Colorado Civil Rights Com'n v. Travelers Ins. Co.

• Decision Date: 18 July 1988
• Docket Number: No. 86SC159,86SC159
• Citation: 759 P.2d 1358
• Parties: 47 Empl. Prac. Dec. P 38,289, 57 USLW 2074, 10 Employee Benefits Cas. 1843 COLORADO CIVIL RIGHTS COMMISSION, Petitioner and Cross-Respondent, and Amy J. Budde, Complainant, v. The TRAVELERS INSURANCE COMPANY and Miles & McManus, Respondents and Cross- Petitioners.
• Court: Colorado Supreme Court

Page 1358

759 P.2d 1358

47 Empl. Prac. Dec. P 38,289, 57 USLW 2074,

10 Employee Benefits Cas. 1843

COLORADO CIVIL RIGHTS COMMISSION, Petitioner and Cross-Respondent and Amy J. Budde, Complainant, v. The TRAVELERS INSURANCE COMPANY and Miles & McManus Respondents and Cross- Petitioners.

No. 86SC159.

Supreme Court of Colorado En Banc.

July 18, 1988.

Rehearing Denied Sept. 12, 1988.

Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Kathryn J. Winters, First Asst. Atty. Gen., Denver, for petitioner and cross-respondent.

Rothgerber, Appel, Powers & Johnson, Michael D. Nosler, Laura A. Wing, Mark Spitalnik, Denver, for respondent and cross-petitioner The Travelers Ins. Co.

Miles & McManus, n/k/a Miles, McManus & Epstein, Richard G. McManus, Jr., Denver, pro se.

David H. Miller, Denver, for amicus curiae American Civil Liberties Union Foundation of Colorado.

Pamela A. Gagel, Denver, for amicus curiae Colorado Women's Bar Ass'n.

KIRSHBAUM, Justice.

In Budde v. Travelers Insurance Company, 719 P.2d 376 (Colo.App.1986), the Court of Appeals set aside an order of the Colorado Civil Rights Commission (the Commission) containing the conclusion that the employer and an insurer of Amy J. Budde had violated statutory and administrative prohibitions against discrimination on the basis of sex. Specifically, the Commission concluded that Miles & McManus, Budde's employer, violated section 24-34-402(1)(a), 10 C.R.S. (1982 & 1987 Supp.); section 80.8(b) of the Colorado Civil Rights Commission Sex Discrimination Rules, 3 C.C.R. 708-1; and article II, section 29, of the Colorado Constitution (the Equal Rights Amendment) when it provided Budde a group insurance policy covering complications of pregnancy but excluding expenses incurred during a normal pregnancy and childbirth. The Commission also concluded that The Travelers Insurance Company (Travelers) violated section 24-34-402(1)(e), 10 C.R.S. (1982), by offering a group insurance policy with those coverage restrictions to Miles & McManus. The Court of Appeals concluded that Miles & McManus did not discriminate on the basis of sex when it provided such a health insurance policy as compensation to its employees. Having granted certiorari to review this conclusion, we reverse and remand with directions.

I

From early October of 1981 until March 8, 1982, Miles & McManus employed Budde as a secretary and provided a comprehensive group medical insurance policy underwritten by Travelers in conjunction with Budde's employment. ¹ This insurance policy provided benefits for complications of pregnancy, but excluded reimbursement of medical expenses resulting from normal pregnancy. ² In late January or early February of 1982, Budde informed her employer that she was pregnant. On March 8, 1982, Budde's employment was terminated. She experienced a normal pregnancy and childbirth, and incurred medical expenses of $1,751.29. When Budde filed a claim with Travelers for reimbursement of these expenses, Travelers denied the claim on the basis that the costs of her normal pregnancy and childbirth were not covered by the employer's policy.

On March 10, 1982, Budde filed charges with the Commission alleging that the failure of Miles & McManus to provide an insurance policy affording benefits for normal pregnancy constituted discrimination and that Travelers aided and abetted in this allegedly discriminatory practice by issuing a policy lacking coverage for expenses incurred as a result of normal pregnancy. After investigating the charges, the Commission Director determined that there was probable cause to credit Budde's allegations of discriminatory practice. ³ The Commission subsequently filed complaints against Miles & McManus and Travelers, and the two actions were consolidated by the Commission hearing officer.

The Commission hearing officer granted a motion for summary judgment in support of the complaint. The hearing officer concluded that the insurance policy provided to Budde was discriminatory in nature in violation of section 24-34-402(1)(a), 10 C.R.S. (1982 & 1987 Supp.) (proscribing discrimination on the basis of sex in matters of compensation), and the Colorado Civil Rights Commission Sex Discrimination Rules, section 80.8(b), 3 C.C.R. 708-1 (requiring that pregnancy or childbirth be treated by employer in same manner as other disabilities for purposes of accrual of benefits or payment of health or disability insurance). Also concluding that Travelers aided and abetted in the discriminatory employment practice, the hearing officer ordered Miles & McManus and Travelers to pay Budde the medical expenses she incurred as a result of her pregnancy and ordered Miles & McManus to adopt a benefits plan that provided coverage for normal pregnancy.

The Commission reviewed the decision of the hearing officer on its own motion and affirmed. The Commission adopted the hearing officer's findings and conclusions and, as an additional basis for its determination, observed that the Equal Rights Amendment, Colo. Const. art. II, § 29, required the conclusion that "all health insurance plans must treat pregnancy as [they] would any other sickness or disability." The Commission also concluded that although section 10-8-122, 4A C.R.S. (1987) (requiring that sickness and accident insurance policies provide coverage for a sickness, disease or accident which is a complication of pregnancy in the same manner as any other sickness, disease or accident is covered under the policy), established a minimum insurance coverage requirement, section 24-34-402 and the Equal Rights Amendment established an additional requirement. The Commission reasoned that Travelers could not disclaim responsibility for aiding and abetting a discriminatory employment practice under section 24-34-402(1)(e), 10 C.R.S. (1982), simply because it had offered Miles & McManus the option of selecting a policy providing comprehensive coverage for pregnancy.

Both Miles & McManus and Travelers appealed the Commission's order. A divided panel of the Court of Appeals set aside the order, concluding that section 24-34-402 does not require that insurance benefits be provided for expenses incurred as the result of a normal pregnancy and that the Commission's interpretation of section 80.8(b) of the Commission Rules as requiring such benefits was inconsistent with section 24-34-402. The Court of Appeals majority also concluded that the Equal Rights Amendment does not proscribe exclusion of insurance benefits on the basis of a difference in gender.

II

A

The Commission urges that pursuant to the Equal Rights Amendment, Colo. Const. art. II, § 29, and section 24-34-402, 10 C.R.S. (1982 & 1987 Supp.), an employer discriminates on the basis of sex by providing employees as part of a total compensation package a group health insurance policy providing coverage only for complications of pregnancy and excluding from coverage expenses incurred during a normal pregnancy. We agree.

Section 24-34-402 provides in pertinent part as follows:

Discriminatory and unfair employment practices. (1) It shall be a discriminatory or unfair employment practice:

(a) For an employer to refuse to hire, to discharge, to promote or demote, or to discriminate in matters of compensation against any person otherwise qualified because of handicap, race, creed, color, sex, age, national origin, or ancestry....

§ 24-34-402, 10 C.R.S. (1982 & 1987 Supp.). ⁴ This statutory language unambiguously proscribes discrimination in matters of compensation on the basis of sex; it is undisputed that the provision of group health insurance to Budde in conjunction with her employment constituted a matter of compensation.

The language employed in section 24-34-402 is similar to that found in Title VII of the Civil Rights Act of 1964, Pub.L. No. 88-352, 78 Stat. 253 (codified as amended at 42 U.S.C. § 2000e (1982)). ⁵ Although there are close parallels between section 24-34-402 and Title VII, Colorado's antidiscrimination legislation antedated the federal statute. See C.R.S.1953, §§ 81-19-1 to -8. The provision proscribing discrimination on the basis of sex in matters of employment was added to C.R.S.1963, section 80-21-6(2), the immediate predecessor to section 24-34-402, in 1969. See Act approved July 1, 1969, ch. 205, § 1, 1969 Colo.Sess.Laws 667. ⁶

In concluding that the health insurance policy provided here did not violate section 24-34-402, the Court of Appeals majority relied upon the United States Supreme Court decision in General Electric Co. v. Gilbert, 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976), interpreting the provisions of Title VII. In Gilbert, the Supreme Court concluded that an employer did not violate the provisions of Title VII by providing its employees as part of a total compensation package a disability plan which provided weekly benefits to employees disabled by sickness or accident but which excluded from coverage disabilities arising from pregnancy. Observing that Title VII contained no definition of the term "discrimination," ^{7 7} the Court concluded by analogy to decisions construing the equal protection clause of the fourteenth amendment that by enacting Title VII Congress intended to require coverage of pregnancy benefits only in situations in which the exclusion of such benefits was a "subterfuge" designed to accomplish "an invidious discrimination against the members of one sex." Id. at 136, 97 S.Ct. at 408 (quoting Geduldig v. Aiello, 417 U.S. 484, 496-97, 94 S.Ct. 2485, 2492, 41 L.Ed.2d 256 (1974) (decided under equal protection grounds)). The Court further concluded that the disability benefits plan at issue did not constitute a mere pretext to effect an invidious discrimination against the members of one sex, because the plan did not divide potential recipients into groups strictly on the basis of gender but rather divided potential benefits recipients into the non-gender-based groups of...