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HB Counsel Client Alert – Group Health Plan Eligibility: Must Plans Include Same-Sex Spouse Coverage?

As a result of the U.S. Supreme Court’s ruling in Obergefell v. Hodges, all states must allow same-sex couples to marry and must recognize same-sex marriages lawfully performed in other jurisdictions.


The ruling itself, however, does not change plan eligibility requirements for group health plans.  Fully insured plans generally have less discretion in defining eligibility, and adopt the eligibility guidelines set forth by the insurer in its certificate of coverage.  It is important for plan sponsors to review the certificate of coverage to determine how the term “spouse” is defined.  If a certificate of coverage leaves the definition of spouse to the discretion of the plan sponsor, it is critically important for the plan sponsor to define the term in its plan document, including the summary plan description.


Self-insured ERISA plans generally remain free to define, by their terms, whether same-sex spouses are eligible for benefits provided to spouses.  However, due to the decision in Obergefell v. Hodges participants and courts will interpret plan references to spouses to include same-sex spouses, if not expressly excluded.  To avoid ambiguity, issues in plan administration, and possible litigation, a plan sponsor should clearly define spousal eligibility.  A plan sponsor considering excluding same-sex spouses from group health and welfare plan coverage should first take into account the legal uncertainty surrounding this issue, as discussed herein.


Federal Law Uncertainties

Title VII of the Civil Rights Act is the most relevant federal law applicable to excluding same-sex spouses from group health plan coverage.  Title VII of the Civil Rights Act of 1964 prohibits covered employers, including the federal government, from discriminating based on various traits, including sex.  The law does not expressly list sexual orientation or gender identity as one of those traits.


However, according to the U.S. Equal Employment Opportunity Commission (“EEOC”), the agency responsible for enforcement of federal laws protecting against discrimination in employment, lesbian, gay, bisexual, and transgender (“LGBT”) individuals may bring valid sex discrimination in employment claims under Title VII.


Notably, the EEOC has taken the position that Title VII’s prohibition on sex discrimination prohibits employers from discriminating based on sexual orientation or gender identity, and thus, health and other welfare plans that provide benefits to different-sex spouses or domestic partners of an employee must provide the same benefits to same-sex spouses or domestic partners of an employee.  This position is outlined in the EEOC’s Management Directive:  Processing Complaints of Discrimination by LGBT Federal Employees, in which EEOC staff are directed to process sexual-orientation claims as sex-discrimination claims.


The position of the EEOC is not uniformly adopted among other federal agencies or courts, creating a lot of uncertainty as to how Title VII should be interpreted.


The Fifth Circuit Court of Appeals[1] rejected a transgender employee’s discrimination claim in Wittmer v. Phillips 66 Co.  The Court reaffirmed and extended its 1979 decision in Blum v. Gulf Oil Corp. stating that Title VII does not prohibit discrimination based on sexual orientation or gender identity.


Whereas, the Sixth Circuit[2] held in EEOC v. R.G. & G.R. Harris Funeral Homes, Inc. that discrimination based on gender identity is sex discrimination under Title VII.  The Second Circuit[3] in Zarda v. Altitude Express Inc., and Seventh Circuit[4]  in Hively v. Ivy Tech Community College of Indiana, recognized sexual orientation as discrimination based on sex.


Appeals courts are divided over whether Title VII actually protects employees with same-sex spouses from discrimination.  Whether or not excluding same-sex spouses from group health and welfare plan coverage is discrimination varies among states within the jurisdictions of the various U.S. Circuit Courts.


U.S. Supreme Court Intervention? 

Interestingly, the U.S. Department of Justice, on behalf of the EEOC which prevailed in the Sixth Circuit, filed a brief with the Supreme Court asking the justices to consider reviewing the Sixth Circuit opinion, but only if the court grants review of the decisions in the Second and Seventh Circuit court decisions holding that Title VII protects employees from discrimination based on sexual orientation.


Shockingly, the Justice Department’s brief states that the EEOC would like “to be sure, the United States disagrees with the court of appeals’ decision.” The EEOC was the party that argued for the Circuit Courts to decide that Title VII protects employees from discrimination based on sexual orientation.  The Justice Department is arguing that the Supreme Court should rule that the EEOC is wrong.  This is a quite an unprecedented dispute between federal agencies governed by the same administration.


The United States Supreme Court on April 22, 2019 granted petitions for certiorari regarding the cases from the Sixth, Second, and Seventh Circuit Courts and will complete a full review of these cases to determine whether Title VII’s prohibition of sex discrimination applies to discrimination based on sexual orientation or gender identity.


The Supreme Court will render its decision regarding LGBT protections before the end of the current session, which is the end of September.


Until the Supreme Court renders a decision, plan sponsors should bear in mind the possibility that discrimination based on sexual orientation or gender identity may be actionable under Title VII.


Next Steps

Although courts (and now, federal agencies) disagree on the parameters of Title VII, employers can at least agree that litigation against a Title VII action is a costly prospect.  Additionally, although federal protections may be uncertain, these discrepancies do not affect various state and local laws that extend protections to LGBT employees beyond federal law.


The safest approach for ERISA plan sponsors, at this time, is to include same-sex spouses in the definition of “spouse” for purposes of group health and welfare plans, to avoid potential litigation.


The content herein is provided for educational and informational purposes only and does not contain legal advice.  Please contact our office if you have any questions regarding eligibility language for your employee benefit plans.

Dated:  April 23, 2019

[1]   Appellate jurisdiction over the District Courts in Louisiana, Mississippi, and Texas.

[2]   Appellate jurisdiction over the District Courts in Kentucky, Michigan, Ohio, and Tennessee.

[3]   Appellate jurisdiction over the District Courts in Connecticut, New York, and Vermont.

[4]   Appellate jurisdiction over the District Courts in Illinois, Indiana, and Wisconsin.