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Employee Benefits Bulletin December 2001

Prescription Contraceptives Coverage Update

SHOULD YOUR COMPANY'S HEALTH PLAN PROVIDE PRESCRIPTION CONTRACEPTIVE COVERAGE?

Whether an employer must provide coverage for prescription contraception in its health plan has been a hot topic in the legal community. Although the dust has not settled on the issue, employers should be aware of what has taken place to date.

The initial plunge into this issue was made by the EEOC last December when it determined that employer health plans cannot lawfully exclude prescription contraceptive coverage after charges were brought before it by employees against their employers. The EEOC based its determination on the Pregnancy Discrimination Act ("PDA"), an amendment to Title VII. Title VII makes it unlawful for an employer to discriminate against an individual with respect to his employment because of the person's "race, color, religion, sex, or national origin." The PDA amendment was intended to make clear that discrimination because of "pregnancy, childbirth, or related medical conditions" is discrimination on the basis of sex as set forth in Title VII. The EEOC determination mandated that the named employers include coverage for prescription contraceptives "to the same extent, and on the same terms" that "other" drugs, devices and preventative care is covered by their respective plans.

Two federal district court cases have also addressed prescription contraception exclusions in employer health plans. In the first case, EEOC v. UPS, the employer's plan excluded coverage for oral contraceptives for any purpose. The wife of an employee who sought coverage for oral contraception prescribed to her for treatment of a female hormonal disorder was denied coverage based on the prescription contraception exclusion. The EEOC brought the claim on behalf of the female employees of UPS and successfully defeated the employer's motion to dismiss based solely on Title VII. The court noted that the EEOC had not alleged a violation of the PDA in its complaint, and, that even if it had, the court had "serious doubts about the merits of a PDA claim in this context."

An employer's exclusion of prescription contraceptives was found to be unlawful by a Washington district court in June this year. Erickson v. Bartell Drug Co. The court held that the employer's exclusion of prescription contraception violated the PDA because it found that the legislative history of Title VII and the PDA, the language therein, and case law led to the finding that the employer's exclusion of prescription contraception violated federal law. In so holding, the court stated that when an employer offers a prescription plan excluding only selective drugs and devices, "it has a legal obligation to make sure the resulting plan does not discriminate based on sex-based characteristics and that it provides equally comprehensive coverage for both sexes."

In 14 states, employer-sponsored insured plans are required by law to cover prescription contraception if the plan covers prescription drugs. Alabama is not a state with such legislation; however, the mandate may reach the state in the near future. In addition, a class action lawsuit was filed in Atlanta in October.

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