I Wonder if These Anti-Freedom Companies Have Thought This Through?

A story that moved across the AP wire this morning reports that a company in Oklahoma City has appealed a lower-court federal ruling that it could not be exempted from a national mandate that all companies except religious organizations must provide health insurance that includes coverage for contraception. The company is Hobby Lobby and it is apparently owned by a family of Evangelical Christians who find abortion and some kinds of conception immoral.

The company is a privately held corporation but corporations are not eligible to allege that they hold any beliefs. Their owners and founders, of course, may do so.  But the corporation? Nope.

But here comes the Green family trying to convince a federal court that these behaviors that it finds immoral should not be mandatorily covered by insurance plans offered to employees. They are, in effect, asking the court to determine that the company can be thought of as having the beliefs of its owners.

But I don’t think they’ve thought this through very well. If they succeed, it seems to me they will have run a huge risk of “piercing the corporate veil.” This principle says that the owners and managers of a corporation cannot generally be held individually liable for acts of the company, its employees or contractors. The existence of this shield is one of the primary reasons people form corporations.

But if the corporation’s veil of protection can be pierced to avoid insurance coverage, then it seems to me that the owners have thereby admitted that the corporation is nothing more than a proxy for them as individuals and, therefore, they are individually liable for its acts.

I’m no lawyer, but that seems to be a reasonable understanding of the law as I do understand it.

(I’m refraining from commenting on the case itself beyond saying that I think the original court ruled correctly.)

 

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