Geduldig v. Aiello

417 U.S. 484, 94 S. Ct. 2485, 41 L. Ed. 2d 256, 1974 U.S. LEXIS 23, 7 Empl. Prac. Dec. (CCH) 9432, 8 Fair Empl. Prac. Cas. (BNA) 97

Opinions

Mr. Justice Stewart

delivered the opinion of the Court.

For almost 30 years California has administered a disability insurance system that pays benefits to persons in private employment who are temporarily unable to work because of disability not covered by workmen’s compensation. The appellees brought this action to challenge the constitutionality of a provision of the California program that, in defining “disability,” excludes from coverage certain disabilities resulting from pregnancy. Because the appellees sought to enjoin the enforcement of this state statute, a three-judge court was convened pursuant to 28 U. S. C. §§ 2281 and 2284.¹ On the appellees’ motion for summary judgment, the District Court, by a divided vote, held that this provision of the disability insurance program violates the Equal Protection Clause of the Fourteenth Amendment, and therefore enjoined its continued enforcement. 359 F. Supp. 792. The District Court denied a motion to stay its judgment pending appeal. The appellant thereupon filed a similar motion in this Court, which we granted. 414 U. S. 897. We subsequently noted probable jurisdiction of the appeal. 414 U. S. 1110.

I

California’s disability insurance system is funded entirely from contributions deducted from the wages of participating employees. Participation in the program is mandatory unless the employees are protected by a voluntary private plan approved by the State.² Each employee is required to contribute one percent of his salary, up to an annual maximum of $85.³ These contributions are placed in the Unemployment Compensation Disability Fund, which is established and administered as a special trust fund within the state treasury.⁴ It is from this Disability Fund that benefits under the program are paid.

An individual is eligible for disability benefits if, during a one-year base period prior to his disability, he has contributed one percent of a minimum income of $300 to the Disability Fund.⁵ In the event he suffers a com-pensable disability, the individual can receive a “weekly benefit amount” of between $25 and $105, depending on the amount he earned during the highest quarter of the base period.⁶ Benefits are not paid until the eighth day of disability, unless the employee is hospitalized, in which case benefits commence on the first day of hospitalization.⁷ In addition to the “weekly benefit amount,” a hospitalized employee is entitled to receive “additional benefits” of $12 per day of hospitalization.⁸ “Weekly benefit amounts” for any one disability are payable for 26 weeks so long as the total amount paid does not exceed one-half of the wages received during the base period.⁹ “Additional benefits” for any one disability are paid for a maximum of 20 days.¹⁰

In return for his one-percent contribution to the Disability Fund, the individual employee is insured against the risk of disability stemming from a substantial number of “mental or physical illness[es] and mental or physical injuries].” Cal. Unemp. Ins. Code §2626. It is not every disabling condition, however, that triggers the obligation to pay benefits under the program. As already noted, for example, any disability of less than eight days’ duration is not compensable, except when the employee is hospitalized. Conversely, no benefits are payable for any single disability beyond 26 weeks. Further, disability is not compensable if it results from the individual’s court commitment as a dipsomaniac, drug addict, or sexual psychopath.¹¹ Finally, § 2626 of the Unemployment Insurance Code excludes from coverage certain disabilities that are attributable to pregnancy. It is this provision that is at issue in the present case.

Appellant is the Director of the California Department of Human Resources Development.¹² He is responsible for the administration of the State’s disability insurance program. Appellees are four women who have paid sufficient amounts into the Disability Fund to be eligible for benefits under the program. Each of the appellees became pregnant and suffered employment disability as a result of her pregnancy. With respect to three of the ap-pellees, Carolyn Aiello, Augustina Armendariz, and Elizabeth Johnson, the disabilities were attributable to abnormal complications encountered during their pregnancies.¹³ The fourth, Jacqueline Jaramillo, experienced a normal pregnancy, which was the sole cause of her disability.

At all times relevant to this case, § 2626 of the Unemployment Insurance Code provided: Appellant construed and applied the final sentence of this statute to preclude the payment of benefits for any disability resulting from pregnancy. As a result, the appellees were ruled ineligible for disability benefits by reason of this provision, and they sued to enjoin its enforcement. The District Court, finding “that the exclusion of pregnancy-related disabilities is not based upon a classification having a rational and substantial relationship to a legitimate state purpose,” held that the exclusion was unconstitutional under the Equal Protection Clause. 359 F. Supp., at 801.

“ ‘Disability’ or ‘disabled’ includes both mental or physical illness and mental or physical injury. An individual shall be deemed disabled in any day in which, because of his physical or mental condition, he is unable to perform his regular or customary work. In no case shall the term ‘disability’ or ‘disabled’ include any injury or illness caused by or arising in connection with pregnancy up to the termination of such pregnancy and for a period of 28 days thereafter.” (Emphasis added.)

Shortly before the District Court’s decision in this case, the California Court of Appeal, in a suit brought by a woman who suffered an ectopic pregnancy, held that § 2626 does not bar the payment of benefits on account of disability that results from medical complications arising during pregnancy. Rentzer v. Unemployment Insurance Appeals Board, 32 Cal. App. 3d 604, 108 Cal. Rptr. 336 (1973).¹⁴ The state court construed the statute to preclude only the payment of benefits for disability accompanying normal pregnancy.¹⁵ The appellant acquiesced in this construction and issued administrative guidelines that exclude only the payment of “maternity benefits” — i. e., hospitalization and disability benefits for normal delivery and recuperation.

Although Rentzer was decided some 10 days before the District Court’s decision in this case, there was apparently no opportunity to call the court’s attention to it. The appellant, therefore, asked the court to reconsider its decision in light of the construction that the California Court of Appeal had given to § 2626 in the Rentzer case. By a divided vote, the court denied the motion for reconsideration. Although a more definitive ruling would surely have been preferable, we interpret the District Court’s denial of the appellant’s motion as a determination that its decision was not affected by the limiting construction given to § 2626 in Rentzer.

Because of the Rentzer decision and the revised administrative guidelines that resulted from it, the appellees Aiello, Armendariz, and Johnson, whose disabilities were attributable to causes other than normal pregnancy and delivery, became entitled to benefits under the disability insurance program, and their claims have since been paid. With respect to appellee Jaramillo, however, whose disability stemmed solely from normal pregnancy and childbirth, § 2626 continues to bar the payment of any benefits. It is evident that only Jaramillo continues to have a live controversy with the appellant as to the validity of § 2626. The claims of the other appellees have been mooted by the change that Rentzer worked in the construction and application of that provision. Thus, the issue before the Court on this appeal is whether the California disability insurance program invidiously discriminates against Jaramillo and others similarly situated by not paying insurance benefits for disability that accompanies normal pregnancy and childbirth.

II

It is clear that California intended to establish this benefit system as an insurance program that was to function essentially in accordance with insurance concepts.¹⁶ Since the program was instituted in 1946, it has been totally self-supporting, never drawing on general state revenues to finance disability or hospital benefits. The Disability Fund is wholly supported by the one percent of wages annually contributed by participating employees. At oral argument, counsel for the appellant informed us that in recent years between 90% and 103% of the revenue to the Disability Fund has been paid out in disability and hospital benefits. This history strongly suggests that the one-percent contribution rate, in addition to being easily computable, bears a close and substantial relationship to the level of benefits payable and to the disability risks insured under the program.

Over the years California has demonstrated a strong commitment not to increase the contribution rate above the one-percent level. The State has sought to provide the broadest possible disability protection that would be affordable by all employees, including those with very low incomes. Because any larger percentage or any flat dollar-amount rate of contribution would impose an increasingly regressive levy bearing most heavily upon those with the lowest incomes, the State has resisted any attempt to change the required contribution from the one-percent level. The program is thus structured, in terms of the level of benefits and the risks insured, to maintain the solvency of the Disability Fund at a one-percent annual level of contribution.¹⁷

In ordering the State to pay benefits for disability accompanying normal pregnancy and delivery, the District Court acknowledged the State’s contention “that coverage of these disabilities is so extraordinarily expensive that it would be impossible to maintain a program supported by employee contributions if these disabilities are included.” 359 F. Supp., at 798. There is considerable disagreement between the parties with respect to how great the increased costs would actually be, but they would clearly be substantial.¹⁸ For purposes of analysis the District Court accepted the State's estimate, which was in excess of $100 million annually, and stated: “[I]t is clear that including these disabilities would not destroy the program. The increased costs could be accommodated quite easily by making reasonable changes in the contribution rate, the maximum benefits allowable, and the other variables affecting the solvency of the program.” Ibid.

Each of these “variables” — the benefit level deemed appropriate to compensate employee disability, the risks selected to be insured under the program, and the contribution rate chosen to maintain the solvency of the program and at the same time to permit low-income employees to participate with minimal personal sacrifice- — -represents a policy determination by the State. The essential issue in this case is whether the Equal Protection Clause requires such policies to be sacrificed or compromised in order-to finance the payment of benefits to those whose disability is attributable to- normal pregnancy and delivery.

We cannot agree that the exclusion of this disability from coverage amounts to invidious discrimination under the Equal Protection Clause. California does not discriminate with respect to the persons or groups which are eligible for disability insurance protection under the program. The classification challenged in this case relates to the asserted underinclusiveness of the set of risks that the State has selected to insure. Although California has.created a program to insure most risks of employment disability, it has not chosen to insure all such risks, and this decision is reflected in the level of annual contributions exacted from participating employees. This Court has held that, consistently with the Equal Protection Clause, a State “may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind.... The legislature may select one phase of one field and apply a remedy there, neglecting the others. .. .” Williamson v. Lee Optical Co., 348 U. S. 483, 489 (1955); Jefferson v. Hackney, 406 U. S. 535 (1972). Particularly with respect to social welfare programs, so long as the line drawn by the State is rationally supportable, the courts will not interpose their judgment as to the appropriate stopping point. “ [T]he Equal Protection Clause does not require that a State must choose between attacking every aspect of a problem or not attacking the problem at all.” Dandridge v. Williams, 397 U. S. 471, 486-487 (1970).

The District Court suggested that moderate alterations in what it regarded as “variables” of the disability insurance program could be made to accommodate the substantial expense required to include normal pregnancy within the program’s protection. The same can be said, however, with respect to the other expensive class of disabilities that are excluded from coverage — short-term disabilities. If the Equal Protection Clause were thought to compel disability payments for normal pregnancy, it is hard to perceive why it would not also compel payments for short-term disabilities suffered by participating employees.¹⁹

It is evident that a totally comprehensive program would be substantially more costly than the present program and would inevitably require state subsidy, a higher rate of employee contribution, a lower scale of benefits for those suffering insured disabilities, or some combination of these measures. There is nothing in the Constitution, however, that requires the State to subordinate or compromise its legitimate interests solely to create a more comprehensive social insurance program than it already has.

The State has a legitimate interest in maintaining the self-supporting nature of its insurance program. Similarly, it has an interest in distributing the available resources in such a way as to keep benefit payments at an adequate level for disabilities that are covered, rather than to cover all disabilities inadequately. Finally, California has a legitimate concern in maintaining the contribution rate at a level that will not unduly burden participating employees, particularly low-income employees who may be most in need of the disability insurance.

These policies provide an objective and wholly non-invidious basis for the State’s decision not to create a more comprehensive insurance program than it has. There is no evidence in the record that the selection of the risks insured by the program worked to discriminate against any definable group or class in terms of the aggregate risk protection derived by that group or class from the program.²⁰ There is no risk from which men are protected and women are not. Likewise, there is no risk from which women are protected and men are not.²¹

The appellee simply contends that, although she has received insurance protection equivalent to that provided all other participating employees, she has suffered discrimination because she encountered a risk that was outside the program’s protection. For the reasons we have stated, we hold that this contention is not a valid one under the Equal Protection Clause of the Fourteenth Amendment.

The stay heretofore issued by the Court is vacated, and the judgment of the District Court is

Reversed.

1 This litigation began as two separate suits on behalf of California employees who had paid sufficient amounts into the Disability Fund to be eligible generally for benefits under the program. Carolyn Aiello brought, her suit against appellant in the Federal District Court. Augustina Armendariz, Elizabeth Johnson, and Jacqueline Jaramillo jointly initiated their suit as a petition for a writ of mandate in the California Supreme Court. Both suits were brought as class actions and asserted the unconstitutionality of § 2626 of the California Unemployment Insurance Code under the Equal Protection Clause of the Fourteenth Amendment. The appellant removed the state court suit to the Federal District Court, where the two actions were consolidated. See 28 U. S. C. § 1441 (b).

2 Cal. Unemp. Ins. Code §§ 3251-3254.

3 §§ 984, 985, 2901.

4 § 3OO1.

5 § 2652.

6 § 2655. This provision has been amended, effective July 1, 1974, to provide for a maximum weekly benefit amount of $119.

7 §§ 2627 (b) and 2802.

8 § 2801.

9 §2653.

10 § 2801. Section 2608 provides a formula for determining whether a disabling condition that is intermittent is one disability or more than one disability for purposes of applying the limitations in §§ 2653 and 2801 on the maximum amount of benefits payable.

11 § 2678. Sections 2675-2677 contain various other factors that will disqualify an employee from receiving benefits but that relate to matters other than the nature of the disabling condition.

12 Effective July 1, 1974, the Department of Human Resources •Development will be renamed the Department of Employment Development. See Cal. Unemp. Ins. Code § 301 et seq.

13 Aiello and Johnson suffered ectopic and tubal pregnancies, respectively, which required surgery to terminate the pregnancies. Armendariz suffered a miscarriage.

14 In an earlier decision, the Court of Appeal had sustained § 2626 against an equal protection challenge by a female employee who had suffered disability as a result of normal pregnancy and delivery. Clark v. California Employment Stabilization Comm’n, 166 Cal. App. 2d 326, 332 P. 2d 716 (1958).

15 Section 2626 was later amended, and a new § 2626.2 was added, in order clearly to reflect this interpretation. The two sections now provide as follows:

§ 2626 “ 'Disability’ or ‘disabled’ includes both mental or physical illness, mental or physical injury, and, to the extent specified in Section 2626.2, pregnancy. An individual shall be deemed disabled in any day in which, because of his physical or mental condition, he is unable to perform his regular or customary work.”

§2626.2 “Benefits relating to pregnancy shall be paid under this part only in accordance with the following:

“(a) Disability benefits shall be paid upon a doctor’s certification that the claimant is disabled because of an abnormal and involuntary complication of pregnancy, including but not limited to: puerperal infection, eclampsia, caesarian section delivery, ectopic pregnancy, and toxemia.

“(b) Disability benefits shall be paid upon a doctor’s certification that a condition possibly arising out of pregnancy would disable the claimant without regard to the pregnancy, including but not limited to: anemia, diabetes, embolism, heart disease, hypertension, phlebitis, phlebothrombosis, pyelonephritis, thrombophlebitis, vagi-nitis, varicose veins, and venous thrombosis.”

These amendments took effect on January I, 1974.

16 In his message to the state legislature proposing the creation of this program, Governor Earl Warren stated:

“It is not possible for employees to obtain from private insurance companies protection against loss of wages or salary during sickness as adequately or cheaply as that protection could be obtained by diverting their present 1 per cent contribution for the support of a Disability Benefits Program.” California Senate Journal, Jan. 23, 1946, p. 229.

The California Supreme Court has concluded “that the legislative purpose in providing unemployment disability benefits . . . was to provide an insurance program to pay benefits to individuals who are unemployed because of illness or injury. . . Garcia v. Industrial Accident Comm’n, 41 Cal. 2d 689, 692, 263 P. 2d 8, 10 (1953) (internal quotation marks omitted).

17 Section 2604 of the Unemployment Insurance Code vests the Governor and the appellant with authority to modify the payment of benefits and to increase the waiting time for eligibility if such steps are necessary to forestall insolvency of the Disability Fund. But neither the Governor nor the appellant is authorized to increase the contribution rate under any circumstances.

18 Appellant’s estimate of the increased cost of including normal pregnancy within the insured risks has varied between $120.2 million and $131 million annually, or between a 33% and 36% increase in the present amount of benefits paid under the program. On the other hand, appellee contends that the increased cost would be $48.9 million annually, or a 12% increase over present expenditures.

19 The same could be said of disabilities continuing beyond 26 weeks.

20 The dissenting opinion to the contrary, this case is thus a far cry from cases like Reed v. Reed, 404 U. S. 71 (1971), and Frontiero v. Richardson, 411 U. S. 677 (1973), involving discrimination based upon gender as such. The California insurance program does not exclude anyone from benefit eligibility because of gender but merely removes one physical condition — pregnancy—from the list of compensable disabilities. While it is true that only women can become pregnant,, it does not follow that every legislative classification concerning pregnancy is a sex-based classification like those considered in Reed, supra, and Frontiero, supra. Normal pregnancy is an objectively identifiable physical condition with unique characteristics. Absent a showing that distinctions involving pregnancy are mere pretexts designed to effect an invidious discrimination against the members of one sex or the other, lawmakers are constitutionally free to include or exclude pregnancy from the coverage of legislation such as this on any reasonable basis, just as with respect to any other physical condition.

The lack of identity between the excluded disability and gender as such under this insurance program becomes clear upon the most cursory analysis. The program divides potential recipients into two groups — pregnant women and nonpregnant persons. While the first group is exclusively female, the second includes members of both sexes. The fiscal and actuarial benefits of the program thus accrue to members of both sexes.

21 Indeed, the appellant submitted to the District Court data that indicated that both the annual claim rate and the annual claim cost are greater for women than for men. As the District Court acknowledged, “women contribute about 28 percent of the total disability insurance fund and receive back about 38 percent of the fund in benefits.” 359 F. Supp. 792, 800. Several amici curiae have represented to the Court that they have had a similar experience under private disability insurance programs.