A small Minnesota firm founded on Catholic principles should be exempt from the Obamacare requirement that a company's group health insurance provide contraception coverage for women employees who want it, the company's attorney told a three-judge panel of the U.S. 8th Circuit Court of Appeals on Thursday.

The attorney said that Annex Medical, based in Minnetonka, should be exempted under the Religious Freedom Restoration Act.

But an attorney for the U.S. Justice Department countered that while the exemption is available for religious organizations, the company, which makes medical devices, has no legal grounds for opting out of that portion of the federal Affordable Care Act.

The three judge-panel, sitting in its courtroom on the fifth floor of the U.S. Courthouse in St. Paul, also listened to arguments in a similar case brought by a company in Missouri, which is also covered by the 8th Circuit.

Despite pointed questions and at least some skepticism directed at the companies' attorneys, there was no clear indication how the panel might rule.

It may not matter, because the U.S. Supreme Court has been asked to rule on a similar case involving national craft-store chain Hobby Lobby. If the high court agrees to take the case, its decision will likely resolve the fate of Annex Medical and dozens of other cases wending their way through federal courts across the country.

Stuart Lind, who founded Annex Medical and a second company, is a devout Catholic with moral objections to contraception, said his attorney, Erick Kaardal. In 2001, Lind conducted a Catholic ceremony, attended by 30 people and officiated by a priest, making a formal commitment to operate the companies "in accordance with the teaching of Jesus Christ," according to court papers.

Companies with 50 or more employees must provide health insurance that includes birth control coverage. As owner of a company with only 16 employees, Lind is not required by Obamacare to provide group health insurance, but he wants to do it both to fulfill a religious obligation and to remain competitive with other firms, Kaardal said. He pointed out that under federal law, if a company with fewer than 50 workers does offer health insurance, it must include contraceptive coverage.

Local health insurance companies do not offer insurance without contraceptive coverage, so currently Lind doesn't offer workers insurance, although he provides some reimbursement for some medical costs, Kaardal said. He said there have been negotiations with one local company and he is hopeful they will offer Annex Medical a plan that does not include birth control.

Questioning how it applies

Eighth District Chief Judge William Riley pressed Kaardal on Thursday as to why a business should be eligible for a religious exemption. "I don't see how the regulation applies to Annex Medical," he said.

Adam Jed, a Justice Department attorney, said that while churches or other religious organizations can have a religious belief, the same does not apply to for-profit corporations.

Kaardal said after the hearing that he is not trying to overturn Obamacare, but simply to get an exemption for his client.

If Annex Medical gets the exemption, Kaardal predicted that hundreds of other Minnesota companies would apply in federal court for the exemption.

In January, U.S. District Judge David Doty denied a motion by Annex Medical for a temporary injunction against the mandate for contraceptive coverage, but in February, a three-judge panel of the 8th Circuit granted the temporary injunction pending the outcome of the case.

In April, the Minnesota chapter of the American Civil Liberties Union filed an amicus brief supporting the Justice Department and opposing the exemption, saying Annex Medical was attempting to invoke the Religious Freedom Restoration Act "to deny their female employees, who may have different beliefs about contraception use from their employer, equal health benefits."

According to the website of the Becket Fund for Religious Liberty, which backs Annex Medical, federal judges have granted 30 preliminary injunctions and rejected only five in similar cases. However two of three U.S. circuit courts of appeals have sided with the Justice Department.