No. 93-363
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
BANKERS LIFE & CASUALTY CO. ,
Petitioner and Appellant,
LEA PETERSON, LORILI BARNETT,
KRISTI WOLF, DIANE CHAIDEZ and
MONTANA HUMAN RIGHTS COMMISSION,
t
Respondents and ~espondents. !
CLERK OF SUPREME: COURT
STATE OF MONTANA
APPEAL FROM: District Court of the Judicial District,
In and for the County of Lewis and Clark,
The Honorable Dorothy McCarter, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Tom K. Hopgood, Luxan & Murfitt, Helena, Montana
For Respondent:
Peter M. Meloy, Meloy Law Firm, Helena, Montana;
David Rusoff, Montana Human Rights Commission,
'Helena, Montana
Submitted: November 30, 1993
Decided: December 28, 1993
Filed:
Just.ice Karla M. Gray delivered the Opinion of the Court.
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 g
49-2-309, MCA. Unique to Montana, 5 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 affir.m 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 PolicyuT 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 ~ i f e ;Bankers Life
denied coverage for those expenses. Pursuant to 5 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 g 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 ~istrictCourt's interpretation of 5 49-2-309, MCA, in light of
the agreed facts. The legal issues before us are whether 5 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 (Mass. 1978), 375 N.E.2d 1192, 1198. As a result,
the court concluded that 5 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 5 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 Human Rights Act, 42 U.S.C.
2000e-2(a)(l) (Title VII). Gilbert, 420 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:
[mlountain Bellts.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, 5 49-2-310 and -311, MCA, we
stated that:
[plregnancy is a condition unique to women, and the
ability to become pregriant 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
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 5 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 under statutes involving both employment and non-
employment situations have reached similar conclusions. For
example, in Civil Rights Comm'n v. Travelers Ins. Co. (Colo. 1988),
759 P.2d 1358, an employer provided a comprehensive group medical
insurance policy as a benefit to its employees; the policy excluded
coverage for medical expenses resulting from normal pregnancy but
covered complications arising from pregnancy. The Colorado Supreme
Court, en banc, concluded that the policy violated a Colorado
statute prohibiting sex discrimination in matters of employment
compensation. Travelers, 759 P.2d at 1361. Also, in Kirsh v.
State Farm Mut. Auto Ins. Co. (Cal.App. 1991), 284 Cal.Rptr. 260,
266, the California Court of Appeals concluded that an insurance
company violated the Unruh Act, which prohibits sex discrimination
in all ubusiness establishments," by failing to cover pregnancy-
related expenses in an insurance policy. Additionally, in
Binghamton Cr. Un. v. Div. of Human Rights (N.Y.App. 1990), 564
N.E.2d 1051, 1054, the New York Court of Appeals determined that a
disability insurance policy that excluded benefits for pregnancy
and was offered in conjunction with an automobile loan was
discriminatory because a woman could not obtain credit on the same
terms as a man.
Although the great weight of authority supports the District
Court's determination that 5 49-2-309, MCA, prohibits
discrimination based on pregnancy, Bankers Life argues that the
legislature did not intend 5 49-2-309, MCA, to encompass pregnancy-
related distinctions. It asserts that the 1991 Legislature's
failure to pass House Bill 388, which would have added specific
language including pregnancy distinctions as sex discrimination to
5 49-2-309, MCA, and its enactment of §§ 33-22-1201, MCA, et seq.,
demonstrate legislative intent that 5 49-2-309, MCA, does not
include pregnancy-based discrimination. Bankers Life cites no
relevant authority or legislative history to support either
assertion.
Section 49-2-309, MCA, is clear and unambiguous; it prohibits
discrimination based on sex in insurance policies. Thus, no
further interpretation is necessary. GBN, Inc. v. Montana Deprt of
Revenue (1991), 249 Mont. 261, 265, 815 P.2d 595, 597. In any
event, the legislature's failure to enact a proposed amendment is
of little value in interpreting legislative intent because an
amendment may be defeated for many reasons. In re Matter of W.J.H.
(1987), 226 Mont. 479, 484, 736 P.2d 484, 487. Furthermore, 2 5 33-
22-1201, MCA, et seq., merely authorizedthe Insurance Commissioner
(Commissioner) to issue Itlimited benefit disability insurancet1
policies, which are exempt from certain premium taxes. Sections
33-22-1202 and -1205, MCA. Those polices are statutorily required
to contain maternity benefits. Section 33-22-1203, MCA. Bankers
Life has not demonstrated how the passage of this provision of the
insurance code, seven years a f t e r the passage of the anti-
discrimination statute, reflects any legislative intent regarding
the unisex statute.
Bankers Life also argues that, because the unisex statute does
not specifically refer to discrimination based on pregnancy, this
Court is not free to insert such terms. On that basis, Bankers
Life asserts that we are prohibited from concluding that an
exclusion for expenses for normal pregnancy and childbirth in a
major medical expense policy violates 5 49-2-309, MCA.
Section 1-2-101, MCA, which precludes courts from "adding" or
"inserting" language into a statute, has no bearing here because we
do not add anything to § 49-2-309, MCA, by our decision today.
Section 49-2-309, MCA, is clearly intended to cover
discriminations in insurance policies that are based solely on sex.
As is usually the case, the legislature declined to enumerate all
conceivable varieties of sex discrimination, but rather left the
interpretation and application of this general anti-discrimination
statute to the courts. Our task is merely to interpret 5 49-2-309,
MCA, to determine whether distinctions based on normal pregnancy
and childbirth constitute discrimination on the basis of sex.
We conclude that discrimination on the basis of pregnancy is
discrimination on the basis of sex and is, therefore, prohibited by
the Montana unisex insurance statute.
2) Do the major medical expense insurance policies issued by
Bankers Life, which exclude expenses for normal pregnancy and
childbirth, violate 5 49-2-309, MCA?
The District Court concluded that the exclusion of normal
pregnancy and childbirth expenses from Bankers Life's policies
violated 9 49-2-309, MCA, reasoning that pregnancy is a physical
condition requiring medical attention and the exclusion of
maternity expenses imposes a hardship on women not imposed on men.
On appeal, Bankers Life's primary argument is that its policy
covers expenses only for "sickness, injury or mental illness" and
that a normal pregnancy does not qualify as a sickness or injury.
It asserts, therefore, that the policy does not discriminate solely
on the basis of sex; rather, it argues that the determinative
classification is based on the fact that pregnancy is not a
"sickness."
We rejected a similar argument in Mountain States. There, the
employer argued that normal pregnancy was not a typically covered
"disease or disabilityM and, therefore, that the Montana Maternity
Leave Act's protection for women "disabled because of pregnancyn
did not apply to normal pregnancies. This Court disagreed, and
affirmed the district court's conclusion that normal pregnancy
resulted in an "inability to pursue an occupation because of
physical impairment" and thus was covered by the Act. Mountain
States, 609 P.2d at 1062. The argument was also rejected in
Travelers, where the Colorado Supreme Court stated that pregnancy
is a natural incident of adult life requiring medical attention,
and the purpose of health insurance is to defray costs of needed
medical treatment. Travelers, 759 P.2d at 1364. As stated by the
District Court, pregnancy is a physical condition which requires
medical attention, regardless of whether it is technically
classified as a sickness.
In sum, Bankers Life's major medical insurance policy excludes
a significant major medical expense for women, a hardship which is
not imposed on men. Thus, while men are--at least on the face of
this policy--provided comprehensive coverage for major medical
expenses, including male-specific conditions, women are not
provided similar protection. See Quaker Oats Co. v. Cedar Rapids
Human Rights Commrn (Iowa 1976), 268 N.W.2d 862, 864 and
Massachusetts Elec., 375 N.E.2d at 1198. We conclude that this
disparity of treatment is, on its face, sex discrimination in
violation of 5 49-2-309, MCA.
Bankers Life also argues that, because its policy is not
comprehensive," Travelers and other cited cases are
distinguishable. This distinction is without import. Section 49-
2-309, MCA, prohibits gender-based discrimination in insurance
policies. Regardless of whether Bankers Life's policy is
technically classified as "cornprehensi~e~~ "major medical,"
or
discrimination on the basis of sex is proscribed by statute. In
any event, if such a distinction exists other than as semantics,
Bankers Life failed to make a record upon which either the
commission, the District Court, or this Court could so rule.
As an alternative approach, Bankers Life contends that
covering normal pregnancy and childbirth expenses will constitute
reverse discrimination against men because men will pay premiums
for benefits that only women receive. We disagree.
Rejecting a similar argument, the Colorado Supreme Court
stated that:
[allthough the risk of one class may not be precisely the
same as the risks of the other class, an insurance policy
which provides benefits comprehensively to males and
females for medical conditions to which each class is
separately subject cannot be deemed to discriminate
against either class on the basis of sex.
Travelers, 759 P.2d at 1364. The same holds true here. The only
gender specific exclusion in the policy at issue is the pregnancy
exclusion; no male gender-specific exclusions are listed. Absent
male gender-specific exclusions in Bankers Life's policy, women are
paying premiums for benefits only men receive. As noted in Miller-
i3
w, treating pregnancy on an equal basis with other medical
conditions merely places men and women on more equal terms.
Miller-Wohl, 692 P.2d at 1254.
As a final matter, Bankers Life argues that the Montana
Commissioner of Insurance is required by 5 33-1-502(5), MCA, to
review all policies for compliance with s 49-2-309, MCA, and
withdraw approval if a policy violates the unisex insurance
statute. Bankers Life asserts that, because the Commissioner
approved the policies at issue, it is entitled to rely on that
approval. This argument is without merit.
First, Bankers Life's policies were approved prior to the
passage of g 33-1-502(5), MCA, by the 1991 Legislature; at the time
of that approval, the Commissioner had no duty to review the
policies for violations of § 49-2-309, MCA. We also note that this
argument is somewhat inconsistent with the following provision in
Bankers Life's policy:
Any provision of this policy which, on its effective
date, is in conflict with the laws of the state in which
you live on that date is amended to conform to the
minimum requirement of such laws.
As set forth above, S 49-2-309, MCA, was enacted in 1983. The
Charging Parties purchased their Bankers Life policies subsequent
to October 1, 1985, while the unisex statute was in full force and
effect. Pursuant to the policies themselves, then, the policies
were automatically llamendedl' conform to the requirements of 5
to
49-2-309, MCA. Even absent such a provision in the policy itself,
it is well established that provisions in insurance statutes are to
be read into an insurance policy as though written therein. Sagan
13
v. Prudential Ins. Co. (Mont. 1993), 857 P.2d 719, 721, 50 St-Rep.
902, 903.
Bankers Life's policy excludes normal pregnancy and
childbirth expenses from coverage, thus entitling women to fewer
benefits in a major medical expense insurance policy because of
their sex. We conclude that this differential treatment based on
sex is discriminatory on its face. Therefore, we hold that the
major medical expense insurance policies purchased by the Charging
Parties from Bankers Life violate 5 49-2-309, MCA, by unlawfully
discriminating on the basis of sex.
We concur: