Contraception Controversy: Can Employers Refuse to Pay for The Pill? - Bartell Drugs sued by Planned Parenthood: discrimination in drug plan alleged - Industry Legal Issue

Workforce, Oct, 2000 by Gillian Flynn

To fund or not to fund? In July, Planned Parenthood brought a class-action federal lawsuit on behalf of women employees of Seattle-based Bartell Drugs, alleging that the company's failure to include female contraceptives in its employee prescription plan was a form of gender discrimination. The suit argued that the policy violated Title VII of the Civil Rights Act because the decision not to cover contraceptives, including birth-control pills, disproportionately affects women. The case raises important questions: Can a company choose to exclude a gender-specific product in its prescription plan? And what does this mean for the bill, stalled now in Congress for about four years, that would require all health plans that cover prescription drugs to cover contraceptives? (In 1998, it should be noted, Congress mandated that insurance plans cover contraceptives for federal employees). Arthur F. Silbergeld, a partner in the labor and employment practice group of the Los Angeles-based firm Proskauer Rose, sheds some light on what it all means.

Let's get a little background on this lawsuit.

This is a lawsuit that's relatively unique in that it arises under Title VII of the 1964 Civil Rights Act. It's not an accommodation claim; it's a direct claim of a discriminatory practice. It alleges that an employer, the defendant, specifically has maintained an insurance plan that excludes contraceptives. but covers other prescription drugs, and that that exclusion is sex discrimination under Title VII. According to the suit, it's sex discrimination because the effect of the exclusion is felt only by females. Presumably if there were a male contraceptive that was available only by prescription, and it were excluded from coverage, this case would have no viability.

So what's the main issue here?

In my view, the issue isn't whether it's fair or right as a matter of social policy. The narrow question is whether or not it's covered by Title VII. Insurance typically is a matter of contract that's regulated by state law. A number of states have already mandated coverage for prescription contraceptives. Congress will occasionally intervene. For instance, Congress passed a law called the Health Insurance Portability Protection Act a few years ago. That act made it a matter of federal law that if an employee is covered by insurance by Employer A and leaves to go to Employer B, Employer B's carrier can't rule out pre-existing conditions, which could discourage the individual from making the move. So the federal government has inserted itself from time to time in a non-ERISA context when policy has an effect on job mobility. But in this case, I don't think Congress would intervene on the basis of that rationale. I don't see Congress acting under federal law.

Is this the general trend with Congress?

Given the relatively conservative bent of Congress, it's just not likely that they'd act. And the U.S. Supreme Court as a matter of principle tends to say that matters of state law should be left to the states. They're likely to say in ruling on a Title VII challenge that this is an insurance issue and not a Title VII issue. Insurance issues are state law issues and should be left to the states. And the fact that a number of states have addressed the issue is evidence enough that it's a state law issue. Again I emphasize that whether it's fair or politically correct is an entirely different issue, because as a matter of public policy, I think plans should provide contraceptives. But that's not a legal perspective, that's a political perspective. I think the issue of the availability of contraceptives to women under plans will probably be addressed on a state-by-state basis.

So for this case to win...?

It would have to be under Title VII. They have to show that Title VII is directed to the employer-employee relationship, and they are going to have to convince the court that a benefit of employment is covered by Title VII. And that the benefit differentiates between members of one gender and the other. And the way they have to do that is to show the denial of a prescription medication that members of only one gender would use. Now if vasectomies, which are an elective procedure, were not covered presumably because they apply only to males, a male could challenge the exclusion on the same basis, and I don't believe there have been such challenges. I don't think the fact that a particular prescription is used predominantly or exclusively by members of one gender is enough to show discrimination under Title VII. That's the burden of proof: showing the exclusion of a medication that is statistically used predominantly or exclusively by members of one gender, and proving it's a benefit of employment, and therefo re part of the employer-employee relationship and that it violates Title VII. I just think it's an uphill battle.

What will Bartell's argument be?

Bartell's argument will be that insurance is a matter of contract. That they (Bartell Drugs) are free to decide based on cost considerations alone what package of benefits their policies will and will not provide, and that they have not selected contraceptives for exclusion because of any intent to discriminate against their female employees, but simply because of cost considerations. Of course they're going to argue the coverage issue in the first place, that Title VII was never intended to cover specific benefits under a group health plan.