A Federal Court of Appeals
has recently determined that a self-insured employer health plan that
explicitly excludes same-sex spouses from coverage did not violate
ERISA. In Roe v. Empire Blue Cross Blue Shield, the Second
Circuit upheld a district court's dismissal of a plaintiff's claim
that a group health plan's exclusion of same-sex spouses violated
ERISA's benefit interference provision (i.e., Section 510).
The Second Circuit also dismissed the plaintiff's breach of fiduciary
claim under Section 404 of ERISA.
Background. An employee attempted to add her same-sex
spouse to her employer's group health plan. The health plan at issue
did not define "spouse" but did expressly exclude same-sex
spouses and domestic partners. When the coverage request was denied,
the couple sued, claiming that, by declining to cover the spouse, the
employer had impermissibly interfered with the attainment of benefits
as determined under the Supreme Court's U.S. v. Windsor
decision. (See the Alert of 6/27/13.)
NOTE: In order to prevail on a benefit interference
claim under ERISA Section 510, a plaintiff must show (i) that the
employer took adverse employment action against an employee in
retaliation for the employee's assertion of an ERISA right; or, (ii)
that the employer interfered with the employee's attainment of an
District Court. The district court dismissed the plaintiffs'
benefit interference claim because the couple made no allegation that
the employer took an adverse employment action in relation to the
employee's assertion of an ERISA right under the plan. In fact, the
court found that the plaintiffs failed to allege any ERISA right to
which they are or would become entitled under the plan. The court
noted that ERISA Section 510 prohibits interference with the
employment relationship and that the employee was still employed by
the employer and had suffered no adverse employment action.
After holding that the
exclusion did not violate ERISA's benefit interference provision, the
court proceeded to dismiss the couple's breach of fiduciary claim
because it was based on an argument that enforcing an unlawful plan
term amounted to a breach of fiduciary duty. In turn, the plaintiffs
appealed to the Second Circuit.
Second Circuit. On appeal, the Second Circuit held that the
district court properly dismissed the plaintiffs' claims because the
couple failed to allege: (i) any ERISA right to which they are
entitled, or may become entitled, under the plan that resulted in
discrimination or interference; and (ii) the defendants had acted in
a fiduciary capacity or had breached any fiduciary duty under ERISA.
Impact of Decision on
Employers. It should be noted
that there are no federal rules preventing discrimination based on
sexual orientation, and it is likely that any state laws of this
nature (other than state insurance laws) would be preempted by ERISA.
However, HHS has announced that, beginning in 2015, health insurance
issuers that offer coverage to opposite-sex spouses must provide
policyholders with the option of offering identical coverage to
same-sex spouses. See the 3/27/14 Alert for further details.
Employers that are
considering such an exclusion for their self-funded plans should
recognize that this decision is expressly limited to consideration of
the ERISA claims and that both the district court and Second Circuit
declined to answer whether the exclusion is valid under any other
federal or state law.