Wis.LIRC ER Decision: Genther - July 31, 1996 - Marital status discrimination - insurance benefits for married couples where both are employes of the employer

STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

THOMAS W. GENTHER, Complainant

DIANE M. WALTON, Complainant

CITY OF KENOSHA
KENOSHA POLICE DEPARTMENT, Respondent

FAIR EMPLOYMENT DECISION
ERD Case No. 9453358, ERD Case No. 9453816

An administrative law judge (ALJ) for the Equal Rights Division of the Department of Workforce Development (Department of Industry, Labor and Human Relations prior to July 1, 1996) issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on the applicable law, records and evidence in this case, the commission makes the following:

FINDINGS OF FACT

1. Respondent, City of Kenosha, Kenosha Police Department, through Kenosha Health Care Partners, Inc., provides two (2) health care plans for its employes: the Traditional Plan and the Partners Plan.

2. The two plans offer different benefit packages and co- payments as described on a document entitled "The City of Kenosha Benefit Comparison," which is attached hereto as Exhibit "A," and incorporated by reference. Under the Traditional Plan, the insured has freedom of choice of primary care physicians, specialists and hospitals. Under the Partners Plan, the primary care physicians, specialists and hospitals are limited to a service network established by the service provider. It is financially advantageous for the employer to have its employes enrolled in the Partners Plan where there is the greatest potential for cost control and reduction. For this reason the benefit package of the Partners Plan was made attractive by adding services and reducing co-payments.

3. Complainants, Thomas W. Genther and Diane M. Walton, are both employed by the City of Kenosha as police officers and are married. Their spouses, Christine M. Genther and Ken Walton, respectively, also work for the City of Kenosha. Christine Genther is employed as an attorney in the City Attorney's office. Ken Walton works as a firefighter.

4. On March 24, 1995, Christine M. Genther chose the traditional plan, with coverage for the employe and children. On September 19, 1994, under protest, Thomas W. Genther chose the Partners Plan, employe coverage. This is their current coverage.

5. Ken Walton chose the Partners Plan, employe and family coverage. Diane Walton chose the Traditional Plan, employe and family coverage. On August 30, 1994, the City denied Mrs. Walton's selection of family coverage under the Traditional Plan. Currently, Ken Walton and Diane Walton and their children have coverage under the Partners Plan, employe and family.

6. The City gives City employes who are married to each other the option of selecting one or the other of the referenced health care plans, but not both, and prohibits the election of a single and/or family coverage plan by either husband or wife if he/she is covered as a dependent on their spouse's family coverage plan. This policy is stated and defined in an August 16, 1994 memo from Chuck Grapentine, Supervisor of Personnel, to City employes married to each other which is attached hereto as Exhibit "B," and is incorporated herein by reference.

7. In response to the City's denial of their health care selections, Thomas Genther and Diane Walton filed complaints with the Department of Industry, Labor and Human Relations, Equal Rights Division, leading to the Division's decision to consider the legality, or lack thereof, of the City's current administration of the selection criteria for its alternative health care plans to married couples, when both spouses are City employes.

Based on the Findings of Fact made above, the Commission makes the following:

CONCLUSIONS OF LAW

1. The Respondent, City of Kenosha, Kenosha Police Department, is an employer within the meaning of the Wisconsin Fair Employment Act.

2. The Respondent's current administration of the selection criteria for its alternative health care plans to married couples, when both spouses are City employes, does not constitute prohibited marital status discrimination within the meaning of the Wisconsin Fair Employment Act.

3. The Respondent did not discriminate against Thomas W. Genther or Diane M. Walton on the basis of marital status, within the meaning of the Wisconsin Fair Employment Act.

4. Based on the Findings of Fact and Conclusions of Law made above, the Commission makes the following:

DECISION

The decision of the administrative law judge is reversed. The complaints of Thomas W. Genther or Diane M. Walton against the City of Kenosha, Kenosha Police Department, are dismissed.

Dated and mailed: July 31, 1996
genthth . rrr: 110 :

Pamela I. Anderson, Chairman

Richard T. Kreul, Commissioner

David B. Falstad, Commissioner

MEMORANDUM OPINION

Introduction -- This case presents the recurring issue of whether it is prohibited marital status discrimination under the Wisconsin Fair Employment Act for an employer to impose restrictions on the rights of its employes to obtain otherwise available health insurance benefits because the employe's spouse also has (or is entitled to have) health insurance coverage.
The facts are not at issue. Recognizing that this was the type of case in which the issues were legal and in which a hearing was not necessary, the parties entered into a stipulation of fact. As the Administrative Law Judge did, the commission has adopted the stipulated facts as its findings.

Cases bearing on the issue presented -- Over the years, the commission has issued a number of decisions interpreting the "marital status" discrimination provisions in the Wisconsin Fair Employment Act. See, e.g., Bourque v. Wausau Medical Center (LIRC, 02/10/84); Birk v. Georgia-Pacific (LIRC, 08/03/90, aff'd. sub nom. Birk v. LIRC, Milw. Co. Cir. Ct. 01/04/91); Andree v. C.T. & I. Corp. of Wis. (LIRC, 08/29/91); Miner v. Blunt, Ellis & Loewi (LIRC, 05/29/91), aff'd. sub nom. Miner v. LIRC (Rock Co. Cir. Ct., 04/07/92); Scheife v. Apple Chevrolet (LIRC, 09/11/91); Vaisman v. Aldridge, Inc. (LIRC, 10/21/91). A number of the commission's decisions in this area have dealt specifically with the issue of insurance coverage plans which take into account whether a covered employe has a spouse. See, e.g., Hartmann & Lavine v. Mueller Food Services (LIRC, 9/10/85), aff'd. sub nom. Hartmann & Lavine v. LIRC (Washington Co. Cir. Ct., 07/18/86); Dacquisto v. Fred Knapp Engraving (LIRC, 11/30/90); Kortesma et al. v. School District of Maple (LIRC, 10/26/90), rev'd sub nom. Braatz et al. v. LIRC (Douglas Co. Cir. Ct., 06/12/91), aff'd., Braatz et al. v. LIRC, 168 Wis. 2d 124, 483 N.W.2d 246 (Ct. App. 1992), aff'd., 174 Wis. 2d 286, 496 N.W.2d 597 (1993). In addition, two cases which originated with other administrative agencies, Phillips v. Wisconsin Personnel Commission, 167 Wis.2d 205, 482 N.W.2d 121 (Ct. App., 1992), and Kozich v. Employee Trust Funds Bd., 203 Wis. 2d 363, 553 N.W.2d 830 (Ct. App. 1996) also touch on this issue.

In the decisions involving the significance of marital status to insurance coverage, two different rationales have been invoked, depending on the circumstances. One rationale is that certain distinctions are not based on "marital status" at all, but on other characteristics. The other rationale is that while certain differential treatment is based on "marital status," there are reasons to believe that the legislature did not intend to make that kind of differential treatment unlawful when it passed the prohibition on "marital status" discrimination. Because this latter rationale, which has come to be referred to as the "implied exception" theory, is important to the commission's decision in this matter, it is worthwhile to review its history.

The "implied exception" rationale was articulated at least as long ago as the commission's decision in Hartmann & Lavine v. Mueller Food Services (LIRC, 9/10/85). In that case, an employer's health insurance program required employes to contribute to part of the premium through payroll deduction; the result was that employes with the same gross wage received a lower take-home if they had family insurance coverage. The employer (with the agreement of the union) then instituted a plan whereby married employes who had family insurance coverage were given a higher gross pay rate so that their take-home pay ended up being the same as that of their unmarried co-workers who were only paying a share of a single coverage premium. Two single employes claimed that this was marital status discrimination in pay. The Commission's decision in Hartmann & Lavine held that while extending greater health insurance benefits to married employes than to single employes was differential treatment (i.e., discrimination) based on marital status, the legislature did not intend that the prohibition on marital status discrimination would cover that kind of differential treatment based on marital status. In so holding, the Commission relied significantly on the fact that the State of Wisconsin, as an employer, itself followed policies that involved differential treatment of employes with respect to eligibility for health insurance coverage depending on their marital status. Hartmann & Lavine was appealed to the circuit court, where the Commission's decision was affirmed. Hartmann & Lavine v. LIRC (Washington Co. Cir. Ct., 7/18/86). The circuit court expressed agreement with the Commission's analysis, that consideration of the State's own practices as an employer required the conclusion that the legislature did not intend to make it unlawful to provide greater health insurance benefits to married persons.

The first of the reported cases dealing with the issue of marital status discrimination in provision of insurance benefits, Phillips, concerned a claim that it was marital status discrimination for an employer to provide family health insurance coverage which extended to the adult opposite-sex spouse of an employe, while not offering similar coverage extending to the adult same-sex companion of a lesbian employe. The court of appeals affirmed lower court and agency decisions, that this did not constitute marital status discrimination. In so doing, the court of appeals seemed to be invoking both an "implied exception"-type rationale, see, 167 Wis. 2d at 217-18, and the rationale that the distinction drawn in the case was not actually one based on "marital status" at all, see, 167 Wis. 2d at 219-20. However, the supreme court subsequently characterized the court of appeals decision in Phillips as having been based on the latter rationale:

Phillips, 167 Wis. 2d at 220, held that this practice does not constitute marital status discrimination. The court reasoned that "[i]t is only where similarly situated persons are treated differently that discrimination is an issue." Id. at 219. Even though an employee and an adult companion may "have a committed relationship that partakes of many of the attributes of marriage in the traditional sense," a spouse and a companion are not similarly situated. Id. at 220. This is so because Wisconsin law imposes a mutual duty of general support upon married couples, but there is no comparable duty of support imposed upon adult companions.

Braatz v. LIRC, 174 Wis. 2d at 294. Thus, as explained by this subsequent supreme court decision, Phillips should be seen as a decision relying principally on the rationale that the distinction involved was not one based on marital status.

The Braatz case itself concerned the question of whether an employer could restrict the health insurance benefit options of an employe, if the employe was covered by insurance coverage their spouse had through employment elsewhere. In Braatz, the employer's policy provided, in part, that all single employes were entitled to single coverage under the plan, unmarried persons who had the care, custody or support of any minor children were entitled to family coverage, and married employes were entitled to family coverage, but a married employe whose spouse was eligible for family coverage at his or her place of work would have the option of carrying either the district's policy or the spouse's policy but not both. The commission found that there was no violation of the Wisconsin Fair Employment Act. On review, it argued both an "implied exception" theory, and the theory that the distinction drawn in the employer's policy simply did not distinguish on the basis of "marital status" at all. (1 )

Ultimately, the court rejected both of the commission's theories. What is important for the proper resolution of the case which is now before the commission, however, is to appreciate exactly what the rejected "implied exception" theory of the commission was, and the exact reason that the court rejected it.

The "implied exception" theory which the commission relied on in Braatz was to the effect that health insurance benefits generally were implicitly excepted from the WFEA's prohibition on marital status discrimination, and what the court rejected definitively was the idea that there was such a general exception. See, 174 Wis. 2d 292, 293. The court expressly declined to decide the question of whether the legislature's adoption of certain limitations in its plan for state employes' health insurance could be construed to create an implied exception for similar limitations; it simply noted that even if that were the case, the limitations contained in the School District of Maple's plan were different from those contained in the state plan:

"Even if we assume arguendo that [the state's] policy indicates that there is an implied exception to the WFEA's prohibition against marital status discrimination, the school district of Maple's policy would not fall within this exception. The state's policy is not the same as the Maple policy. The state's policy only applies where both spouses are employed by the state. Maple's policy applies no matter where the employe's spouse is employed".

Thus, while a cursory reading of Braatz can seem to support the conclusion that it completely rejected the idea of there being any implied exceptions to the WFEA prohibition on marital status discrimination, the commission is persuaded that it did not do so. Rather, it rejected the idea that there was a general exception for all issues relating to health insurance. It left open the question of whether the legislature's adoption of policies placing certain limitations on health insurance options for state employes whose spouses were also state employes, could justify finding an implied exception for policies by other employers to the extent that they placed similar limitations on health insurance options for its employes whose spouses were also employes of that employer.

That question left open by Braatz, was then decided in Kozich. In that case, the court of appeals adopted the distinction which the supreme court had drawn in Braatz between policies that affected married employes wherever their spouses worked, and policies that affected married employes whose spouses were also employes of the employer. The court then relied almost entirely on the "implied exception" theory: that an exception for such latter situations must be implied into the statute, because it is not reasonable to assume that when the legislature adopted the prohibition against marital status discrimination it intended to make illegal the very scheme it had itself put in place for state employes.

The significance of Kozich -- Respondent argues that Kozich is controlling and requires reversal of the discrimination decision. The respondent argues further that even if Kozich is considered to be relevant only where the limiting policies discussed in that case are directly applicable to the employes involved, it is still relevant here because it is a municipal employer, and the legislative scheme which applied those limiting policies to state employes also expressly provided that municipal employers could provide their employes with coverage under the same plan. The complainants argue that Kozich concerns only a state practice, which has its basis in state statutes and administrative rules. They assert that only the State, and not other public sector or private sector employers, may claim the benefit of the "implied exception" recognized in Kozich.

Obviously, Kozich arrived at a different result from Braatz; the different result is presumably due to differences in the facts of the two cases. There are two differences between the fact situations presented which may or may not be significant: (1) in Kozich the policy extended only to employes whose spouses were also employed by the same employer, while in Braatz the policy extended to employes whose spouses were employed elsewhere and had insurance coverage through that other employment; and (2) in Kozich the employer was the State, while in Braatz the employer was not. The difficulty in applying Kozich here lies in determining which of these differences constitute material distinctions. If it is the latter, then Kozich is not necessarily controlling here; if it is the former, then it is.

The question of which of the differences from Braatz were material, is not directly answered by Kozich itself. The Kozich court conspicuously mentioned both of the elements that distinguished that case from Braatz -- that it involved a state employment as opposed to local employment situation, and that it involved a policy affecting only persons whose spouses were also employes of the same employer as opposed to persons whose spouses were employed anywhere.

The commission concludes that, as between these two possible bases for distinguishing Kozich from Braatz, it is the latter which must be viewed as significant. It arrives at this conclusion because the alternative -- making a distinction based on the identity of the employer -- is unacceptable.

If the implied exception which Kozich recognized only applies to the state as an employer (or, as the respondent herein argues, to any public employer which is authorized by statute to offer that state insurance plan), then certain conduct which is unlawful if engaged in by a private sector employer would be lawful if engaged in by the state. There is persuasive evidence, however, that the legislature would not have intended such a result.

Originally, the Fair Employment Act contained no definition of the term "employer", and in 1975 the supreme court held that it did not apply to the State as an employer. However, the court expressed grave reservations about that situation:

We agree with the conclusion reached by the circuit court that the state and state agencies are not included within the terms of the Fair Employment Act and that DILHR has no jurisdiction over the employment practices of DPI. . . . We do, however, urgently suggest that the legislature reconsider the problem. The state is the largest single employer within the state. The legislative purpose or public policy as set forth in the Fair Employment Act should apply to all employees whether hired by the state or others. If the legislature does not include them, questions of constitutional equal protection could be raised.

State ex rel. DPI v. DILHR, 68 Wis. 2d 677, 229 N.W.2d 591 (1975) (emphasis added). The legislature evidently agreed with this assessment, for it promptly responded to the court's suggestion by adopting a definition of the term "employer" that expressly included the state. Since 1975, the only difference in the applicability of the Fair Employment Act to the state has been a purely procedural one (administration of the Act for state employes is assigned to the Personnel Commission).

To accept the complainant's argument concerning the significance of Kozich would be to accept the idea, that the legislature decided to recreate a substantive difference between the state as employer and all other employers, in terms of what was lawful or unlawful under the Fair Employment Act. The commission cannot accept that idea. The same legislative purpose and public policy considerations that the supreme court identified in State ex rel. DPI v. DILHR would exist if the Act were construed to allow the State to engage legally in employment practices that would be illegal for any other employer. In addition, the same constitutional questions would be raised. Statutes should, if possible, be construed in such a way that constitutional questions about them do not have to be confronted. David Jeffrey Co. v. Milwaukee, 267 Wis. 559, 576, 66 N.W.2d 362 (1954). To avoid the questions of constitutional equal protection which the supreme court mentioned in State ex rel. DPI v. DILHR, the commission should construe the Act as applying the same standards to other employers as it does to the State as an employer, where this matter of rules relating to insurance policies for married employes is concerned. According to Kozich, the legislature did not intend that the limitations on health insurance coverage eligibility it created for state employes whose spouses were also state employes would be considered unlawful. To maintain the necessary uniformity of application, the same thing must be true for other employers who adopt functionally similar limitations for their employes.

Conclusion -- Braatz teaches that it is marital status discrimination to disadvantage a married employe in respect to health insurance coverage eligibility, based on the fact that his or her spouse is employed elsewhere and has a potential to obtain health insurance coverage for the employe through that other employer. Kozich, however, teaches that the legislature did not intend, in adopting the marital status discrimination provision, to make unlawful the system which the state had in place for handling situations where married couples were both employed by the state. The system employed by the City of Kenosha is not materially distinguishable from the State's system, in terms of the disadvantage at which it can put a married employee whose spouse is also employed by the same employer. If the City's system were found unlawful, it would create a situation in which the State of Wisconsin (as an employer) was not subject to the same substantive standards under the Fair Employment Act as other employers. However, State ex rel. DPI v. DILHR, and the legislature's reaction to that decision, strongly suggest that the legislature does not intend to have different substantive rules about what is lawful under the Act for itself and for other employers. Therefore, the commission concludes that Kozich should be viewed as controlling here.

NOTE: There having been no hearing in this matter, there were obviously no issues of witness credibility as to which impressions of the hearing officer would be significant. The commission's disagreement with the ALJ involved issues of law. It was therefore unnecessary for the commission to consult with the Administrative Law Judge concerning witness credibility, see, Carley Ford, Lincoln, Mercury v. Bosquette, 72 Wis. 2d 569, 576, 241 N.W.2d 596 (1976), and no such consultation has been held.

cc:
Attorney Robert K. Weber
Attorney James W. Conway

Footnotes:

(1)( Back ) Although in its arguments to the reviewing courts in Braatz the commission had relied both on the "implied exception" theory and on the theory that the distinction drawn in the case was not based on "marital status", see, Braatz v. LIRC, 168 Wis. 2d 124, 127-28, 483 N.W.2d 246 (Ct. App. 1992), Braatz v. LIRC 174 Wis. 2d 291-92, the commission's original decision in the case had been based only on the "implied exception" rationale. For that reason, the supreme court applied a de novo review standard to the "not based on marital status" theory. 174 Wis. 2d 292. However, the court, acknowledging the commission's experience in interpreting the marital status discrimination provisions of the WFEA, indicated that it would give deference to the commission's "implied exception" interpretation. It would be upheld, the court stated, if it was reasonable and not clearly contrary to the legislative intent. 174 Wis. 2d at 293.

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