Must Employers Who Cover Prescription Drugs Cover Contraception?
The EEOC's Position, the Courts' Recent Rulings, States' Limited Coverage, and the Need for a New Federal Statute

Last month, the U.S. Court of Appeals for the Eighth Circuit ruled that an employer need not provide insurance coverage for prescription contraceptives - which are only used by women -- in order to comply with Title VII's guarantee of sex equality.

In this column, I'll explain how this ruling directly contravenes a ruling by the Equal Employment Opportunity Commission (EEOC), the agency charged with implementing federal employment discrimination laws; and why it makes the need for federal regulation of contraceptive coverage even more pressing.

Access to Contraception as a Women's Issue: Why the EEOC Views Contraceptive Coverage as Guaranteed by the Pregnancy Discrimination Act

The class of prescription drugs and devices currently available to prevent pregnancy - birth control pills, Depo Provera, and intrauterine devices (IUDs), to name the most common ones -- are exclusively used by women. Women are therefore the ones hurt by the lack of insurance coverage for contraception -- poor women, most of all. And, obviously, the lack of access to contraception may result in unwanted pregnancy, a consequence that imposes disproportionate and unique burdens on women.

It is for these reasons that access to contraception has figured prominently on the agenda for women's rights advocacy during the last decade. Fortunately, that effort has brought about many successes.

First, as a result of many months of pressure from public interest organizations, the EEOC issued a ruling, in January 2001, on insurance coverage for contraception. Though the groups had formally requested a "policy guidance," a formal interpretation of a federal statute issued by its implementing agency, the EEOC instead expressed its views in an individual case. In that ruling, the EEOC made clear that it agreed with the public interest organizations that omitting contraceptive coverage from employee insurance is illegal.

In its ruling, which I have discussed at length in a previous column, the EEOC held that an employer's failure to provide insurance coverage for prescription contraceptives was a form of illegal pregnancy discrimination.

The Pregnancy Discrimination Act of 1978 (PDA) amended Title VII to provide that discrimination on the basis of "pregnancy, childbirth, or related medical conditions" is a form of sex discrimination. (The Supreme Court had previously interpreted Title VII to provide no protection against pregnancy discrimination in General Electric Co. v. Gilbert.) The PDA also provides that employers must treat pregnant women no worse than other comparably disabled employees.

With respect to contraceptive coverage, the EEOC began its analysis by reasoning that a classification on the basis of contraception is a classification on the basis of pregnancy. It relied on the Supreme Court's ruling in International Union, UAW v. Johnson Controls, holding that an employer's prohibition on fertile women's securing certain jobs with lead exposure violated the PDA. To reach that conclusion, the Court reasoned that the PDA prohibits discrimination on the basis of potential pregnancy, as well as actual pregnancy. Relying on this precedent, the EEOC concluded that the PDA prohibits employers from discriminating against employees who try to control their own ability to get pregnant, through the use of contraception.

The EEOC further concluded that the employer's omission of contraceptive coverage constituted unfair treatment. After all, the employer covered forms of treatment designed to prevent (rather than cure) disease, such as vaccinations and dental care. Thus, excluding coverage for contraception wasn't just based on its preventive status.

The EEOC's Ruling and Court Decisions Have Resulted, in Practice, in Greater Insurance Coverage for Contraception

Six months after the EEOC ruled, a federal district court in the State of Washington reached the same conclusion as the EEOC, in the case of Erickson v. Bartell Drug Co. -- the first court ruling requiring employer-based insurance to cover prescription contraceptives under Title VII.

In Erickson, the district court noted that "[a]lthough the plan covers almost all drugs and devices used by men, the exclusion of prescription contraceptives creates a gaping hole in the coverage offered to female employees, leaving a fundamental and immediate healthcare need uncovered. . . . Title VII requires employers to recognize the differences between the sexes and provide equally comprehensive coverage, even if that means providing additional benefits to cover women-only expenses."

With the EEOC and Erickson rulings in hand, many female employees nationwide were able to convince their employers to voluntarily begin covering contraception -- in order simply to comply with the law, or else, more pragmatically, to avoid future litigation or liability. (Reports of such successes are detailed on the National Women's Law Center's website.)

Since Erickson, many more district courts have had occasion to consider the contraceptive coverage issue. The results have been roughly split between finding a violation of Title VII, and refusing to find one. Then came the Eighth Circuit's ruling - the first federal appellate decision on the issue.

The Eighth Circuit's Ruling: A Significant Loss for Female Employees

The Eighth Circuit case began when Brandi Standridge and Kenya Phillips filed suit challenging their employer's refusal to provide insurance coverage, under the employee health plan, for prescription contraceptives. They represented a class of women employed by Union Pacific Railroad Company, and alleged that the coverage omission constituted illegal sex discrimination under Title VII.

The employees' insurance plan provided coverage for a broad-range of prescription drugs, but excluded coverage for contraceptives when used for the sole purpose of preventing pregnancy. (Oral contraceptives would, for example, be covered if used to regulate menstrual periods or control acne.)

At issue was whether Union Pacific's failure to provide insurance coverage for prescription contraceptives violates Title VII, as amended by the PDA. The district court ruled in favor of the employees. Following Erickson, it held that the exclusion of all prescription contraceptives violates Title VII because it "treats medical care women need to prevent pregnancy less favorably than it treats medical care needed to prevent other medical conditions that are no greater threat to employees' health than is pregnancy."

The Eighth Circuit reversed, however, and ruled in favor of Union Pacific. With respect to the PDA claim, the court reached two key conclusions:

First, it concluded that contraception is not "related" to pregnancy for PDA purposes. It distinguished Johnson Controls on the grounds that "fertility" is covered because it involves the potential to become pregnant; contraception and infertility, on the other hand, by definition do not involve such potential. In so reasoning, it relied on an earlier Eighth Circuit ruling in Krauel v. Iowa Methodist Medical Center, a 1996 case in which the panel held that the PDA does not require employers to provide insurance coverage for infertility treatments. Like infertility treatment, the court observed, contraception is only indicated - not required -- prior to pregnancy, and thus is not covered by the PDA.

Second, the court concluded that because contraception is used by both men and women, the decision whether or not to provide insurance coverage for it is also gender-neutral. Employers, the court ruled, are thus free to refuse coverage without implicating Title VII's prohibition on pregnancy discrimination.

The Eighth Circuit flatly refused to follow the EEOC ruling on the contraceptive coverage issue. In the court's view, such a ruling need only be followed by courts to the extent it has the "power to persuade." Finding it unpersuasive, the court just disregarded it.

The Eighth Circuit also considered whether Union Pacific's insurance plan constituted sex discrimination. Here, the court considered whether the plan treated men, as a class, better than women, as a class. In concluding that it did not, the court criticized the lower court's decision to compare contraception with other treatments designed to prevent disease. Instead, the court explained, the court should have limited the comparison to the category at hand: contraception.

Since the plan did not cover any contraceptive drug or device, whether used by men or women, the Eighth Circuit concluded, it did not treat one sex more favorably than the other. (It is hard to fathom that this provides any meaningful comparison, since all prescription contraceptives are for female-only use, and insurance doesn't generally provide any coverage for non-prescription drugs or devices, ranging from over-the-counter cough medicine to condoms.)

Insurance Coverage for Prescription Contraceptives: The Need for Legislative Protection

From a gender equality standpoint, the Eighth Circuit's ruling in Union Pacific is cause for concern. Admittedly, the language of the PDA is ambiguous, but the failure of employers to provide equally comprehensive coverage to male and female employees clearly violates Title VII's ban on sex discrimination.

Moreover, contraceptive inequity is just another unequal burden borne by working women. Women's out-of-pocket health costs already significantly exceed those of men, and the need to pay full price for contraception only exacerbates that gap. Access to contraception is essential for women to be able to exercise control over their ability to become pregnant; and that control, in turn, is an essential aspect of gender equality.

The uneven results achieved in litigation thus far, and the ambiguous language of the PDA, make it important for advocates - while perhaps also continuing to battle on in the courts -- to pursue other avenues to secure contraceptive equity. Indeed, perhaps the most significant activity surrounding the issue of contraceptive insurance coverage in the last decade has been going on outside of courtrooms, and in state legislatures.

Since 1998, for example, nearly half the states have adopted laws mandating that insurers include coverage for prescription contraceptives if they cover other prescription drugs. Also in 1998, Congress voted to provide contraceptive coverage to federal employees; it has renewed that coverage ever year since.

These state laws have made a significant difference in the number of women who have access to coverage for prescription contraceptives, but their force is limited in two respects. First, under a federal law, ERISA, employers who self-insure are exempt from state-mandated benefits laws. Many large corporations provide insurance benefits in this way, leaving as many as half of all employees outside the protection of state-level laws - though potentially within the scope of new federal ones that could be enacted. Second, these state laws apply only to group-based health plans, so people who purchase individual health insurance policies are not protected.

Even with these limitations, the protection provided by these laws is a big improvement over the pre-1998 landscape. Still, with some states providing no mandate, and others' having their mandate undermined by ERISA, there is a genuine need for Congress to pass a statute guaranteeing women's access to contraception.

A committed group of federal legislators has tried, so far unsuccessfully, to bring that about. The Equity in Prescription Insurance and Contraceptive Coverage Act (EPICC) has been introduced in every Congress since 1997. Most recently, it was introduced in both the House and Senate in early 2007, as part of a broader bill to expand access to preventive healthcare services. If enacted into law, EPICC would require employer-based health insurance plans to provide coverage for prescription contraceptives. The current versions of the bill are pending before committees in both branches of Congress.

Rulings like the Eighth Circuit's in Union Pacific, combined with the uneven protection available under state law, make the need for federal regulation more acute. If women cannot rely on courts to enforce Title VII's broad mandate for sex equality, federal regulation is needed to provide complementary protection via federal statutes.