State Division of Human Rights, ex rel. Ewing v. Prudential Ins. Co. of America, 12414
| Decision Date | 30 November 1978 |
| Docket Number | No. 12414,12414 |
| Citation | 273 N.W.2d 111 |
| Parties | 19 Empl. Prac. Dec. P 9025 STATE of South Dakota, DIVISION OF HUMAN RIGHTS, ex rel. Robbie EWING, Appellant, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA and Gary Heuer, Prudential District Agent, and Northeast South Dakota Community Action Program, Respondents. |
| Court | South Dakota Supreme Court |
Lori Scully and LeAnn Larson, Finke, Asst. Attys. Gen., Pierre, for appellant; William J. Janklow, Atty. Gen., Pierre, on brief.
H. L. Fuller of Woods, Fuller, Shultz & Smith, Sioux Falls, for respondents Prudential Ins. Co. and Gary Heuer.
David E. Gilbertson, Sisseton, for respondent N. E. South Dakota Community Action Program.
This is an appeal from an order of the Human Rights Commission (Commission) finding that exclusion of benefits to unmarried persons for pregnancy and pregnancy-related disabilities under a group health insurance plan constituted illegal discrimination on the basis of sex. The circuit court reversed the Commission upon finding that providing a group insurance policy which does not include pregnancy in its coverage of unmarried persons does not constitute discrimination on the basis of sex. We affirm the circuit court in its reversal of the Commission.
The facts were stipulated by the parties. The Prudential Insurance Company of America (Prudential) is a life and health insurance company engaged in the business of selling insurance privately to selected risks. Prudential had issued a group insurance policy to the Northeast South Dakota Community Action Program (CAP). Prudential's policy form was approved by the South Dakota Commission of Insurance or by the Director of the Division of Insurance of the Department of Commerce and Consumer Affairs. The policy provided certain medical and hospital expense benefits to CAP employees who became covered individuals under the policy's terms.
The Prudential policy provided two basic classes of coverage, namely, employee only and employee and dependent. Complainant Ewing, who was at all times mentioned herein an employee of CAP, enrolled for employee-only health coverage due to the fact that she was not married and had no dependents. Thereafter, Ewing gave birth to a child and filed a claim with Prudential for maternity benefits which would pay for the medical expenses of the childbirth. Ewing's employee-only coverage did not include maternity benefits. The insurance policy provided maternity benefits to those employees who listed a spouse as a dependent and paid an increased premium. Therefore, Ewing's claim for maternity benefits was denied.
Ewing filed a complaint with the Commission alleging that "(s)ince marriage is not a prerequisite for pregnancy, this policy discriminates against unwed mothers and married women who for various reasons would not list their husbands as dependents" and that such denial of maternity benefits constituted sex discrimination in employment and public accommodations. The Commission concluded that CAP was an employer and Prudential was a public accommodation within the jurisdiction of the Commission under the South Dakota Human Relations Act of 1972 1 (the Act). The Commission further concluded that the exclusion of benefits for pregnancy and pregnancy-related disabilities under group health insurance for employee-only coverage constituted illegal sex discrimination under the Act and the administrative rules promulgated thereunder.
This administrative decision was appealed to the circuit court. In reversing the Commission, the circuit court found that Prudential was not a public accommodation under the Act and that the Commission exceeded its statutory authority by adopting ARSD 20:03:09:12. The circuit court further found that the differentiation in maternity benefits in the group insurance policy was based upon marital status and not upon sex and held that such differentiation did not constitute illegal sex discrimination. On appeal to this court pursuant to SDCL 1-26-37, Ewing assigns as error the circuit court findings and holding listed above. Specifically, Ewing contends that Prudential is a covered public accommodation under the Act, that the Commission did not exceed its authority and did not legislate by passing ARSD 20:03:09:12, that differentiation in the insurance coverage was based upon sex and not marital status, and that providing an insurance policy for single persons which does not cover pregnancy is discrimination based upon sex.
In reviewing the circuit court's judgment, we must make the same review of the administrative agency's action as does the circuit court. SDCL 1-26-36. Our decision as to whether the administrative decision can be sustained must be made without the presumption that the circuit court's decision is correct. Piper v. Neighborhood Youth Corps, 1976, S.D., 241 N.W.2d 868.
The first issue is whether Prudential is a covered public accommodation under the Act. Among other proscriptions, the Act prohibits sex discrimination in the provision of public accommodations. SDCL 20-13-23. 2 In pertinent part, public accommodations is defined by the Act as "each and every place, establishment, or facility of whatever kind, nature, or class that caters or offers services, facilities, or goods to the general public for a fee, charge, or gratuitously." SDCL 20-13-1(12). Prudential does not solicit the patronage of the general public and is not a place of general trade; it only insures selected risks. The parties even stipulated to the fact that Prudential engaged itself in the business of selling insurance privately to selected risks. Such solicitation and selling through individual agents dealing with selected groups and selected risks on matters of private contract does not constitute a public accommodation. 3 Therefore, we conclude that Prudential is not a covered public accommodation under the Act and is not subject to the jurisdiction of the Commission under the circumstances present in this case. 4
The Commission's jurisdiction over CAP is clearly established. It was stipulated that Ewing was at all times concerned in this case an employee of CAP. The Act, SDCL 20-13-10, expressly prohibits employers from committing unfair or discriminatory practices as follows:
"It shall be an unfair or discriminatory practice for any person, because of race, color, creed, religion, sex, ancestry, or national origin, to fail or refuse to hire, to discharge an employee, or to accord adverse or unequal treatment to any person or employee with respect to application, hiring, training, apprenticeship, tenure, promotion, upgrading, compensation, layoff, or any term or condition of employment."
The second issue raised by the state is whether the Commission exceeded its authority by adopting ARSD 20:03:09:12. The Act gives the Commission the "power and duty to adopt * * * regulations consistent with and necessary for the enforcement of" the Act's provisions. SDCL 20-13-27. The Commission adopted the administrative rule in question to implement SDCL 20-13-10 and a similar provision relating to labor organizations embodied in SDCL 20-13-12. The administrative rule reads in pertinent part as follows:
"No employer shall:
ARSD 20:03:09:12(2).
Regarding delegation of powers by the legislature to administrative agencies, it is understood that where the legislature sufficiently prescribes a policy, standard, or rule for the guidance of the administrative body, authority may be delegated to the administrative body in order to carry out the legislative purposes in detail and to exercise the administrative power to regulate and control. Application of Kohlman, 1978, S.D., 263 N.W.2d 674; Clem v. City of Yankton, 1968, 83 S.D. 386, 160 N.W.2d 125; Boe v. Foss, 1956, 76 S.D. 295, 77 N.W.2d 1. The legislature's policy is clear, i. e., to eliminate discrimination based upon race, color, creed, religion, sex, ancestry or national origin in the areas of employment, labor unions, housing, education, property rights, public accommodations and public services. SDCL 20-13. The standards for the...
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