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 OFSUPREME:COURT STATEOF MONTANA

APPEAL FROM: District Court of the Judicial District, In and for the County of Lewis and Clark, The Honorable Dorothy McCarter, Judgepresiding.

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

Filed: Submitted: November 30, 1993 Decided: December 28, 1993

### Just.iceKarla 

### M. Gray delivered the Opinion of the Court.

In a case of first impression, the issuebefore 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 thepolicy issuedby Bankers Life and Casualty Co.

(Bankers Life) unlawfully discriminated against female policyholders. We affir.mthe District Court. Bankers Life isan insurance company authorized to dobusiness in Montana. Lorili Barnett, Lea Peterson, Kristi Wolf and Diane Chaidez (collectively the Charging Parties), in separate transactions, purchased a "Major Medical Expense PolicyuTfrom 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 conjunctionwith 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 ~ife; 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 caseswere consolidated and a hearing was held on January 24, 1992. 

### The Commission issued its Findings of Fact, Conclusions of Law and Order onApril 17, 1992,determining that Bankers Life had unlawfully discriminated against the Charging Partiesby excluding coverage and denying benefits for normal maternity expenses. Bankers Lifepetitioned theDistrictCourt for judicialreview of the Commission's decisiononMay 8,

### 1992. The State ofMontana, 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 distinctionbased on

sex. Because Bankers Life's policy excludedbenefits forpregnancy and childbirth, the court concluded that the policy unlawfully discriminated against female policyholders inviolation 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), 257Mont. 197, 199, 848 P.2d 1020, 1022. Thus,we focuson the ~istrict Court's interpretationof 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 thebasis of pregnancy in a major medical expense insurance policy? The DistrictCourt concluded that discrimination on thebasis 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 retirementplans. (1) It is anunlawful discriminatory practice for any financial institutionorperson todiscriminate solelyonthebasis of sex or marital status in the issuance or operation of any type of insurance policy,plan, or coverageor 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 antidiscrimination statutes in different scenarios are not binding on this Court. Indeed, even the Montana cases discussed belowinvolved different sections of the Montana Human Rights Act. Bankers Life reliesonGeneral 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) (TitleVII). 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,theUnited StatesSupremeCourt's interpretation of the federal statuteprohibiting sexdiscrimination in employment is not binding on this Court's interpretation of Montana's unisex insurancestatute. 

### SeeNorth v. Bunday (1987), 226 Mont. 247, 254, 735 P.2d 270, 275. Moreover, Congress effectively overruled Gilbertby passing the Pregnancy DiscriminationAct,which amended TitleVII 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 followGilbert. 

### See Mountain States Telephonev. Comm'r of Labor (1980), 187Mont. 22, 608 P.2d 1047. As we stated in Mountain States: [mlountainBellts.positionfailstotake intoaccount the rather checkered history ofGilbert,includingtherecent 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 followGilbert 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 concernedwith 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 tobecomepregriant isaprimary characteristic of the femalesex. Thus,any classification which relieson pregnancyasthedeterminative criterion isadistinction 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 pregnancyrelated disabilities from a comprehensive disability plan constituted sexdiscrimination in employment. Mountain States, 608

In 1984, we reaffirmed the principle that differentialtreatment 

### 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 casewas one of federal preemption. However, inMiller-Wohl,we determined that an employer's sick leavepolicy created a disparate effect onwomenwho became pregnant compared to

men who did not. Although the policy was facially neutral, it nonetheless subjectedwomen to job termination on a basis not faced by men. We concluded, therefore,that thepolicy was gender-based discrimination. Miller-Wohl, 692 P.2d at 1052. Mountain Statesand Miller-Wohl established thatdifferential 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 insurancepolicy. The plain language of § 49-2-309, MCA, and our previousholdings inMountain StatesandMiller-Wohl,amply support

our conclusion. We note,moreover, that themajority of courts consideringthe issue of whether distinctions based on pregnancy constitute sex discrimination under statutes involving both employment and nonemployment situations have reached similar conclusions. For example, in Civil RightsComm'n v. Travelers Ins. Co. (Colo. 1988), 759 P.2d 1358, an employer provided a comprehensive group medical insurance policy asa benefit to itsemployees;thepolicy excludedcoverage for medical expenses resulting from normal pregnancy but covered complications arising from pregnancy. TheColorado 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 theUnruh Act, which prohibits sex discrimination in all ubusiness establishments," by failing to cover pregnancyrelated 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, theNew 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 legislaturedid not intend 5 49-2-309,MCA, to encompasspregnancyrelated distinctions. It asserts that the 1991 Legislature's failure to pass House Bill 388, which would have added specific language includingpregnancy distinctions as sex discriminationto 

### 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 norelevant authority or legislative history to support either assertion. Section 49-2-309,MCA, is clear and unambiguous; itprohibits discrimination based on sex in insurance policies. Thus, no further interpretationisnecessary. 

### GBN, Inc.v. Montana Deprtof 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 amendmentmay be defeated formany reasons. InreMatter of

### W.J.H.

(1987),226Mont. 479, 484, 736 P.2d 484, 487. Furthermore, 25 33- 22-1201,MCA, et seq., merely authorizedthe InsuranceCommissioner (Commissioner) to issue Itlimitedbenefit disability insurancet1 policies, which are exempt from certain premium taxes. Sections 33-22-1202 and -1205,MCA. Thosepolices are statutorilyrequired to contain maternity benefits. Section 33-22-1203, MCA. Bankers Life has not demonstratedhow thepassage of thisprovision of the insurance code, seven years after the passage of the antidiscrimination statute, reflects any legislative intent regarding the unisex statute. Bankers Life also argues that,because theunisex 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 intoa statute,has no bearing herebecausewe 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 arebased solelyon sex. As is usually the case, the legislature declined to enumerate all conceivable varieties of sex discrimination, but rather left the interpretationand application of this general anti-discrimination statute to the courts. Our task ismerely 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 discriminationonthebasis of sex and is,therefore, prohibited by the Montana unisex insurance statute. 2) Do themajor medical expense insurancepolicies 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 imposesa hardship on women not imposed onmen. On appeal, Bankers Life's primary argument is that its policy covers expenses only for "sickness, injury ormental illness" and that a normal pregnancy does not qualify as a sickness or injury. Itasserts,therefore, that thepolicy does notdiscriminate solely

on the basis of sex; rather, it argues that the determinativeclassification is based on the fact that pregnancy is not a "sickness." We rejected a similar argument inMountain States. There,the employer argued that normal pregnancy was not a typically covered "disease or disabilityMand, 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,BankersLife's major medical insurance policy excludes a significant major medical expense forwomen, 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 thisdisparity 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 iswithout 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~~ or "major medical," 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: [allthoughthe risk of one classmay notbe precisely the sameasthe 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 forbenefits onlymen receive. As noted inMiller

## i 

## 3

# 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 thetime 

### 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 inconsistentwith the following provision in Bankers Life's policy: Any provision of this policy which, on its effective date, is in conflictwith 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 Partiespurchased their Bankers Life policies subsequent to October 1, 1985, 

### while theunisex statutewas in full force and effect. Pursuant to the policies themselves, then, the policies were automatically llamendedl' to conform to the requirements of 

### 5 49-2-309, 

### MCA. Even absent such a provision in the policy itself, it iswell establishedthatprovisions in insurance statutesare to be read into an insurancepolicy as thoughwritten therein. Sagan 

### 13v. 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 con cur: