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Hobby Lobby Finds Loophole To Avoid Daily Fine Of 1.3M

Facing daily fines of $1.3 million for refusing to provide employees with health coverage for emergency contraception, the chain has now found a loophole in U.S. federal law which will allow them several more months before they have to pay a dime to Uncle Sam.
OKLAHOMA CITY (ABC 4 News) - The legal team for Hobby Lobby -- a nationwide craft store chain -- is certainly earning its paycheck for this one.

Facing daily fines of $1.3 million for refusing to provide employees with health coverage for emergency contraception, the chain has now found a loophole in U.S. federal law which will allow them several more months before they have to pay a dime to Uncle Sam.

Last month, Hobby Lobby announced that it would not cover emergency contraception for its employees -- most notably, the "morning after pill," which the company's president believes is no different than other abortion methods. Since its founding in 1972, the company's business practices and ethics have run parallel with the religious beliefs of its owners -- currently, CEO David Green.

The U.S. Patient Protection and Affordable Care Act, adopted in 2010, continues to take effect and impact citizens and businesses around the country. A certain provision of the act -- also known as Obamacare -- which requires employers to provide coverage for emergency contraception methods kicked in on Jan. 1. The penalty for failing to provide such coverage is a daily fine to the Internal Revenue Service (IRS) of $1.3 million.

Green had announced prior to Jan. 1 that Hobby Lobby would stand by its religious beliefs, and refuse to provide the coverage.

"We simply cannot abandon our religious beliefs to comply with this mandate," Green said.  "We are Christians, and we run our business on Christian principles."

So far, Hobby Lobby has accrued fines totaling more than $18 million. However, attorneys for the store have discovered a way to delay the beginning of its employees' health insurance coverage for 2013. In other words, attorneys say the company is effectively able to extend employees' coverage from 2012 and be exempt from the fines.

"Hobby Lobby discovered a way to shift the plan year for its employees' health insurance, thus postponing the effective date of the mandate for several months," said Peter Dobelbower, the company's chief counsel.

The Affordable Care Act requires employer-provided health insurance to cover all FDA-approved contraception methods, sterilization methods, and education and counseling for women. That provision took effect last August but the fines didn't start accruing until Jan. 1.

On Dec. 26, Hobby Lobby asked the U.S. Supreme Court for an emergency injunction that would have blocked the fines while appropriate courts hear the case. The request was denied. Some officials believe that Hobby Lobby is merely postponing the inevitable, and will still be on the hook for hundreds of millions of dollars when its new health plan finally kicks in. However, the loophole does give the store's attorneys more time to find a legal solution.

Hobby Lobby has more than 500 locations in 42 states nationwide -- including 6 in Utah -- and employs more than 13,000 workers. The company generates $2.6 billion in sales.
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