Bankers Life & Cas. Co. v. Peterson, 93-363

• Decision Date: 28 December 1993
• Docket Number: No. 93-363,93-363
• Citation: 263 Mont. 156,866 P.2d 241
• Parties: , 62 USLW 2483 BANKERS LIFE & CASUALTY CO., Petitioner and Appellant, v. Lea PETERSON, Lorili Barnett, Kristi Wolf, Diane Chaidez and Montana Human Rights Commission, Respondents and Respondents.
• Court: Montana Supreme Court

Page 241

866 P.2d 241

263 Mont. 156, 62 USLW 2483

BANKERS LIFE & CASUALTY CO., Petitioner and Appellant, v. Lea PETERSON, Lorili Barnett, Kristi Wolf, Diane Chaidez and Montana Human Rights Commission, Respondents and Respondents.

No. 93-363.

Supreme Court of Montana.

Submitted Nov. 30, 1993.

Decided Dec. 28, 1993.

Tom K. Hopgood, Luxan & Murfitt, Helena, for petitioner and appellant.

Peter M. Meloy, Meloy Law Firm, David Rusoff, Montana Human Rights Com'n, Helena, for respondents and respondents.

GRAY, Justice.

In a case of first impression, the issue before this Court is whether an individual major medical expense insurance policy that excludes coverage for normal pregnancy and childbirth violates § 49-2-309, MCA. Unique to Montana, § 49-2-309, MCA, prohibits discrimination based solely on sex in the issuance, operation, coverage, rates or premiums of any type of insurance policy. The First Judicial District Court, Lewis and Clark County, affirmed a determination by the Montana Human Rights Commission (the Commission) that the policy issued by Bankers Life and Casualty Co. (Bankers Life) unlawfully discriminated against female policyholders. We affirm the District Court.

Bankers Life is an insurance company authorized to do business in Montana. Lorili Barnett, Lea Peterson, Kristi Wolf and Diane Chaidez (collectively the Charging Parties), in separate transactions, purchased a "Major Medical Expense Policy" from Bankers Life. The policies contained the following provisions at issue in this case:

BENEFIT PROVISIONS--We'll pay covered expenses incurred by a family member due to injury, sickness or mental illness.

EXCEPTIONS--This policy does not cover expenses for:

. . . . .

(13) Normal pregnancy and childbirth. Complications of pregnancy expenses are covered as a sickness.

In conjunction with this policy, Bankers Life offered an optional Maternity Benefits Rider which would provide coverage for normal pregnancy and childbirth expenses. The Charging Parties did not purchase the Maternity Benefits Rider.

The Charging Parties subsequently gave birth and submitted their normal maternity expenses to Bankers Life; Bankers Life denied coverage for those expenses. Pursuant to § 49-2-309, MCA, each of the Charging Parties filed a complaint with the Commission, alleging unlawful sex discrimination in an insurance policy. The four cases were consolidated and a hearing was held on January 24, 1992. The Commission issued its Findings of Fact, Conclusions of Law and Order on April 17, 1992, determining that Bankers Life had unlawfully discriminated against the Charging Parties by excluding coverage and denying benefits for normal maternity expenses.

Bankers Life petitioned the District Court for judicial review of the Commission's decision on May 8, 1992. The State of Montana, on behalf of the Commission, was granted leave to intervene in the action. After oral argument, the District Court issued its decision and order on May 19, 1993, determining that, because pregnancy occurs only to women, any classification which relies on pregnancy as the determinative criterion is a distinction based on sex. Because Bankers Life's policy excluded benefits for pregnancy and childbirth, the court concluded that the policy unlawfully discriminated against female policyholders in violation of § 49-2-309, MCA.

The parties agree that only issues of law are before this Court. Therefore, our standard of review is whether the District Court's interpretation of the law is correct. Mooney v. Brennan (1993), 257 Mont. 197, 199, 848 P.2d 1020, 1022. Thus, we focus on the District Court's interpretation of § 49-2-309, MCA, in light of the agreed facts. The legal issues before us are whether § 49-2-309, MCA, prohibits discrimination on the basis of pregnancy in a major medical expense insurance policy and, if so, whether the Bankers Life policies at issue violate the statute.

1) Does § 49-2-309, MCA, prohibit discrimination on the basis of pregnancy in a major medical expense insurance policy?

The District Court concluded that discrimination on the basis of pregnancy constitutes discrimination on the basis of sex, relying on Massachusetts Elec. Co. v. Massachusetts Comm'n Against Discrimination (1978), 375 Mass. 160, 375 N.E.2d 1192, 1198. As a result, the court concluded that § 49-2-309, MCA, prohibits discrimination on the basis of pregnancy. On appeal, Bankers Life contends that this conclusion is erroneous as a matter of law.

This Court has not interpreted § 49-2-309, MCA, since its passage in 1983. The statute, which is sometimes referred to as Montana's "unisex" insurance statute, provides in pertinent part:

Discrimination in insurance and retirement plans. (1) It is an unlawful discriminatory practice for any financial institution or person to discriminate solely on the basis of sex or marital status in the issuance or operation of any type of insurance policy, plan, or coverage or in any pension or retirement plan, program, or coverage, including discrimination in regard to rates or premiums and payments or benefits.

Section 49-2-309, MCA, has no federal or sister-state counterpart. Thus, federal cases and cases from other states interpreting anti-discrimination statutes in different scenarios are not binding on this Court. Indeed, even the Montana cases discussed below involved different sections of the Montana Human Rights Act.

Bankers Life relies on General Electric Co. v. Gilbert (1976), 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343, and its limited progeny, to support the assertion that pregnancy-related distinctions do not constitute sex discrimination. Gilbert held that an employee disability benefit plan which excluded benefits for pregnancy did not unlawfully discriminate on the basis of sex in violation of Title VII of the 1964 Civil Rights Act, 42 U.S.C. § 2000e-2(a)(1) (Title VII). Gilbert, 429 U.S. at 135, 97 S.Ct. at 407, 50 L.Ed.2d at 353. Although the language in Gilbert appears to support Bankers Life's position, Gilbert is not controlling authority for numerous reasons.

First, the United States Supreme Court's interpretation of the federal statute prohibiting sex discrimination in employment is not binding on this Court's interpretation of Montana's unisex insurance statute. See North v. Bunday (1987), 226 Mont. 247, 254, 735 P.2d 270, 275. Moreover, Congress effectively overruled Gilbert by passing the Pregnancy Discrimination Act, which amended Title VII to specifically include pregnancy as a basis of unlawful discrimination in matters of employment. 42 U.S.C. § 2000e(k). Following the passage of the Pregnancy Discrimination Act, the United States Supreme Court stated that Congress had overruled Gilbert and unequivocally held that discrimination based on a woman's pregnancy is, on its face, discrimination because of her sex. Newport News Shipbuilding & Dry Dock Co. v. EEOC (1983), 462 U.S. 669, 684, 103 S.Ct. 2622, 2632, 77 L.Ed.2d 89, 103.

Most importantly, like the majority of state courts, this Court refused to follow Gilbert. See Mountain States Telephone v. Comm'r of Labor (1980), 187 Mont. 22, 608 P.2d 1047. As we stated in Mountain States:

[m]ountain Bell's position fails to take into account the rather checkered history of Gilbert, including the recent significant addition to Title VII demonstrating a contrary congressional intent, and the cases decided after Gilbert, demonstrating a consistent refusal on the part of the majority of the courts to follow Gilbert.

Mountain States, 608 P.2d at 1055. We decline to follow Gilbert in this case and, indeed, consider Montana law sufficient to resolve this issue.

In Mountain States, this Court determined that distinctions based on pregnancy are sex-linked classifications. Although we were primarily concerned with the question of federal preemption of the Montana Maternity Leave Act, §§ 49-2-310 and -311, MCA, we stated that:

[p]regnancy is a condition unique to women, and the ability to become pregnant is a primary characteristic of the female sex. Thus, any classification which relies on pregnancy as the determinative criterion is a distinction based on sex ... By definition, [placing pregnancy in a class by itself] discriminates on account of sex; for it is the capacity to become pregnant which primarily differentiates the female from the male.

Mountain States, 608 P.2d at 1056 (citations omitted). Citing Massachusetts Elec., we stated that the exclusion of pregnancy-related disabilities from a comprehensive disability plan constituted sex discrimination in employment. Mountain States, 608 P.2d at 1056.

In 1984, we reaffirmed the principle that differential treatment of pregnancy is gender-based discrimination because only women can become pregnant. Miller-Wohl Co., Inc. v. Comm'r of Labor (1984), 214 Mont 238, 254, 692 P.2d 1243, 1251. Again, the primary issue in that case was one of federal preemption. However, in Miller-Wohl, we determined that an employer's sick leave policy created a disparate effect on women who became pregnant compared to men who did not. Although the policy was facially neutral, it nonetheless subjected women to job termination on a basis not faced by men. We concluded, therefore, that the policy was gender-based discrimination. Miller-Wohl, 692 P.2d at 1052.

Mountain States and Miller-Wohl established that differential treatment of pregnancy constitutes sex discrimination in Montana. Section 49-2-309, MCA, prohibits sex discrimination in the operation, coverage, pricing and benefits of an insurance policy. We conclude, therefore, that § 49-2-309, MCA, prohibits discrimination based on pregnancy in a major medical expense insurance policy. The plain language of § 49-2-309, MCA, and our previous holdings in Mountain States and Miller-Wohl, amply support our conclusion.

We note, moreover, that the majority of courts considering the issue of whether distinctions based on pregnancy constitute sex discrimination...