Leonard Link: How Far Does N.Y. Marriage Recognition Reach?

Leonard Link: How Far Does N.Y. Marriage Recognition Reach?

How Far Does N.Y. Marriage Recognition Reach?
The New York Civil Liberties Union has filed suit on behalf of a same-sex couple who married in Canada in 2006 and who seek spousal benefits from a public employer in western New York State.

Jeanne Kornowicz, a school psychologist in the Cheektowaga Central School District in Erie County, applied to her employer to add her spouse, Joy Higgins, to her insurance coverage after the New York Appellate Division, 4th Department, ruled in Martinez v. County of Monroe, 850 N.Y.S.2d 740 (February 1, 2008), that a same-sex marriage contracted in Canada would be recognized in New York, and that a New York public employer, in that case Monroe Community College, would be obligated to recognize the marriage for employee benefits purposes in order to avoid liability for unlawful discrimination under the state’s Human Rights Law.

Erie County is in the 4th Department, whose appellate ruling creates a statewide precedent unless contradicted by another Department of the Appellate Division or reversed by the Court of Appeals. Monroe County officials stated when the ruling came out that they would appeal it, but the Court of Appeals rejected their first attempt to appeal as premature because the Monroe County Supreme Court had not yet entered a final order in the case. It is possible, in light of Governor Paterson’s subsequent order to state agencies to comply with the marriage recognition rule announced in the Martinez case, that Monroe County officials will decide not to appeal, but that’s not clear at present.

The Cheektowaga school district quickly endorsed Ms. Kornowicz’s request, acknowledging its legal obligation to recognize her marriage, and passed it on to Blue Cross & Blue Shield of Western New York, the insurance company that provides group health insurance coverage to employees of the school district under a group insurance contract. Blue Cross said their contract did not obligate them to cover a same-sex spouse, that if the district wanted such coverage, they needed to purchase a “domestic partnership rider” for their policy, and persisted in their refusal to treat Ms. Higgins as Ms. Kornowicz’s “spouse” despite repeated requests from the school district, leading to this lawsuit, Kornowicz & Higgins v. Healthnow New York Inc. (filed in NY Supreme Court, Erie County, July 8, 2008). Copies of the complaint are available from the NYCLU’s website. The plaintiffs are not suing the school district. They are suing the insurance company as “third party beneficiaries” under the school district’s contract with the insurer.

This actually poses an interesting issue in contracts law. Blue Cross’s obligations are based on its contract with the school district to provide health insurance, so the question would be whether contract provisions drafted long ago under which Blue Cross agreed to provide coverage for spouses of school district employees at specified rates can be construed to apply to same-sex couples who are recognized as legally married under state law. Blue Cross might argue that at the time the contract was made, it only contemplated that different-sex couples could be considered married, and that its services were priced accordingly. Thus, it would be arguing, presumably, that requiring it to provide insurance coverage for a same-sex spouse without the school district agreeing to modify the contract (presumably for additional compensation to Blue Cross) would be imposing a performance burden that was not part of the bargain struck by the parties, and that had same-sex spouses been contemplated, the coverage might have been priced differently.

Will a New York court find that the changing social and legal context for the contract requires a broad interpretation of its terms to include a contingency that was not anticipated by the parties when the contract was made? On the other hand, once a marriage is recognized under New York law, it is just a plain old marriage, not a “same sex marriage” or “different sex marriage,” so unless the Blue Cross contract contains a specific definition of marriage that is expressly limited to different-sex couples, one could argue that the terms “marriage” or “spouse” or “husband” or “wife” used in the insurance contract should be construed to have whatever meaning they now have under state law, which would certainly encompass legally-married same-sex couples.

This case illustrates the importance of terminology in discussing this issue. As Evan Wolfson, Executive Director of Freedom to Marry, has been arguing throughout the current struggle over the right to marry for same-sex couples, we should not be using terms like “same-sex marriage” or “gay marriage” to described the goal of this movement. Rather, we should be careful to note that what same-sex couples are seeking is, plain and simple, marriage, and refer to our Issue as opening up marriage to same-sex couples, or providing a right for same-sex couples to marry. The resulting marriage is a marriage, no different from a legal perspective from the marriage of a different-sex couple.

But this again brings up the interesting question of contract law: what does the word “marriage” mean when it is used in a contract? Is it limited to the meaning it had when the contract was drafted, or is the contract effectively “amended” as a matter of law when the legal meaning of the term changes to encompass factual situations different from those pertaining when the contract was made?

The Rhode Island Supreme Court faced an analogous question, at least as it construed the issue before it, in its recent ruling in Chambers v. Ormiston, 935 A.2d 956 (R.I. 2007), that the Family Court in that state does not have jurisdiction to grant a divorce to a same-sex couple that was legally married in Massachusetts, because the word “marriage” used in the Family Court statute in 1961 referred only to marriages involving different-sex couples. The Family Court Act gives that court exclusive jurisdiction to grant a “divorce from the bonds of marriage.” The Court ruled that the meaning of a word used in a statute is fixed at the time of the statute’s enactment, and is not subject to modernizing interpretation by subsequent events, and cited dictionary definitions of marriage from that period in support of its interpretation. This, of course, depended on the Court’s view that a “marriage” involving a same-sex couple is legally different from a marriage involving a different-sex couple. Certainly that is not true as a matter of California or Massachusetts or Canadian law, however. These marriages, whether between same-sex or different-sex couples, all carry the same legal status under the laws of these jurisdictions. While opponents of marriage for same-sex couples almost always throw quotation marks around the word when they use it in their written arguments in these cases, the quotation marks are not justified as a matter of law. And that is what should count, as a matter of statutory interpretation, one might think.

As a contracts law teacher, I am aware of the difficulties inherent in the use of language to express agreements and obligations. Words, after all, are merely social conventions we have adopted to express ideas, and they may take on different meanings over time. What should that mean for the obligations created by contracts? Must their meanings be frozen at the time they were made? There are certainly good arguments to made in support of that contention, based on reliance and the underlying policy of contract law that contracts are voluntary obligations. A large body of consumer protection law has grown around the contention that people should not be saddled with obligations that were not known to them – or at least reasonably knowable to them – at the time they enter into contracts to purchase goods or services. Should the insurance company here be able to make the same argument? -- That when they sold a group insurance policy to Cheektowaga Central School District, they were undertaking a specifically defined and known obligation in exchange for agreed-upon compensation, and that requiring them to accept this “additional” obligation goes beyond the terms of their contractual duty? They are happy to provide the benefit, or so the complaint indicates, provided the school district is willing to purchase the "domestic partnership rider" that they use with employers who have agreed to provide health insurance coverage to same-sex partners of their employees.

From an actuarial point of view, Blue Cross may be correct to claim that the cost of providing this coverage differs from the cost of covering only different-sex spouses. One would have to see their experience data over the time they have been selling these "domestic partnership riders" to see whether it justifies an additional charge. Certainly it seems possible that when one broadens the eligibility for marriage to include same-sex couples, then the proportion of a given workforce that will be married and will seek the benefit may increase, although one suspects that the increase is slight, to judge by studies about the costs of adding domestic partnership benefits that have been mentioned from time to time in the employee benefits literature. It would be interesting to see whether the cost of insuring same-sex spouses is different from the cost of insuring different-sex spouses on an average unit basis...

The complaint filed by the NYCLU does not discuss any of these contract law issues. Rather, it claims first that Blue Cross breached its contract because the contract provides that a "spouse" can be added for dependent coverage and New York law requires recognition of the marriage, and second, that Blue Cross violates the Human Rights Law (Section 296 of the N.Y. Executive Law) because its failure to provide the plaintiffs with spousal health care coverage is discrimination on the basis of sexual orientation, a form of discrimination expressly outlawed in that statute.

The Martinez court had found that Monroe Community College’s failure to recognize the Martinez marriage in this context violated the Human Rights Law. There is this difference, however. In Martinez, the suit was against the public employer, and it seems clear in light of that ruling that the employer is bound to recognize the marriage. But it is not settled that a contractor of the employer is obligated to recognize the marriage. This lawsuit seeks to take the issue one step further beyond Martinez, asserting that a private company that sells services to a public employer must treat the same-sex couple as married or be found in violation of the Human Rights Law. That is an additional step.

Of course, the New York State Insurance Department could facilitate matters by adopting a rule that insurers in New York State must provide equal treatment to all marriages recognized under New York State law, and presumably such a rule would be a logical outgrowth of Governor Paterson’s mandate to the state agencies to comply with the trend in the New York marriage recognition case law. Any attempt to adopt such rule would predictably be met by protests from the insurance industry and its friends in the state legislature.