Insurance Com'r of State of Md. v. Equitable Life Assur. Soc. of U.S.

• Decision Date: 01 September 1993
• Docket Number: No. 26,26
• Citation: 664 A.2d 862,339 Md. 596
• Parties: The INSURANCE COMMISSIONER OF the STATE OF MARYLAND et al. v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES. ,
• Court: Maryland Court of Appeals

Page 596

339 Md. 596

664 A.2d 862

The INSURANCE COMMISSIONER OF the STATE OF MARYLAND et al. v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES.

No. 26, Sept. Term, 1993.

Court of Appeals of Maryland.

Sept. 11, 1995.

Evelyn O. Cannon, Assistant Attorney General (J. Joseph Curran, Attorney General; Dennis W. Carroll, Assistant Attorney General) all on brief, Baltimore, Martha F. Davis (Deborah A. Ellis, NOW Legal Defense and Educ. Fund, all on brief), New York City and Laurence Eisenstein, (Covington & Burling, on brief), Washington, DC, Sally L. Swann, Assistant General Counsel, Maryland Com'n on Human Relations Glendora C. Hughes, General Counsel (both on brief), Baltimore, for appellant.

Barrett W. Freedlander (Weinberg and Green), Baltimore, Joseph G. Williams, Jr., (The Equitable Life Assur. Soc. of the U.S.) both on brief, New York City, for appellee.

Wendy A. Kronmiller, Wright, Constable & Skeen, all on brief, Baltimore, for American Ass'n of Retired Persons, The American Ass'n of University Women-Maryland, The American Jewish Congress, B'Nai B'rith Women, Equal Rights Advocates, Inc., Federation of Maryland Teachers, AFT-AFL-CIO, The League of Women Voters of Maryland, Inc., The National Clearinghouse for Ending Sex Discrimination in Ins., National Displaced Homemaker's Network, The Northwest Women's Law Center, Puerto Rican Legal Defense Educ. Fund, and The Women's Law Center of Maryland, Inc., as amicus curiae.

Stephen L. Kass, Deborah Goldberg, Monica Bose, Berle, Kass & Case, all on brief, New York City; Susan Goering, American Civil Liberties Union Foundation of Maryland, on brief, Baltimore, for American Civil Liberties Union of Maryland, Americans for Democratic Action, Inc., Coalition for Labor Union Women, Federally Employed Women, Inc., Feminist Majority Foundation, Maryland State Teachers Ass'n, National Council of Negro Women, Inc., National Educ. Ass'n, The National Federation of Business and Professional Women's Clubs, National Organization for Women, National Woman's Party, and Women's Legal Defense Fund, as amicus curiae.

Alan N. Gamse, P.C., Thomas Waxter, Jr., P.C., Franklin T. Caudill, P.C., Semmes, Bowen and Semmes, all on brief, Baltimore, for National Ass'n of Independent Insurers and State Farm Mut. Auto. Ins. Co., as amicus curiae.

David M. Funk, Bryan D. Bolton, Steven J. Troy, Shapiro and Olander, all on brief, Baltimore, for League of Life and Health Insurers of Maryland, Inc., as amicus curiae.

Phillip E. Stano, American Council of Life Ins., and Theresa L. Sorota, Health Ins. Ass'n of America, both on brief, Washington, DC, for Amici American Council of Life Ins. and Health Ins. Ass'n of America, filed on behalf of The Equitable Life Assur. Soc. of the U.S., as amicus curiae.

Craig A. Berrington, David F. Snyder, James L. Kimble, all on brief, Washington, DC; James J. Doyle, Jr., James J. Doyle, III, Doyle & Craig, P.A.,; Robert B. Barnhouse, Deborah T. Garren, Piper & Marbury, all on brief, Baltimore, for American Ins. Ass'n., as amicus curiae.

Argued Before MURPHY, C.J., and ELDRIDGE, RODOWSKY, ^* McAULIFFE, CHASANOW, KARWACKI and BELL, JJ.

ELDRIDGE, Judge.

The Insurance Commissioner held in this case, inter alia, that portions of Ch. 479 of the Acts of 1975, codified in Maryland Code (1957, 1994 Repl.Vol.), Art. 48A, §§ 223(b)(2), 226(c)(2) and 234A(b), authorizing differentials in certain insurance rates and underwriting based on gender if actuarially justified, are unenforceable in light of Article 46 of the Maryland Declaration of Rights (the Equal Rights Amendment or "E.R.A."). The Circuit Court for Baltimore City, in an action for judicial review of the Insurance Commissioner's determination, reversed in part the Commissioner's decision and held that Ch. 479 did not violate the E.R.A. We issued a writ of certiorari primarily to review the Insurance Commissioner's and circuit court's constitutional determinations. For reasons hereinafter set forth, we shall not reach the constitutional issues decided below. Instead, we shall direct that this case be remanded to the Insurance Commissioner.

I.

When this controversy began in 1975, the Maryland Human Relations Commission was authorized to enforce, in its entirety, Code (1957, 1994 Repl.Vol.), Art. 49B, § 8(a), which states as follows:

"(a) It is unlawful for any person, business, corporation, partnership, copartnership or association or any other individual, agent, employee, group or firm which is licensed or regulated by a unit in the Department of Licensing and Regulation as set out in § 2-108 of the Business Regulation Article to refuse, withhold from, deny or discriminate against any person the accommodations, advantages, facilities, privileges, sales, or services because of the race, sex, creed, color, national origin, marital status, or physical or mental handicap of any person. Nothing in this section shall be construed or interpreted to prohibit any person, business, corporation, partnership, copartnership, association or any other individual, agent, employee, group or firm which is licensed or regulated by the Department of Licensing and Regulation from the right to refuse, withhold from, or deny any person for failure to conform to the usual and regular requirements, standards, and regulations of any person, business, corporation, partnership, copartnership, or association contemplated by this section so long a the denial is not based upon discrimination on the grounds of race, sex, color, creed, or national origin, marital status, or physical or mental handicap."

The Human Relations Commission began an investigation into alleged discriminatory practices of the Equitable Life Assurance Society of the United States in 1975. In 1978, the Commission issued a written finding of probable cause, charging that Equitable was discriminating on the basis of sex in setting rates for life insurance policies and discriminating on the bases of sex and race in setting rates and underwriting practices with regard to disability income insurance policies. Equitable challenged the Human Relations Commission's jurisdiction, arguing that insurers were already subject to the jurisdiction and regulation of the Insurance Commissioner, and that the General Assembly did not intend to grant concurrent jurisdiction to the Human Relations Commission. Ultimately, Equitable's challenge came before this Court, Equitable Life v. State Comm'n, 290 Md. 333, 430 A.2d 60 (1981). Our opinion in Equitable Life held that (290 Md. at 337, 430 A.2d at 63)

"one's ability to obtain an insurance policy is an advantage, and since under Art. 41, § 211A(a) the Insurance Division is included within the Department of Licensing and Regulation, it is plain that § 8 grants the Commission on Human Relations jurisdiction to investigate alleged unfair discriminatory practices by insurers." ¹

In April 1982, subsequent to the proceedings in this Court, the Human Relations Commission filed an amended statement of charges, and a public hearing was held before a Commission hearing examiner during June and July 1982. ² Equitable's principal argument regarding the charges of sex discrimination was based on the amendments to the Insurance Code enacted by Ch. 479 of the Acts of 1975. Chapter 479 amended Art. 48A by adding new subsections § 223(b)(2) and § 226(c)(2). The new subsections, identically worded, read as follows:

"(2) Notwithstanding any other provisions in this section, an insurer may not make or permit any differential in ratings, premium payments or dividends for any reason based on sex of an applicant or policyholder unless there is actuarial justification for the differential."

In addition, Ch. 479 amended Art. 48A, § 234A(b), to read as follows:

"(b) No insurer shall require the existence of special conditions, facts, or situations as a condition to its acceptance or renewal of, a particular insurance risk or class of risks in an arbitrary, capricious, unfair or discriminatory manner based in whole or part upon the race, creed, color, sex, religion, national origin, or place of residency. Actuarial justification may be considered with respect to sex."

Equitable argued that by enactment of Ch. 479, the General Assembly expressly authorized discrimination in rate setting and underwriting based on gender if there existed an actuarial basis for the differentials. As to the charges of race discrimination in connection with its disability income policies, Equitable's primary contention was that the charges were based on inaccurate factual information.

On August 31, 1982, the Human Relations Commission's hearing examiner issued an opinion and order dismissing the amended statement of charges because the original statement had not been made under oath. This decision was appealed to the Commission's Appeal Board which reversed and remanded the case to the hearing examiner for further proceedings.

Meanwhile, the original hearing examiner had resigned, and a new hearing examiner was directed to render an opinion based on the record. On April 28, 1986, the new hearing examiner issued a opinion and order finding that Equitable was engaged in unlawful discrimination on the basis of sex, in violation of Art. 49B, § 8, in setting rates for its life insurance policies because of its reliance on gender based mortality tables. Moreover, the hearing examiner found that Equitable was discriminating on the bases of race and sex, with regard to the issuance of its disability income insurance policies, because of its occupation and income eligibility requirements. ³ In addition, the hearing examiner held that the exclusion of pregnancy from coverage as a disability under Equitable's disability income insurance policies violated Art. 49B, § 8, as impermissible gender discrimination. Equitable was ordered to cease and desist from the discriminatory practices found by the hearing examiner.

On September 17, 1986, Equitable requested that the ...