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Michigan Appeals Court Rejects Challenge to “Absurd” Benefits Policy

Posted on: January 11th, 2013 by Art Leonard No Comments

Despite finding that an employee benefits policy adopted by the Civil Service Commission drew “absurd” distinctions based on marital status and biological relationships, a 2-1 panel of the Court of Appeals of Michigan ruled on January 8 that the policy, extending health insurance benefits eligibility to non-marital cohabitants of state employees, did not violate equal protection or the state’s anti-gay marriage amendment. Attorney General v. Civil Service Commission, 2013 Westlaw 85805 (Mich. App., Jan. 8, 2013)(not reported in N.W.2d).

Michigan voters amended their constitution in 2004 to prohibit the state government from recognizing any “agreement” other than “the union of one man and one woman in marriage” as “a marriage or similar union for any purpose.” Subsequently, the state’s Supreme Court ruled, in National Pride at Work v. Governor, 481 Mich. 56, 748 N.W.2d 524 (2008), that this meant that the state could not provide domestic partnership benefits for same-sex partners of state employees.

When the amendment vote was taken, unions representing state workers had recently negotiated with the Civil Service Commission over partner benefits. Their agreement, worked out in negotiations, was to create benefits eligibility for cohabitants, regardless of gender, so long as the employee was not legally married and the cohabitants were not blood relatives. They referred to this as “other eligible adult individual” (OEAI). Married employees were eligible to share benefits eligibility with their spouses, of course.

After a change in administration, the Attorney General filed suit, seeking to have this new policy invalidated as a violation of the Marriage Amendment and the equal protection requirements of the state constitution, also arguing that the Civil Service Commission’s adoption of this program violated its constitutional authority over employment compensation.

The court easily found that there was no violation of the Marriage Amendment. “This policy is unambiguously completely gender-neutral,” wrote the majority in a per curiam opinion. “Furthermore, while it does not allow married employees to share their benefits with anyone other than spouses and does not allow employees to share their benefits with close blood relations, it does not depend on the employee being in a close relationship of any particular kind with the OEAI beyond a common residence. The Marriage Amendment prohibits recognizing certain kinds of agreements as ‘marriages or similar unions;’ it does not in any way prohibit incidentally benefiting such agreements, particularly where it is clear that an employee here could share benefits with a wide variety of other people.” The court noted that in light of economic realities, many unrelated people may be sharing housing, so it would be “unreasonable to predict same-sex domestic partnerships to necessarily be the most-benefitted group under this policy.”

The Attorney General’s equal protection challenge posed a tougher issue. He argued that the policy discriminated against married employees, and discriminated against employees who might want to share benefits with a cohabiting parent or brother, for example, contending that there was no rational basis for drawing the eligibility line where the Civil Service Commission had drawn it.

The court found that this equal protection argument was to be evaluated using the deferential rational basis test, as the courts had not identified marital status as a suspect classification, and “close relatives are not a suspect/quasi-suspect classification that warrants heightened judicial scrutiny.” When deferential rational basis is used to evaluate a challenged policy, the policy is presumed to be constitutional and the burden falls on the challenger to prove the lack of a rational basis.

“Quite bluntly,” wrote the majority, “we agree wholeheartedly that those restrictions strike us as absurd and unfair. The restrictions excluding married employees from sharing their benefits with persons other than their spouses and excluding employees from sharing their benefits with blood relatives strike us as ridiculous.” The court noted an example provided at oral argument: that an employee could benefit a fraternity brother but not an actual brother with whom he was living. “These restrictions are nothing short of ridiculous,” wrote the court.

But ridiculous does not equal unconstitutional, when the standard of review is deferential rational basis review, said the court. “Defendant’s policy was crafted through negotiation and bargaining with the unions, and pursuant to the negotiations the policy excluded married persons and close relatives. The exclusion of the cited groups from the OEAI benefits policy does not clearly demonstrate that the policy is arbitrary or unrelated to the state’s interests. The policy appears to serve the negotiated, bargained-for needs of the individuals affected, and so we conclude that the policy passes muster under rational basis scrutiny. We do hope, however, that defendants will see fit and be able to strengthen the policy by eliminating the exceptions we have discussed.”

The court also rejected the Attorney General’s argument that the Civil Service Commission exceeded its constitutional authority to set government employee compensation, finding that there was sufficient authority that health benefits are part of the compensation package. “OEAI benefits qualify as compensation,” wrote the court, “because they are provided in exchange for services rendered by public employees,” citing a popular dictionary definition of “compensation” in the absence of a statutory definition of the term.

Judge Michael J. Riordan, dissenting, could not agree with the majority’s equal protection analysis. “There are no facts in the record to support the trial court’s conclusory holding that the OEAI provision is, or is not, supported by a rational basis,” he argued. “Despite the attorney general’s contention that the proffered reasons were illogical, the trial court performed no inquiry into whether they were supported by anything, even if debatable, in the record. Instead, the trial court simply adopted the proffered justifications as being factual.” The conclusion, for Judge Riordan, naturally followed: “Equal protection is not achieved through the indiscriminate imposition of inequalities. Respect for this principle explains why laws singling out a certain class of citizens for disfavored legal status, or general hardship, are rare. Romer, 517 U.S. at 633. Because the OEAI provision makes it impermissible for one group of citizens, as opposed to another, to receive a government benefit, without there being any identifiable, rational basis for doing so, it is a denial of equal protection of the law.”

Attorney General Bill Schuette’s office promptly reacted to the ruling. A spokesperson told the Detroit News (Jan. 10), “This is an important case, and we will appeal to the Michigan Supreme Court.”

The majority’s approach to the equal protection issue is a bit puzzling. First it ridicules the policy as absurd and ridiculous, then it upholds it as rational, citing the fact that it was negotiated with the unions representing state employees. The oblique wording of the opinion omits what was probably one of the motivations for drawing the line where it was drawn: money. That is, the unions undoubtedly demanded an expansive benefits policy, and the Civil Service Commission undoubtedly sought a way to compromise on a policy that would achieve the immediate goal of extending coverage to “significant others” of employees without breaking the bank, so negotiations ended up excluding certain categories of cohabitants and including others. One suspects that estimated costs of the program contributed to this decision. As such, it probably reflects an expense-based rationale. We’re just speculating here, but the description of OEAI strikes us as the product of a collective bargaining compromise that is what it is, without any thought to discriminating against particular groups for any other reason.