The District of Columbia Circuit Court of Appeals, in a 2-1 ruling, found in favor of the owners of Freshways Foods and Freshways Logisitcs, who challenged the contraceptive mandate on the grounds it violates their exercise of religious freedom under the First Amendment.
Referring to the healthcare reform law as "the behemoth known as the Affordable Care Act," the court said the case was not about the law's "constitutional authority."
"Instead, we must determine whether the contraceptive mandate imposed by the Act trammels the right of free exercise -- a right that lies at the core of our constitutional liberties -- as protected by the Religious Freedom Restoration Act. We conclude it does."
The appeals court, widely regarded as the second-most powerful U.S. court after the Supreme Court, found the mandate was burdensome to business owners even if it does not require them to pay for contraception directly.
"The burden on religious exercise does not occur at the point of contraceptive purchase," wrote Judge Janice Rogers Brown, an appointee of former President George W. Bush. "It occurs when a company's owners fill the basket of goods and services that constitute a healthcare plan."
The court found that while companies with small ownership groups may challenge the mandate on religious grounds, for-profit corporations may not, SCOTUSblog reported.
The Supreme Court is already being asked to rule on three other lower court rulings on the contraception coverage mandate, and Friday's decision may prompt the court to take up the issue during its current term, the report said.