This Part considers the meaning of discrimination in the context of employee benefit plans that offer employees comprehensive coverage for medically necessary physician services, and drugs and devices prescribed by a physician and approved by the FDA, but exclude coverage for reversible forms of contraceptive services, drugs, and devices. As explained in Part II, this pattern is common. ⁵⁶ Apart from HMOs, the typical insurance plan offered by U.S. employers and insurers excludes coverage for reversible forms of contraception. ⁵⁷ The typical policy provides men coverage for all physician services and prescription drugs and devices, but denies women coverage for medical services and prescribed drugs and devices for reversible contraception. ⁵⁸ These plans thus discriminate against women.

A. The Basic Title VII Claims

Title VII of the Civil Rights Act of 1964 makes it unlawful for an employer "to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." ⁵⁹ This prohibition applies to the benefits an employer provides its employees, including health insurance coverage, because "[h]ealth insurance and other fringe benefits are 'compensation, terms, conditions, or privileges of employment.'" ⁶⁰

Title VII prohibits employer policies that discriminate against women intentionally or explicitly. In the hiring context, explicit sex-based discrimination can be justified only if the employer demonstrates that gender is a "bona fide occupational qualification," which requires the employer to show that "the essence of the business operation would be undermined" by hiring either women or men. ⁶¹ Title VII also prohibits employer policies that are neutral in form but discriminatory in effect. To establish a prima facie disparate impact claim, a plaintiff must show that the challenged employment practices "in fact fall more harshly on one group than another, without justification." ⁶²

Many reasons support the claim that excluding contraceptives from otherwise comprehensive coverage for physician services and prescription drugs disproportionately impacts women. The current state of technology permits prescription contraceptives only for women. Thus, when an employer covers all prescription drugs except for contraception, the discrimination against women is explicit. However, because this characterization is based on technological limitations, treating the exclusion of coverage for prescription contraceptives as a facially neutral policy that has a discriminatory impact upon women seems more appropriate. ⁶³

Insurance policies that exclude coverage for contraception dispro-portionately impact women for two reasons. First, because all of the medically prescribed reversible methods of contraception must be obtained and used by women, they bear all of the physical risks and hassles that accompany obtaining and using reversible contraception. Second, because employment-based insurance plans that ordinarily cover prescription drugs single out and exclude coverage for contraception, women bear a disproportionate share of the out-of-pocket financial costs of health care services. Women spend approximately sixty-eight percent more in out-of-pocket health care costs than men. ⁶⁴ More than twice as many women (7.4 million compared with 3.4 million men) had out-of-pocket expenditures for health care services that exceeded ten percent of their income. ⁶⁵ The costs of prescription contraceptives, excluded from general insurance coverage, account for the largest portion of this disparity. ⁶⁶

Even if technology were to make effective prescription contraception available to men, excluding contraception from insurance coverage would still disproportionately impact women. Women, and only women, bear all of the physical burdens of unwanted pregnancy.

Once a plaintiff has established a prima facie case that a policy has a disproportionate adverse impact upon women, the employer may defend the policy by showing it is justified by business necessity. ⁶⁷ It is difficult to imagine how an employer could show that "business necessity" requires excluding prescription contraceptive services from insurance coverage.

Historically, employment-based health insurance plans excluded vaginal deliveries and neonatal care from coverage. ⁶⁸ In 1974, the U.S. Supreme Court held that denying medical and disability insurance for medical problems related to pregnancy was not a form of sex discrimination prohibited by the Equal Protection Clause. ⁶⁹ Two years later, the Court held in General Electric Co. v. Gilbert that an otherwise-comprehensive insurance program that excluded pregnancy-related disabilities from disability coverage did not constitute sex discrimination prohibited by Title VII of the Civil Rights Act of 1964. ⁷⁰ In upholding the policy, the Court stated:

[The policy] does not exclude anyone from benefit eligibility because of gender but merely removes one physical condition-pregnancy-from the list of compensable disabilities. While it is true that only women can become pregnant, it does not follow that every legislative classification concerning pregnancy is a sex-based classification . . . .

The program divides potential recipients into two groups-pregnant women and nonpregnant persons. While the first group is exclusively female, the second includes members of both sexes. . . . [T]here is no risk from which men are protected and women are not . . . [and] no risk from which women are protected and men are not. ⁷¹

Applying this rationale to insurance coverage for reversible contraception, employers could argue that excluding reversible contraception from reimbursable services "does not exclude anyone from benefit eligibility because of gender but merely removes one" service from the list of compensable items. "While it is true that only women can become pregnant," so the argument would go, it does not follow that every insurance policy classification touching on pregnancy is a sex-based classification. The common U.S. insurance programs under consideration here merely "divide potential recipients into two groups"-those who seek to avoid pregnancy and those who do not. Thus, employers could argue that this division is not sex-based discrimination because both men and women might seek to avoid pregnancy. Because contraceptive services are denied to both men and women equally, employers might argue as in Gilbert that "there is no risk from which men are protected and women are not . . . [and] no risk from which women are protected and men are not." ⁷²

B. The Pregnancy Discrimination Act

Congress rejected Gilbert's assertion that discrimination against pregnant women was not discrimination based on sex by adopting the Pregnancy Discrimination Act of 1978 (PDA). ⁷³ The PDA prohibits covered employers from discriminating "on the basis of pregnancy, childbirth, or related medical conditions" and requires that "women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work." ⁷⁴ Thus, the legitimacy of denying employees coverage for reversible contraception hinges upon the meaning of the PDA.

Consider some defenses employers might offer to the assertion that excluding contraception from an otherwise comprehensive benefit program constitutes discrimination on the basis of sex. First, an employer might argue that excluding contraception from coverage is not sex discrimination because the exclusion is not made "on the basis of pregnancy, childbirth, or related medical conditions." ⁷⁵ Second, an employer might assert that because insurance policies available in the commercial market typically exclude contraceptive services from coverage, the employer should not be required to include such coverage. Finally, some employers might assert that freedom of religious conscience allows them to deny coverage for contraception. These arguments will be considered in turn.

1. The Language of the PDA Excludes Contraception Coverage

The first likely response to the claim that the PDA prohibits excluding contraception from coverage is that the PDA requires equality only in relation to "pregnancy, childbirth, and related medical conditions." ⁷⁶ Contraception is not included in this list. Contraception is about avoiding pregnancy and childbirth, employers could argue, not about protecting pregnant women from discrimination.

This argument, that the only effect of the PDA is to reverse Gilbert's narrow holding that discrimination against pregnant workers is not sex discrimination, was advanced by the employers in Newport News Shipbuilding and Dry Dock Co. v. EEOC. ⁷⁷ The plaintiffs challenged an employee benefit program that provided comprehensive benefits to workers and spouses, but denied pregnancy benefits to workers' wives. Justice Rehnquist, joined by Justice Powell, dissented. They embraced a strict reading of the PDA and urged that the first clause of the PDA, prohibiting discrimination on the basis of "pregnancy, childbirth, or related medical conditions," must be read as limited by the statute's second requirement that "women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work." ⁷⁸ According to the dissent, the PDA "speaks only of female employees affected by pregnancy and says nothing about spouses of male employees." ⁷⁹

According to the majority, however, neither the words of the statute nor its legislative history supported the dissent's narrow reading of the statute. The majority recognized instead that the language of the PDA reflects a broad remedial purpose. "The 1978 Act makes clear that it is discriminatory to treat pregnancy-related conditions less favorably than other medical conditions." ⁸⁰ "[F]or all Title VII purposes, discrimination based on a woman's pregnancy is, on its face, discrimination because of her sex." ⁸¹ "The meaning of the first clause [of the PDA] is not limited by the specific language in the second clause, which explains the application of the general principle to women employees." ⁸² In short, the PDA broadly requires employers to treat equally pregnancy and pregnancy-related conditions for which benefits are provided to an employee or his or her otherwise qualified dependents.

The Court also has recognized repeatedly that the protection of Title VII, as amended by the PDA, is not limited to women who are already pregnant. For example, in International Union, UAW v. Johnson Controls, Inc., ⁸³ the Court held that an employer's policy excluding women from certain jobs because of concern for the health of the employee's potential fetus violated Title VII as amended by the PDA. ⁸⁴

The Court found that the PDA's prohibition on pregnancy discrimination applies both to policies that affect pregnant women and those that affect women's abilities to become pregnant. ⁸⁵ A policy that explicitly classifies employees by their potential for pregnancy "[u]nder the PDA . . . must be regarded, for Title VII purposes, in the same light as explicit sex discrimination." ⁸⁶

Likewise, the dissent in General Electric Co. v. Gilbert explained that when evaluating a claim of discrimination by an insurance program, the relevant classification is not between pregnant women and non-pregnant individuals. ⁸⁷ Rather, the relevant classification is "between persons who face a risk of pregnancy and those who do not." ⁸⁸ Similarly here, an insurance program that excludes contraception from coverage discriminates against people "who face a risk of pregnancy and those who do not." ⁸⁹ By adopting the PDA, Congress explicitly affirmed the reasoning and analysis of the Gilbert dissent. ⁹⁰ Courts have consistently reaffirmed that the PDA protects not only pregnancy, but the risk of pregnancy as well. ⁹¹

The PDA's explicit abortion exclusion also supports the conclusion that the Act's prohibition against discrimination on the basis of "pregnancy, childbirth, or related medical conditions" ⁹² includes a prohibition against unfavorable treatment of contraceptive services. The PDA specifically provides that the Act "shall not require an employer to pay for health insurance benefits for abortion, except where the life of the mother would be endangered if the fetus were carried to term, or except where medical complications have arisen from an abortion." ⁹³

The abortion exclusion makes plain that Congress understood that a law prohibiting discrimination against benefits related to "pregnancy, childbirth, or related medical conditions" ⁹⁴ would require coverage for abortion unless Congress specified otherwise. The abortion exclusion confirms that Congress understood that discrimination against pregnancy and related medical conditions encompassed discrimination against measures taken to avoid pregnancy. If Congress had intended to leave employers free to disfavor contraceptive services in employee benefit plans, Congress could have easily added the words "or contraception" to the abortion exclusion. Congress did not do so.

Cases involving discrimination against women who seek treatment for infertility also confirm that the PDA's prohibition against discrimination on the basis of "pregnancy, childbirth, or related medical conditions" ⁹⁵ must be read broadly to include insurance plans that treat contraception disfavorably. In Pacourek v. Inland Steel ⁹⁶ and Erickson v. Board of Governors, 97 female employees were fired because they used sick leave time to obtain infertility treatment. ⁹⁸ In both cases, the plaintiffs alleged sex discrimination, while the employers argued that discrimination on the basis of infertility did not constitute discrimination on the basis of sex within the meaning of the PDA. ⁹⁹ The Pacourek court found in favor of the plaintiffs.

The basic theory of the PDA may be simply stated: Only women can become pregnant; stereotypes based on pregnancy and related medical conditions have been a barrier to women's economic advancement; and classifications based on pregnancy and related medical conditions are never gender-neutral. Discrimination against an employee because she intends to, is trying to, or simply has the potential to become pregnant is therefore illegal discrimination. It makes sense to conclude that the PDA was intended to cover a woman's intention or potential to become pregnant, because all that conclusion means is that discrimination against persons who intend to or can potentially become pregnant is discrimination against women . . . . ¹⁰⁰

The legislative history of the PDA supports the Pacourekcourt's conclusion. The House Report on the PDA stated, "In using the broad phrase 'women affected by pregnancy, childbirth and related medical conditions,' the bill makes clear that its protection extends to the whole range of matters concerning the childbearing process." ¹⁰¹ Similarly, Senator Harrison Williams, the chief sponsor of the Senate bill leading to the PDA, observed, "[T]he overall effect of discrimination against women because they might become pregnant, or do become pregnant, is to relegate women in general, and pregnant women in particular, to a second-class status." ¹⁰² Representative Ronald Sarasin expressed a similar sentiment when he remarked that the PDA gives a woman "the right . . . to be financially and legally protected before, during, and after her pregnancy." ¹⁰³

The language of the PDA is expansive, covering "pregnancy, childbirth, or related medical conditions." ¹⁰⁴ Furthermore, the legislative history demonstrates that the language of the PDA-particularly because of the phrase "related medical conditions"-was meant to be expansive. The Pacourek court agreed when it stated that "'[r]elated' is a generous choice of wording, suggesting that interpretation should favor inclusion rather than exclusion in the close cases." ¹⁰⁵ Insurance coverage for contraception should be included under this broad interpretation.

That the PDA prohibits discrimination against women who seek to avoid pregnancy, as well as those who are pregnant, is confirmed by the Act's prohibition of discrimination against women who have had an abortion. The Equal Employment Opportunity Commission (EEOC) Guidelines, adopted at the time of the PDA's enactment, interpret the PDA to mean that an employer may not discharge, refuse to hire, or otherwise discriminate against a woman because she had an abortion. ¹⁰⁶ Similarly, in Turic v. Holland Hospitality, Inc. , ¹⁰⁷ the Sixth Circuit held that Title VII, as amended by the PDA, prohibits an employer from discriminating against an employee who has, or contemplates having, an abortion. The court said, "Since an employer cannot take adverse employment action against a female employee for her decision to have an abortion, it follows that the same employer also cannot take adverse employment action against a female employee for merely thinking about what she has a right to do." ¹⁰⁸ Because the discrimination prohibited by the PDA encompasses discrimination against women who have abortions, a fortiori, it encompasses discrimination against women who seek services designed to prevent conception.

A final difficulty with the argument that the PDA does not prohibit discrimination against measures to avoid pregnancy is that medical treatment is also about avoiding undesired consequences. ¹⁰⁹ Virtually all employment-based insurance plans include coverage for preventive services such as screening exams to detect problems in healthy people, ¹¹⁰ as well as coverage for treatments that can delay or avoid adverse consequences. ¹¹¹ Much of what standard medical practice does, and much of what health insurance pays for, is avoiding damaging consequences to the patient that will be more costly in the long run. Excluding contraception-also a preventive measure-from coverage effectively discriminates against employees who want to avoid the undesired consequence of pregnancy.

In sum, an employee benefit plan that provides comprehensive coverage for all prescription drugs and devices except those used to avoid unwanted pregnancy discriminates against women and violates Title VII, as amended by the Pregnancy Discrimination Act. Employers' claims that the PDA should be read narrowly to exclude coverage for contraception are inconsistent with the language of Title VII and with the U.S. Supreme Court's interpretation of the Act.

2. Commercial Market Health Insurance Policies Exclude Contraception Coverage

A second employer response to the claim that the PDA prohibits excluding contraception from coverage is that health insurance policies available in the commercial market typically exclude contraception. The U.S. Supreme Court considered and decisively rejected this defense in Arizona Governing Committee v. Norris. ¹¹² According to the Court:

It would be inconsistent with the broad remedial purposes of Title VII to hold that an employer who adopts a discriminatory fringe benefit plan can avoid liability on the ground that he could not find a third party willing to treat his employees on a nondiscriminatory basis. An employer who confronts such a situation must either supply the fringe benefit himself, without the assistance of any third party, or not provide it at all. ¹¹³

Title VII directly prohibits discrimination only by employers, not by insurance companies. ¹¹⁴ Some states, however, have created an additional cause of action against insurance companies that aid and abet employer discrimination prohibited by state or federal law. ¹¹⁵ In Colorado Civil Rights Commission v. Travelers Insurance Co., ¹¹⁶ for instance, a state court considered a claim against both an employer and an insurance company for denying coverage for normal-birth deliveries in violation of the PDA. The insurance company had offered the employer the choice between policies excluding and including coverage for normal delivery. ¹¹⁷ The company selected the more limited policy, excluding coverage for pregnancy. ¹¹⁸ The court found the insurance company liable, explaining that the company "could not disclaim responsibility for aiding and abetting a discriminatory practice . . . simply because it offered [the employer] the option of selecting a policy providing comprehensive coverage for pregnancy." ¹¹⁹

3. Religious Convictions Permit Excluding Contraception Coverage

Finally, some employers might assert that the employer's or other employees' religious convictions that contraception is immoral justify excluding contraception from general coverage for prescription drugs and medical services. Religious opposition to contraception has been a central factor in recent debates on proposed state laws requiring insurance coverage for contraception. ¹²⁰ Title VII includes a special exemption for religious organizations, which provides that the prohibition against discrimination on the basis of race or gender does not apply "to a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities." ¹²¹ In addition, Title VII provides:

Notwithstanding any other provision of this subchapter, (1) it shall not be an unlawful employment practice for an employer to hire and employ employees . . . on the basis of . . . religion, sex, or national origin in those certain instances where religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise . . . . ¹²²

Despite the language of Title VII, courts have interpreted these exemptions narrowly to prohibit invidious discrimination on the basis of gender. For example, a Jesuit university was allowed to require that a faculty member in the philosophy department be Jesuit, ¹²³ but a Christian school was not entitled to fire a pregnant, unmarried teacher, even though the school claimed that the teacher's actions violated the church's moral and doctrinal precepts. ¹²⁴ Moreover, the Ninth Circuit has held that the religious-based exemptions from Title VII's prohibition against discrimination apply only to hiring and firing decisions, and not to benefit determinations. ¹²⁵

Courts also hold that requiring people to contribute, through taxes or employee benefit contributions, to activities they consider immoral is not a burden on freedom of religious conscience. For example, an Amish farmer could not avoid paying social security tax simply because the tax violated his religious belief. ¹²⁶ This general principle is not limited to taxation. Students who asserted that their religious beliefs prevented them from contributing to their university's health care system because it financed abortion services failed to state a claim under the Religious Freedom Restoration Act. ¹²⁷

Although federal law and the laws of many states protect health care workers who refuse to perform abortions for reasons of conscience, ¹²⁸ these laws provide no support for a religious employer who seeks to exclude contraception from an employee benefit plan. First, such conscience clauses are limited to abortion and do not include contraception. ¹²⁹ Further, neither employers who provide coverage for contraceptive services nor their employees are required as a result of that financial contribution to use contraception themselves. Thus, the religious conviction justification for excluding contraceptive services from employer-based insurance plans carries little weight.

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