affiliated Nonprofits May Exempt Themselves From Obligation To Pay For Contraceptive Coverage “With The Stroke Of A Pen.” David Gans of the Constitutional Accountability Center explained the law's exemption for religiously affiliated nonprofits:

Under the ACA regulations, the contraceptive coverage requirement does not apply at all to churches and other houses of worship. The Obama Administration found that churches and other houses of worship “are more likely than other employers to employ people of the same faith” and therefore exempted them entirely from the requirement, recognizing that a church's employees would very likely share in any religious objection to the use of contraceptives.

The Obama Administration also crafted a second accommodation applicable to religiously-affiliated organizations, such as universities and health care and other service providers. Generally, the ACA requires employers that offer a group health plan to ensure that their plans provide coverage for certain preventive health care and services for their employees, without requiring plan participants to make copayments or pay deductibles or coinsurance. However, when it comes to contraceptives, any religiously-affiliated organization -- such as the University of Notre Dame or the Little Sisters -- may, with the stroke of a pen, exempt itself from the legal obligation to pay for contraceptive coverage to which it has a religious objection.  [Constitutional Accountability Center, 1/16/14]

Contraceptive Mandate Exemption Does “Not Include For-Profit Secular Organizations.” Because federal law does not offer religious accommodations to for-profit secular organizations, these for-profit corporations are similarly not exempt from the requirement that employees health benefits cover preventative services like birth control:

The Departments do not propose that the definition of eligible organization extend to for-profit secular employers. Religious accommodations in related areas of federal law, such as the exemption for religious organizations under Title VII of the civil Rights Act of 1964, are available to nonprofit religious organizations but not to for-profit secular organizations. Accordingly, the Departments believe it would be appropriate to define eligible organizations to include nonprofit religious organization, but not to include for-profit secular organizations. [Internal Revenue Bulletin, 4/29/13]

Legal Experts: For-Profit Corporations Are Separate From Individuals With Defined Religious Rights

CAC: Corporations Are Legal Entities, Not “Living, Breathing, Individuals” With Protected Exercise Of Religion. David Gans of the Constitutional Accountability Center detailed how under First Amendment law “corporations can assert some -- but not all -- of the constitutional rights that individuals have”: 

[C]orporations are “mere creatures of law;” they are not a part of “We the People” by whom and for whom the Constitution was written. The Constitution never mentions corporations, and the Court's cases recognize a basic, common-sense difference between living, breathing, individuals -- who think, possess a conscience, and a claim to human dignity -- and artificial entities, which are created by the law for a specific purpose, such as to make running a business more efficient and lucrative. Even Justice Kennedy, the author of Citizens United, has recognized that corporations may not invoke the Self-Incrimination Clause because the Fifth Amendment right “is an explicit natural right of a person, protecting the realm of human thought and expression.” For some purposes, corporations lack the same rights as individuals.

[...]

[I]t is nonsensical to treat a business corporation as an actor imbued with the same rights of religious freedom as living persons.  No decision of the Supreme Court has ever recognized such an absurd claim. Even Citizens United, which gave extensive protections to corporations under the Free Speech Clause, emphasized that electoral advocacy by corporations was protected, not because business corporations were capable of the human aspects of thought and expression, but to provide a robust debate for individual listeners. [Constitutional Accountability Center, 7/30/13]

Lyle Denniston: Corporations Are Set Up So Owners Can “Keep Themselves Independent From It.” Writing for the National Constitution Center's blog Constitution Daily, Lyle Denniston observed that nonprofit secular corporations exercising religious rights is “a new constitutional perspective” and “somewhat strange”:

Most corporations that engage in ordinary business activities are organized as secular firms; that is, they enter the marketplace to carry out commercial, not religious, endeavors. But what is perhaps more important is that business people who form corporations do so to keep themselves independent from it: one of the main advantages of the corporate form is that the owners are not targeted when their company gets sued.

Moreover, it sounds somewhat strange for a commercial entity that is considered to have an artificial legal personality, like a corporation, to “exercise” religion.

[...]

The key dispute in this context thus appears to turn on whether the faith preferences of the owners of a profit-making corporation can be transferred to the business entity so that it is not an independent entity but rather, for constitutional purposes, an alter ego. [National Constitution Center, 1/2/13]

Daily Kos: The Corporation “Is Treated As A Separate Legal Entity” Than Owners And Shareholders. On March 24, The Daily Kos pointed out that in regards to the Hobby Lobby case and traditional corporate law, the corporation “is treated as a separate legal entity” from the shareholders or owners of that corporations, therefore, “the individuals are not the corporation, and the corporation is not the individuals”:

Under traditional corporation law, the corporation is treated as a separate legal entity whose actions do not legally reflect upon the shareholders or officers of the corporation. Thus, under this analysis, the corporation does not act as the shareholders. The most common manifestation of this principle is that the acts of the corporation do not create liability for the shareholders or officers of the corporation. They are, in the eyes of corporation law, completely distinct and separate entities.

A related argument made by Hobby Lobby is that the ACA violates RFRA by impinging on the exercise of religion by the owners of the corporation. The government responds:

Respondents' alternative suggestion that the Greens [the owners of Hobby Lobby] may challenge the contraceptive-coverage provision in their individual capacities likewise suffers from threshold defects. The challenged provision imposes no personal obligations on the Greens; it instead regulates only the corporations they own and the group health plan the corporations sponsor. The provision therefore does not burden the Greens' individual exercise of religion in any cognizable sense, and RFRA does not entitle them to an exemption for the corporations based on their individual religious beliefs.

This is the mirror image of the previous argument, the individuals are not the corporation, and the corporation is not the individuals. [The Daily Kos, 3/24/14]